Very early days still but I’m feeling increasingly optimistic about my small holding in AIZ. I didn’t realise VAH and AIZ have v similar topline revenue numbers (c $5.7bn in FY19) and the market caps are only $200m apart but AIZ has ~$2.2bn in net debt vs VAHs $5bn+ = VAH is 2x AIZ’s EV. It’s funny how the market can throw up these sorts of pricing anomalies. Not that VAH is the poster child airline for benchmarking against but it’s informative.
Having spent a bit more time going through the books, 65% of all passengers carried on AIZ’s flights are domestic and that increases to ~85% if you include Australia and the pacific islands, which are the international routes most likely to open up following domestic. I haven’t got as far as looking at the segment profitability but my desktop research suggests an extended reduction in international passenger volumes won’t hurt AIZ that badly compared to other carriers eg VAH and QAN.
It looks like employee expenses were running at about $100m / a month for 1H20, that’ll come down as they right size their workforce. Once you add in some g&a, finance expenses etc my guestimmate would be $150m max monthly burn so they look to have ample liquidity to see out the next 12 months. That said, I’ll be a ready and willing participant in any upcoming discounted cap raise
AIZ Price at posting:
90.5¢ Sentiment: Buy Disclosure: Held
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