Silverjet Share Discussion Threads

[papalpower] 24/4/2008 12:49

Daniel Stewart Update today :


Silverjet plc - SELL

Price: 14.5p Target price: 0p

Code: SIL.L Analyst: Mike Stoddart | 0161 830 1892


We have reworked our model on Silverjet on the basis that it continues to run a three aircraft fleet for the year to March 2009. This is in the absence of any news from the company regarding the 4th and 5th aircraft (codes G-BYAA and G-BYAB). These were originally to have been delivered to the company in March but this now looks unlikely to happen. There was an anonymous posting on www.pprune.co.uk yesterday saying that the aircraft would return to service with Thomsonfly, their current owners.

If it sticks with its current fleet, Silverjet will avoid the dilutive effect of the new aircraft (presuming that one would have been used to doubled up the frequency to Dubai and the other would have been used on a new route to Los Angeles). It will also avoid fit out and refurbishment costs although these would have been rolled up into the monthly lease cost. Offsetting these factors, we assume that Silverjet will lose the £963,000 deposit it paid to Thomsonfly.

We have also raised our assumed yields - to better reflect the company's current standard fares - (although the company has been giving no guidance on yields) and our projected fuel price, for obvious reasons.

2009 Forecast – Revenue £80.4m (previously £126m), a pre-tax loss of £29.9m (previously £39m), EPS of minus 46.4p (previously 60.5p). The "upgrade" to a smaller loss projection is the net effect of fewer aircraft, higher assumed yields and higher oil prices. Our projected net debt figure for 31 March 2009 is now £33m (previously £57m) with the difference reflecting the absence of the 4th and 5th aircraft (which would have cost £21.7m and been accounted for as being under finance leases) and the changes to our forecast.

Silverjet does not have facilities to sustain a £33m net debt figure: it has a £10m loan from the Reuben Brothers and £17.4m of finance leases on aircraft #2 and #3. This is why we consider that it needs additional equity, its cash balances are running out.

Break-even? The continually rising fuel price is raising the point at which Silverjet can break even. The sterling price is up 74% in the last year and is up 34% since Silverjet announced its capital raising in November. Compared with the company's guidance in January that its operating costs per rotation were £74,000, the increase in the fuel price since then will have added about £11,500 per rotation to Silverjet's costs. In other words it's break-even load factor, whatever it was, has gone up by almost 10 passengers at our current assumed yields of £1,200 per round trip

[drewz] 24/4/2008 10:12

It would have been written a lot longer than that ago - I've had my copy for 4 weeks already, so probably interviewed/written at the end of last year or January to meet print deadlines.

Also, I believe the FD is restricting his comments to 'operational costs' of each rotation at that time, wheras Mike Stoddart was calculating 'all-in' costs which is obviously fundamental to the survivability of the airline.

I believe they will be out of cash and grounded within 3 months if they don't find a new investor to inject more cash soon.

[stluke] 23/4/2008 19:46

Article in this months Accountancy magizine with finance director stating costs of return flight approx £70,000 instead of £135,000 stated by Daniel Stewart note and approx 65% load factor required to breakeven.

As this written probably 4 - 6 weeks ago i would imagine the figures would now be nearer 70 - 75% due to the continued increase in price of oil.

[bygadsir] 23/4/2008 17:34

If Mr. Hunt has gone to ground the airline will soon
be joining him. This is really a basket case.

bygadsir

[i am myself2] 20/4/2008 10:01

It is reported that EOS has raised another $50m. In May Eos starts a route to Newark and then Dubai in July. Back at Silverjet they have not told the stockmarket that they cannot afford the two extra planes which shareholders thought they had paid for. The oil price is now $117/barrel. Every creditable bidder has been dismissed and I expect Silverjet will be grounded in 2 months. Long before that ths shares could be suspended as without a real cash injection the firm may not be a going concern.

Mr Hunt seems to have gone to ground.

