AIR - Air NZ.

[Beagle]

Roger I think you are correct re to be analyst estimates. By giving monthly updates re operating stats I think we are watching a slow motion train smash as we will continue to see load factors fall across the most profitable routes. This isnt to say air nz are to start losing money anytime soon but the landscape is changing and more completion is seeing air nz dropping their pants to fill seats On the long haul routes. How much they can make back on the domestic routes once all the travelers is in nz is the million $ question. Still think holding out for a windfall special divi in these changing times Is a big call. Going forward with reduced profitability what is the long term sustainable divi level for air is the question ?

Early days on the new trend towards lower load factors and lower yields and I think describing it as a slow motion train wreck is excessively pessimistic but its well worth noting that AIR's management themselves acknowledged the operating environment has now normalised, (as opposed to tailwinds through more modest competition). They wouldn't / couldn't estimate the extra competition effect going forward at the investor day briefing but I do think the last two month's operating stat's show analyst estimates made at that time may be a little optimistic. I remain of the view that we're looking at $500m - $600m before tax for FY17, (which is well below average analyst estimate) but there's LOTS of water to flow under the bridge between now and June 30 2017. I think an annual dividend rate of circa 20 cps fully imputed are sustainable going forward across the cycle, but again time will tell.

[Snow Leopard]

Not sure about profit basis but domestic makes up about a third of passenger numbers....

Pity about that, profit being the important set of numbers

Best Wishes
Paper Tiger

[freddagg]

Wow ... 54 % into just one (at least medium risk) stock? Some might call that brave, others might use less PC words. Are you sure that you want to take this risk? I guess even if we assume that AIR is not a cyclical stock on the downwards path ... S**t happens in any industry, but particularly in industries who tend to fly people (or ship goods) around the world.

Just imagine it would have been AIR instead of Malaysian Airlines loosing a handful (or just one) plane. How would you than feel about your investment? Sure - some airlines are better than others, but there is no absolute security.

Personally - my limit is 10% in any stock ... and yes, sometimes I allow this number to grow slightly in an uptrend. However - never choose to put more than half of my eggs into the same basket ... Kids - don't try that at home!

Of course 54% of his portfolio could still be a small percentage of his wealth.

[workingdad]

Pity about that, profit being the important set of numbers

Best Wishes
Paper Tiger

Indeed but trying to estimate the impact of competition on the bottom line is a best guess scenario that no one can answer with any degree of certainty. Looking at passenger numbers and on the routes in particular facing competition can at least give some indication on that impact. To what degree do AIR release commercially sensitive calculations on specific route margins.....

A post after the June stats were released honed in on the only load factor in the 70s range that when taking into account the route grouping being the smallest number of passengers flown and statements of how this impacts overall profits to such degrees when in reality a large portion of AIRs business is not really being affected quite so much as supported by the overall stats.

Time will tell PT and I don't think I am looking through rose tinted glasses nor am I looking at worst case.

[Marilyn Munroe]

Etihad has coughed up the Dirhams to paticipate in Virgin's(Under Arm Bowlers Division) capital raising.

http://www.theaustralian.com.au/busi...64a3676f24975a

Y'all know my plan for Etihad to buy Cullen Airlines from John Key. Seems Etihad is still interested in Austalasia, so my hopes remain.

Rumor has it that Virgin(Under Arm Bowlers Division) wants to swap in its Tiger brand metal on short haul international. I wonder if that includes across the ditch? Crouching Tiger Airlines and Cullen Airlines can compete on how many bodies they can compress onto an aircraft in thrombosis class.

Boop boop de do
Marilyn

[Snow Leopard]

Indeed but trying to estimate the impact of competition on the bottom line is a best guess scenario that no one can answer with any degree of certainty. Looking at passenger numbers and on the routes in particular facing competition can at least give some indication on that impact. To what degree do AIR release commercially sensitive calculations on specific route margins.....

A post after the June stats were released honed in on the only load factor in the 70s range that when taking into account the route grouping being the smallest number of passengers flown and statements of how this impacts overall profits to such degrees when in reality a large portion of AIRs business is not really being affected quite so much as supported by the overall stats.

Time will tell PT and I don't think I am looking through rose tinted glasses nor am I looking at worst case.

Stats - read the title of my last post.

But RPK and ASK for Domestic is the smallest (at 15%) bit of AIR operations.

Asia is next at 21%, then TasPac at 29% and USA/UK at 35%.

But of course it is not that simple. In fact it is very complicated.

BTW Do you want to buy some A380's, PM if you are interested.

Best Wishes
Paper Tiger

[h2so4]

Of course 54% of his portfolio could still be a small percentage of his wealth.

Yes I presume it's only his share portfolio and if there is a Mrs Couta then it's only 27%.
So that's Ok in my books.

[RTFQ]

[QUOTE=workingdad;629844]Not sure about profit basis but domestic makes up about a third of passenger numbers.

Domestic is where most of the profit is made. Still got a monopoly there. With fuel heading south towards $35/brl again, with a little uncertainty towards the end of year, AIR will continue to make good profits. The fuel issue will mean conservative forecasts.

[Nasi Goreng]

I think 54% is a bit crazy but probably no more crazy than a property investor buying an investment property as their only investment and borrowing $500k to do it.

You won't get rich quick with an ETF or 20 stock portfolio but over time, you should. There is a chance Air goes to $3 in the next 6 months and if it does and he hangs on for the ride, he's cashing in big chips.

If the tide goes out, he's going to be caught swimming naked... I'm sure he knows this.

[workingdad]

Stats - read the title of my last post.

But RPK and ASK for Domestic is the smallest (at 15%) bit of AIR operations.

Asia is next at 21%, then TasPac at 29% and USA/UK at 35%.

But of course it is not that simple. In fact it is very complicated.

BTW Do you want to buy some A380's, PM if you are interested.

Best Wishes
Paper Tiger

I have a lot of respect for you PT and your wit.

At the end of the day different terms but still similar..... load factors are RPK divided by ASK and yield well that is as you say very complicated. My point is still the same, this competition everyone keeps referring to as if the end of AIRs profitability is not across the board on all groupings and there are tailwinds to offset it.


[QUOTE=RTFQ;629903]

Not sure about profit basis but domestic makes up about a third of passenger numbers.

Domestic is where most of the profit is made. Still got a monopoly there. With fuel heading south towards $35/brl again, with a little uncertainty towards the end of year, AIR will continue to make good profits. The fuel issue will mean conservative forecasts.

They also stand to do better with rather good US dollar hedging in place as well.