The Risky Strategy of Vassilakis: Aegean’s Profit Decline The Bold but Risky Strategy of Vassilakis: Aegean’s Profit Decline and the Volotea Acquisition
Aegean's nine-month financial results for 2024 confirmed a worrisome trend that had begun to surface on the stock market, revealing a significant deterioration in the company's financials. The 3% drop in revenue and a 23% decline in post-tax profits compared to the same period last year underscore the financial pressure facing the company.
This downward trend is also reflected in Aegean’s stock, which has plummeted by 26.22% over the past six months, showing losses of 13.14% since the start of the year. These developments intensify investor pessimism, with the stock nearing its 52-week low.
Despite these challenges, Aegean made a bold yet potentially risky move by acquiring a 13% stake in Volotea, one of Europe’s top low-cost carriers. This €100 million investment could be seen as Aegean’s attempt to strengthen its position in the European market and increase its international presence. However, given the current negative financial state, the investment appears risky, particularly considering the challenges the company is already facing.
Mr. Vassilakis, Aegean's chairman, continues to pursue investments despite the company’s financial difficulties, a strategy that could lead to further risks. Aegean is facing a decline in efficiency and a serious drop in key financial metrics. Especially concerning is the EBITDA, which dropped by 10%, indicating reduced operational profitability and raising doubts about the long-term viability of this strategy.
The decision to allocate such a large capital amount for an acquisition amid falling profits leaves room for questioning the appropriateness of this move in the current economic climate.
Looking ahead to the year’s end, prospects appear bleak, as the company’s financial trajectory suggests potentially greater losses. The negative growth rate in critical indicators suggests that challenges will persist, casting doubt on the profitability of the Volotea acquisition at this stage.
This acquisition could only be successful if Aegean manages to reverse its negative course and capitalize on its investment in Volotea, but current signs leave little room for optimism. The combination of financial challenges and high acquisition costs may confront Aegean's management with tough decisions.
Key financial results for Aegean for Q3 and the nine months of 2024:
Third Quarter 2024 compared to 2023:
Revenue: €630.8 million (down 3% from €653.6 million in 2023)
EBITDA: €182.3 million (down 20% from €227.9 million in 2023)
Earnings before interest and taxes: €136.1 million (down 27% from €186.2 million in 2023)
Earnings before taxes: €138.8 million (down 18% from €168.8 million in 2023)
Net profit after taxes: €108.3 million (down 19% from €133.6 million in 2023)
Nine Months 2024 compared to 2023:
Revenue: €1,379.9 million (up 4% from €1,331.7 million in 2023)
EBITDA: €329.9 million (down 10% from €367.4 million in 2023)
Earnings before interest and taxes: €199.5 million (down 21% from €253.7 million in 2023)
Earnings before taxes: €170.4 million (down 22% from €217.5 million in 2023)
Net profit after taxes: €132.0 million (down 23% from €170.7 million in 2023)
