easyJet share price crash - 'no blame'

[Hugh Crummond]

Sad to see that the orange lot have seen their share price crash on the market, dropping well below Ryanair (whom they have kept ahead of convincingly in the past). High £5.62, low £2.44 or thereabouts, below the 11/09/01 value by a goodly margin. Small recovery on Friday.

Why is this?

It can't possibly be anything to do with the market's awareness of the appalling catalogue of errors by senior management, can it?

Letters appearing in the press telling us all how cr*p the company's performance is, incompetent rostering which knocks the schedule for six and then gets booted out whilst those responsible sit pretty amid the 'no blame' culture, pilots and cabin crew already on the brink of exhaustion and now learning they're to bring their own sandwiches and get through the British winter without a hot meal all day 'because it'll save money', are all (as we know) signs of a top-rank air carrier GETTING IT RIGHT. Oh, and the April pay deal which might be back-dated in part, if they ever get around to 'negotiating' it.

At least we know they're all well-experienced airline managers with an awareness of modern airline business issues (chokes and splutters)

No, no, it must be something else.

Elves, I expect, or a nasty Troll...?

[Stan Woolley]

Hugh

The management couldn't be awarding themselves huge bonuses if it was that bad .................:rolleyes: :rolleyes: :mad: :mad:

[ojay]

And also,let's keep this in an open forum,our 'managers' awarded themselves a breathtaking 10 million pounds in shares,between 40 (and I shudder to think who numbers 11-40 might be,i/c easyland toilets or crew sandwiches perhaps?).Our pay offer is still apparently derisory after days of negotiation-not even apace with inflation.This in a company making large amounts of profit.Fat -cat excesses that even the worst tabloids couldn't exagerate.If this is the 'dynamic','innovative',future of civil aviation,I won't be encouraging my son to take flying lessons.Modelled on Southwest Airlines?-I don't think so.

[Stelios]

The all too familiar situation all over again, too rapid an expansion, not enough management capability to handle, low morale, poor working conditions, NO FOOD, etc... Does anybody really expect this to produce good results in the end??????

[newswatcher]

HC, analysts were pretty united in their explanation of the fall on Thursday, putting it down mainly to concerns about a possible rights issue to fund the purchase of aircraft, and a potential share sale by Stelios on his departure, perhaps to "fund" his Internet cafes, both of which of course he denied!

Perhaps the most significant, with regard to management decisions, was the disclosure that EasyJet does not hedge its exposure to fuel prices, which means it would be particularly hit by rising prices stemming from the impending Iraq conflict.

Most were "confident" that results for the year to September 30 would be in line with market expectations. In fact Chris Avery, an aviation analyst at JP Morgan, said he was forecasting a rise in pre-tax profit of 50%!

Remember that the shares went up by nearly 20% on 6th July, and I don't remember anyone complaining then!

It will be interesting to see how Sir Colin gets on with RW.

[dontdoit]

All best summed up in 2 words: "Air Europe"

[Wing Commander Fowler]

dontdoit-

All best summed in up 2 words: "Air Europe"

Not the "up 2 words" most of us would think of....... hehe

:rolleyes:

[swede-basher]

Err, Hugh, where as I may agree with some of the points you raise it is clear that you are no financial analyist and should, if indeed you are (noting you have just registered, 1st post etc, a pilot, stick to flying.

At no time to my recollection has EZJ market Cap been greater than RYA. (you just don't compare the price of one share! on a peri pasu basis)

One of the main reasons for the fall is the fact, as Newswatcher rightly points out, that there is continuing uncertainty over Stelios'sstake and Rights Issues. This inturn has been noted by the Bears in the Market who in turn are shorting the stock. Once a high profile Bear (enter Simon Cadwell AKA Evil Kinevil) goes public stating he is shortthe Stock, every man and his dog with the facility with their Broker does likewise driving the price lower.

