MYT shares jump almost 30% in one day.
Thread Starter
Join Date: Feb 2001
Location: terra firma
Posts: 186
Likes: 0
Received 0 Likes
on
0 Posts
MYT shares jump almost 30% in one day.
And it looks like the banks are really interested in MyTravel as a long-run successful travel business. Talk today of financing to 2006. And yet...the knives are out and people from the competing companies all seem to feel threatened. So let's celebrate some good news, or at the very least some good rumours.
Join Date: Jan 2002
Location: North of London
Posts: 370
Likes: 0
Received 0 Likes
on
0 Posts
Isn't it a nice change to hear that banks or inverstors are taking the long term view that MYT is a sound business and a good investment, with a future? It was an excellent business before the accounting debacle, built up over many years of public confidence by Crossland and will now hopefully be that again. Maybe change the name back again?
Good luck to all the pilots whose jobs are now hopefully safe!
Good luck to all the pilots whose jobs are now hopefully safe!
.Join Date: Nov 2000
Location: Grobelling through the murk to the sunshine above.
Age: 60
Posts: 562
Likes: 0
Received 0 Likes
on
0 Posts
The shares I bought a couple of weeks ago are up by 70% !!
I started dabbling with shares in 1979, and that's easily the best short-term rise I've had. If they rise a bit more I may even be able to afford a holiday.
I started dabbling with shares in 1979, and that's easily the best short-term rise I've had. If they rise a bit more I may even be able to afford a holiday.
Join Date: Mar 2003
Location: UK
Posts: 36
Likes: 0
Received 0 Likes
on
0 Posts
Fingers crossed it is good news and pilots jobs are safe, but don't get carried away yet.
The only reason that some sort of financial backing is being considered is because the debt of MyTravel is so large that the banks will make more money from the debt interest payments than seeing the company go bust. The other slightly more interesting part of this is that the value of the company as a whole (basically share price X No of shares plus cash reserves) has to be greater than the sum of it's liabilities (the cost of getting holiday makers home if it goes bust) for the CAA to be able to isssue a license to operate as a tour operator. This was clearly not the case a few weeks ago and the CAA would have had no choice but to suspend MyTravels license when it came up for renewal (bet that this renewal is due in the next 6-8 months). The banks that provide the capitalisation aren't daft and will obviously artificially lift the share price to ensure that company value exceeds liabilty. That is exactly what is happening now and what will continue to happen for the next few months till license renewal.
This has coincided with broker comment that the major carriers may be at the bottom of the slump (war over, SAR possibly under control, oil price drop etc etc).
So short term, 2-3 years MyTravel will probably be OK. Long term they have no chance of survival, as soon as the amount of debt is reduced enough that the banks own debt is not effected then all support will be taken away and the company will collapse. This doesn't have to mean massive job losses, more likely a take-over from another source.
The problem for MyTravel and the supporting banks is to keep share price above liability levels for the long term.
Who in this industry can look further than 2-3 years ahead? Even BA has problems (similar vein to MT in that the banks can't afford for BA to go bust), the Low Cost are expanding much too quickly (this is the most common form of company problems) and facing stricter regulation from EC. When Easy and Ryan have to provide compensation and/or hotels for flight cancellations or delays then they will find it much tougher to compete.
So MT may not have along term future but who does at the moment...at least it's not more bad news.
The trick to survival at the moment is to owe so much money to the banks that if you go under the bank goes under. Strange world we live in.
The only reason that some sort of financial backing is being considered is because the debt of MyTravel is so large that the banks will make more money from the debt interest payments than seeing the company go bust. The other slightly more interesting part of this is that the value of the company as a whole (basically share price X No of shares plus cash reserves) has to be greater than the sum of it's liabilities (the cost of getting holiday makers home if it goes bust) for the CAA to be able to isssue a license to operate as a tour operator. This was clearly not the case a few weeks ago and the CAA would have had no choice but to suspend MyTravels license when it came up for renewal (bet that this renewal is due in the next 6-8 months). The banks that provide the capitalisation aren't daft and will obviously artificially lift the share price to ensure that company value exceeds liabilty. That is exactly what is happening now and what will continue to happen for the next few months till license renewal.
