SOUTHEND 5
Selling assets at a higher price than you paid for them is a valid way to make money. Most businesses like Stobart tend to find that it's not long term sustainable and that they need to charge people for use of those assets on a regular basis. Furthermore this game only works when there is someone willing to pay a higher price for said asset
Thus an airline might be able to buy aircraft cheaply and sell later at a higher price - eg Ryanair. Long term though they have to find a way of charging people for the use of those assets - ie selling tickets for air transport. In Stobart's case if nobody is willing to pay £100m (or more) for SEN, then Stobart need to find a way to make enough people pay more money to Stobart each year than it costs Stobart to run SEN
Thus an airline might be able to buy aircraft cheaply and sell later at a higher price - eg Ryanair. Long term though they have to find a way of charging people for the use of those assets - ie selling tickets for air transport. In Stobart's case if nobody is willing to pay £100m (or more) for SEN, then Stobart need to find a way to make enough people pay more money to Stobart each year than it costs Stobart to run SEN
Last edited by davidjohnson6; 11th Jan 2017 at 22:20.
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Stobart would like that to happen. Wether they 'need' that to happen is a different matter. They are generating cash for shareholders . Hence the 70 per cent rise in the share price last year. Money talks ..
If the airport cashes in then stick another quid on that.. if it doesn't then knock 25 per cent off the share price.
Either way it's not a ****e or bust trade for stobart. The real estate alone is worth a fortune
If the airport cashes in then stick another quid on that.. if it doesn't then knock 25 per cent off the share price.
Either way it's not a ****e or bust trade for stobart. The real estate alone is worth a fortune
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In 2016 they promised £300m would be returned to shareholders, they must have good reserves and future plans for the real estate they have to commit to that. They have also gone to paying a quarterly dividend rather than 6 monthly.
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Thursday's blizzard warning London
The TAFs for the LONDON area this evening are scarey readings.....gusts of 45kts...200m in heavy snow.....then clearing after 4 hours..followed by heavy snow showers 300m vis. Sounds like a forecaster not wanting to be Michael Fish 2nd or indeed passengers on finals to the runways are in for a very bumpy ride!
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When we talk about the real estate that is Southend Airport, unless the world changes dramatically, then an airport of sorts it will remain. I've seen it suggested here in the past that the land could be developed for housing or industrial use, but it's a non-starter. So if Stobart fail in regards to achieving their ambitions, they won't be able to run down the place, turn it into an eyesore, obtain planning permission for a thousand luxury homes and sell the asset at a huge profit. They really are stuck until and unless someone wants to take over the airport and are prepared to pay handsomely for the privilege. Southend Airport is not Carlisle.
I also understand that the local authority own the freehold still.
I also understand that the local authority own the freehold still.
But they’re paying more out in dividends than they’re actually earning. That’s one of my concerns about the way that Stobart Group is being run.
To say that payment of dividends through asset sales is a viable business plan is an oversimplification. Generally, dividends are paid out of earnings. One offs like asset disposals are ideally re-invested in the business; if not, they’re normally returned to shareholders through a one-off special dividend.
Yes, to dispose of an asset for more than you acquired it for is fine. But, unless I’ve totally misunderstood the business, Stobart Group are not a Real Estate company.
My concern is that Stobart’s dividend policy is unsustainable. They’re not making enough money to pay the dividend so they have to either dispose of assets or dip into reserves to maintain those dividends. Sooner or later those reserves will be exhausted. Either Stobart Group need to grow the business sufficiently to cover the dividend through earnings, or eventually they’ll have to bite the bullet and reduce the dividend. Meanwhile, they’re planning to underwrite a new airline operation with uncertain prospects……..
As I’ve said before it’s a high risk strategy.
To say that payment of dividends through asset sales is a viable business plan is an oversimplification. Generally, dividends are paid out of earnings. One offs like asset disposals are ideally re-invested in the business; if not, they’re normally returned to shareholders through a one-off special dividend.
Yes, to dispose of an asset for more than you acquired it for is fine. But, unless I’ve totally misunderstood the business, Stobart Group are not a Real Estate company.
