Don't count out the heavy-weight boxer that staggers for the first time from a well landed punch. It certainly doesn't mean that a light-weight suddenly can take him on.
BA is not as bad off as many Nigel haters would like to believe, or as bad as they perpetuate themselves. And the smaller firms are not as strong as they would like to make you believe. Have you ever heard of Contrarian Investing. As soon as you start seeing how crap a firm is in every newspaper daily and their share price lies battered on the floor as investors rush for the door, that is when the smart money quietly buys. BA's tough ride is not yet over I will not be buying yet.
But for Remember "BA's ongoing focus on cash conservation resulted in a closing cash balance of £1,219 million; the largest year-end balance since privatisation. Cash burn in the fourth quarter was zero." More property disposals to come, as well as DBA and a hefty credit line in the billions.
The tremendous growth of low cost will be difficult to maintain, the market is only so big in Europe. Outside of Europe how fast can he expand and at what cost ? Why Do you think Stelios is buying GO and others at such a high price (3 times Go's value last year)? It couldn't be because a merger was the only way such a majority share holder in Easyjet could cash out 100mill pounds worth of shares without causing a collapse in his own share price ? No that would only be cynical of me....or maybe just contrarian.
This is not to say that the tide is already turning, but turn it will. Easyjet, Ryanair, BA all have their niche to fill like it or not. If regulators eventually free BA management to merge like they intend, they will also one day be part of something even bigger. I will be happy for anyone to re-post this statement 2-3years down the road and laugh at how silly I was.
By the time you know it's a band-wagon, it's already too late.
Last edited by airrage; 24th May 2002 at 13:33.