Retail investors fail to get aboard as easyJet shares climb 10% on debut

Retail investors missed out on an instant profit yesterday as shares in easyJet climbed 10 per cent in first day dealings, valuing the cut-price airline at £856m.

Retail investors missed out on an instant profit yesterday as shares in easyJet climbed 10 per cent in first day dealings, valuing the cut-price airline at £856m.

The shares were priced at 310p and immediately rose by 34p as investors scrambled to pick up stock after the public offer was 10-times subscribed. The shares later eased back slightly to close at 342p.

An easyJet spokesman defended the decision not to open the offer to small shareholders, saying it would have been "physically incapable" of meeting demand. "In the scheme of things a 10 per cent premium does not put anyone in windfall-profits land.... Small investors would have been hugely scaled back and left with relatively meaningless stakes."

The sale of 63 million shares, or 25 per cent, of easyJet will raise £195m to help fund an ambitious fleet expansion programme. It is buying 32 new Boeing 737s and plans to introduce one new route a year while increasing frequencies significantly on existing services.

The flotation co-incided with the closure of easyJet's main hub, Luton airport, for part of the day because of fog. EasyJet is in dispute with the airport over a planned 400 per cent increase in landing charges and admitted in its prospectus yesterday that the two sides remained "a long way apart in their negotiations".

Stelios Haji-Ioannou, the founder and chairman, together with his brother and sister, will retain a 63 per cent stake in the airline, worth £540m at last night. Ray Webster, the chief executive has options showing a profit of £7m. Directors are prevented from selling shares for one year.