Shares down 20% since January: What's the Future for BA?
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Shares down 20% since January: What's the Future for BA?
SHARES in BA are at their lowest level in nearly five months, closing at 313p yesterday.
The shares have fallen some 20 per cent since the start of the year. Australian airline Qantas, in which BA has a 25 per cent stake, gave the latest reason for pessimism - reporting disappointing results.
BA has revived its plan for a link-up with American Airlines. This may frighten the competition, such as Richard Branson’s Virgin, but it is having little effect on the shares.
BA is Europe’s biggest airline, and it accounts for 39 per cent of aircraft movements through Heathrow Airport. It also owns Deutsche BA, Germany’s second-biggest flier.
However, chief executive Rod Eddington has warned next year will be challenging, especially in the winter. Fears of a global economic slowdown persist, and high oil prices will do BA no favours. Pre-tax profit, £150 million for the year to 31 March, may fall to £123 million next time, analysts say.
The recent declines still don’t make the shares cheap. Forecast earnings-per-share of 10.4p give a price-earnings ratio of 30 for 2002, more than 50 per cent above the average for the FTSE All-Share.
The long-term outlook may get better, but investors must be prepared for turbulence.
Saturday, 18th August 2001
The Scotsman
The shares have fallen some 20 per cent since the start of the year. Australian airline Qantas, in which BA has a 25 per cent stake, gave the latest reason for pessimism - reporting disappointing results.
BA has revived its plan for a link-up with American Airlines. This may frighten the competition, such as Richard Branson’s Virgin, but it is having little effect on the shares.
BA is Europe’s biggest airline, and it accounts for 39 per cent of aircraft movements through Heathrow Airport. It also owns Deutsche BA, Germany’s second-biggest flier.
However, chief executive Rod Eddington has warned next year will be challenging, especially in the winter. Fears of a global economic slowdown persist, and high oil prices will do BA no favours. Pre-tax profit, £150 million for the year to 31 March, may fall to £123 million next time, analysts say.
The recent declines still don’t make the shares cheap. Forecast earnings-per-share of 10.4p give a price-earnings ratio of 30 for 2002, more than 50 per cent above the average for the FTSE All-Share.
The long-term outlook may get better, but investors must be prepared for turbulence.
Saturday, 18th August 2001
The Scotsman
They always used to say that if you weren't a socialist at the age of 20, you had no heart, but that if you were still one at 40, you had no head.
BUT!
As I get older, I become more disillusioned with the effects of the unrestrained market on industry and business. Boeing's manoeuvring to avoid upsetting the shareholders forced it not to invest adequately in its 747 replacement, cedeing that sector of the market to Airbus. Good for short-term shareholders, but not for Boeing. And how much confidence can any of us really have in privatised ATC? And now BA....
So Pre-tax profits of a miserly £123 million will so scare the shareholders as to threaten the airline's future?
Forecast earnings-per-share which will still be more than 50 per cent higher than the FTSE All-Share average will prompt panic?
Shareholders? Donchya just love them?
When BA was state-owned, it created jobs and supported UK industry. I can't help but wonder whether running it more efficiently within the state sector - adopting more commercial practises might not have been better overall than complete privatisation. Who knows, there might have been Government subsidies to encourage action on DVT, and more orders for Airbuses with British-built wings, rather than for 737s and 777 vomit-comets?
BUT!
As I get older, I become more disillusioned with the effects of the unrestrained market on industry and business. Boeing's manoeuvring to avoid upsetting the shareholders forced it not to invest adequately in its 747 replacement, cedeing that sector of the market to Airbus. Good for short-term shareholders, but not for Boeing. And how much confidence can any of us really have in privatised ATC? And now BA....
So Pre-tax profits of a miserly £123 million will so scare the shareholders as to threaten the airline's future?
Forecast earnings-per-share which will still be more than 50 per cent higher than the FTSE All-Share average will prompt panic?
Shareholders? Donchya just love them?
When BA was state-owned, it created jobs and supported UK industry. I can't help but wonder whether running it more efficiently within the state sector - adopting more commercial practises might not have been better overall than complete privatisation. Who knows, there might have been Government subsidies to encourage action on DVT, and more orders for Airbuses with British-built wings, rather than for 737s and 777 vomit-comets?
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Well guv the stock market is not the real world is it!!.I travel virtually weekly with BA positioning to fly for a Uk charter airline and have travelled worlwide with Ba both business and pleasure.As an experienced traveller with inside knowledge I regard them as the most consistent and best airline I have travelled with.Sure some trips are better than others but overall they are excellent.I have nothing (nor my relatives) to do with BA but am sure they will weather the difficult times the industry is experiencing.Others may not!!.
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Why do people make doom and gloom comments on the stock market purely off a snap shot of what the markets are doing over a few months, yes the markets are on the slide in value, and true the people who are looking for a quick buck are finding it hard to make fast money, but the stock market will in the end rise. When I did business studies at school the FTSE was around the 600 mark, now 20 years later its around the 5300, and in another 10 years it will be around the 10,000 mark, so if you are looking for a medium to long term investment the FTSE 100 are a good investment for capital growth.
