Easyjet has suffered its worst week in 2021, a 13.65% drop in price and a disastrous Friday close at 0.680p, down 3.87% on the day. On Thursday, the airline had rejected a takeover bid by Wizz Air, declaring it “low premium and highly conditional all‐share transaction which, in the board’s view, fundamentally undervalued the company”. Had the takeover been completed, Wizz Air would have acquired 100% of Easyjet’s shares and created a direct subsidiary airline, in the aim of competing with Ryanair. The British low-cost carrier will now begin to sell some of its new shares to various investors, in the hope of raising £1.2 billion ($1.6 billion), which it hopes will compensate for its recent losses. Its capital stands at £2.0 billion.
Wizz Air has begun to have a wider outlook this year, adding to general confidence in Eastern European airlines and destinations, due to those countries’ more relaxed restrictions. Its Abu Dhabi subsidiary, which mainly flies to destinations in ex-Yugoslavia and the former Soviet Union has begun operations without any problems, and it is looking to expand its Northern European network (especially to Germany, Sweden and Norway) from Serbia and Bosnia. Airports in Yugoslavia are seeing record passenger numbers and interest from numerous Western and Northern European airlines, such as Latvian flag carrier airBaltic. Ryanair is expanding its base in Zagreb by 8 destinations, which are not concentrated in a singular part of Europe. Pristina Airport saw a 27% growth in passengers for August 2021 compared to August 2019 and Croatia Airlines is in talks with the Slovenian and Macedonian tourism boards for an eventual interconnecting flight plan between the three countries. However, it is well known for ex-Yugoslavian airlines to call off plans for new hubs, as Air Montenegro has just done with Frankfurt. But Wizz Air’s decision too, gendered a 3.91% share price decrease for the airline on Friday, showing that even expanding airlines have bad days. As a matter of fact, Wizz’s performance in the market hasn’t been to promising recently, 4.59% down on the week and -8.04% on the month.
There is a lot of worry that the airline industry is never going to recover again, an idea that may not be so far-fetched. What’s worse is that these airlines (Wizz and Easyjet) are not closing on the up, but on the down: people are desperate to get rid of their airline shares. Although daily charts are seldom looked at by traders, we think it should be noted that on Friday, the worst performance of both airline happened during the final half hour of trading. On the more positive side, Wizz is reaching at the general recovery line of 4’721, so a small buyback is possible. As for Easyjet, the only hope is that the very low down trend (which touches 23rd of March, 19th of July and 10th of September), hits some form of resistance. Sadly, that possible line, at 0.722p, has already been passed, so the stock should be heading towards the 0.530s, where it last took off from in November 2020. 12th of September 2021.
Aeronews24 