Member Info for badjob

We have seen analysts suggest that the aircraft by themselves are worth £5bn and the new airbus orders will be at massively discounted prices which a new buyer could never achieve. I suspect Castlelake will be looking to satisfy themselves as to that value which is commercially sensitive and perhaps this limited look at the books will reveal that to them. I would imagine that if those values stack up and the rest of the business is effectively almost for free, they may be in a position to make a material increase in their offer to above £7. The flipside is that they walk away and say having looked at the books they can't justify a higher price which could knock the share price quite badly. All in all an interesting few days a head that could move the price very sharply either way. I'm holding on as I think the odds of a good outcome are now slightly better than evens. Castlelake are clearly pretty determined and have deep pockets if they think there is value there to be unlocked. There are still questions over whether their structure will be sufficient for EU rules on control and you could probably find lawyers who would argue the opposite position very convincingly. Buying a company for £5bn plus and accepting only 49% control in reality as opposed to legal form is unusual to say the least.

I would find Jarvis and the board's rejection of the offer rather more compelling if Jarvis was loading up with shares himself but his own purchases are derisory. Actions speak louder than words. If the bid fails, I would like to see him buying massively to support his claims of undervalue.

If no further putative bids come in, I expect Castlelake will walk away as the board are not co-operating with the suggested level of £6.25 for a bid and there would be no vote. It is unlikely Castlelake would launch a hostile bid. They will want to get board support and the chance to do a bit of due diligence. They would be hoping that shareholders would be pressuring the board to co-operate but I haven't seen any evidence of that happening. If they went hostile, shareholders would get a vote.

Interesting comment on Jarvis. His total interest in EZJ shares is around 600k mostly through options etc awarded to him rather than acquired shares which are a pitiful level. From his own perspective it is therefore much better to turn down the bid and carry on trousering salary and bonuses which, regardless of performance, will probably only go in one direction.

Webba, I think significantly enhanced dividends or buy-backs are very unlikely because the strategy involves heavy investment in new more efficient planes to bring down operating costs and so it could be a while before the benefits are visible. Assuming no bid materialises, the board will be under immense pressure to improve returns and will at the very least have to better articulate their strategy in a way that resonates better with investors. Reducing costs and that huge winter loss profile is essential if this is to meaningfully rerate. I've quite a big holding here - certainly by my standards anyway - and have no plans to sell at the moment as I am reasonably optimistic that even if the bid fails, the underlying value here will be difficult for the market to continue discounting over the medium to long term. Would be good to get an idea what Stelios thinks as he is probably key to this.

This is a business with some tremendous assets which is not making the most of them. Question for me is whether the current board are actually capable of turning it into the profit making machine it could be with a much reduced winter loss profile which is really damaging. The markets seem to take a very short term view and give little credence to the board's turnaround plan.I think with the right management and messaging, this is a business that is worth comfortably more than the current offer but that's not to say I wouldn't take it given the chance .

I think castlelake have gone public with the £6.25 early this week not because it is their best offer but because they want to flush out what it might take. The signals seem to suggest £7 which may be too much for them but I'm sure they would have envisaged a bit more than the £6.25.

I find Stelios's silence interesting because he is not normally quiet in expressing his views through the media. That could perhaps be an indication that he is interested and certainly not trying to discourage Castlelake. If they could get him onside, it would give them some real momentum but I suppose the question is what price that might take.

CEO holding may be small but if there is one good thing about this, it is that in rejecting the proposed offer so strongly, the pressure will ramp up on him to perform and justify his rejection of the offer assuming a higher bid does not come in.

If they walk I think it will pull back sharply at first but then start to recover relatively quickly because I think the speculation has at least given focus to the value of the underlying assets here.

If a bid does emerge, which is looking less and less likely, I don't see it as a precursor to Easyjet being broken up but it could well see a change in the way it operates with attempts to monetise its aircraft and aircraft orders. The holiday business depends on a strong Easyjet airline and so it would be pretty difficult to see that being defenestrated with the sale of key slots all over Europe. Castlelake may see an opportunity to make a quickish profit by financial engineering with the aircraft and bringing in a partner to take over the running of the airline and holiday business. Bid would need to reach at least £6.75 and have strong backing from Stelios. A low ball offer without his support has no chance and they won't waste their time.

