Aerlingus

kippy

Well, I am surprised that there isnt a thread on this already.
Any comments on the potential of Aer Lingus?
I relaise there is a 10K minimum investment but I think that the initial share price, if it happens at the lower end, provides significiant value and room for growth, especially in the long term.
I think that as like the eircom shares, they will most likey increase in value over the first couple of months but perhaps fall back after. Then I believe they will level out and increase steadily.
I suppose the main issue with the shares over the longer term are that there are a lot of external influences affecting the share price-fuel prices,terrorism, increasing competition. However I still think they are worth the investment. Over the past few years they have become more of a ryanair model and with more a more passangers predicted for Dublin, as well as new terminal I feel they can increase their profits year on year.
Kippy

rondjon

I'm not sure I agree with you.

However, firstly, on a factual note, the prospectus for AL specifically states that they are not going to follow the Ryanair model.

With regards to growth, while I believe that the €2.10-€2.70 price level appears cheap in comparison to Ryanair for example, the Ryanair stock price has remained almost flat in the last 3+ years for example.

My holding of Ryanair has increase 10% in that period of time but all of that 10% has come in the last 2-3 weeks. Despite its growth in profits and passenger numbers, the share price has hardly moved.

And I'm not getting dividends as income in the meantime.

I don't see why AL would be any different. Static shareprice is most likely given all the other shareholder stakes (government and unions). And they've said they're not paying dividends either, so you don't have the benefit of income.

Compare this to British Airways which has increased 60% since the very day that Willie Walsh took charge.

PDelux

I guess it will do well in the first few months, like the Standard Life float which was discussed here recently. In the couple of months since it floated SL is up i guess around 15%. And now that it has joined the FTSE there should be more upside.

Sonderval

Most IPO's do well in the first few months, for a variety of reasons (honeymoon period, 60 day restriction of board share sales, etc). There is probably some easy money to be made within this window.

As for Airlines in general, their profitability is highly dependant upon external factors. Fuel alone frequently constitutes 25% or more of operating costs. And we all know where fuel costs are heading... (albeit not as of this writing - temporary downturn in price of crude )

Nuttzz

the deal was nearly sank because 14 workers in shannon voted against the business plan, i would be worried about a long term investment in a company that so dependent on whims like this tbh

BendiBus

kippy wrote:

Then I believe they will level out and increase steadily

Steady growth is not something associated with the aviation business. It's usually more of a rollercoaster ride.