This has coincided with broker comment that the major carriers may be at the bottom of the slump (war over, SAR possibly under control, oil price drop etc etc).
So short term, 2-3 years MyTravel will probably be OK. Long term they have no chance of survival, as soon as the amount of debt is reduced enough that the banks own debt is not effected then all support will be taken away and the company will collapse. This doesn't have to mean massive job losses, more likely a take-over from another source.
The problem for MyTravel and the supporting banks is to keep share price above liability levels for the long term.
Who in this industry can look further than 2-3 years ahead? Even BA has problems (similar vein to MT in that the banks can't afford for BA to go bust), the Low Cost are expanding much too quickly (this is the most common form of company problems) and facing stricter regulation from EC. When Easy and Ryan have to provide compensation and/or hotels for flight cancellations or delays then they will find it much tougher to compete.
So MT may not have along term future but who does at the moment...at least it's not more bad news.
The trick to survival at the moment is to owe so much money to the banks that if you go under the bank goes under. Strange world we live in.
Join Date: Jun 2001
Posts: 19
Likes: 0
Received 0 Likes
on
0 Posts
So, Youwererobbed, what you're saying, in effect, is that other operators are in even bigger trouble? 
Thank-you for confirming what the MT people have been saying.
Won't be long before the press discover that there's an even bigger story waiting to be told, about those other operators, then.
Thank-you for confirming what the MT people have been saying.
Won't be long before the press discover that there's an even bigger story waiting to be told, about those other operators, then.
Join Date: Nov 2002
Location: MAN
Posts: 122
Likes: 0
Received 0 Likes
on
0 Posts
Youwererobbed: If MyTravel didn’t meet the financial criteria for its licence, the CAA would revoke it straight away and at any time. So you theory that “this renewal is due in the next 6-8 months” and that the banks “will obviously artificially lift the share price to ensure that company value exceeds liabilty” at that point in time is wrong.
The share price is rising on the back of good news concerning MyTravel’s sales for Summer 2003 and the fact that no more accounting errors have been found, as some investors feared. (And given that Deloitte & Touche, Ernst & Young and PricewaterhouseCoopers have all been over the books with proverbial fine-tooth combs, there really shouldn’t be any more errors).
Unbelievable, how some people can put a negative spin on any piece of news. Last week it was the Mail on Sunday saying that because the banks had requested MyTravel change its hedging policy for Summer 2004, it meant the “that the banks will not keep the company running after this summer” (article). And now we have Youwererobbed saying that “as soon as the amount of debt is reduced enough that the banks own debt is not effected then all support will be taken away”. Come on.
The share price is rising on the back of good news concerning MyTravel’s sales for Summer 2003 and the fact that no more accounting errors have been found, as some investors feared. (And given that Deloitte & Touche, Ernst & Young and PricewaterhouseCoopers have all been over the books with proverbial fine-tooth combs, there really shouldn’t be any more errors).
Unbelievable, how some people can put a negative spin on any piece of news. Last week it was the Mail on Sunday saying that because the banks had requested MyTravel change its hedging policy for Summer 2004, it meant the “that the banks will not keep the company running after this summer” (article). And now we have Youwererobbed saying that “as soon as the amount of debt is reduced enough that the banks own debt is not effected then all support will be taken away”. Come on.
Join Date: Apr 2000
Posts: 257
Likes: 0
Received 0 Likes
on
0 Posts
Youwererobbed
Not sure your analysis is correct! Banks can no more influence the share price than we can, look at some of the banks own share prices over the last year or so. It is a question of confidence in the market and at the moment there is not very much of that around. MYT’s share price should be around 80p but for obvious reasons this is not the case at the moment!
