Q has a very clear & present danger almost requiring theorising about the potential return of some A380s into service.
So much 'questionable content' in any statements made these days about Qantas, such as 'well capitalised' for example.
After all Q raised $1.3bn in new equity on 25/26 June 2020 yet just 4 days later Q's total equity was $1.5bn - is this Q's idea of 'just-in-time' capital?
Without that successful equity raising then Q's Equity would have been just $0.2bn represented 6 times over by deferred tax benefits & intangibles of $1.2bn. See excerpts from BS at bottom of this post.
As Q has not written down the value (yet) of the A380s to zero then it must keep saying it intends to bring some back to service - otherwise the auditors will be forced to require both a complete write-off AND the creation of a liability to cover the ongoing storage costs & estimated future disposal costs. Remember it was not long ago that each 8+ or more year old A380 appeared valued close to list price (based on 'value in use' valuation used by Q) a value which is likely close to twice the actual amount paid for each A380.
Taking all this into account, & adding in $468m of Deferred tax assets (30% of Net losses generated) - Q's total equity stands at just $759m, less than half what it was at 30 June 2020.
Ain't accounting great.
As of last December, 31st to be exact - Q had more liabilities (owed more money) than it had tangible assets and this was despite Q not writing down the valuations (ex depn) for around 290 of its fleet for over two years. Does anybody believe airframe valuations have not fallen in two years for a fleet with an average age approaching 15 yrs?
Hard to understand how they convinced their Auditors that their previous 'value in use' valuations for its entire international fleet had not fallen by even $1 despite over 95% not being on scheduled service aka grounded and having a net cost not benefit.
Now this is even more of a concern (for AFFers et al) than it may seem.
Why?
Qantas states that QFF points have a zero cash value in contrast to VA who had them 100% cash backed protected by a separate trust structure. If you were to deduct the value of outstanding QFF points on issue then that NTA per share figure would not be pretty.
With $17.8 bn of liabilities to $0.76 bn of Equity, and 200% of the equity value represented by future tax benefits & other intangibles ($1.53bn) - it is curious for anybody to describe Q as 'well capitalised'.
By way of comparison - VA had written off some hundreds of millions in 'deferred tax benefits' by June 2019, and carried in its BS under $60m as of 30.6.2019.
Even more so, if AJ's comments about a full year loss of around $2bn (is that pre-tax or post-tax?) then Q's equity may soon be below $0.5bn perhaps even as low as $0.2bn - and yes that is
after adding in an additional deferred tax benefit of a couple of hundred million.
Should we be seeking a market on whether Q will announce another late June equity raising?