Steve Gurr, I phrased it badly, my fault :-). Setting up EasyJET Europe was mentioned on Bloomberg TV this morning as an additional cost created by BREXIT, I agree madness, which took me by surprise. Biggest increase in costs was of course fuel, because of fall in value of pound following leave EU vote. I bet very few holders of EasyJet shares voted to leave EU :-)
Smiles, I thought you said "added costs of moving to EU" .....................
Their "new airline" in Austria Head Office is basically a 'Portakabin' and involves a few staff and re-registering about 100 aircraft under Austrian jurisdiction - total cost about £10m which is a miniscule price to pay for an EU Operating Licence to protect itself from the madness of BREXIT.
Steve Gurr, "They are not moving to the EU" I was referring to EasyJET Europe. They need to create this business to continue to operate under Open Air rules.
"It is the latest effort by the airline, which unveiled its full-year results today, to get Brexit-ready, after establishing a new airline in July, EasyJet Europe, which is headquartered in Vienna. That is to allow the airline to continue to operate flights both across Europe and domestically within European countries after the UK has left the EU, regardless of the outcome of Brexit negotiations."
"When Carolyn McCall climbed into the LSE:EZJ:easyJet cockpit in July 2010, the airline's new chief executive faced a multitude of problems. Top of the list was improving the carrier's poor punctuality record, as well as soothing relations with ..."
I bought EZJ for EU referendum so been a disastrous investment for me though looking up of late. The reduction in capacity from failure of Air Berlin, Monarch and other European airlines as well as Ryan Air problems is all helpful for EZJ. I have confidence that EZJ did not overpay for Air Berlin assets. They still have head wind of pound devaluation and added costs of moving to EU so that they can maintain advantage of EU open air policy. Long term I think I may yet make a profit out of EZJ.
I wont be the only investment writer scribbling that easyJet (LSE: EZJ) is flying after todays results. The budget airlines share price is up more than 5.5% in early trading, despite printing a 17.3% drop in its headline pre-tax profit for the year to 30 September, from £494m to £408m.
Take it easy
Markets were in an unusually forgiving mood because the drop in headline profits was within guidance, and reflects the adverse £101m impact of currency swings. Investors know this has been a tough time for the industry, due to terror attacks, Brexit uncertainty, tough competition and subdued demand, and see the figures as demonstrating the resilience of easyJets business model, as todays report puts it.
There were some positive figures too, with a record 80.2m passengers, up 9.7% year-on-year, and record load factor at 92.6%. Markets will also have liked this: Strong cost control, driven by increasing benefits of scale and stronger network positions, along with Lean savings of £85m offsetting inflationary pressure in the market.
The bankruptcies of Monarch Airlines, Alitalia and Air Berlin have reduced competition and easyJet has picked up part of Air Berlins business. Throw in a strong balance sheet and net cash position of £357m, and it looks nicely placed for better times. The proposed dividend of 40.9p per share is in line with the companys policy of paying 50% of headline profits after tax. City analysts reckon EPS will bounce 17% next year, which adds to my sense of optimism, while the forecast yield is a decent 3.2%, covered twice. easyJet has been flying high for some time now.
The figures in the Finals out this morning say that the cost of incorporating AB into EZJ in 2018 will be around £200m, that is half the headline gross peofit made by EZJ this year. OK it may be earnings accretive in 2019, and it may be that it is a relatively cheap way to grow your market.....but there is the £200m, and the EZJ fnancials are not as strong as they might be. Not sure why there has been such a rise in the SP this morning. OK, EZJ is a strong airline; it happens to be my favourite airline and does a good job IMHO for the consumer. However, its financials over the past few years have been fairly rough to say the least. Not rushing to invest here just yet. Better locations elsewehere, even in aviation, all IMHO of course.
Definitely worth holding on, I've heard that people who lost their Monarch flights and had to switch to EasyJet at the last minute are being charged phenomenal prices! there will be some money made this autumn!
I think long term EasyJet will come out much stronger. EasyJet are picking up the pieces from these smaller airlines that are failing while RyanAir looks like it could have some serious issues. I'm going to hold in the belief that EZJ will come out on top.
If Alitalia fails there will be less less competition. At the moment there are too many air carriers operating in Europe which has depressed price of air-line seats. Good for passengers but bad for airlines. The over capacity needs to be reduced so there are fewer but viable airlines. I am hoping EZJ will be in survive camp.
