Aegean | Stay on board
In our new note we argue that Aegean’s near-term outlook looks far less uncertain than that of other airlines facing capacity headwinds and Brexit risk, thereby placing Aegean in a sweet spot in the European aviation industry. With the capacity backdrop looking much more benign this year, we expect accelerated revenue growth (+7%) and similar operating profit growth (c7%) on flattish ex-fuel unit costs.On the dividend front, we reiterate our view that the high dividend-paying policy will continue given the solid cash flow generation (c€90m of annual operating cash flow in the last 5 years on average) and Aegean’s flexibility in financing its re-fleeting plan, noting that the recent bond issue will enable it to largely finance aircraft pre-delivery payments through to 2021e. On that basis, we anticipate DPS to remain in the €0.5-0.6 range in 2019-2020e, translating to a compelling c6-7% yield.
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.
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