The debt mountain is not really that big in real terms, £450 – 500 million, TUI has a 500m bond not to mention another 4-6 billion of outstanding debt, given your reasoning the CAA should pull their bond in the UK now as they are valued at 2.5 billion on the German stock exchange. MYT's Off book debt leases etc are relatively short term and covered by day too day operations. If the refinancing goes ahead the share price will rise to around 60 – 80p, I hope! In the short term I expect to see the share price drop again next week as some investors make a few quick bucks. Then again if I were that good at predicting share prices I would not have lost so much money last year!
The CAA bond is not really an issue, if we don’t get the financing in place it is game over at the end of the summer. If the financing is put in place and with the current figures I can see no reason for it not to be, then the share price will rise and our debt is reduced (convertible bonds) and many of our problems start to go away! Banks are in the business of lending money and as long as you can keep paying the interest and have cash flow they will be only too happy to lend it to you. They stand to make 12 million in interest charges this year from MYT!
The hedging situation the Mail made such a big deal over is a bit of a non-story as those who hedged at the beginning of the year may catch a cold. When the financing issue is dealt with then I have no doubt MYT will hedge against next year. Delaying this process may prove to have been a good move, granted a case of serendipity.
The company is proving it is a sound business and can continue to operate even with all the bad press. The future looks much better than it did a few months ago but I am bracing for another round of bad publicity from the press, they hate good news these days so they like you are bound to look on the black side and play down the good news!
Put in perspective look at the debt some of our competitors have and no one is suggesting they are about to go bust! MYT’s biggest problem has been the management that were running the company until last year and the connection to the ENRON scandal, which drove down our share price. The debt can be managed if the banks feel the company is basically sound, which it appears to be. I am confident the worst is behind us as long as the refinancing goes ahead.
The bottom line is that a good portion of our debt is due to the low share price; if the share price rises then a good part of the debt ceases to be an issue. The share price will rise if the financing is put in place and the company continues to perform and make money. Even under the old management they managed to turn a good profit every year except last year. Had the old board run the company as it is being run now then our share price would still be around £5 and I would be a lot better off than I am now!
Not sure your analysis is correct! Banks can no more influence the share price than we can, look at some of the banks own share prices over the last year or so. It is a question of confidence in the market and at the moment there is not very much of that around. MYT’s share price should be around 80p but for obvious reasons this is not the case at the moment!
The debt mountain is not really that big in real terms, £450 – 500 million, TUI has a 500m bond not to mention another 4-6 billion of outstanding debt, given your reasoning the CAA should pull their bond in the UK now as they are valued at 2.5 billion on the German stock exchange. MYT's Off book debt leases etc are relatively short term and covered by day too day operations. If the refinancing goes ahead the share price will rise to around 60 – 80p, I hope! In the short term I expect to see the share price drop again next week as some investors make a few quick bucks. Then again if I were that good at predicting share prices I would not have lost so much money last year!
The CAA bond is not really an issue, if we don’t get the financing in place it is game over at the end of the summer. If the financing is put in place and with the current figures I can see no reason for it not to be, then the share price will rise and our debt is reduced (convertible bonds) and many of our problems start to go away! Banks are in the business of lending money and as long as you can keep paying the interest and have cash flow they will be only too happy to lend it to you. They stand to make 12 million in interest charges this year from MYT!
The hedging situation the Mail made such a big deal over is a bit of a non-story as those who hedged at the beginning of the year may catch a cold. When the financing issue is dealt with then I have no doubt MYT will hedge against next year. Delaying this process may prove to have been a good move, granted a case of serendipity.
The company is proving it is a sound business and can continue to operate even with all the bad press. The future looks much better than it did a few months ago but I am bracing for another round of bad publicity from the press, they hate good news these days so they like you are bound to look on the black side and play down the good news!
Put in perspective look at the debt some of our competitors have and no one is suggesting they are about to go bust! MYT’s biggest problem has been the management that were running the company until last year and the connection to the ENRON scandal, which drove down our share price. The debt can be managed if the banks feel the company is basically sound, which it appears to be. I am confident the worst is behind us as long as the refinancing goes ahead.
