International Consolidat... Share Discussion Threads

[neilrich] 23/5/2018 21:15

...just to rub the salt into my wound, HSBC have a buy rating for Thomas Cook with target price 140p.

Thankfully I follow my own advice.

[m1k3y1] 23/5/2018 18:28

I am no analyst neil but the ratings make absolutely no sense to me whatsoever !

[neilrich] 23/5/2018 18:17

The HSBC difference in valuation between the two airlines is astonishing, you'd think that IAG was an absolute basket case.

Makes me wonder which bank EZJ banks with...haha!

[m1k3y1] 23/5/2018 17:54

Norwegian Fuel

[neilrich] 23/5/2018 17:45

Interesting to note that HSBC have a BUY recommendation for EZJ, target price 1850P...that would be a forward PE of 16.5.

Their 590p target price for IAG would be a forward PE of 6.

Obviously rising oil prices shall have no effect on EZJ, one of their points against IAG.

[m1k3y1] 23/5/2018 17:15

Qatar Airways boss says Norwegian needs a 'strong partner' to survive
hxxp://www.cityam.com/286284/qatar-airways-boss-says-norwegian-needs-strong-partner

[neilrich] 23/5/2018 17:01

Shares in British Airways owner International Consolidated Airlines Group PLC (LON:IAG) descended after HSBC downgraded the stock, saying it believes the market overreacted to better-than-expected first quarter profits.

HSBC cut its rating on the stock to ‘reduce’ but raised its target price to 590p from 570p.

Earlier this month, IAG reported operating profit before exceptional items of €280mln for the first three months of the year, ahead of €160mln the previous year and analysts’ forecasts of €206mln.

“We believe that the market has overreacted to the moderate good news of the Q1 results and seems to be overlooking the pressure from rising fuel prices,” HSBC said.

A recovery in oil prices is set to push up the cost of fuel for many airlines. For IAG, fuel unit costs rose 0.6% in the first quarter, partially offset by a weaker US dollar against the euro and the pound.

HSBC predicts year-on-year declines in profit for fiscal years 2018 and 2019, which is 17% below the latest Bloomberg consensus forecast for 2018 and 26% lower for 2019.

HSBC likes idea of IAG buying Norwegian

More positively, the bank said it “likes the concept” of IAG buying Norwegian Air Shuttle.

Spanish newspaper Expansion reported this week that IAG was planning to offer €1.52bn for Norwegian following two unsuccessful approaches.

In April, IAG disclosed that it had bought a 4.61% stake in Norwegian with a view to make a full offer for the airline.

“We are conceptually enthusiastic about a potential Norwegian transaction,” HSBC said.

“However, we recognise this is a minority view and would expect the markets to react cautiously to the leverage consequences of any acquisition.”

HSBC believes there is "powerful industrial logic" for IAG to acquire Norwegian as it would address two of its core concerns for the airline – capital expenditure challenges from the British Airways fleet demographic and Atlantic fragmentation.

The bank also sees value in Norwegian’s short-haul order book.

IAG-Norwegian deal 'complex'

“However, we think progressing the deal would be complex as multi-player negotiations would play out not just between IAG and Norwegian but also with the potential lessors that are considering acquiring Norwegian’s aircraft and the two aircraft OEMs (original equipment manufacturers) that we expect would also have veto rights over any deal since aircraft orders of the scale that Norwegian has placed typically have change of control provisions.”

Should the deal not go ahead, HSBC expects “more vigorous than ever competition” on the North Atlantic between IAG and Norwegian.

Shares dropped 2.5% to 685p in mid-morning trading.

[m1k3y1] 23/5/2018 09:46

A 2.45% drop because ?

[m1k3y1] 21/5/2018 23:16

Bloomberg
Airbus May Finally Crack Ryanair as O'Leary Touts Order Prospect


"Airbus has previously downplayed the chances of winning orders from Ryanair, suggesting the Irish carrier only wanted to secure deeper discounts from Boeing. O’Leary said his company could look to add aircraft from the existing backlogs of both planemakers if airlines go bust as oil prices climb, citing Norwegian Air Shuttle ASA as one operator where jets may become available."

