easyJet sees biggest fall in 16 months; Turkish Airlines looks to acquire stake in European carriers


European airline shares slumped again on Monday (17-May-2010) as investors remained concerned over the future of the region's economy and ash-related cancellations continued.

  • European airline shares slump as concerns over the economy and ash-related cancellations persist.
  • Turkish Airlines considers purchasing a stake in LOT Polish Airlines and plans to create a joint venture with LOT on selected routes.
  • easyJet experiences its biggest fall in 16 months following the resignation of founder Sir Stelios Haji-Ioannou.
  • Analysts express concerns about easyJet's short-term prospects but still see significant growth opportunities for the airline.
  • Thomas Cook Group shares fall despite a 'Buy' recommendation from analysts at Panmure Gordon.
  • SAS and Ryanair shares decline significantly, while Aegean Airlines, Aeroflot, and airberlin experience marginal gains.

In key markets, Germany's DAX (+0.2%) gained slightly, France's CAC (-0.5%) ended the session lower and UK's FTSE was relatively flat.

Turkish Airlines looking to purchase stake in LOT Polish Airlines and JAT Airways

Turkish Airlines (-3.0%) was down, as CEO, Temel Kotil, stated during trading that the airline is considering purchasing a stake in fellow Star Alliance member, LOT Polish Airlines. Turkish is to first create a joint venture with LOT on selected routes. Mr Kotil stated LOT is the only Central European carrier it is interested in, as it fits with Turkish Airlines' business model. The carrier was previously in talks to purchase a stake in Serbian carrier, JAT Airways.

easyJet suffers biggest fall in 16 months

easyJet (-5.9%) suffered its biggest fall in 16 months, following the resignation of founder, Sir Stelios Haji-Ioannou. Sir Stelios resigned his position in protest at the carrier's planned rate of capacity expansion and to gain greater freedom to exercise easyGroup's rights as a shareholder. easyJet's board approved a growth rate in Jun-2009 of approximately 7.5% p/a over the medium term.

Sir Stelios has now stated the carrier has one month to place its expansion plans on hold, with the Board of Directors scheduled to discuss expansion plans at an "away day" in Jun-2010.

Analysts at Deutsche Bank stated there is a "considerable downside risk" in the short term due to the resignation, adding the discord between Sir Stelios and the carrier's Board of Directors is unsettling. However, Royal Bank of Scotland (RBS) analyst, Andrew Lobbenberg, stated he still sees "significant growth opportunities" for the LCC, despite the resignation. The company rates the LCCs stock at 'Hold'.

Analysts maintain 'Buy' recommendation on Thomas Cook Group

Thomas Cook Group (-3.2%) also fell despite analysts at Panmure Gordon maintaining their 'Buy' recommendation for the company's shares. However, the analysts reduced their earnings per share estimate for the group, citing higher assumed interest charges, after Thomas Cook's successful refinancing.

Elsewhere, Aegean Airlines (+1.7%) shares rose for the day, with Aeroflot (+0.5%) and airberlin (+0.4%) also gaining marginally.

SAS (-6.2%) and Ryanair (-4.2%) fell significantly. SAS last week announced it raised EUR104.6 million through the issuance of senior unsecured bonds.

Europe Airline Daily covers fleets, routes, financials, traffic, bilateral agreements, alliances, financing, ownership, along with analysis of all significant developments. Other stories featured in today's issue:

  • British Airways wins injunction against cabin crew strike;
  • KLM to launch Amsterdam-Kigali, Rwanda service;
  • Finnair moves to assigned seating for domestic flights;
  • Malév changes sales strategy in Germany;
  • UTair to launch Ufa-Khojend service on 30-May-2010.

Europe selected airlines daily share price movements (% change): 17-May-2010

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