Easyjet flying high as shares soar 13%

Aug 2 2007 by Tony McDonough, Liverpool Daily Post

SHARES in budget airline Easyjet soared almost 13% after a US private equity giant Blackrock Inc acquired a 5.09% stake in the company.

The stock was also boosted after bank Goldman Sachs upgraded the carrier to “buy” from “neutral”.

However, the company sought to play down any rumours of a possible bid, pointing out that founder Stelios Haji-Ioannou and his family still hold 40% of the stock.

They could certainly block any attempt at a takeover of the group which has a current market capitalisation of more than £2.1bn.

Easyjet, which is Liverpool John Lennon Airport’s second biggest airline, with more than 20 routes, also received a boost from Goldman Sachs.

The bank said: “We believe that Easyjet may address its strong balance sheet and the strategic options it provides. This could be through an acquisition or some form of return to shareholders.”

In the last few months, the outlook for the budget airline sector has looked less certain. Both Easyjet, and its main rival Ryanair, have talked about more challenging trading conditions which may impact on revenues over the coming year.

Early last month, Easyjet admitted that an early summer price-cutting drive had failed to drive up load factors – the percentage of seats filled.

Passenger statistics show the group’s load factor stood at 86.8% in June, down from 87.6% a year earlier, after the airline carried 3.44m people, an increase of 15.1% on a year earlier.

In May, it announced a series of price promotions, including offers of up to 30% off flights in June and July.

Revenues for the 12 months to the end of June were up 13.1% to £1.73bn, with 35.69m passengers flown during the period.

EasyJet expects a 40% to 50% rise in pre-tax profits in the year to September.

Earlier this week, Liverpool’s biggest carrier Ryanair posted record second-quarter profits, but chief executive Michael O’Leary said he remained cautious about the group’s prospects for the remainder of the year.

Easyjet’s shares closed slightly down yesterday at 501.02p.

tonymcdonough