Do They Think It’s All Over? BA Shares Soar 25% in Past MonthBack to Forum
Anonymous5 Aug 2009
So much for the Walsh-haters on this message board.
British Airways shares (BAY.L) spiked 7.7% today closing at £1.62 – a 25% gain on this time last month.
Passenger numbers are UP 1% on the same time last year, although fewer of them, for now, are buying the higher margin and premium fares (such passenger numbers were down 11%).
BA has a load factor of 86% which compares favourably with pile it high sell ’em cheap carrier Ryanair’s 89%.
Personally, I think the hoped for upsurge in business in September is premature; much of the good news being reported is pent up demand being released onto the market after a hiatus in Q4 last year and Q1 this year.
It’s still hard work out there and current broader stock market gains seem to me like “irrational exuberance”.
However BA is well positioned for the eventual, modest upturn whenever it does materialise.
The first of several new fuel efficient 777s came onstream last month, and the launch of the Club World/London City A318 service direct to New York starts in September, for which forward sales are apparently buoyant, supported by a resurgent international banking sector, and consolidation with either IB or AA cannot be far off..5 Aug 2009
Here is the FULL Times comment, rather places it all in a more even context!
“In BA’s case, its traffic figures for July were better than they have been all year but that is largely because the airline has slashed fares to drive up volumes.
The carrier’s fundamentals are still weak with yields, revenue per seat, falling fast.
The problem is that in many cases the sentiment is getting well ahead of the fundamentals. As one trader put it yesterday: “People seem to want to buy anything at the moment.”7 Aug 2009
More positive comment on the share price, with a target of 300p, and some interesting thinking on the issue of bmi, from yesterday’s Times, especially the BM/IB comments.
“British Airways helped the FTSE 100 to climb to its highest level for more than a year yesterday after a push from one of the City’s leading brokers.
Shares in the flag carrier rose 2.9p to 221.8p after Royal Bank of Scotland told clients to buy the stock, noting that it was on the verge of an avalanche of news. The broker said that BA was on the cusp of decisions relating to labour cost savings, with talks with unions set to resume tomorrow, its proposed merger with Iberia, the Spanish carrier, and antitrust immunity for its proposed American Airlines tie-up.
It added that BA would benefit from an economic recovery in America, which would boost already recovering premium passenger numbers.
RBS, which raised its price target on the airline to 300p from 225p, also suggested that, should its proposed merger with Iberia fail, it expected BA to trade its stake in the Spanish airline with Lufthansa, the German airline, for control of its bmi unit.
The broker said that such catalysts could mean that the airline’s story would be very different in six months, by which time it might even be a partial owner of the embattled Japan Airlines, together with American Airlines and Qantas, thereby keeping it in their oneworld alliance and out of the hands of SkyTeam, the rival alliance.”15 Oct 2009
While The Great White Hype (i.e.Vintage Krug) takes it upon himself to talk up BA’s shares based on a report from RBS (that paragon of financial acumen and proven success), an alternative view from the latest Investors’ Chronicle should provide shareholders with food for thought. I can’t quote the full article (too long) so I’ll just quote the analyst’s assessment:
“Average business class ticket prices for a return to New York are now around £1,000, with some carriers offering two-for-one deals.That threatens the success of BA’s £5,000-a-seat business class-only service between London City and New York. Although Mr. Walsh says it will be immediately profitable, every other attempt at a premium-only service has so far failed.
BA’s shares have rallied strongly, but expectations of a rapid recovery are running well ahead of reality. And lumbered with its ‘flag carrier’ legacy, BA has too many seemingly intractable structural problems to make the shares attractive over the long term. Sell at 220p”.19 Oct 2009
I really don’t think you can compare the LCY 32 seat brand new A318 British Airways backed service with the 60+ seats on once-a-day refurbished 767 start ups based in Luton and Stansted.
The moron quoted also lacked the intelligence to distinguish the huge difference between “the average business class fare to New York” and BA’s most expensive publicly available fully flexible walk up fare on its unique London City service. Tabloid journalism.
In other news, possibly slightly better informed than a casual stockpicker writing in IC:
British Airways (LON:BAY) shares are up thanks to a buy recommendation from brokers at Goldman Sachs.
Goldman Sachs has added British Airways to ts conviction buy list. Goldman sees an upside of as much as 45% for BA shares if revenue recovery starts on a restructured cost base.
