Easyjet Share Discussion Threads

[ben gibbons] 24/5/2022 16:17

Mustard sandwich looming Jason ;-)

[danvandan] 21/5/2022 16:46

This was under £5 just a few days ago - no 'black swan' event needed for that. No real telling which way it'll go over the next few days, but as has been pointed out, when the market moves on from what it thinks are 'recovery stories' and realises that EZJ isn't one of them, then the share price will be valued on fundamentals.

That may have happened already. The pandemic is mostly behind us. Now many investment houses are talking about coming recession. Only Apple is holding the US market up for the moment.

Sandbar are the 'conviction trader' shorting eZJ at the moment and they reduced their short on Thursday, contributing about a quarter of the buy trades on that day, possibly for fear of getting burnt by another wave of optimism. They're still short almost 1% of the total share issue though (about 7m shares). Their short reduction was most probably risk management more than anything.

Key aspects are two-fold. 1, in 2019, a record yr for EZJ, the business made £350m net profit. 2020, they lost a billion. 2021 they lost £800m. This year they will probably lose another £500m (already down £500m but I'm guessing a smaller loss for this quarter 3 balanced with a small profit for Q4). Maybe a profit in 2023 but it will most probably be a small one as it tries to tackle inflation and borrowing costs while also confronting a slowdown in consumer spending. So the fundamentals don't really support a bullcase based on EZJ's current market cap of £4bn.

2. The coming recession. All boats will sink on the descending tide. There is just too much going wrong right now. Inflation has been stoked by years of money printing. The Russo/Ukraine war has caused the supply shock that has now let the brakes off a runaway train of inflation. Continuously rising interest rates will hurt mortgage-holders and indebted businesses will inevitably start going broke as consumers rein-in spending. When lay-offs start, we will be on the downward roller-coaster run. Exactly when that starts is difficult to time, but the dow is down 15% from its recent peak - it may have already started. This might be the right moment to sell any EZJ spikes caused by irrational retail sentiment.

[jasonpugh] 21/5/2022 11:41

The only way this share goes sub £5 is a black swan event. I will literally eat a mustard sandwich if it does ( im allergic to mustard 😳).

[thornintheside] 21/5/2022 02:08

Correct greco. It was an unlikely reaction, but it's all true. After the second RI (Sept 2021) easyjet had twice as many shares in issue compared to 2019. When the shares hit £8, the company's market cap was higher than in 2019 (equal to £16 share price for 2019). That's not according to me - it's according to basic arithmetic and the facts.

Irrational market excitement plus short covering etc was skewing the behaviour. Check the share numbers and market cap and you will see the situation clearly.

But even if you don't bother with any of that, just take a look at the profits from 2019 (the best year for commercial aviation EVER). Easyjet made about £350m. That's the target for this company in a couple of years from now, which would give the current price a p/e of 11 for this bus company of the skies.

But this year the business is already sitting on a half billion pound loss and definitely won't turn a profit by the end of the year. If everything goes well, easyj might be two years away from mediocre profits and will still hold significant debt. BUT we are about to enter a recession, so more likely pushing that p/e and profits even further into the future. When the market eventually figures this out, the share price will drop to something which reflects actual earnings and future prospects. My guess is about £4 or lower.

[greco600] 20/5/2022 22:11

Its an interesting point, but based on what you've saying that means when there share price reached 8 in October 21 according to you that equivalent to 16 pounds a share.That seems pretty unlikely considering how things where back then "i mean effectively £16 a share,"

[thornintheside] 20/5/2022 17:21

btw, look at the Dow. A bear market has started. We are heading for recession. £4 and lower is coming imo. dyor (and try to keep up with the number of shares issued!!!!).

[thornintheside] 20/5/2022 17:18

km18, if 'wealthoracle' can't even look at recent history and see that there's now twice as many shares in EZJ and the share price HASN'T LAGGED other airlines, then I don't think it's going to be much of an 'oracle'.

[thornintheside] 20/5/2022 17:13

Share price here is almost at 2019 levels. Don't forget that EZJ has had TWO rights issues during the pandemic and issued new shares so that there are virtually twice as many now as there were in 2019. That would make today's price of 520p the same as £10.40 in 2019. EZJ has NOT LAGGED in share price recovery. The shares have nearly completely recovered. There is no 'recovery story' to be had with these shares. Look at the market cap and the price/earnings ratio. On current prices the shares are WAY OVERPRICED!!!

This business lost another half a billion pounds in H1. In January the ceo said that bookings were close to 2019 levels for summer but clearly either that is untrue, or EZJ were selling seats much cheaper and costs are way higher. Either way, the ceo is running out of runway because the next quarter IS the summer season. He can't keep saying 'close to 2019 volumes' and still keep showing huge losses. I reckon it will take EZJ several years to clear its debts and become profitable. By the end of this year, I suspect the ceo will be found out and he will be gone.