The bottom line is that a good portion of our debt is due to the low share price; if the share price rises then a good part of the debt ceases to be an issue. The share price will rise if the financing is put in place and the company continues to perform and make money. Even under the old management they managed to turn a good profit every year except last year. Had the old board run the company as it is being run now then our share price would still be around £5 and I would be a lot better off than I am now!
Last edited by kinsman; 3rd May 2003 at 20:19.
Join Date: Mar 2003
Location: UK
Posts: 36
Likes: 0
Received 0 Likes
on
0 Posts
U/S President the tour operators license isn't revoked immediately or can be revoked during the period of issue. It's only when a company comes to renew it's license that the CAA looks up it's worth against liabilty.
I hope it is good news, but MT has massive problems that are nothing to do with the airline part of it's operation. Air Europe (remember them?) was the same and eventually it disappeared. The accountancy review isn't good news rather a lack of more bad news that there isn't anything worse being hidden from the investors.
Unfortunately the banks have no reason to keep MT running other than to reduce their own liabilities, as soon as that happens they'll be off. Bankruptcy may be the only answer in the long term but for now it would serve no purpose to the banks hence the desparate need to keep the company up and running which it can only do with the rubber stamp from the CAA.
Remember at one time ( 4 weeks ago) the whole of MT was worth about £47 million (yep that is million)....not much security there for the big boys to invest..why do you think that they have decided to restructure the firms finances? Maybe because the airline/tour industry is a good long term bet...ummmm...or maybe not.
This is all about the guys in the city trying to minimise the losses as best they can over the next few years.
If you owe the banks millions you're in trouble......if you owe billions then the banks are in trouble. Thats how it works.
I hope it is good news, but MT has massive problems that are nothing to do with the airline part of it's operation. Air Europe (remember them?) was the same and eventually it disappeared. The accountancy review isn't good news rather a lack of more bad news that there isn't anything worse being hidden from the investors.
Unfortunately the banks have no reason to keep MT running other than to reduce their own liabilities, as soon as that happens they'll be off. Bankruptcy may be the only answer in the long term but for now it would serve no purpose to the banks hence the desparate need to keep the company up and running which it can only do with the rubber stamp from the CAA.
Remember at one time ( 4 weeks ago) the whole of MT was worth about £47 million (yep that is million)....not much security there for the big boys to invest..why do you think that they have decided to restructure the firms finances? Maybe because the airline/tour industry is a good long term bet...ummmm...or maybe not.
This is all about the guys in the city trying to minimise the losses as best they can over the next few years.
If you owe the banks millions you're in trouble......if you owe billions then the banks are in trouble. Thats how it works.
Join Date: Apr 2000
Posts: 257
Likes: 0
Received 0 Likes
on
0 Posts
Youwererobbed
Banks make money by lending money! We do not owe the banks big money at least not in banking terms! They are making a lot by supporting us, they will continue to support us as long as we service the debt and they are making money out of us.
If the tour operation were not viable the CAA would pull the bond make no mistake! We must of course meet the bond requirements to renew it at the end of the year that is rather stating the obvious but that should not be a problem for the reasons I gave earlier.
MYT is a very different set of problems to ILG; to draw parallels is really not appropriate or correct!
I am pleased to see some good press reports appearing today, I hear there is even a nice one in the Sun!
Banks make money by lending money! We do not owe the banks big money at least not in banking terms! They are making a lot by supporting us, they will continue to support us as long as we service the debt and they are making money out of us.
If the tour operation were not viable the CAA would pull the bond make no mistake! We must of course meet the bond requirements to renew it at the end of the year that is rather stating the obvious but that should not be a problem for the reasons I gave earlier.
MYT is a very different set of problems to ILG; to draw parallels is really not appropriate or correct!
I am pleased to see some good press reports appearing today, I hear there is even a nice one in the Sun!
Join Date: Nov 2002
Location: MAN
Posts: 122
Likes: 0
Received 0 Likes
on
0 Posts
Indeed there is a positive article in The Sun.