Another reason not to fly with Ryanair, as if you needed one. I can't think of anything worse than having a stressed and worried pilot in charge of several hundred lives when/if something goes wrong up there. I wonder if O'Leary has ever heard of Human Factors?
I'm not sure what the lead time is on a fleet of vans but there have been at least 20 - 30 brand new Monarch liveried vans parked at Luton airport for weeks (not main entrance but round the back - next to the Easyjet training building). I've been past there several times recently* and I've not seen any of them move once - I even commented to the missus about them. I know a fleet of new vans is small change to an airline but I remember wondering if it might be symptomatic of something bigger going on. Never thought they'd go under though. ...The management must have known passenger numbers were down but presumably didn't react quick enough (or at all?) It ain't rocket science - you need bums on seats in this game.
Sorry for all those affected by Monarch going under.
* I have no connection with Easyjet other than as a shareholder.
I think I've only flown with Monarch once and it was OK (as good as it gets in short haul cattle class). Easyjet - similarly OK on the several occasions I've flown with them. Ryanair (twice) - never again - the cabin crew seemed to treat the passengers with what I can best describe as an undercurrent of contempt. Happy to be an Easyjet shareholder. Wouldn't touch Ryanair with a bargepole.
"Although equity markets are marginally higher, this is more a response to currency moves rather than fundamental investor confidence, with a stronger dollar helping the @GB:UKX:FTSE 100 start the week up, while a weakening euro is supporting ..."
News is that two of Monarchs biggest markets, in Egypt and Tunisia, were closed to tourists after terrorist attacks. Unrest in Turkey also badly hit Monarchs holiday business. They then had to search for other business but competition very tough so they could not maintain profitability. The fall in value of pound where most of income was against US dollar where a lot of its costs were, was final straw.Their fall into administration will slightly reduce competition for European flights so be of benefit to other airlines operating flights between European destinations.
It has struck me that failure of Monarch will be be bad for credit card companies and banks as people who have booked flights to fly out from UK with monarch have been advised to claim refunds, if they paid by card, from their credit card company or bank.
accused of frequent breaches of consumer law by CAA.Failure to inform customers of their right re cancellatiuons ,compensation etc..Consumer groups are furious apparently that RYA has to be "dragged to the steps of the court" before complying! OOps!
Not showing in the shareprice yet,could another sharebuyback programme prop up the shareprice and can rya afford it?
I`m assuming they would have to call an EGM to initiate it.
Interesting times and we could do with a brand new CEO on board concentrating on taking advantage.The current one is probably watching ITV`s back catalogue! lol.
mikey¬s "ratner" moment..It`s ok being Mr Arrogance until the sticky stuff hits the turbines!
CAA may well have been waiting for this moment.I guess he is unsackable..but if he is sacked ,we don't want him at the vacant EZJ helm!
1216 live ,not sure unless Air Berlin news is percolating .I have reprised it on LSE ezj board. Steve,why don't you repeat that point on ezj boards on lse forum..I`m ploughing a lonely furrow over there.
I also heard the 'rumour' that Pilots were leaving RYA for Norwegian, and imvho if this is the case and the reason for the cancellations then RYA would have known about it for some time. Arguably even if they are telling the truth about holiday allocation being the reason then they will have known about that also.
The excuse of atc and weather being a reason is just a smokescreen - EZJ have those issues as well.
I suggested it would be an awesome marketing opportunity for EZJ to 'say' to RYA customers that have had a flight cancelled to come on over to EZJ and receive a 5% discount - and guaranteed flight. The immediate response from an employee is that whilst it was a great idea they simply do not have the capacity - their aircraft are pretty much all full!
regarding the drop on RYA midweek ..last week.I complained to the FCA that there was an usual drop in RYA`s shareprice before the Friday rns..Very naughty imo..
I have also monitored the apparent migration of rya`pilots to Norwegian air.Mikey reckons the problem with 6 weeks of cancellations is all about the holiday roster..What a lot of nonsense!
RYA of course after the initial drop have picked up a bit but then they are buying their own shares!Cheaply at the minute.
The reality seems to be according to callers to Radio 2 programme is rya pilots are treated poorly and are voting with their feet.
I smell a cover up ,and reckon a few have made some dosh selling before this all unravelled.Stinky imo..but long term good for EZJ .Many will not trust them again.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.