AC and stock issueWhile no one can predict with certainity or know what happens in board rooms, but we can try to put 2 and 2 together loically.
Facts:
1. AC doesn't need additional liquidity. Liquidity at end of Q1 was $6B+additinal $1.5B raised for acft purchase and credit line.
2. Pension plan is $2B+ surplus and is at minimal risk. Excellent plan. Can skip payments if need be.
3. Currently, using wage subsidy program and with AT news delay, probably will go ahead and complete the layoff plan to align cost further.
4. $22M daily cash burn (March) will probably go down to ~$10M in Q2 and lower (~$5M/day in Q3) and could break even in Q4 with 50% capacity.
5. Have enough on hand to buy new aircraft for 2021/22. Assumptions is 2021 capacity at 75% will generate positive cash and will be able to lease aircraft.
6. AT decision is delayed. This will give more power to AC to re-negotiate the deal.
7. Current float or outstanding shares are lowest in industry and with this issue might get close to United. Other airlines have twice or more the size.
Then why issue more stock. Something is up for sure. They are hoarding up cash. As they say, why I get additional credit and secure cash?.......... beacuse I can. And be ready for opportunities and safe guard future.
In one of the recent interviews an analyst had asked about possibility of using all this cash for buyiing additional appropriate businesses. To that CFO responded that AC will be ready for opportunities as and when they present. He added, that they are very confident and they will pass through current situation. They will do their due diligence before jumping on.
I think something is up. We will know in coming months. Untill then, make your own decisions whether to ride it out or quit.