AIR - Air NZ.

[Animeart]

Hope the new guy doesn't get the CEO job. OneUp could very well be a preview of his style/approach to make money. It's badly executed and the new GGM seems indifferent to customer/staff feedbacks.
I heard that business was so bad in March hence the decision to finally introduce fuel surcharge. The Chairman must be mad to be paying dividents when the company could be in the red comes the next announcement. Probably only doing it to please his master, the finance minister...LOL. Hope he goes together with Rob Fyfe end of the year.

[Jaa]

Hope the new guy doesn't get the CEO job. OneUp could very well be a preview of his style/approach to make money. It's badly executed and the new GGM seems indifferent to customer/staff feedbacks.
I heard that business was so bad in March hence the decision to finally introduce fuel surcharge. The Chairman must be mad to be paying dividents when the company could be in the red comes the next announcement. Probably only doing it to please his master, the finance minister...LOL. Hope he goes together with Rob Fyfe end of the year.

This was the first dividend in the last few years where Air NZ ran a DRP so they didn't lose all the cash. But I agree it is not a good sign. Notably the government didn't subscribe to the DRP, which is one way to dilute it's overhang!

[Jaa]

In other news, Aerolíneas Argentinas is not offering flights for sale on it's website to Auckland past 30 June 2012. Can anyone confirm that they have pulled the plug?

[iceman]

In other news, Aerolíneas Argentinas is not offering flights for sale on it's website to Auckland past 30 June 2012. Can anyone confirm that they have pulled the plug?

Jaa I just asked my travel agent in Argentina about this. He was not aware of it but on checking, found that AA has no flights available after 30 June through his booking system over here in Argie. So they must be pulling out. He also said that with Qantas having already pulled out, it would leave only LAN via Santiago as a realistic option to fly between NZ and Argentina and he fears LAN flights may become full and hard to book with increased pricing !

[bung5]

Yeah aerolineas cut their 2 worst performing routes. I thought that Cathay pacific have a flight there now or is it a code share?

[Jaa]

I re-checked and the booking system says Aerolineas are flying direct to Sydney after June this year. Guess they are trying to pick up the old Qantas traffic. So much for Auckland being a hub to South America!

From Air NZ's perspective it removes their cheapest competitor on the Auckland > Sydney route. Also surely offers them the best chance they have ever had to start a profitable route to South America.

Edit: Here's a link: http://www.travelweekly.com.au/trave...-sydney-direct

I would argue they struggled to operate in both NZ & Aus because their planes never left on time, a 2 hour delay was normal, their product and service were crap and their fares non-nonsensical but what would I know.

[modandm]

fyi - according to airliners.net they are still routing EZE-AKL-SYD, however the SYD-EZE leg will now be direct. (This is due to winds assisting on the SYD-EZE leg)

Interestingly some on ANet are promoting NZ take up AKL-LIM to connect with AV/TACA's Lima hub. It is about 10% further than SCL and 300miles further than EZE. It is also operable with EDTO 240m whereas EZE requires EDTO 330m. It is definately in range of the 777-200er.

I see this as potentially a better option than EZE since most travellers want to see Machu Pichu and also it avoids the uncertainty in Argentina. Realistically I dont see NZ operating direct to Brazil even with the 787s - unless fuel prices recede and the 787-9 exceeds current projections.

[Animeart]

I reckon Rio is not far off the radar for Air NZ, as the airline seems to be chasing the Olympic hosting cities. SYD-BEJ-LON-RIO-TYO

[Jaa]

fyi - according to airliners.net they are still routing EZE-AKL-SYD, however the SYD-EZE leg will now be direct. (This is due to winds assisting on the SYD-EZE leg)

That may be so but you can not buy a ticket through their website, Buenos Aires > Auckland past 30th June. Guess the PAX will be staying on the plane while it refuels.

I see this as potentially a better option than EZE since most travellers want to see Machu Pichu and also it avoids the uncertainty in Argentina. Realistically I dont see NZ operating direct to Brazil even with the 787s - unless fuel prices recede and the 787-9 exceeds current projections.

With respect to my many Peruvian friends, there is probably more demand from Uruguay than Peru. Animeart is right the demand is in Brasil then Argentina. I doubt there would be many non-pacific routes Air NZ could make work with only NZ and Australian demand. As a rough example, NZ gives out the following working holiday places to South Americans each year:

Peru: 100
Uruguay: 200
Chile: 1,000
Argentina: 1,000
Brasil: 300

These generally fill up within a couple of days every year. I am sure Air NZ could get Brasil's quota increased if it starts flying to the continent, fill up a few more planes lol There is also significant latent NZ based English language course demand in Brasil.