I see there being nothing wrong with BA as a long term investment, they had the foresight to change the strategy; yes they took losses during the transition, but now are moving back in to profit. BA like most airlines are having to change as the markets change, and this cost money and sadly jobs. I would buy stock in BA now for a long term investment, it is a well run company and has one of the strongest brands, also the public like BA. So the share price may be at the on the bottom of it’s cycle, but in time it will recover and grow.
[ 18 August 2001: Message edited by: touch&go ]
I see there being nothing wrong with BA as a long term investment, they had the foresight to change the strategy; yes they took losses during the transition, but now are moving back in to profit. BA like most airlines are having to change as the markets change, and this cost money and sadly jobs. I would buy stock in BA now for a long term investment, it is a well run company and has one of the strongest brands, also the public like BA. So the share price may be at the on the bottom of it’s cycle, but in time it will recover and grow.
[ 18 August 2001: Message edited by: touch&go ]
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Lord Luvaduck! Guvnor strikes again! 2 1/2 thousand anti-pilot and anti-BA postings, and he still hasn't said it all? Well Cleverdick- tell me- what is the share price in your airline. How many of your 40-odd Tristars from Delta have you paid something on and when are they all flooding in to the UK. Face it- at least BA is in business and producing something for UKplc. Where is your airline? Why do you have so many opinions here? This is a Professional Pilots Forum. I see more posts from a failed wannabee wishful airline manager than anybody else. Please go off and keep yourself busy with that Airline Manager computer game, but strewth! You are beyond the limit!
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For goodness sake, Notso Fantastic - grow up. And whilst you're at it, learn to read - Saturday, 18th August 2001 The Scotsman indicates to the more intelligent of us that it came from a newspaper. 
As for the "2 1/2 thousand anti-pilot and anti-BA postings" you claim that I've made ... sheesh!! 
Jackonicko - I agree with you completely. This was one of the reasons that Richard Branson took the Voyager Group (which incorporated Virgin Atlantic) private again shortly after listing it.
The biggest problem that successful companies have with investors - especially institutional ones - is that they are expected to maintain consistent growth rates and when that doesn't happen then they lose interest in them and so the whole roller-coaster share price effect commences. In most cases, the growth expectations are wholly unviable - and here's an exercise to prove it. Take a chess board, and put one grain of rice on the first square and double up for each subsequent square - 2, 4, 8, 16 etc. See the sort of numbers you run into very quickly?
BA is obviously still held in high regard by the city because its P/E ratio is still very high, at around 30 which as the article says is one third higher than the FTSE average of 20. However, given Bob Ayling's focus on high yield business traffic at the expense of back of the bus pax, I think that BA will feel the bite of the recession harder than other carriers such as VS and BD. Stampe is right that BA offers an excellent product, but when companies cut back on business travel and seek the cheapest methods of getting from A to B, will BA be the first choice? That's debatable.
As for buying equity in BA - I think it will fall further, and that's when to buy it. Long term, they are without doubt going to be one of the few global players left standing and therefore represent an excellent investment.
As for the "2 1/2 thousand anti-pilot and anti-BA postings" you claim that I've made ... sheesh!! Jackonicko - I agree with you completely. This was one of the reasons that Richard Branson took the Voyager Group (which incorporated Virgin Atlantic) private again shortly after listing it.
The biggest problem that successful companies have with investors - especially institutional ones - is that they are expected to maintain consistent growth rates and when that doesn't happen then they lose interest in them and so the whole roller-coaster share price effect commences. In most cases, the growth expectations are wholly unviable - and here's an exercise to prove it. Take a chess board, and put one grain of rice on the first square and double up for each subsequent square - 2, 4, 8, 16 etc. See the sort of numbers you run into very quickly?
BA is obviously still held in high regard by the city because its P/E ratio is still very high, at around 30 which as the article says is one third higher than the FTSE average of 20. However, given Bob Ayling's focus on high yield business traffic at the expense of back of the bus pax, I think that BA will feel the bite of the recession harder than other carriers such as VS and BD. Stampe is right that BA offers an excellent product, but when companies cut back on business travel and seek the cheapest methods of getting from A to B, will BA be the first choice? That's debatable.
As for buying equity in BA - I think it will fall further, and that's when to buy it. Long term, they are without doubt going to be one of the few global players left standing and therefore represent an excellent investment.
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If the track record of a certain ex CX CEO is anything to go by I suggest the future for BA is a campaign to prove that pilots and engineers salaries are far too high and are the direct cause of company loss of profits.....bullying tactics to reduce the number of cabin staff and make them work up/down in grade followed by a cabin crew strike.......followed by a departure of the CEO to the great unwashed land in the south to follow a career in politics or Newscorp..... 
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Guvnor, at last I have your attention. I really think we need to give you some counselling! Of the R & N Forum, you currently have 4 threads of your own, plus numerous contributions on other threads! Thank you for all your philosophy of business (presumably you are a very successful expert......not), and telling us all how to do it, but maybe at this level of contributions (2 1/2 thousands!), you have reached the time when you should go off, get your own server and start your own Failed Airline Management Rumour Network! and give us all some peace from telling everybody....CX management, BA, wider airline industry in general....how to do their jobs! Now I have 2 choices- complain higher up to have you restricted as you are not a Professional Pilot in a Professional Pilot Rumour Network, or experiment with the 'ignore' function. So please....once again....give it a rest and go out do something useful and not spend 5 hours a day in a professional forum you really have nothing to do with!