I think it's fairly stable because the bid talk has triggered a bit of a rerating as analysts have put a value on the assets. I don't think the market expects this deal to happen or the price would be a lot higher - that is not to say that it won't but I think it less likely than more likely. I think a take out price would have to be at least £6.75 to have any chance. I would have thought that Castlelake would have engaged more with the board at this stage if the bid had real momentum behind it. Whatever happens, hopefully the days of this sinking well below £5 are over.

I think it would be a mistake to sell out at this price. I plan to ignore the noise and let this play out. Saba will keep a close eye on the board and will drive them to maximise returns. The fact they are there and think they can make profit here and have frankly engineered this position is enough for me to sit tight. I think cancelling dividends was a must to avoid pressure becoming intolerable which would make it even harder to achieve decent value for the assets.

Impossible to crystal ball gaze about demand reduction but the momentum for airport expansion suggests that air travel is seen as a growth business by most. My preference for Easyjet is more about its relative underperformance compared to other airlines which i don't think is justified.

Prospero - surely you would expect most benefits to go to state pensions. People over 65 make up about 20% of the population. It becomes a serious structural problem when large amounts are being paid out to people of working age and is not sustainable over the long term. Over the phone benefits decisions are not acceptable. Those in need should get proper support but it does need to be policed effectively. With pensions they have been cutting back by extending the retirement age but I'm not aware of anything equivalent for working age benefits. Everyone knows the triple lock will have to go but that's a big vote loser so it will hang on until government's hand is forced. Most of us know people who abuse the benefits system just as most of us know people who desperately need and deserve help.

Taking into account borrowings and share price, very roughly Wizz aggregates at £7.34bn and EZJ around £5.75bn. I think the market currently values the low cost carriers higher than Easyjet which sits a bit in the middle with more expensive airport slots etc. Easyjet's ownership of most its aircraft is a huge structural advantage over Wizz. Add in the holidays business and it is certainly a bit head scratching. I think Easyjet is still priced for very underwhelming performance so I'm not sure the price will collapse that much if and when Castlelake walk away as the current price suggests the market is not really expecting a firm bid to materialise. I think taking a 12 month view we will see a materially higher share price unless management completely mess up their communications.

Thumper, will certainly interesting to see how Italy pans out. The potential bid does at least seem to have brought some focus onto the net asset value here and the quality of some of the slots owned. Add the holiday business into that mix and I am struggling to understand why the share price is languishing as much as it has been which is why I think there must be a serious lack of belief in the management team and doubt about their ability to get the best out of the assets. Hopefully summer figures will start to shift the dial assuming the bid doesn't materialise which is probably still the most likely outcome.

True and even with the bid rumour the share price is massively underperforming on virtually any timeframe when measured against other airlines. I think the share price reflects the fact that the management team are failing to communicate very effectively about how they will deliver value. For example the expansion in Italy should be a real winner in the medium term and hopefully through the summer but the presentation of this is so poor that the market just sees the upfront losses. No wonder bidders are looking it over.

Have had similar thoughts re WIzz because of their previous interest. I think a massive sale and leaseback strategy would be difficult because it puts the airline in a much weaker position structurally and that is a problem for WIzz. Wizz has a lot of debt and loading a combined business with a lot of extra lease liabilities would be a challenge. However, there might be scope for a more hybrid approach, particularly with more fuel efficient jets coming down the line and Castle could probably make very good use of Easyjet's older planes when the new ones are acquired. Whatever happens, it will be an interesting couple of weeks.

Although well up, the share price still suggests a lot of scepticism over whether an actual bid will emerge. Although there is a lot of value there, for example in the planes, if a bidder aggressively stripped them out or had some kind of sale and leaseback, it might raise a lot of cash but would leave EZJ as a very weak airline with huge debt like Wizz. Will be interesting to see how Castlelake handle this if they do bid. There's clearly a lot of value here but realising it in a way that can make a bid work will be challenging to say the least. Holidays is valuable but needs a strong airline behind it.