Easyjet sets flotation price

Easyjet receives most of its bookings through its website

UK-based budget airline Easyjet has set a price of 310 pence a share for its flotation on the London Stock Exchange, giving it a valuation of about £777m ($1.12bn).

Private investors, however, are losing out on this investment opportunity. The airline, run and owned by 33-year-old Stelios Haji-Ioannou, plans to offer 25% of its capital only to large institutional investors such as banks and investment funds.

Stelios Haji-Ioannou has turned Easyjet into Europe's second-largest budget airline

During the first few minutes of trading, Easyjet's share price shot up 21p, to 331p.

Easyjet was set up five years ago, and has grown rapidly ever since. With 1,400 employees and 19 planes, the company flies 28 short haul routes in Europe to 18 destinations.

The firm recently bought 32 new Boeing 737-700 aircraft, the last to be delivered by May 2004.

Its main UK base is Luton, an airport to the north of London.

No lastminute.com

Easyjet has tried to put a positive spin on the exclusion of private investors. The company says the "number of shares available would be unlikely to meet the requests of all potential investors".

"Rather than disappoint or frustrate hundreds or thousands of people by only allowing them to purchase very small shareholdings - or nothing at all - we have decided not to offer the shares publicly. We cannot afford to repeat the reported lastminute.com experience."

Lastminute.com gained notoriety not only for being very popular with investors, but for flopping on the stock market as well.

Easyjet hopes that institutional investors will buy the shares not to make quick speculative gains, but as a long-term investment.

The flotation price is in line with expectations. The company had predicted it would sell the 63 million new ordinary shares at a price between 250p and 350p.

Easyjet is Europe's second-largest discount carrier, behind only Ryanair, and Mr Haji-Ioannou will hope that his company can emulate the stock market success of his rival.

Ryanair's share market value currently stands at 41 times its annual earnings - an outstanding performance for an "old economy" company.

The Greek millionaire - one of Europe's richest men - has expanded the "easy" brand into other areas, now offering car rental services and internet cafes as well.

The shares on offer, though, are only for Easyjet itself.