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Should the Government Nationalise essential industries?

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Quantas and other airlines are facing a black hole.
Given the fact that air travel will collapse for months ahead should the Government formally renationalise Quantas to protect the infrastructure as an essential national asset ?

Should we be considering the same action to protect other critical industries ?

How could it be done ?
 
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Quantas and other airlines are facing a black hole.
Given the fact that air travel will collapse for months ahead should the Government formally renationalise Quantas to protect the infrastructure as an essential national asset ?

Should we be considering the same action to protect other critical industries ?
IMO Qantas, Air NZ etc will be propped up, as for nationalising, I doubt that will happen neither major party is into running organisations and being responsible for its performance.
It is much easier for politicians to sit on the side lines and tut tut, than to be held responsible for the performance of an organisation, it is the last thing a minister wants, minister for aviation and Qantas :rolleyes: I don't think so.
 
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Quantas and other airlines are facing a black hole.
Given the fact that air travel will collapse for months ahead should the Government formally renationalise Quantas to protect the infrastructure as an essential national asset ?

Should we be considering the same action to protect other critical industries ?

How could it be done ?
They shouldn't have let things like the power industry be privatised in the first place, but I doubt if we have the money to buy them back.

Is Qantas an essential service ? There are other businesses more important imv, including power, water, food and fuel.

We have a thing called the Future Fund which should be investing more in these industries.
 
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IMO Qantas, Air NZ etc will be propped up, as for nationalising, I doubt that will happen neither major party is into running organisations and being responsible for its performance.
It is much easier for politicians to sit on the side lines and tut tut, than to be held responsible for the performance of an organisation, it is the last thing a minister wants, minister for aviation and Qantas :rolleyes: I don't think so.
Absolutely , our politicians are jellyfish, they can't take any pressure.
 
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IMO Qantas, Air NZ etc will be propped up, as for nationalising, I doubt that will happen neither major party is into running organisations and being responsible for its performance.
It is much easier for politicians to sit on the side lines and tut tut, than to be held responsible for the performance of an organisation, it is the last thing a minister wants, minister for aviation and Qantas :rolleyes: I don't think so.
Governments don't have to formally run a business. We still have QUANGO's. The rules for running them can always be reviewed.

My observation is that QUANTAS and all other airlines are looking at massive losses which their balance sheets can't stand and which banks won't lend against. If/when they fall over there will be hundreds of planes lying idle with basically no value.

Clearly operational airlines are an essential service. At the moment I can only see an indeterminate financial support. If the government offered to buy the business outright and keep on the current admin it would create certainty.

Consider this .
COVID-19. By the end of May, most world airlines will be bankrupt
https://centreforaviation.com/analy...y-most-world-airlines-will-be-bankrupt-517512
 
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Is Qantas an essential service ? There are other businesses more important imv, including power, water, food and fuel.
Indeed. But I think these will not be as dramatically affected and will survive. And if the are at serious risk Governments will need to step in.

I'm surprised you don't see airlines as an essential service. At this stage local and international transport of people, mail and cargo are indispensable to our society. Mail and freight can't finance airlines by themselves but have to work anyway.
 
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My observation is that QUANTAS and all other airlines are looking at massive losses which their balance sheets can't stand and which banks won't lend against. If/when they fall over there will be hundreds of planes lying idle with basically no value.
Qantas will be fine Bas, by the way drop the U in Qantas, it looks strange, it would look even stranger written on the side of a plane.:D

Citi analysts have done the numbers to see what will happen to Qantas if it stops flying. It is good news. They expect to see a U-shaped recovery from July this year to mid-2021, but expect the dividend will be suspended. They have upgraded the stock to buy/high risk with a target price of $3.70. Shares are currently down 15.6 per cent at $2.42.

"We model a scenario where Qantas' entire flying operations are grounded and generating no revenue for the company,'' Citi's Jakob Cakarnis writes.

"This would increase the reliance on Frequent Flyer to cover about $465 million of monthly fixed costs for Qantas resulting in cash burn of about $330 per month. With available liquidity of about $2.2 billion we estimate Qantas could withstand six to 11 months of no flying before having to reduce its cost base further, increase gearing or raise equity.''

Mr Cakarnis said there were no material near-term risks for the Qantas balance sheet and he believes it can ''trade its way through this considerably tough market.''

He estimates Qantas will report losses of about $542 million for the January to July 2020 period after Monday's decision to slash international capacity by 90 per cent and domestic capacity by 60 per cen
t.
 
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Indeed. But I think these will not be as dramatically affected and will survive. And if the are at serious risk Governments will need to step in.

I'm surprised you don't see airlines as an essential service. At this stage local and international transport of people, mail and cargo are indispensable to our society. Mail and freight can't finance airlines by themselves but have to work anyway.
It's the regional airlines that need the most help. There are any number of international carriers but very limited competition in the regional routes. Rex may be the only one for a lot of routes.
 
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Not sure the government is capable, but in principal I think more national ownership would help ensure less dependency on other countries, but it relies on the consumer buying Australia. If you want another 'Holden' manufactured in this country, a LOT will have to CHANGE from the ground up, but the biggest will need to be the mindset. Maybe start by making one that doesn't use petrol or a steering wheel.
We are proven innovators, we had to be, to live and adapt to this country.
 
