Member Info for birddog816

Hi Gerry - I read up about Luton - Almost scandalous! I'm normally a glass half full type, but the reality is that there is a very small and restricted window for summer tourism that will be all but over in 6-7 weeks. Then a long tough winter ahead for the businesses that rely on tourism. With loan holiday periods ending and furlough being scrapped in 7 weeks I think there will be a lot of failures in the next 6 months unfortunately.

By the rationale of Supercharger, Southend Airport will burst into profit in the next few weeks. Despite the fact it has never made profit under ESKN / STOB. Interesting perspective! Other 3 big airports? Does that mean Southend is a big airport?
There is still a huge under capacity at LHR/LGW/LTN/STN and City. They are all further up the pecking order than Southend I'm afraid. The best that could be hoped for is 2019 numbers by 2025. Not sure ESKN have 4 months left in them, let alone 4 years.

TF - succinctly put. 2 short sentences perfectly sums up the situation here.

The talk of a recover in the airline industry is valid but also over hyped. Airlines and airports alike are in lots of trouble.
The 'recovery' at Southend is very small and as Gerry points out actually worsens the cash situation. They would be better closing the airport and moth balling it from a cash perspective. with or without covid, the business plan was flawed. Based on the hope that everywhere else gets full up and that these airports (STN,LTN,LGW even City) are not capable of dealing with growth - which of course they are. They got EasyJet, Ryan Air, Wizz etc...by being very cheap - nothing else. Anyone can sell a tenner for a fiver.

what's the story with Carlisle Airport then? - It's closed I thought.

Gerry is definitely the king of ESKN chat! Commentary over opinion. Pretty much every RNS and statement from ESKN has a million words - They are very skilled at camouflaging the reality with sugar coating. The actual reality of course lies in the published results and not so much the words that surround them. There is only one direction of travel for this stock. The only thing of value is Southend airport, and even that is hugely over valued. Carlyle essentially paid £100m for 30%. When the next inevitable requirement for cash comes I'm sure Carlyle will once again come to the rescue. The only difference will be that the next 30% they acquire will be at significantly less than £100m. Maybe half that. The security value lies in the prime location real estate. I'm afraid that the mismanagement of Southend Airport over the past decade and the amount of debt it has accrued probably spells the end of it ultimately. I truly hope I'm wrong but I can't imagine it will ever be able to trade out of the mess ESKN has put it in.

jarule - haha. I know that facts can be an inconvenient truth but also very useful when looking at investments.
Do you honestly believe that Southend airport is somehow going to outperform it's 2019 high of 2.1m passengers any year soon? - Stansted, Luton, Gatwick etc...are all crying out for business and are far better placed geographically and far more established. Compare this stock in the last 3 years to others in the sector.

EasyJet will 100% NOT be returning to Southend. The reason they left Southend had a lot more to do with the relationship between the 2 companies than the pandemic. They will continue to offer Ryan Air heavily discounted rates in order to get passenger numbers up and the illusion of doing well. The reality is in their previous results. In the past 5 years, Southend Airport has lost well over £50m even in the best years it's never made a profit. Why people think this is some sort of jewel in the crown is beyond me. As Gerry has said many times, Southend Airport will likely survive to fight another day...who's running it is the big question.

having read this again I would be surprised if Carlyle don't take up the 30% option fairly soon and then look to take further slices at reduced premiums as the saga continues. A bit of prime brown field real estate as the ultimate security.

I can't understand the logic that the SP rises after such awful financials....for the second year on the trot they have lost more than they turned over which is mad. For every £1 in, they've spent £2.50. Anyone remember the film Brewsters Millions!

Hi TF - interesting that you think the energy division potentially overvalued. I don't really know enough about it to comment, but I believe LSA is over valued - certainly as a going concern. Covid has accelerated the push for less flights and going back to more hub and spoke system for international travel. LSA has never made a profit under STOB / ESKN even in the good times. The business plan has always been predicated on the basis of everywhere else like Stansted, Luton etc...being full up. That is now completely flawed. I might survive as an airport, but they would need to drastically change the business plan and with that right off a load of debt as it will simply be unrecoverable. As per previous posts, It doesn't seem that this decision is in the gift of the ESKN BOD. Too many analogies to use, but if it were a dog, you'd be taking the poor thing to the vet.

Hi Gerry / TF - good analysis there.
With LSA essentially mortgaged there is a real risk that the mortgagee, in this case Carlyle, will look to recover their funds by way of sale in the event the business itself (LSA Co. Ltd) cannot maintain the debt obligations. I can see Carlyle taking more and more slices of the airport until it owns it outright. Then it will be either sell it as a going concern or to the circling vultures for development. There's a lot of real estate there, in a commuter sweet spot with a station straight to the City on it's doorstep. I guess the council have the last word though, but I'm sure the revenue a new development would bring in would certainly be attractive, especially post pandemic.

