Aer Lingus share price hits a new low

Shares in Aer Lingus closed Monday at a new low of €0.84, a figure which values the airline at less than 60% of it's net cash pile of €767m. The airline now has a market valuation of €450m which is substantially lower than the value of the recently spurned Ryanair offer of €748m.

One of the possible reasons for the recent drop is that the market has priced in substantial losses over the next 18 to 24 months, in anticipation of the year end accounts providing for the cost of the recently agreed restructuring plan. Another possible reason is the departure of speculative shareholders who had been hanging in for the past two to three years in anticipation of a Ryanair takeover of Aer Lingus. Ryanair's statement that a third attempt at takeover is not likely may well have forced the speculators to depart the scene. Monday's share price has seen 60% wiped off the IPO share value from 2006.