Enter then the Technical Traders who look at price charts (T/A) if you look at EZJ it is dire, the news released the other day was an attempt to have a "Bear Squeeze" (price rises and the bears have to buy in to cover their position, this in turn can attract Bulls who buy for upside.

Enough of the Market, I got out of it years ago to fly but I do agree it could be a case of trying too much too soon and an implosion could occur if not managed properly.

(oh and when do they take on DBA??? I hope the indigestion is better before they do)

:D

[Hugh Crummond]

Thanks to those who gave factual help above.

You're right, swede-basher, I am quite happy flying aircraft, and am not a financial whizz-kid. I've been a contented lurker for some time. That said, if we assume that Ryanair and easyJet are similar companies, in the same sector, should a noticeable drop in the relative share price of one against the other not be indicative of trouble?

maxfactor, are there not any 'no-men' at LTN? From what I see, there is plenty of dissention amongst middle managers. Is there any value in attempting to engender change from within, which I guess some may be doing...?

[Few Cloudy]

As cynical as it sounds - easy shares have benefited from general market uncertainties - because people (business men included) wanted to save money and flew low cost. A bubble started after the 2001 terrorist attacks - lost a bit of puff around March/April with the Stelios announcement and poor publicity in the press - gained a bit at the GO deal announcement and is now riding the general trend downwards.

Employees will also be able to sell their shares in winter, which may also be having a pre-dragging effect.

All that said, the long term prospects should still be sound - well, as sound as any shares are these days...

[FlapsOne]

I'm no financial whizz either but, the stock market on both sides of the Atlantic has been plummeting for many weeks. I have lost count of the amount of leader news items there have been on the subject.

So, if someone with the requsite skills could somehow 'factor out' the general market conditions, I wonder if the comparative fall in EZ shares over the past few months is really that startling.

And indeed comparing one share price with another just doesn't work - it all depends on the value of the company and the amount of shares issued - surely!

[SpannerInTheWerks]

Makes me smile!

Uncertainty about Stelios' shares etc. Manipulation of the share price in my view.

Funny how all this is taking place only weeks ahead of the time when a large number of staff are looking forward to their share options becoming available - and were considering selling up (and in some cases retiring from/leaving the company). Not much chance of that in the present climate. So no sale of shares on a large scale (phew says the management/city!) and no immediate nest egg for the future (**** say the employees!).

Call me a cynic but .........

I may be wrong but I don't think so. It has all happened so many times in the past.

[brakedwell]

Dontdoit - Your sums don't add up. EZ is publicly owned whereas Air Europe was a private company after Harry G bought back the shares when the City became too jittery about his plans for turning AE into a mainly scheduled airline.

[Mr Moustache]

At least I can bask in the knowledge that the company share incentive will let me buy easyJet shares at only £4.54 each (if I stay long enough, be good etc) :rolleyes:

[fred peck]

Mr Moustache, don't do it; you fool, you would be losing two pounds a share.

fred.

[Brakes to Park]

Spanner in the werks

Spot on mate. Absolutley spot on. Only thing is they think us pilots are too dim to see that.

[The Prisoner]

The Easy back lash will begin, the City have already anticipated its eventual fruition. How often do you hear, "oh, easyjet, a rip off"? Well its true, a single journey ticket to Spain can be upwards of 160 quid.Thats single. So watch this space,

THE RUMBLE IN THE JUNGLE will be less easy in the future. Personally, I think they suck, and are heading for the financial scrap heap. Did I hear RESONATIONS OF 1991 and Air Europe?
Yes, a good time to buy BA.

Oh, and yes, I have never applied, ever wanted or ever needed to fly easyJet.

