Virgin Australia will reduce group capacity by -6% in the June half and -8% in the December half. This could be adjusted further to reflect changes in demand, either through tactical cancellations or further scheduling cuts.
Earnings guidance is suspended for FY20 because of ongoing uncertainty.
While the current demand situation is difficult to predict, UBS estimates the airline would need to generate flat operating earnings (EBITDA) over the next 12 months to use up all cash balances.
Neutral rating and $0.12 target maintained.
Sector: Transportation.
Target price is $0.12.Current Price is $0.07. Difference: $0.05 – (brackets indicate current price is over target). If VAH meets the UBS target it will return approximately 42% (excluding dividends, fees and charges – negative figures indicate an expected loss).