[p@] 16/4/2008 12:50

Brian Bailey raises stake in Silverjet to 4.1 percent




LONDON (Thomson Financial) - Brian A. Bailey has raised its stake in British
business class airline Silverjet Plc. to 4.1 percent.
On Apr. 10, the carrier, which flies from Luton to New York Newark and
Dubai, said it is in talks over a potential takeover of the company.

[p@] 14/4/2008 11:59

Maybe BAY want them to store their luggage !

[m.t.glass] 14/4/2008 07:48

Granville - try this

It appears to indicate that Silverjet are searching for a buyer, rather than being courted.

[granville2] 13/4/2008 20:00

sportbilly1976 - do you have a link to that piece?

[sportbilly1976] 13/4/2008 18:48

Well according to the sunday times the bidder is Lufthansa....

interesting to see if any comment is made tomorrow, or a takeout price is mentioned.

[steddieddie] 11/4/2008 11:55

I'm surprised that the main press coverage links haven't been posted:

[i am myself2] 10/4/2008 19:41

Siverjet management are very careful not to lie in RNSs. When ypu look back over a year of statements you see great care is taken in the wording (most of the time). If they are only talking to one possible bidder then why whould that bidder offer more than a few pence per share. I suspect the talks are a delaying tatic as the airline may not be a going concern without extra cash and it failled to lease the planes even though shareholders have already paid for them to do that.

my guess is that talks will fail when anyone looks at the books.

[reefseeker] 10/4/2008 15:59

So .... we are discussing and analysing the company's latest rns, which is what people do on bbs.

Geez ....

[200308] 10/4/2008 14:10

so?.........

Remember there is very little in terms of logic - the best thing to do is if you are nervous is take your profit, if any and get out!

Otherwise just stick it out

;0)

[reefseeker] 10/4/2008 14:04

You are right re the wording; usual wording in these situations is "The company has been approached ..." or "The company has received ..."

[i am myself2] 10/4/2008 13:18

hello all,
I hope you are selling your homes and buying silverjet shares if you are one of those who think I am a fool.

The statement from the firm did not say they had an approch but are is discussions. That cound mean Mr Hunt is going round possible buyiers. It one of them shows any interest then they can say they are in discussions.

Oil is around $110/barrel. The business model cannot work. They seem not to have any more planes coming. the last £12m from shareholders and £10m load must be mostly spent by now.

At least Mr Hunt is still taking money from the gulable.

[200308] 10/4/2008 11:03

well I have just bought in - a small stake, mind ...but every little helps, now where have i heard that before ;0)

[granville2] 10/4/2008 10:50

35p for a takeout.

[montyhedge] 10/4/2008 09:34

I reckon it Emirates Airlines, they have the Dubai route sewn up, Silverjet undercutting then on Business class by a big margin, the arabs don't like that.

[whiteboard] 10/4/2008 09:33

I agree totally.

I also suspect that SIL management also know that there are people out to get them. This is why they are playing their cards as close to their chest as possible. The down side to this is that they are not giving the shareholders all the information they need to make valid decisions, thus playing into the hands of the bears.

[drewz] 10/4/2008 09:27

Short-selling activity aside, the only people who would want SIL to fail are rival airlines who don't want the competition.

It is certainly conceivable that employees of other UK business carriers may be spreading negative views on SIL.

BA, for example, have invariably tried to knock out UK competition, often by dirty tricks or predatory pricing, whether it was BCal, Danair, Laker, BMI, Virgin etc etc. They have the Court appearances and fines to prove it.

[whiteboard] 10/4/2008 09:14

Drewz, you are right, what you say is hard to argue against.

The problem I have, is that it was known by all parties involved that a startup airline NEVER has an easy ride in the first few years. They themselves stated that it would take 3 years to get near to profitability. EVERYONE should of realised that more funding would be needed as the months go on. It was also blindingly obvious that the operational profit forecast for March was due to the return of the Bond (which I understand is now due in April).

I just get the feeling that there are too many people that don't want SIL to succeed, so use whatever tactics they can to do them harm.