The article ends with: “This is excellent news. It was heartbreaking to see a firm like MyTravel - which is important to so many Britons - in the state it was in. Hopefully it can now be saved.”
And most of the more reputable papers also carry positive MyTravel stories:
The Telegraph
The Times
The Guardian
The article ends with: “This is excellent news. It was heartbreaking to see a firm like MyTravel - which is important to so many Britons - in the state it was in. Hopefully it can now be saved.”
And most of the more reputable papers also carry positive MyTravel stories:
The Telegraph
The Times
The Guardian
Last edited by U/S President; 3rd May 2003 at 22:12.
Join Date: Oct 2001
Location: UK
Posts: 235
Likes: 0
Received 0 Likes
on
0 Posts
Nice to know I'm not alone 'Youwererobbed'.
From Yahoo Business News May 3rd.
MyTravel bookings drop
LONDON (Reuters) - Package holiday firm MyTravel Group, battling to recover from profit warnings and accounting errors, has reported a drop in summer and winter bookings but sees signs of recovery as war in Iraq ends.
The firm, formerly known as Airtours, also said a review of the value of some of its assets was likely to lead to a "significant" impairment. It added it was making progress on a proposed extension of its credit facilities.
The Iraq conflict has hit bookings for holiday firms across the world, putting further pressure on a sector that was already suffering from an economic downturn and the aftermath of the September 11, 2001, attacks on the United States.
However, MyTravel (LSE: MT.L - news) has fared worse than most because it had previously ramped up capacity in a bid to capture market share. This left it committed to high fixed costs and having to cut prices on unsold holidays when the market turned down.
The group, which has changed its chairman, chief executive and finance director in recent months, has embarked on a strategy to cut costs and has announced over 2,000 job losses over the last year. It employs over 20,000 staff worldwide.
Group winter bookings were four percent behind last year, in line with capacity reduction, and summer bookings were three percent down, MyTravel said.
"While current trading conditions continue to make it difficult to comment with any certainty on the outlook for the rest of the year, bookings over the last two weeks, particularly in the UK, have been encouraging," Chief Executive Peter McHugh said in a statement.
MyTravel , which is in financing talks with its banks, also said it had proposed extending the maturity of all senior credit facilities to May 2006.
Shares in MyTravel, which have plunged over 90 percent over the last year, closed at 11.20 pence on Thursday. The company has a current stock market value of around 56 million pounds.
MyTravel bookings drop
LONDON (Reuters) - Package holiday firm MyTravel Group, battling to recover from profit warnings and accounting errors, has reported a drop in summer and winter bookings but sees signs of recovery as war in Iraq ends.
The firm, formerly known as Airtours, also said a review of the value of some of its assets was likely to lead to a "significant" impairment. It added it was making progress on a proposed extension of its credit facilities.
The Iraq conflict has hit bookings for holiday firms across the world, putting further pressure on a sector that was already suffering from an economic downturn and the aftermath of the September 11, 2001, attacks on the United States.
However, MyTravel (LSE: MT.L - news) has fared worse than most because it had previously ramped up capacity in a bid to capture market share. This left it committed to high fixed costs and having to cut prices on unsold holidays when the market turned down.
The group, which has changed its chairman, chief executive and finance director in recent months, has embarked on a strategy to cut costs and has announced over 2,000 job losses over the last year. It employs over 20,000 staff worldwide.
Group winter bookings were four percent behind last year, in line with capacity reduction, and summer bookings were three percent down, MyTravel said.
"While current trading conditions continue to make it difficult to comment with any certainty on the outlook for the rest of the year, bookings over the last two weeks, particularly in the UK, have been encouraging," Chief Executive Peter McHugh said in a statement.
MyTravel , which is in financing talks with its banks, also said it had proposed extending the maturity of all senior credit facilities to May 2006.
Shares in MyTravel, which have plunged over 90 percent over the last year, closed at 11.20 pence on Thursday. The company has a current stock market value of around 56 million pounds.