[km18] 20/5/2022 14:47

Easyjet (EZJ) posted interims yesterday. The low cost carrier posted a headline loss before tax of £545 million down from H1 2021: £701 million loss. Total revenue increased by 524% to £1,498 million (H1 2021: £240 million) predominantly due to an increase in capacity flown and ancillary products continuing to deliver incremental revenue. Group headline costs increased by 117% to £2,043 million (H1 2021: £941 million), primarily due to the increase in flown capacity.
EasyJet has continued to allocate aircraft to the markets where we demand is at its strongest. In the second half of the year leisure and domestic routes have fully recovered with capacity at 113% and 104% of FY19 levels respectively, whilst business and city traffic continues to recover with demand currently below FY19 levels. Travel is recovering, so will revenues, profits and EPS. Share price is still roughly 50% below pre-COVID levels and has lagged other names in the sector. Like with many travel names there is a recovery story here, although near term share price lacks momentum. BUY.

...from WealthOracleAM

[thornintheside] 19/5/2022 23:45

Expecting this year to end with a record breaking volume at the beginning of a new recession is probably unrealistic.

[thornintheside] 19/5/2022 23:41

Impressive that easyjet managed to finish flat on the day when the main index was down about 2%. I strongly suspect that there's a delayed reaction though.

ezj revenue for Q2 is less than Q1, which is amazing considering that the covid restrictions were being reduced throughout that quarter. Johan made the same promise about the summer being close to 2019 volumes that he made in January, BUT if that is really the case, how come revenue dropped in Q2? I am sceptical. I also wonder just how much of the confirmed bookings for summer have been carried fwd as credits from cancellations in the previous periods. I've got £500 myself that I'm hoping to spend on a flight to somewhere with less onerous covid restrictions.

What everyone is turning a blind eye to is the 'cost of living crisis'. If interest rates go up much further, along with energy and general inflation, a lot of easyjet customers will be considering a UK holiday. Also the pound has lost 10% against the euro in the last two months, making foreign holidays even more expensive. Budget airline customers by definition do not have bottomless pockets. Add in high fuel costs and wage inflation and I reckon we will see £4 here quite soon. DYOR.

[iandippie] 19/5/2022 07:31

They have to have 1 crew per 50 passenger seats. They took a row of seats out of planes that had 154 passenger seats so that they could fly with 3 cabin crew instead of 4. It's more to do with avoiding having to cancel flights when there was a lot of crew off sick with Omicron.

[ram376s] 18/5/2022 10:09

Thinking not drop that low .GDR primed for possible multibagger . 300 nurses to train new test .

[milliecusto] 16/5/2022 12:48

Where are we looking, sub 400p

[waterloo01] 11/5/2022 15:27

Back in in a small way having sold in the £6's.

[zaxarobal] 09/5/2022 19:11

Budget airline EasyJet is removing seatsfrom its airplanes so they can fly withfewer cabin crew amid a labor squeeze

[time for common sense] 09/5/2022 19:05

As always Hugo nails it. MORE UKRAINE BBC U2 BULL? / HUGO TALKShttps://hugotalks.com/2022/05/09/more-ukraine-bbc-u2-bull?-hugo-talks/

[staggie65] 09/5/2022 14:12

I’m in on this stock, no sentiment involved just a stayer in the market and well placed to make a recovery. An industry insider has told me that sector wise no concerns and even a takeover possibility.

[davidro77] 09/5/2022 11:25

These headlines are not helping sentiment but at least the demand appears to be there https://news.sky.com/story/manchester-and-birmingham-airports-chaos-as-passengers-left-to-stand-for-hours-in-long-queues-for-security-12609201

[davidro77] 09/5/2022 11:23

Don't panic they will make loads of money again now they're stripping out the back row of seats Unfortunate that the actions of one unhinged dictator can tip the entire world into recession, it was looking good for a recovery until the invasion

[hornetnest] 06/5/2022 00:12

It went very quiet here after the last results announcement. The ceo says improved trading (as he says every quarter) but the business books another half a billion pound loss even with all this claimed enthusiasm for the 'summer season'. Last quarter the ceo said that the business was almost at 2019 levels. Turns out that either that's a lie or costs have risen so much that the business is still lossmaking even at near 2019 levels.

In case anyone here doesn't know the significance of 2019 levels; that was the busiest year EVER for aviation. So it looks like the only way easyjet can start to clear its debt, apart from yet another rights issues, is for aviation to get even more popular during what will be another big recession. Easyjet customers are looking at a triple whammy - rising mortgage costs and general rises in cost of living; rising taxes to pay for covid and the Ukraine conflict; massive drop in the pound due to Brexit impact.

easyjet is heading back down again now - £4 will be coming soon I strongly suspect. DYOR. A recession is coming - there's no avoiding it imo.

[ttny2004] 04/5/2022 08:14

As covid restrictions now eased in most countries airlines such as Easyjet and BA are becoming full, which is good news, but poses challenges of having enough ground and crew to meet this pent up demand.So many have waited so long to travel again and now they can.