[modandm]

Just a quick update on all things AIR - pre April stats.

The shareprice is moving up - good news - a steady move from lows of around 85c to around 94c today. Why? A few ideas below aswell as commentary on the March stats.

NEWS
- Shanghai daily - pulling out of beijing - good call coming out of the longhaul review. Shanghai is easily more popular and having a single mainland base is more cost effective. Also the flight is 10% shorter. Apparently there were solid numbers of people flying to Beijing and then backtracking to Shanghai which is crazy. Daily is always good and extracts most value from fixed costs - ie airport fees etc.

- Perth and HNL increases - further evidence of NZ taking an active stance in alocating capacity to meet demand and by using seats to suit targeting NZ leisure travellers. In combination with Bali, Fiji, Tahiti, and Raro AIR has a comprehensive medium haul leisure network now on the S2S model. To be adding flights and capacity indicates profitable growth on these routes which is great to see.

- Queenstown is getting an increase in capacity from both Auckland, Wellington and Australian destinations. I see this as a long overdue response to JQ success in ZQN. ZQN really is an world class destination and NZ needs to capture more of the low end market for the destination. Fares have traditionally been overpriced and with S2S and grab-a-seat I see NZ again increasing profits through demand stimulation. As we have seen on the TT market yields have not sufferred as much as expected and total profits are significantly higher using the model.

- Little other news on the longhaul front. Expected cuts haven't materialised as yet however speculation is that flights to the UK will be reduced post summer and the olympics. I could see the HKG-LHR route cut completely and would view this as a good move. NZ should still be able to maintain daily 777 to HKG.

OP Stats:
Now a full year from EQ so some funny data on the longhaul yoy numbers which must be noted.

My take and points of interest:
- Feb and March both saw slight declines in Domestic RSK -2.4 and -0.6. This needs to be watched in upcoming months as any loss of share/demand on the highly profitable domestic network is of concern to me. Load factors remain excellent at 84%

Tasman Pacific continues to flatten out, 4.2% RSK growth yoy vs -0.5% in feb more reflecting the weak result in March 11 vs Feb and April 11. Overall I interpret as stagnant but profitable, looking to see growth in June-July as recently announced changes to Perth and HNL come into effect. Also the July intro of Sunshine Coast (only 2x weekly though). Should see growth pickup to 5% on the back of these changes. 82.5% LF is solid if lower than average of 83.8% over last 12 months.

UK/NA - continued decline -5.4% RSK with LF at 84.8% on reduced capacity. Here we see why NZ is trying to growth the pacific rim routes - growth on Longhaul has been in decline for 12 months. Note that Qantas is off the AKL-LAX route sometime this month (May) which is a major boost for NZ so we should see some RSK growth return to this market, NZ is also increasing capacity to North America and with the recent improvement in the US economy signs may be looking up for these markets.

Asia/UK - +11.4% reflects weak March 2011 (-15%). Still shows market is now circa 95% of what it was pre earthquake which is good news. Traffic no longer being reported as split Japan which is a shame as gave more insight. Still Japan market weak as evidenced by lack of capacity - still significantly down. NRT for instance is just 4x777 vs 747s or daily 777s pre EQ. KIX is just a 1x767 per week. Very very weak market still. NZ was quite successful with charters over summer to japan and I would like to see a consolidation of NRT and cut KIX (same as done in China) - use ANA partner to service other parts of Japan. Then continue to use Charter flights to service KIX and other Japanese destiantions as demand dictates.
HKG continues to outperform. And HKG-LHR no doubt continues to struggle and be a loss maker.

Yield trends remain consistent at +4 longhaul and +2 shorthaul. Sadly Jetfuel continues to rise at greater than 4% per year although crack spread has narrowed.

SUMMARY:
- Some positive news on pacific capacity increases indicate NZ is profitable on these routes and looking to grow medium haul markets with S2S model.
- Positive factors including solid demand for Shanghai and move towards daily + Qantas off AKL-LAX and improving US economy bode well for an improvement in Longhaul performance in the 1st half of FY13. Expect an improvement in 2H FY12 vs 1H results, although 747 retirement x2 costs will be worn as well as redundancy costs. Overall Fy12 has been a bad year for AIR, however there does seem to be an improvement in outlook for FY13.