Join Date: Feb 2001
Location: uk
Posts: 93
Likes: 0
Received 0 Likes
on
0 Posts
It is worth reading the article on MYT in todays Business section in the Sunday Times. It would appear that MYT are adopting a smoke and mirrors approach to present financial difficulties- quote ' Something doesn't feel quite right about MyTravel and the announcement it made on Friday' unquote.
The article centres on MIPS (minority-interest preference shares ) - these originally appeared as equity on the company balance sheets. They have now been transferred to debt rather than equity as a result of '' modifications to the arrangements relating to the MIPS ''
Peter Mc Hugh, chief executive of MYT, declined to say why this had occurred.
Hmmmm....
Final quote from the article - 'Mc Hugh and the MyTravel team should be nervous'
The article centres on MIPS (minority-interest preference shares ) - these originally appeared as equity on the company balance sheets. They have now been transferred to debt rather than equity as a result of '' modifications to the arrangements relating to the MIPS ''
Peter Mc Hugh, chief executive of MYT, declined to say why this had occurred.
Hmmmm....
Final quote from the article - 'Mc Hugh and the MyTravel team should be nervous'
Last edited by willoman; 5th May 2003 at 06:48.
Ut Sementem Feeceris
Willowman
"The article centres on MIPS (minority-interest preference shares ) - these originally appeared as debt on the company balance sheets. They have now been transferred to equity rather than debt as a result of '' modifications to the arrangements relating to the MIPS ''
I think you mean the other way round. They USED to shown as equity, they are now shown as debt. If anything this is making MYT's accounts more transparent than "smoke and mirrors".
A4
"The article centres on MIPS (minority-interest preference shares ) - these originally appeared as debt on the company balance sheets. They have now been transferred to equity rather than debt as a result of '' modifications to the arrangements relating to the MIPS ''
I think you mean the other way round. They USED to shown as equity, they are now shown as debt. If anything this is making MYT's accounts more transparent than "smoke and mirrors".
A4
I've only made a few posts so I don't feel the need to order a Personal Title and help support PPRuNe
Join Date: Sep 2000
Posts: 207
Likes: 0
Received 0 Likes
on
0 Posts
Sorry to be the bearer of not so good news but this has also been reported in the Mail on Sunday today:
No doubt another blow to morale for the crews and other employees. No point in shooting the messengers though as they are only reporting the desertion of Jarvis.
The finance director of Airtours has quit, dealing a fresh blow to its parent company, troubled tour operator MyTravel.
Kenton Jarvis has accepted an offer from rival holiday firm Thomson. 'We are sorry to see him go,' MyTravel chief executive Peter McHugh said. He added that he was 'very conscious' of the need to retain key management staff as MyTravel grapples with its financial problems, but he declined to give details of any additional incentive schemes that might have been put in place to prevent poaching by competitors. Friends of Jarvis said he had become increasingly disillusioned as MyTravel lurched from one crisis to another.
Jarvis is the latest in a series of senior executives to quit. MyTravel has already changed its chairman, chief executive and finance director after a disastrous 2002 when it was laid low by accounting scandals and profit warnings. It is cutting 2,000 jobs. On Friday it announced further amendments to its accounts, which saw debts increase by £210m. The shares are trading at 14p, valuing the firm at £69m
Kenton Jarvis has accepted an offer from rival holiday firm Thomson. 'We are sorry to see him go,' MyTravel chief executive Peter McHugh said. He added that he was 'very conscious' of the need to retain key management staff as MyTravel grapples with its financial problems, but he declined to give details of any additional incentive schemes that might have been put in place to prevent poaching by competitors. Friends of Jarvis said he had become increasingly disillusioned as MyTravel lurched from one crisis to another.
Jarvis is the latest in a series of senior executives to quit. MyTravel has already changed its chairman, chief executive and finance director after a disastrous 2002 when it was laid low by accounting scandals and profit warnings. It is cutting 2,000 jobs. On Friday it announced further amendments to its accounts, which saw debts increase by £210m. The shares are trading at 14p, valuing the firm at £69m