They keep borrowing money and selling off various assets, or parts of assets.
The reality is though that it is cash generation from operating profit that needs to happen. Since STOB / ESKN have owned Southend Airport it's always lost money - and quite a lot too.
This is only going one way now in my opinion. ESKN will be broken up, with the individual entities either being taken into private ownership or liquidated.
I truly hope that Southend Airport has a future. If ESKN laden it with too much debt so they can service debt from other divisions the only way out will be via property developers which would be a crying shame and wholly unnecessary.

https://www.prnewswire.co.uk/news-releases/esken-limited-esken-or-the-group-update-on-stobart-air-potential-strategic-partnership-for-lsa-and-funding-and-trading-update-822461429.html

Published in the Irish Independent 2nd June. Helps explain why financing a deal to buy it might be a challenge! Notwithstanding that it has lost the contract for it's only source of revenue.

"Dublin-based Stobart Air, which operates the Aer Lingus Regional service under contract, made a €36.8m loss last year, with continued losses in 2021 pushing its net liabilities to €68.5m at the end of last March, according to accounts just filed for its immediate holding company."

With all the excitement I forgot that there results were due! - So have they by the looks of it.

I'm no fan of of this BOD so maybe my synopsis is slanted, but it seems farcical the way this has been dealt with. Big announcements that they have managed to offload both the airline and Carlisle Airport, in a very convoluted arrangement, subject to this, that and the other. Then a delay due 'funding', then the Police get called in. Did they do any diligence at all before announcing this deal to the market? In the meantime, on the back of it, the share price rallied a bit as investors thought that this would only aid the business. For sure there is a heady mix of dishonesty and incompetence involved in this process. Now the Police are involved we should at least see where that dishonesty and incompetence lie.

It's all gone a bit quiet on here recently. All the noise about the sale of the airline and Carlisle Airport to Ettyl seems to have died down and any news regarding flights at Southend? From what I can gather there are a handful of flights by Ryan Air from June being mooted and nothing else. In the meantime Amazon have reduced their flights significantly. The airline sale is of course the key thing here.

Hi Gerry - calculations :
26 summer weeks - 5.25m passengers (based on 7m annually)
each flight = 150 passengers
therefore = 35,000 departures = 1,346 departures per week.
assuming 75% of flights will be Th-Su, that's 252 departures per day.
As thames corrected me, 06:30 - 23:00 = 16.5 hours available per day.
Therefore, 15.25 departures an hour, or....a departure every 3.9 mins.
Planes also have to land, so that is take off or landing every 1.96 minutes. Lets call it every 2 minutes.

This without the Amazon cargo flights, any executive jets (don't forget they spent millions developing that facility recently and any other traffic that might come in.

Thames must know something we don't?

Thanks Thames - so what your saying is that you lose 30 minutes in the morning but gain 30 mins in the night. So exactly the same time frame then? To achieve 7m passengers, 5m or so would be in the summer months given the demographics of the passengers. The mathematical facts remain. It would mean a departure every 3 to 4 minutes on the peak days (Th-Su)based on around 140 passengers per flight. These planes need to land before they take off again, so it doubles the movements to a movement of every 1.5 to 2 mins. All this with Boeings and airbuses. There is no way Southend can handle that amount of air traffic on a daily basis. It's not big enough. That's before one considers how all that passenger traffic would filter through the only trunk road into Southend that already gets congested even considering that some will arrive on the train. It took over 10 years for them to achieve 2m passengers, so where (and how) a further 5m will come from, even without the covid situation is highly questionable. Warwick Brady seems to have seen the reality now. He bought into the dream which is fair enough, but why would he leave for Swiss Port if Southend looked as good as all the publicised forecasts suggest. He was set to make a fortune if it did.

Hi Gerry - Even if the market was there for Southend for say 7m passengers, Southend airport simply doesn't have a suitable infrastructure to support that. At just 7m passengers (They've been talking 12m) it would mean an aircraft movement every 2 minutes from 6am to 23 at night. Thats not including any other flights like cargo or business jets. It's pie in the sky for so many reasons. The airport itself would not be able to deal with that, the road infrastructure certainly won't and the market is not there and won't be for a very long time. No airline sale yet. This will provide a lot of opportunities for a bit of upside from the swings, but as a longer term proposal it really has no feasible future. The BOD are like a heavy weight boxer who thinks he's got one last prize fight left in him. I don't like STOB / ESKN, the way they go about their business or their dishonesty. I listened to all the BS a few years back and backed them. Then you realise that the it was wholly unachievable. Hence the utter mess they are in now.