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interesting announcement. the mgmt is focusing on optimisation and yield improvement by opting for smaller planes - fly-thru connectivity, entering secondary cities/hubs, lower fuel consumption lower trip cost, higher load factor due to lower capacity, resulting in higher flexibility, lower operating costs and higher margins for secondary route.
not a problem, Daniel :) The reason is that airlines seldom operates in such manner of buying planes with cash. The 76 billion looks big and scary but in reality, it works differently. You may have heard the term sale and leaseback from the industry. Tony likes that concept and has been using that. And its not lump sum too as its staggered deliveries. The key point here is whether travel demand will be there in 10 to 15 years from now (delivery starting 2028), AAX earnings/profitability higher than the lease cost - driven by demand and manage & deploy # of planes accordingly.
let me tell u guys how to print money into your pocket out of nothing from the so called sales and leaseback:
1. borrow huge money to buy planes.
2. sell it to another entity and lease back.
3. receive huge sum of cash.
4. pay huge special dividen.
5. sell all shares after the dividen. let other s o h a i hold risk for the empty shell company.
hi Shirley, I won't buy at 1.30. I have traded AAX twice at 1.05 and 1.15. Sold it at 1.30 in both occasions. Not recommended to buy airlines stocks if you are not familiar with the industry. I am not in favor of long term position for airlines stock due to seasonality and high leverage. I will consider it when there's huge discount or during peak travel season which is summer. Right now, I am just holding european/regional airlines stock for the upcoming summer.
As for AAX, there is no jet fuel hedging communication up till now and seems to me that there is no plan to initiate hedging. So, this is a risk for higher cost. AAX sentiment will improve once a treaty is signed between US and Iran. Trump is under pressure to sign a deal:) AAX load factor at 84% which is pretty decent and not bad as long as it is above 80%; short term trade is ok if there is discount.
Lol, Adama. I don't think AAX will issue special dividend for the A220 sales and leaseback. Well, it's 2028 which is 2 years from now and things may change by then.
that is why i think aax will still suffer from high fuel cost even if the war ended. There is no way the crude oil fall back to pre-war level and it will still stay at high level for quite some time.
Personally, i believe aax will make unprecedented "real cash" loss. The so called "restructuring" is just an accounting tricks and it provides no buffer to such a crisis.
u manage to cheat death once, maybe this time u dont come back haha...
Of course, hedging cannot be done at current elevated jet fuel prices. AAX insists that they will not do jet fuel hedging similar to policies adopted by US airlines. However, just look at the fate of USA Spirit Airlines. AAX QRs will look really ugly in Q2, Q3 and Q4 2026 as global crude oil prices will stay elevated at least in 2026 and consumer demand destructions (high air fares + fuel surcharges) for air travel starting since May 2026. O&G infrastructures already affected in the Middle East and will take time to recover even after ME conflict ended. AAX should have adopted prudent collar fuel hedging (say 50%-75%) when global crude oil prices were low (US$60-US$70) Pre Middle East conflict.
Choose the one with hedging if you are looking for bargains. Have a look at Jet2 - hedged ~85% of its jet fuel summer requirement at ~700 per metric tonne.
yes, TACO week, World's Premier in Beijing. The key to US-Iran war. Venezuela and then Iran - TACO's leverage against Xi. TACO cannot simply raised tariffs after his liberation day tariff was rejected by the supreme court. He needs leverage and uses oil instead. Lol, no pun intended. Lets see what is the outcome from this week's meeting. Trump needs a soft landing heading into mid term elections in Nov, Xi to meet him year end in US at the back of poor approval ratings.
Summer is coming too. US maybe shielded earlier but the gasoline and diesel inventories are at multi year low in US. Their own people will start feeling the pain from the war. lets see how long can he gung-ho.