WOOD Flash – Aegean Airlines: 3Q20 – cash burn under EUR 20m/month; liquidity should last until spring 2022E
Aegean carried 2m passengers during 3Q20, 62% fewer than the 5m carried during 3Q19. It seems to have reduced the cash burn rate to less than EUR 20m/month during the quarter, and ended September with liquidity of around EUR 455m, on our estimates. In October, Aegean’s liquidity was boosted further by the disbursement of the EUR 150m loan from the Greek banks. Even if we assume a flat cash burn rate of EUR 30m/month, this liquidity should last Aegean up until spring 2022E, we believe, even if factoring in the expected outflows related to PDPs. The company did not provide any colour on the capital increase and or the state aid. We maintain our view that, even without these measures, Aegean has a better liquidity profile than most European carriers, and we believe that the likelihood that either the capital increase (and/or the state aid) will be very significantly dilutive for the existing shareholders should be relatively limited, in our view. However, the total volume of the capital injection mentioned in the press reports (EUR 120m of state aid, plus a EUR 60m capital increase by the existing shareholders) is substantial, accounting for around two-thirds of Aegean’s current market cap. As such, we reiterate our HOLD recommendation, as we wait for more information regarding the structure and pricing of a prospective recapitalisation.Aegean Airlines is an airline carrier based in Greece. Co. is engaged in aviation transportation, providing services that concern the transportation of passengers and commodities in the sector of public aviation transportation inside and outside Greece, conducting scheduled and unscheduled flights. Co. provides full service, premium quality short and medium haul services. Co. maintains a network of 145 destinations, 111 international in 45 countries and 34 domestic destinations. Co. is a member of global airline network, the Star Alliance network.
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