“In a downturn there will be opportunities at both Airbus and Boeing,” O’Leary told Boomberg Television. “If something does happen with Norwegian they have huge order books and a lot of those aircraft will be floating around. We would like to opportunistically be able to jump on some of them.”

[m1k3y1] 21/5/2018 23:07

Good point chief and IAG need aircraft.
According to Bloomberg though, IAG could be overpaying .

[chiefbrody] 21/5/2018 23:04

Backlog on plane orders is years now.I guess if you want any sooner, you gotta take over the company that's higher up the queue than you are!

[m1k3y1] 21/5/2018 23:01

Bloomberg
Norwegian Air Shuttle Hands Around the Sick Bags

[neilrich] 21/5/2018 22:57

The short haul may continue as Norwegian Air Shuttle. Also, worth pointing out that NAS have an order for 30 A321LR with deliveries commencing during 2019.

Yes, I can see some of these orders switching to the likes of BA and Iberia.

I don't believe that Level shall enter the short haul market, I think it shall remain a long haul budget carrier. Watched a review recently for Level on youtube, the reviewer was very positive and all very clever...order food and drink when you want it via the seat back media system.

Personally, I don't see any deals with the likes of Ryanair.

[m1k3y1] 21/5/2018 22:56

Norwegian's fleet consists of around 150 aircraft including Boeing 737-800s, Boeing 737 MAX aircraft and Boeing 787 Dreamliners. With an average fleet age of just 3.6 years.
hxxps://www.norwegian.com/uk/about/our-story/our-aircraft/

Norwegian air shuttle on the other hand is different.
hxxps://www.planespotters.net/airline/Norwegian-Air-Shuttle

[m1k3y1] 21/5/2018 22:44

Thanks neil.
Agree about the merging of level and Norwegian. I don't see the benefit of maintaining the norwegian brand and combining it into level makes sense.

As for the shorthaul element ? would he sell it to Ryanair ? doubtful given that they are currently involved in other purchases. Vuelling ? maybe , or how about creating a shorthaul fleet for Level ?
Does IAG need to expand a shorthaul fleet anywhere ???

[neilrich] 21/5/2018 22:22

IAG has ambitious expansion plans for Level, at present we're up to 5 Airbus A330, however at the full year presentation they stated that the plan was up to 30 aircraft ASAP, they also mentioned ideally B787 Dreamliner. Norwegian hands them this many dreamliners on a plate, plus it eliminates their closest competitor....genius in my book.

Should IAG be successful with a potential bid for Norwegian what shall happen to Level? I don't believe that they shall operate the two independently, I think that the two shall merge, possibly under the name Level.

Not sure what shall happen with the short haul fleet, but I'd imagine that it shall continue as Norwegian, although possibly an option to incorporate into Vuelling, although it would be a mixed Airbus/Boeing fleet.

Interesting times for IAG.

[m1k3y1] 21/5/2018 22:07

Thanks neil.
It is an older article from march but interesting.

If what is written is fact, what is the attraction for IAG and why pay top dollar for it ?
Loss making airline , with forward aircraft orders it can't sustain and an increasing oil price against which Norwegian has only hedged 25% ??

please explain, other than slots of course and existing aircraft but these cannot be worth $1.72B

[neilrich] 21/5/2018 20:53

hxxps://nordic.businessinsider.com/norwegian-is-flagging-huge-losses-for-q1-and-now-a-top-analyst-says-bjorn-kjos-should-ditch-all-long-distance-routes--/

‘Norwegian will survive the summer – but that’s about it!’ Sounds like the company is on its knees....they'd be mad not to accept an offer.

Also, the CEO has been in charge for 16 years and is the largest shareholder, surly he wants to end his career on a high?!

[m1k3y1] 21/5/2018 20:44

I think it's worth 1000p neil :)

[neilrich] 21/5/2018 20:34

Lets face it....should someone wish to take over IAG and they offer a 30% premium on Today's closing price (>900p a share).....I'd accept!

[m1k3y1] 21/5/2018 17:55

Let's hope so chief.

[chiefbrody] 21/5/2018 16:56

Beginning to feel like a done deal...

[neilrich] 21/5/2018 16:35

Yeah, but no denial from either side.

[m1k3y1] 21/5/2018 16:31

because no formal offer has been tabled yet, I am guessing neil.