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Qantas will be fine Bas, by the way drop the U in Qantas, it looks strange, it would look even stranger written on the side of a plane.:D

Citi analysts have done the numbers to see what will happen to Qantas if it stops flying. It is good news. They expect to see a U-shaped recovery from July this year to mid-2021, but expect the dividend will be suspended. They have upgraded the stock to buy/high risk with a target price of $3.70. Shares are currently down 15.6 per cent at $2.42.

"We model a scenario where Qantas' entire flying operations are grounded and generating no revenue for the company,'' Citi's Jakob Cakarnis writes.

"This would increase the reliance on Frequent Flyer to cover about $465 million of monthly fixed costs for Qantas resulting in cash burn of about $330 per month. With available liquidity of about $2.2 billion we estimate Qantas could withstand six to 11 months of no flying before having to reduce its cost base further, increase gearing or raise equity.''

Mr Cakarnis said there were no material near-term risks for the Qantas balance sheet and he believes it can ''trade its way through this considerably tough market.''

He estimates Qantas will report losses of about $542 million for the January to July 2020 period after Monday's decision to slash international capacity by 90 per cent and domestic capacity by 60 per cen
t.
Thanks for the correction:)

I have to say I am absolutely astounded that somehow Qantas has $2.2Billion "in the bank" and can run for 6-11 months of no flying without reducing its cost base base further, increase gearing or raise equity.

Doesn't this strike you as incredible ? I just wonder how they have arrived at these figures.

This story is 5 years old. However it might still have something to say about the capacity of Qantas to last 6 months plus with no flying.

Is Qantas too big to fail?
https://www.abc.net.au/news/2014-09-01/verrender-is-qantas-too-big-to-fail/5709128

 

wayneL

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@OmegaTrader

Here is a thread which illustrates the point made in the other thread about the economy changing. This is just one aspect.
 
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Ok a bit more research on QANTAS.

Apparently they do have $1.9B in cash and a further $1B in credit lines. Have to say the institutions holding this cash might be feeling nervous.

Maybe all the competition going bankrput will end up be a great deal for the survivors. (but not he flyers..)

Coronavirus could see some airlines go bankrupt, but stimulus should help Qantas and Virgin

https://www.abc.net.au/news/2020-03...upt-end-of-may-qantas-virgin-survive/12064856
 

wayneL

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I dunno whether Qantas itself will be privatised or not, @basilio, maybe not. But I reckon there is a better than even money chance that some industries will end up being nationalised out of this.

Prime suspect would be one or more of the banks in my opinion and that might not actually be a bad thing at all.
 
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BHP use Qantas to fly us to work the same for FMG to Solomon at least
Might keep them a bit liquid
 
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Thanks for the correction:)

I have to say I am absolutely astounded that somehow Qantas has $2.2Billion "in the bank" and can run for 6-11 months of no flying without reducing its cost base base further, increase gearing or raise equity.

Doesn't this strike you as incredible ? I just wonder how they have arrived at these figures.

This story is 5 years old. However it might still have something to say about the capacity of Qantas to last 6 months plus with no flying.

Is Qantas too big to fail?
https://www.abc.net.au/news/2014-09-01/verrender-is-qantas-too-big-to-fail/5709128
The Government is bailing out Air NZ, from memory this is the second time.

https://www.stuff.co.nz/national/he...vernment-cash-injection-expected-analysts-say
 
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Yes Air NZ were bailed out in 2002.
Air New Zealand's largest shareholder is the Government, which owns 52 per cent.

In 2002, after the September 2001 terror attacks and the collapse of Air New Zealand subsidiary Ansett, the airline received a $885m bailout from the Government.

In the 2019 financial year Air New Zealand made $5.8b in revenue and had cash on hand of $1.1b. Same as Air NZ, B.A etc most Countries have a national carrier of sorts.

Also @ Basillio
I'm sure if Qantas needs bailing out the Government will do it, they are basically a psuedo Government corporation anyway.

I wouldn't hold out a lot of hope for Virgin, just my opinion.
 
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Rex may be the only one for a lot of routes.
They are.

More broadly, people living in SE Qld, NSW, Vic and SA could survive without Qantas / Virgin albeit not easily but it would be a truly massive blow to WA, NT and Tas if there was no ability to fly domestically to the main cities. The economic costs would be massive.

For those crossing Bass Strait by ship I wouldn't be too worried about anyone going broke however. The TT-Line, which operates the Spirit of Tasmania ships, is 100% state government owned. I guess it's possible that they could suspend services for a period if they're worried about spreading the virus on board but financially they should survive.

In the utilities sector, if any of the smaller players were to go bust then there are provisions already in place so your power or gas won't be cut off. In short what happens in the event of financial failure of a retailer is you'll be automatically assigned to the designated Retailer Of Last Resort - who that is will depend on where you live but it will be one if the big ones. You don't have to remain with them, that's up to you, but your lights stay on whilst you decide what to do. The price they charge you under that scenario will be the government regulated price unless they decide to give you a better offer hoping to keep you as a customer - that would be a commercial decision on their part if they do that or not.

If the owner of a power station, networks, gas production or pipelines goes bust well then the only option would be for government to either bail them out, nationalise or facilitate an immediate take over by someone else. :2twocents
 
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Prime suspect would be one or more of the banks in my opinion and that might not actually be a bad thing at all.
Insurance companies too, the economic environment is now extremely toxic for them.
 
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Unless a cure for the virus is found, and implemented, in short order, questions will be asked as to how Qantas and other large corporations can pay almost no tax for ten years, put the screws on the price of labour in their workforces, pay themselves exorbitant executive salaries and board fees, then cry poor when things turn ugly.

Michael West
 
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