At 425p, easyJet (LSE:EZJ) shares are almost back where they were in April 2020. But the company is in a much better position than it was during the pandemic… isn’t it?

A stronger balance sheet and better cash generation mean the situation today is nothing like it was. But I’m looking for opportunities elsewhere in the FTSE 100 right now.

Underperformance

easyJet’s recent underperformance is eye-catching for two reasons. One is that the stock’s back where it was during the pandemic, despite the travel situation being nowhere near as dire. 

The ongoing conflict in the Middle East has sent oil prices up sharply. And while that means the firm’s costs are likely to increase, it’s not comparable to the Covid-19-induced travel restrictions.

Another issue is that other airline stocks have performed pretty well. The other FTSE 100 airline – International Consolidated Airlines Group (IAG) – is up 186% since April 2020.

All of this makes easyJet’s current share price look cheap. But is there a structural problem investors need to be aware of, or is the stock due a big recovery from today’s prices?

Balance sheet

easyJet’s share price is back where it was in April 2020, but that doesn’t mean the stock is just as cheap. One reason for this is the company’s share count is around 63% higher than it was. That means each share represents a much smaller stake in the overall business than it did at the start of the pandemic. So investors pay the same price but get a lot less. 

Another issue is debt. easyJet’s balance sheet looks strong with a net cash position, but this is partly the result of receiving cash up front for flights.  In other words, it has the cash right now, but it’s going to have to use that to operate flights in the future.

Leaving this aside, the firm’s debt is much higher than it was during the pandemic.

Competition

One reason easyJet shares have fared worse than other airlines is competition. As a no-frills carrier, it has fierce competition on pricing from the likes of Ryanair. 

The situation is slightly different for long-haul operators like IAG. Specifically, the economics of these kinds of flights can be very different, which is why the company has fared better. 

For one thing, there’s almost no interest in business class flights for a 90-minute journey. But there is on a nine-hour flight and that can create opportunities for higher margins. 

Cost-saving measures also don’t work on longer flights. Faster turnarounds make it possible to fly across the Channel one more time in a day, but that doesn’t work with the Atlantic.

Easy money?

In a number of ways, easyJet is in a much stronger position than it was in 2020. The firm’s debt is coming down and its holidays division has been growing at a terrific rate in recent years.

I think there’s also a genuine chance the firm might be taken over in an acquisition by another operator. But that isn’t enough to make me see easyJet easy money, even at 425p.

The good news for investors though, is that the FTSE 100 has a lot of companies in much stronger positions. And that’s where I’m looking for my own portfolio