Low cost airline easyJet, which operates more than 40 routes from Liverpool, sees shares rise on takeover speculation with analysts saying its weak post-COVID recovery compared to rivals leaves it vulnerable. Tony McDonough reports
Low cost airline easyJet was the subject of significant takeover speculation on Monday sending its share price up by as much as 10% in morning trading.
By mid-afternoon easyJet’s market cap had risen to £3.25bn. This might be seen as an attractive price for a carrier that analysts say has underperformed since its recovery from the COVID pandemic compared to rivals such as Ryanair.
In recent years easyJet has continued to expand at Liverpool John Lennon Airport (LJLA) and has recently added a ninth aircraft to its local fleet and taken the number of routes past 40.
And while the airline continues to be a popular choice among travellers in Liverpool city region and the surrounding areas the general consensus is that the company is not doing as well as it should.
Its current market cap is significantly lower than its near £8bn value just over a decade ago. This is why its current value makes it an attractive option. Its fleet of aircraft is also worth around £5bn.
Takeover speculation centres around US private equity firm Castlelake although there has been no formal approach according to easyJet. Under City rules Castlelake has until June 26 to make a formal bid.
In a statement easyJet said: “The board of easyJet notes the announcement made by Castlelake on Friday, May 29, that it is in the early stages of considering a possible offer for easyJet. The board has not had any discussions with, nor received any approach or proposal from Castlelake.
“The board is clear in its duty of aiming to maximise shareholder value and will consider any proposal, should one be made. In any assessment, the board will be especially mindful of its valuation and deliverability.”
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Susannah Streeter, chief investment strategist at Wealth Club, told Sky News: “Its valuation had dropped to a level not seen for more than three years, leaving the company looking vulnerable despite its strong liquidity position.
“Castlelake clearly believes the market may be underestimating easyJet’s longer-term earnings potential and the resilience of its network. easyJet appears open to discussions but does not seem in the mood to accept a bargain-basement offer, calling the bid ‘highly opportunistic’.”
In the last few weeks easyJet has reported pre-tax losses for the six months to March 31 to be between £552m.