AIR - Air NZ.

[OldGuy]

Ummm...how about general market sentiment as a key driver of the SP fall? Nearly all the stocks I follow got hammered this week, not just AIR. IMHO, this is likely to be a significant piece of the puzzle....

[forest]

Maybe the ones you follow old guy but, NZX fell less than 1% last week, AIR down 11% plus.

[OldGuy]

Yes, I realise it fell quite hard. My point was that a lot of others did, too, and for no apparent reason.

AIR's significantly harder fall is likely to reflect its (presumably) high beta, but I agree that there are also other factors at play here...

[Beagle]

Reading the posts here over the past week, it seems to be a series of people trying to catch a falling knife. Something that I learnt not to do after I started reading ST (but often struggle to do).

I finally decided to do a bit of analysis on the operating stats. I have been expecting that AIR might reach the top of its rise at some point so thought I should understand the data that AIR publishes every month.

I threw the operating stats for the past three years into a spreadsheet and tried to understand them. I hadn’t thought too much about the drop in short-haul yield from -0.2% to -1.2%... then I read that this is the change in financial YTD yield compared with the same period in the previous year. Not just monthly change in yield but financial YTD change. Hmmm. 9 months into the financial year, a small change in YTD yield could lead to a big change in monthly yield.

A little bit of analysis showed me that domestic yield for March was 7.6% lower than March 2015, Tasman yield was down 9.3% and long-haul down 0.3%. This is yield falling off a cliff.

Obviously there is a large potential for this to be inaccurate since I’m inferring a lot from very little information and I’m not even 100% sure what all the terms that AIR use actually mean. But this a significantly larger drop in yield than in the past 3 years.

This is a bit of a concern and could have something to do with the latest drop in SP. Airlines operate on pretty thin margins and a drop in yield of this size (if I'm correct) is potentially a big problem, even with the low oil price.

YTD yield is down 1.2% average in $N.Z.(their reporting currency) across the network on RPK's flown which have grown at their fastest rate in the airlines 76 year history.
Did people really expect that yield would be up when they've got something like an extra 15% YTD extra capacity to fill and at a time when jet fuel is the cheapest its been in many many years ?
Did people really expect if QAN got belted down a whole dollar AIR would escape any fallout ?
We all know Jetstar's regional expansion would have some effect on domestic yields...surely this is not rocket science and something that the market already understands !

I know some of us would like to forget the world cup cricket last year, (well certainly the final) but the fact remains that boosted last year's traffic at this time of year and yet load factors despite fast route expansion have held at record high level's...surely a encouraging factor ! I'd suggest the timing of Easter is irrelevant.

[winner69]

This from Stats NZ re CPI for March quarter


International and domestic air fares made downward contributions, down 12 percent and 4.8 percent, respectively. International air fares tend to be affected by seasonal trends, for example, peak seasons and holiday periods.

[Beagle]

This from Stats NZ re CPI for March quarter


International and domestic air fares made downward contributions, down 12 percent and 4.8 percent, respectively. International air fares tend to be affected by seasonal trends, for example, peak seasons and holiday periods.

AIR's route wide network yield only falling 1.2% YTD in the context of ultra low oil prices and other airline's fare decreases is a truly stellar result !!

[Raz]

Given the 15% extra capacity I think they are working wonders although yields will start to fall on the AUK-LAX route in particular at some point overall, Rodger not sure when you are going to LA/Vegas however as at now pricing matching in November picking up flights 1049$ return economy with AIR. (It was September last two weeks ago) Qantas is discounting all over and AIR does follow just more limited seats) If I was you and had the time pick up the Honolulu current deal return with AIR, wide dates available, stop over and then look at Air Alaska or similar first class to the US West Coast. If I recall you want to go to Honolulu as well...

[winner69]

C'mon mickey - you are capable of doing better than that.

As you say a lot of data missing but i think some of 'inferences' you have made aren't that robust - even though a few posters believe (or want to) you.

[Beagle]

Thanks Raz, might look into that.

[forest]

AIR's route wide network yield only falling 1.2% YTD in the context of ultra low oil prices and other airline's fare decreases is a truly stellar result !!

True down 1.2% is not alarming but what mikey was pointing out I think is that the previous month Feb 16 it was down 0.7%.
This extra 0.5% reduction, is calculated as a Yield to date of the financial year. To drop halve a % between 7th and the 8th month of the financial year seems material. It either means March 16 had a very low yield or March 15 very high or as I suspect a combination of those two.