AEGEAN AIRLINES | Sky still blue
In our new detailed note on Aegean, we look in detail at the capacity vs. demand backdrop for 2018 focusing on the key Athens hub. Although capacity growth looks set to accelerate somewhat relative to 2017, we argue that this is not to the extent of causing yield dislocation. We also take comfort by Q1’18 data points, which showcase a continuing trend of demand outstripping supply. Overall, we believe risk to our estimates lies on the upside as we have conservatively assumed yields contract c2% in 2018e following c1% increase in 2017.Our report also seeks to open the debate for IFRS 16, presenting an initial assessment of the potential impact that the implementation of this new accounting standard may have on Aegean’s key metrics.
We reiterate our Buy rating on Aegean, arguing that it is likely to retain its high dividend-paying policy – despite the upcoming fleet renewal – given the >€70m of operating cash flow per annum.
Aegean Airlines is an airline carrier based in Greece. Co. is engaged in aviation transportation, providing services that concern the transportation of passengers and commodities in the sector of public aviation transportation inside and outside Greece, conducting scheduled and unscheduled flights. Co. provides full service, premium quality short and medium haul services. Co. maintains a network of 145 destinations, 111 international in 45 countries and 34 domestic destinations. Co. is a member of global airline network, the Star Alliance network.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
Eurobank Equities S.A. offers a comprehensive suite of investment products—including equities, derivatives, bonds, and mutual funds—serving over 15,000 private, corporate, and institutional clients in Greece and internationally.
The firm maintains a dominant position in the Greek capital markets, consistently ranking among the top brokers in terms of market share and is repeatedly recognised in major institutional investor surveys as one of the leading brokers and top Equity Research Providers for Greece.
Its multi-awarded Research Division delivers timely insights and fundamental coverage on almost 40 listed companies—representing over 90% of the ATHEX’s market capitalisation and traded value.
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