This would suggest the Goldman sees the dispute over pay cuts as not having a fundamental impact on plans to cutting the cost base.
BA shares now up 30% since the first post in this thread, written in August.
I think airline stocks are always risky. And there may be justification for the casual investor to take some profit given the many unknowns out there right now.
But a sell recommendation motivated by the sensible caution of profit taking is very different from one which does not anticipate an increase in share price over the coming months.
BA is weathering the storm effectively, having obtained a cash buffer, and the potential upside of a merger with AA/IB and the potential to acquire slots from bmi, as well as the efficiencies from crew changes and the new (fully funded) fleet of 777s, A380s and 787s is significant.
The T3 First lounge and Elemis Spa, opening next week, new premium leisure services to Las Vegas and the Maldives among others. New First will also be rolling out in December/January on a 747 and 777. All positives.19 Oct 2009
Airpocket and Vintage Krug PLEASE stop bullying each other—Both of you are absolutely annoying !!! Could you just keep your comments on issues regarding airtravel and issues associated with it and DEFINITELY not personal verbal bashings !!
Now back to the REAL isssue here. It is great to hear that BA has a good quarterly results–but let us not forget that such share ratings are also achieved because of the good work which BA employees do in their daily routine–so we hope Waterside will not forget those share of hard work and sacrifice for the sake of the company as a whole !!
I definitely hope that the cash buffer will be used wisely and not for any ostentatious entreprises with no good endings. I think a lot of us really expect good decisions and very wise endeavours from W. Walsh and team in the future for the sake of a striving BA which can survive such crisis and still keep a foot in a globalize airline industry.19 Oct 2009
To be fair to VK he is referring to the journalist who wrote the news piece in IC, rather than Air Pocket, although i really don’t think the use of the word ‘moron’ is appropriate on this forum. Air Pocket, please stop your personal attacks on VK – they are unecessary and unhelpful to other readers.19 Oct 2009
I think you will find my comments were entirely focussed on air travel.
I did not make any reference to any other poster.
Unlike another poster who yet again seems to want to make reference to me continually in his posts about a certain airline. Tiresome.
I would respectfully suggest, Hess, that you focus your attention on the wrongdoer here, rather than tarring me with the same brush.19 Oct 2009
If it is really the journalist who you are referring to than I do not want to critize you for nothing !! But do you and others have to use such words !! As you have commented it– it is tiresome !! Yes, it is tiresome to hear such words and expressions from Airpocket and you–that most users have enough of it !! The Site administrator Mr. Tom Otley should be reading such comments and censoring such commentators.
It is just appalling and tiresome–it is time that the a Site Administrator shows some boundaries here. Otherwise nobody will ever have the decency to stick on mutual respects while giving his or her comments in the future.19 Oct 2009
If you do not wish to criticise me “for nothing” then please do just that and remove my name from your list of wrongdoers.
I have written nothing offensive in my post.
A certain poster specifically referenced me, trolling away against me personally, which is wholly unnecessary.
That poster called me “the Great White Hype”. THAT is unnacceptable, and while I normally let these things wash over, as he quite obviously does this seeking attention such as this, I am fed up of the sniping.
Please represent the facts accurately.
As a relative newcomer to this forum, Hess, I would appreciate it if you didn’t associate me with the persistent trolling actions of others.
In my view the site should self police. If certain poster are set on trolling – and their very handle suggests that upsetting the natural flow is what they want to see – the best thing to do is ignore them. Believe me they will go away eventually.
Having extra moderation is only extra work for the BT team, and adds ammunition to those who wish to troll forums.
I actually do fly regularly on business and have some insight into the issues written about here.
The personal abuse I receive here is absolutely unacceptable and must cease.19 Oct 2009
You are right VK-personal abuses are absolutely a no-go !! and have to stopped immediately.
Yes, indeed I am still a newcomer in this forum comparing to you and Airpocket and others. But believe me–I have read a lot about your ongoing tirades and snidings–that most users here are just shocked and annoyed in how Airpocket and you do your verbal fencing !!
As you know in a discusion there is always two sides–so Airpocket is definitely being censored here from me as well–not only you solely.
I believe that a full silent on the side of the BT Site Administrator would only make the matters worse here –as like children–when there are not parents looking or censoring them why bother to be polite !!19 Oct 2009