What happens of you don't make a dividend payout? I always thought the dividend was paid before the weekend closing not the after. Does it just take you negative or does it liquidate? Right now I'm going to be cutting it close and if it just takes me red I won't worry if it would liquidate I might cancel a lease if it looks like it will be too close to comfort.
If you aren't able to make the payment (not enough in the bank), I believe the system sells off stock to AS Holding to get you enough money to cover the difference. I might be totally wrong. I do know there are "rescue loans" companies are given for mistakes like that so they aren't simply liquidated, but you do have to meet some kind of requirements, and before you ask, I don't know what they are.
Hopefully someone will be able to shed some light on this. I'm curious myself.
We are talking about dividends, not wages... if there are no money for dividends, the shareholders are out of luck and the stock will take a dive. Same as in real world. But this is just my opinion.
I should be ok it just had me thinking. Reconfiguring my 747 and cancelling a couple of its flights gave me a real haircut this week lol.
If the dividend is paid after week end close, you pay 15% of the profit as dividend. Profit is based on week-end closing. So if you lose money or have 0 profit, there is no dividend. If dividend payment is immediately after week-end closing it should not happen that you have no money to pay (because if you could not have paid week end closing you would be liquidated, or given emergency loan). So you should be fine either way.
Anyway, in spite of the above, and out of curiosity, I would really like to know definitive answer: what happens if at the very second of dividend payment you do not have sufficient cash on hand?
I think this is a quiet realistic case. Having a look at my listed company, I have to manage cashflows very tightly to prevent this. While doing a profit of 75m AS$, especially principals can lower cash towards weekend closing, thus after wages paying 10m AS$ can be a problem.
Well, I am keen to know what actually would be the result. I guess it’s a rescue loan.
There are two reasons why you would face this:
1. You can't manage your cashflow.
Solution: don't risk so much, delay investments and keep some cash.
2. You can't make your airline profitable enough.
Solution: Focus on the core routes. Identify areas that are making the most losses and eliminate them.
The reason for why it happens isn't the same as what would happen. I'm wondering if it'd just make your company go negative red or not.
Negative in cash - no (as far as I know impossible)
Negative in PLO - no (as dividends are below the PLO)
The question is, how to deal with the claim of the shareholders and whether shareholders are systemically able to turn their profitable company into bankcruptcy. :)
Well today I had a 747 cancel a round trip due to an error on ny part. I’m now about 200k below the dividend payout. I hope it doesn’t close the doors to my company.