My concern is that Stobart’s dividend policy is unsustainable. They’re not making enough money to pay the dividend so they have to either dispose of assets or dip into reserves to maintain those dividends. Sooner or later those reserves will be exhausted. Either Stobart Group need to grow the business sufficiently to cover the dividend through earnings, or eventually they’ll have to bite the bullet and reduce the dividend. Meanwhile, they’re planning to underwrite a new airline operation with uncertain prospects……..
As I’ve said before it’s a high risk strategy.
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I don't think anyone is seriously concerned that Stobart Group will bankrupt themselves over SEN. The real concern is that they will give up, sell SEN on to a new owner which owns LCY or STN and they will run the place down - this has (allegedly) happened to SEN before.
After the BAA breakup, I find it difficult to believe that SEN could be owned by either MAG (STN) or the consortium that owns LCY - it seems likely that Westminster would step in. By threatening all sort of enquiries and referrals on monopoly grounds (easy to create a delay of a few years), central Govt could make pretty clear which companies should not bid for SEN
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New routes
The Essex Enquirer newspaper, issue dated today, deails the new routes and then goes on to say:
"The routes will be operated by two E195 aircraft (with 118 seats each) which will be based at London Southend Airport".
What are we all to believe?
"The routes will be operated by two E195 aircraft (with 118 seats each) which will be based at London Southend Airport".
What are we all to believe?
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I don't think anyone is seriously concerned that Stobart Group will bankrupt themselves over SEN. The real concern is that they will give up, sell SEN on to a new owner which owns LCY or STN and they will run the place down - this has (allegedly) happened to SEN before.
But why are we considering this? Are we not all singing 'In a brave new world, with a handful of planes, we'll start all over again.........'
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But they’re paying more out in dividends than they’re actually earning. That’s one of my concerns about the way that Stobart Group is being run.
To say that payment of dividends through asset sales is a viable business plan is an oversimplification. Generally, dividends are paid out of earnings. One offs like asset disposals are ideally re-invested in the business; if not, they’re normally returned to shareholders through a one-off special dividend.
Yes, to dispose of an asset for more than you acquired it for is fine. But, unless I’ve totally misunderstood the business, Stobart Group are not a Real Estate company.
My concern is that Stobart’s dividend policy is unsustainable. They’re not making enough money to pay the dividend so they have to either dispose of assets or dip into reserves to maintain those dividends. Sooner or later those reserves will be exhausted. Either Stobart Group need to grow the business sufficiently to cover the dividend through earnings, or eventually they’ll have to bite the bullet and reduce the dividend. Meanwhile, they’re planning to underwrite a new airline operation with uncertain prospects……..
As I’ve said before it’s a high risk strategy.
To say that payment of dividends through asset sales is a viable business plan is an oversimplification. Generally, dividends are paid out of earnings. One offs like asset disposals are ideally re-invested in the business; if not, they’re normally returned to shareholders through a one-off special dividend.
Yes, to dispose of an asset for more than you acquired it for is fine. But, unless I’ve totally misunderstood the business, Stobart Group are not a Real Estate company.
My concern is that Stobart’s dividend policy is unsustainable. They’re not making enough money to pay the dividend so they have to either dispose of assets or dip into reserves to maintain those dividends. Sooner or later those reserves will be exhausted. Either Stobart Group need to grow the business sufficiently to cover the dividend through earnings, or eventually they’ll have to bite the bullet and reduce the dividend. Meanwhile, they’re planning to underwrite a new airline operation with uncertain prospects……..
As I’ve said before it’s a high risk strategy.
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I doubt FR have a particular desire to kill off SEN. They probably do have a desire to encourage passengers to fly with FR instead of any other airline. Would not be too surprised to see something approximating a price war between STN/SEN and PGF for S17...
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I suppose it also means FR believes there's some demand for flights between STN-PGF otherwise why bother. If all they do is kill that one route for Stobart then it just reminds the upstart enterprise what they are capable of.
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i knew my post would get a response...lol. But seriously...if i started up a new airline from SEN to 10 or 12 new routes not served from STN (are there any such places?) then suddenly one of the big boys started the same new routes from there in competition to me i would also feel gutted to some extent. With the way Stobart set up deals to boost the passenger figures i am surprised they havent chartered Air Malta to fly 2x week to Malta.