The following article from today's Times may explain why the share price fell. There is no truth in ghost-rider's assertion that the exercising of options has had an effect as there has as yet been insufficient time for any options to be exercised.
Shares in easyJet down by 14%
By Russell Hotten
SHARES in easyJet fell 14 per cent yesterday as investors worried that the rapid growth of Europe’s biggest budget airline may be coming to an end.
The carrier, which entered a new era as founder Stelios Haji-Ioannou officially stood down as chairman, reported another surge in pre-tax profits, up 78 per cent to £71.6 million last year.
But concerns about increased competition in the low-cost sector, and unease about acquisitions, cast a cloud over Mr Haji-Ioannou’s last day, with the shares falling 55¼p to 334¾p.
Revenues rose 54.6 per cent to £552 million, including an 18.5 per cent contribution from Go, the budget carrier that was spun off from British Airways.
Analysts pointed to a 4 per cent fall in average net fares to £46 as easyJet cut prices to fill new capacity. “I think the competition is probably having a bigger impact than they’re letting on,” Gert Zonneveld, at West LB Panmure, said.
However, Ray Webster, easyJet’s chief executive, said the fall was consistent with the carrier’s growth plans.
“The faster you grow, the more discounts and spending you have in the early stages,” he said.
As well as buying Go, easyJet also has an option to buy BA’s subsidiary in Germany. Mr Webster said work on assessing Deutsche BA was going well and he was optimistic about exercising the option.
But this purchase, along with easyJet’s move into some higher-cost airports and its acquisition of 120 aircraft from Airbus, has led some analysts to wonder if the airline is taking on too much.
Mr Haji-Ioannou, who set up easyJet in 1995 with two aircraft, was yesterday formally succeeded by Sir Colin Chandler, the former defence-aerospace executive.
Run out of an orange corrugated iron shed near Luton airport, easyJet epitomised the booming budget airline sector, which has stripped business from conventional carriers.
Copyright 2000 Times Newspapers Ltd