[jumpseater]

How often do you find 'oh easyjet, a rip off' quoted?. I Never have actually, apart from people with a telly camera stuck in their face, who are unable to understand terms and conditions which are clearly stated,:rolleyes: . Ej are'nt perfect, but tonight you can book LTN to BCN for 1910 dep on the 30th Sept 2002 for GBP 32.50 including all taxes (thats a single too!). Thats less than a week away, where's the rip off there? oh by the way mr/ mrs prisoner if you got out more perhaps you could check your facts a bit, being incarcerated I'll let you off, more than the judge did by the looks!.
A good time to buy BA? dont think so if you follow their share trend, its very similar to easy's, perhaps the prisoner should read the FT they get in the scrubs, rather than wipe his @rse on it.
If you want to buy aviation have a look at BAA, LHR and STN as being front runners for the next runway for london, think the shares might be a bit of a sleeper at the moment!;)

[Hwel]

Combined EZY-GO load factors for August were 84%+, the BA 9AM (business rush) flight I was on the other day from a major European capital had 25pax on a319, even if the other 80 seats had gone for 5 quid its still better than nout.

As they say at the theatre "Bums on seats laddie bums on seats."

[brakedwell]

When hostilities begin around 45 East, I wonder if BA can survive in it's present bloated form. EZ might sneeze, but BA is sure to catch a very bad cold and could even follow AE into oblivion. Not a good time to buy their shares.

[no sig]

How we have short memories. Does anyone care to think back even 5 years or so at the cost of European air travel and the fares being quoted then. easyJet and the other low cost carriers have changed the face of European air transport.

Prisoner, what possible comparison can you make with AE? you've no credibility mate with comments like that.

[airrage]

Sell your Easy shares and use the money to buy BA shares(going for a bargain). Great longterm investment. Yes I am BA, Yes I am Serious.

Stelios is getting out himself, unloaded a lot already, and has stepped back from it's running(good timing so he cannot be blamed) and the whole thing was his idea in the first place. Low-cost expanding airlines grow exponentially but they also quickly run up against a brick wall of escalating costs once they get too BIG, leave their home territory or start buying other outfits(GO, D.BA)as their own recruitment becomes strained. If they try to go LH, the costs will grow even more exponentially than their profits, so there are physical limits to which Easy can grow. To add to the problem, as the airline grows, they start facing the same problems destroying BA. Employees get frustrated by the growing inefficencies or resent being bought out(GO) and after a few years under their belt start demanding better T&C's.

Easy has changed the face of SH European travel forever no one is doubting that. It will continue to be a Viable carrier and the most dominant in SH in Europe before long. But once the growth inevitably slows, how many shareholders do you think are going to hang in there ? Don't keep all your Eggs in One basket, even Stelios doesn't do that !

Good Luck and Well done !!!

PS: I would wait until the Iraq War starts next week to buy BA.

[Scottie]

There was me thinking Stelios was getting out because he's an entrepeneur?!? He's good at that, what's he not especially talented at is running an established company (his excuse not mine). His family still own a large percentage of the shares.

Longhaul doesn't even feature in the plan for easyJet. eJ is based around the SouthWest concept. Stick to what they're good at is the plan.

Point taken about getting larger and the associated costs but on that front they're at least making an effort. Rather than build an Orange Waterside they've gone and bought another warehouse to convert into offices at Luton Airport :rolleyes:

As for shareholders sticking around, you yourself said they'll be around as a viable company. Well if the viable company is making good profits why shouldn't eJ remain in someones balanced portfolio?

Read this article about airlines (& steel) in the States. Uncanny parallels spring to mind about the old established airlines.

http://www.fool.co.uk/stockideas/2002/si020924.htm?ref=emaillunchhtml

[newswatcher]

airrage, where did you get your info about Stelios "unloading a lot(shares) already"?

Remember that such information has to be published to satisfy Stock Exchange regulatory requirements. On September 13, he stated that he held almost 22% of the share capital of easyJet plc and that his brother and sister together held another 24.4%.

He added that, during the capital raising for the acquisition of Go Fly ltd, he did not liquidate any of his shares, contrary to some press reports, selling only enough nil paid rights to take up the remainder of his rights. (don't ask!)

If he has sold any since September 13, I have not seen news of this.

