What BT readers are getting from owned Airline shares?

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This topic contains 10 replies, has 6 voices, and was last updated by  VintageKrug 14 Nov 2012
at 07:38
.

Viewing 11 posts - 1 through 11 (of 11 total)

  • Anonymous

    MarcusUK
    Participant

    Recently bought some AF/ KLM share, with some in Company advice on their 2015 plan for reducing costs and raising productivity. Working well so far with much improved 3rd 1/4 results, which boosted the shares. In 6 months, the share price has doubled. My info has double the price i paid for them.
    But, what benefits are other shareholders receiving Airline to Airline, apart from holding of an investment, and a maybe getting a dividend?

    You shares holding or losing?


    SwissExPat
    Participant

    I’ve lost maybe 25% of the price I paid for a small shareholding in BA but have probably saved this loss in the discount I receive on the flights I bought in the last 2 years. E.g I saved euro 275 last week on 2 CW flights to Asia.


    JohnHarper
    Participant

    BA – shareholder discount but I’ve lost capital too. All told, I regard it as a loss in real terms as the discounts have never made up for the lost capital.


    VintageKrug
    Participant

    I would never advise anyone to hold airline shares in their portfolio; just too volatile and a structurally risky industry.

    However, being volatile they can be good for those who wish to trade them. Short term.

    I hold a modest number of BA shares enabling the 10% discount, which is no longer offered. I rarely actually use the discount except on last minute and £3k+ fares as its value has been eroded by the increase of APD, and the other disbenefits of making a shareholder booking.

    But I bought the shares very inexpensively a long time ago, and have made back many more times the original investment in savings.

    I also think a discount scheme is better than a dividend for smaller shareholders as there is no dividend tax to pay.

    Having said that, it does reduce institututional shareholders interest in acquiring the shares especially if it compromises the ability to pay dividends (though I’d imagine the amount “saved” via shareholder bookings to be pretty paltry, so I doubt there’s much impact there, and diversifying the shareholder base has other advantages).

    Having said that, IAG has been a good punt in the past year or so; had you bought in late Autumn last year and sold in early Spring, you’d have made a 50% return, so there is money to be had!

    Over the past six months, in comparison to IAG, AF/klm has been racing ahead, which MarkRoberts was lucky enough to take advantage of, though it’s still behind BA overall. But over the long term, taking the past five years for example, you’ll see that IAG has held up better than the AF/klm group:

    http://uk.finance.yahoo.com/q/bc?t=5y&s=IAG.L&l=on&z=l&q=l&c=AF.PA&ql=1

    As IAG really begins to get to grips with the high cost base at Iberia, I would suggest the upside is not inconconsiderable.


    LuganoPirate
    Participant

    I don’t fly much with BA so I’m not looking at the shares as a way to get a cheaper fare. I’ve made good money shorting BA/IAG in the past but I’m not sure there’s much more downside in them. As to upside, if they do sort the problems then I agree with VK, and no doubt they will – eventually. And that’s the key, how long will it take and what will it cost?

    LH I follow occasionally, and small investment here could work out over the longer term when Business and First traffic really picks up again. What they face though is a high cost structure, big competition from the ME carriers and of course high fuel costs.

    AF/KLM are attempting to restructure, but the guns will go off when they want to lay off (as they must do to regain profitability) French staff. I can’t remember the exact figure but AF currently employ twice as many people as KLM to generate the same amount of revenue, but KLM is profitable whereas AF is not.

    All in al, with all the uncertainties I would also avoid airline shares and as to discounts, well LH does have this to offer:
    http://investor-relations.lufthansa.com/fileadmin/downloads/en/annual%20meeting/2013/LH-Gewinnspiel-2013-e.pdf

    AF offer their shareholders club:
    http://www.airfranceklm-finance.com/index.php/en/Individual-shareholders/Shareholders-Club

    No big deal at all!


    MarcusUK
    Participant

    Thanks for the replies.
    So can anyone summarise, which shareholders for which Airlines, get any discounts for bookings?

    BTW, AF /KLM, have in place a 2015 yr plan, already being implemented. I agree that AF side weighs them down, but KLM just turned into a £300 million profit this last 1/4.

    I agree with VK that it is a volatile sector, but with us savvy travellers and reading BT, it is easier to see the Airline changes afoot, that will affect share prices.

    It may be a very interesting article for BT to feature some time…?


    NTarrant
    Participant

    I’d agree that it would be an interesting article. I purchased the minimum amount of BA shares when the price was at its lowest to get the discount and I have to thank VK for drawing our attention to this those years ago now on the forum.

    In the first year I recouped the money spent on the shares and made a profit. So for me I have recouped my investment and made a profit. I’ll keep them for the time being but have no thoughts of selling as they are not essentially costing me anything.


    SwissExPat
    Participant

    Just to slightly disagree with VK (for the sake of debate!) I think that there is merit in any person owning shares in companies such as their national airline (or carrier that the use quite frequently and are interested I their service offering). I agree with VK that in advising a friend etc on stock picks for the purposes of capital appreciation or income that such airline stock might not be the best picks available. However for other reasons, it may be quite rational to buh such shares.

    Personally, I am very much in favour of individuals owning shares in companies they use. Economists generally say that these small shareholdings make the stocks more liquid.

    It also gives you a voice at general meetings if you choose to use it!

    I also believe that airlines are perfectly placed to encourage small direct Investments by their customers. The BA 10% is an excellent example and it was largely responsible for my Most Recent 3.5k booking over Emirates.

    Another simple one would be lounge access or accelerated levels in a FF programme. Eg log onto the shareholders booking and be able to print out a voucher for limited number of accesses to a BA lounge per annum.

    I have heard that BA might discontinue the discount soon and if so, I will look to sell them if they appreciate a little so as to break even.


    MarcusUK
    Participant

    So any other Shareholders in any other Airlines get a discount or perks?

    Apart from Dividends that may well still be delayed, and share prices, what actual perks are you getting from the Airline you fly most if you own shares?


    VintageKrug
    Participant

    No other airlines to my knowledge, but you can get a discount via Cunard’s owner on many cruises.

    Oh, and strangely I still get a discount at Debenhams. Joy.

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