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Notso Fantastic - you really ought to read things carefully, dear chap. On the home page of this site, it says:
(my emphasis). On here, you'll find just about everyone involved with aviation and the airline industry - from the passengers (who ultimately pay your salary) through to the mechanics who keep you flying safely. Sorry, but you come across as one of those arrogant SOBs that think that airlines are private clubs for pilots and would be much better off without inconveniences such as management, ground staff, cabin crew (except for the provision of 'Captain's perks' on night stops) and passengers/cargo. Why don't you start up your own airline, if you think it's so simple? 
You're more than welcome to use your 'ignore' button - am I holding a gun to your head, forcing you to read my posts? 
I think not!
As for the threads I have started, every one is pertinent to aviation/airlines. Where exactly is your problem with that?
Air Traffic Controllers, Engineers, Cabin Crew, Operations, Crewing and Rostering staff are also welcome as well as anybody else with a connection or interest in professional aviation.
You're more than welcome to use your 'ignore' button - am I holding a gun to your head, forcing you to read my posts?
I think not!As for the threads I have started, every one is pertinent to aviation/airlines. Where exactly is your problem with that?
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BA wil survive - as always through shear size and socio political advantage, any speculation to the contrary is rather fool hardy in my opinion...we appear to be entering a cyclical downturn in the industry which will lead to consolidation and/or change of policy/direction with the majors and casualties in the lessor leagues...
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Europe's largest airline British Airways has reported a sharp rise in pre-tax profits for the year from just £5m to £150m.
Full-year operating profits rocketed to £380m pounds from £84m last time.
BA is also making more money from each customer than it has done since it was privatised in 1987.
Analysts said the profit figures show that the strategy by Australian chief executive Rod Eddington of cutting back capacity on unprofitable routes, targeting big spenders and offering flat beds in business class is showing results.
.... There has been some profit taking since this excellent news at the start of summer
... Are we getting a tad negative
Full-year operating profits rocketed to £380m pounds from £84m last time.
BA is also making more money from each customer than it has done since it was privatised in 1987.
Analysts said the profit figures show that the strategy by Australian chief executive Rod Eddington of cutting back capacity on unprofitable routes, targeting big spenders and offering flat beds in business class is showing results.
.... There has been some profit taking since this excellent news at the start of summer
... Are we getting a tad negative
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Let's be fair here, RVR800 - the flat beds and targetting of high yield pax were Bob Ayling's strategies, not Rod Eddington's!
The figures you're quoted are historical - they are for last year. Any bets on what the current year's figures will be with the global economic downturn/recession having a very seriously adverse effect on the primary market?
I'll put a tenner on a gallon of red ink, meself!
The figures you're quoted are historical - they are for last year. Any bets on what the current year's figures will be with the global economic downturn/recession having a very seriously adverse effect on the primary market?
I'll put a tenner on a gallon of red ink, meself!
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I'd be surprised if BA manage to stagger on for another 10 years.
They are basically a government department let lose in the outside world, you have only to see the ridiculous way that they use cabin crew as an example of this. If more flexible agreements were reached they could probably halve the number employed, particularly on the short haul side.
They spend fortunes on courses to raise morale and "put people first", then completely counteract this by showing little or no concern for their staff therteafter, only looking for the cheapest option.
Their CEO has probably the most dismal history of any in the world, with his previous victims now teetering on the verge of oblivion, and he was appointed by the same chairman who was responsible for the previous disaster in that role.
Franchising has devalued what was once a premium product, as have catering and service cutbacks.
They have retreated to fortress Heathrow, at a time when even Boeing say that the future is in point to point travel and other European airports are expanding whilst Heathrow is full.
They have comitted to a bias towards high cost travel just as a recession looms.
They continue to blow fortunes on dismal failures (eg ethnic tails)- wonder what the new uniform will be like.
What other share is there in the FT100 that is as likely to be worth zero soon?
They are basically a government department let lose in the outside world, you have only to see the ridiculous way that they use cabin crew as an example of this. If more flexible agreements were reached they could probably halve the number employed, particularly on the short haul side.
They spend fortunes on courses to raise morale and "put people first", then completely counteract this by showing little or no concern for their staff therteafter, only looking for the cheapest option.
Their CEO has probably the most dismal history of any in the world, with his previous victims now teetering on the verge of oblivion, and he was appointed by the same chairman who was responsible for the previous disaster in that role.
Franchising has devalued what was once a premium product, as have catering and service cutbacks.
They have retreated to fortress Heathrow, at a time when even Boeing say that the future is in point to point travel and other European airports are expanding whilst Heathrow is full.
They have comitted to a bias towards high cost travel just as a recession looms.
They continue to blow fortunes on dismal failures (eg ethnic tails)- wonder what the new uniform will be like.
What other share is there in the FT100 that is as likely to be worth zero soon?