Last year he sold a large amount of shares about this time, when his family reduced their overall shareholding by about 17%.

[airrage]

NEWSWATCHER
I said he had offloaded a significant # of shares, nowhere did I claim it had been since SEPT ? But for your info on a quick 15minute glance of Official Records(I might have missed some STELIOS or Easy Group share SALES).....

NOV 2000 IPO
IPO effectively sells 25% of the company @310P. The shares to be issued represent approximately 25% of the enlarged share capital of easyJet.
http://www.uk-wire.co.uk/cgi-bin/articles/200011150701251379U.html

OCT 2001 Open OFFER
"Stelios Haji-Ioannou, the Chairman of the Company, proposes to sell 13,000,000 Ordinary Shares.

The number of shares held by persons other than Stelios Haji-Ioannou and his immediate family following completion of the Placing and Open Offer will increase from approximately 29.2% at present to between 40.1% and 42.1%. IN OTHER WORDS THE STELIOS FAMILY OFFLOAD ABOUT 10% of their holdings.

http://www.uk-wire.co.uk/cgi-bin/articles/200110290700302556M.html

NOV 2001 Director shareholding

32,532,258 shares (12.19%) he sold on Nov 2001 at £3.75/Share.
Proceeds of £121,995,968.
http://www.uk-wire.co.uk/cgi-bin/articles/200111161454502747N.html


NOV 2001 Open OFFER
Stelios offloads between 13 - 18.5 million shares here.....

Of these 39,032,258 shares, 6,500,000 new Ordinary Shares were placed on behalf of easyJet and 32,532,258 existing Ordinary Shares were placed on behalf of easy Group Limited ('easyGroup'), a company indirectly owned by Stelios Haji-Ioannou, the Chairman of easyJet. The net reduction in the shareholding of easyGroup at the completion of the Placing and Open Offer will therefore be between 13,000,000 and 18,538,982 Ordinary Shares. Sold at 375P.
http://www.uk-wire.co.uk/cgi-bin/articles/200111020700325251M.html


19June 2002
Newswatcher "selling only enough nil paid rights to take up the remainder of his rights" That amounted to the following........
22mill shares being offloaded. Although it sounds much better the way Stelios puts it.

Of the 47,569,301 Nil Paid Rights that have been placed, 22,173,317 Nil Paid Rights have been placed on behalf of easyGroup(owned Stelios).


SEP 2002
Today I personally hold almost 22% of the share capital of easyJet plc and my brother and sister together hold another 24.4%.

You can get out the calculators to see how many Millions of shares Stelios has offloaded yourself. It is slightly confusing because each OPEN OFFER Stelios used to Dilute his holding. At the end of the day Stelios and family owned 100% of Easyjet prior to launch, they now hold 46.4% after several Open Offers have increased the total number of EASYJET shares on the market

NEWSWATCHER, I think you need to change Newspapers if you think Stelios isn't offloading and stepping away from the business.

[newswatcher]

...and there was me thinking this thread was exploring the reasons behind the recent price crash!

Thanks for the timeline airrage, your diligence is impressive but perhaps wasted, since in terms of his "offloads" being behind the current drop, from a price of about 440pence at the beginning of June, you have included no recent sales from Stelios.

Certainly the market is nervous that he may still offload, particularly when he vacates the chairman's position, and there are apparently no restrictions to stop him doing so. However, in a depressed market, he would normally be expected to wait for an improvement in price, unless desparate!

At the time of the "GO" purchase a number of sources predicted that he would have to "offload" up to £100m of shares to fund the purchase. So far they have been proved wrong.

Oh, and my sources are perfectly adequate thanks, and they are not necessarily newspapers!

[no sig]

Stelios has not been running the airline for a very long time and although still the public face of the company, the airline he and Ray Webster have built is founded on the product and value not the person. The brand awareness easyjet has in the market is now very well established and very successful and frankly Stelio's decision to step back will have, I believe, little impact. He is committed to remaining very close to the airline.