A bit like Tesco (LONDON:TSCO) in its pomp everyone likes EasyJet (EZJ) which is cheap but not too cheap, flies to predominately mainstream airports and you can even choose where you sit nowadays.
Today's share price shocker has nothing to do with the company's first half results to the end of March which - in the customary loss-making more difficult period of the year - flirted with breakeven for the first time ever apparently aided by an unprecedented number of skiers travelling to Europe with the airline. No, what induced some fear from investors were comments made about the impact on cancelled flights from strikes predominately in France and Germany. Cancelled flights naturally disrupt the business plan and with much of the profitability being generated from last minute travellers who just need to get somewhere, forced rebookings just eat up available seat capacity.
It would be too much to say that such strikes are now behind us. Unfortunately transportation workers realise the added potency of striking in the naturally busier summer period (even if such tactics ultimately run the risk of backfiring on them as any public sympathy wanes).
Stock markets being what stock markets are a strike infested scenario will be being augmented onto earnings forecasts for EasyJet and, with the share trading at all-time highs just a few weeks ago, a combination of profit taking and these analytical evolutions have hit the stock today.
There is much to like about EasyJet's appealing to all business model. Unlike many airlines they are lightly geared and do not have material longer-term liabilities like pension deficits to worry about. Unlike many other airlines they have also rewarded shareholders including via special dividends. Management have proved themselves to be able at keeping costs under control and near 90% capacity utilisation levels form the basis of a very efficient business model. The company proudly announced today further deals with Boeing (NYSE:BA) to augment their fleet (with a slight boast about the deal they had struck) and this will help form the basis of further destination expansion.
Simply put, look beyond some inevitable summer strikes and the future remains bright for EasyJet. Today's volatility is an opportunity for non-investors to buy the stock. Following a suitable time pause after the publication of this article I know I will be.
Disclosure: at the time of writing I do not own any EasyJet shares.
Today's share price shocker has nothing to do with the company's first half results to the end of March which - in the customary loss-making more difficult period of the year - flirted with breakeven for the first time ever apparently aided by an unprecedented number of skiers travelling to Europe with the airline. No, what induced some fear from investors were comments made about the impact on cancelled flights from strikes predominately in France and Germany. Cancelled flights naturally disrupt the business plan and with much of the profitability being generated from last minute travellers who just need to get somewhere, forced rebookings just eat up available seat capacity.
It would be too much to say that such strikes are now behind us. Unfortunately transportation workers realise the added potency of striking in the naturally busier summer period (even if such tactics ultimately run the risk of backfiring on them as any public sympathy wanes).
Stock markets being what stock markets are a strike infested scenario will be being augmented onto earnings forecasts for EasyJet and, with the share trading at all-time highs just a few weeks ago, a combination of profit taking and these analytical evolutions have hit the stock today.
There is much to like about EasyJet's appealing to all business model. Unlike many airlines they are lightly geared and do not have material longer-term liabilities like pension deficits to worry about. Unlike many other airlines they have also rewarded shareholders including via special dividends. Management have proved themselves to be able at keeping costs under control and near 90% capacity utilisation levels form the basis of a very efficient business model. The company proudly announced today further deals with Boeing (NYSE:BA) to augment their fleet (with a slight boast about the deal they had struck) and this will help form the basis of further destination expansion.
Simply put, look beyond some inevitable summer strikes and the future remains bright for EasyJet. Today's volatility is an opportunity for non-investors to buy the stock. Following a suitable time pause after the publication of this article I know I will be.
Disclosure: at the time of writing I do not own any EasyJet shares.