AIR - Air NZ.

[Robomo]

For anyone interested in Jet Fuel price this chart from the US Energy Information Administration is worth following. Current price about the same as 2006.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EER_EPJK_PF4_RGC_DPG&f=D

[KiwiGekko]

Cheers Robomo - interesting, thanks for that.

Not sure if anyone else cares about this stuff, but as I am looking at it I will post it up here.

The latest EIA weekly report is in and its a biggy, with crude inventories jumping 2% in the US. Even with those rigs shutting down the volume is trucking along. According to Bloomberg crude inventory is now at an 80 year high.

Here's a nice graph showing how things are looking: http://www.bloomberg.com/news/articles/2015-02-25/u-s-oil-inventories-surge-for-seventh-week

Also, who would be an Oil trader? After this report the price has actually gone up 3% today! Oh well I am confident it will sort itself out eventually as this Oil has to go somewhere however I must say the Oil Futures market beggars belief most of the time!

There may be a couple of reasons though... There is talk of an emergency Opec meeting: http://money.cnn.com/2015/02/24/investing/opec-emergency-meeting-oil-saudi/ however Saudi's aren't panicking, so likelihood of this happening who knows but a good sign for everyone is that demand from China is increasing: http://www.business-standard.com/article/markets/oil-rises-to-59-as-saudis-say-demand-growing-115022501450_1.html

It really is anyone's guess where it goes from here, but this oil does need to go somewhere.

Back to work for me, hopefully we see a strong AIR opening this morning.

[Beagle]

Craigs just lifted their target price to $3.15 (from $2.68), reiterate BUY recommendation. They see underlying earnings before tax and VAH of $499m for 2015. Net earnings after tax of just over 32 cps this year.

[Marilyn Munroe]

The big cheese at Cullen Airlines has a grump about the profitability of Virgin(Under arm bowlers division).

http://www.smh.com.au/business/aviation/time-for-virgin-australia-to-turn-a-profit-air-new-zealand-20150225-13ngvz.html

Boop boop de do
Marilyn

[h2so4]

Morningstars auto valuation $2.80 HOLD

[KiwiGekko]

Decent turn around for Qantas reported today: http://www.smh.com.au/business/aviation/qantas-back-in-the-black-with-367m-profit-20150226-13oo45.html

Roger, I think you might be waiting a little longer before AIR SP is back on top of QAN, mate. ;)

[Beagle]

Decent turn around for Qantas reported today: http://www.smh.com.au/business/aviation/qantas-back-in-the-black-with-367m-profit-20150226-13oo45.html

Roger, I think you might be waiting a little longer before AIR SP is back on top of QAN, mate. ;)

Mate its a hard one to figure out. First let's look at their relative track record in recent years. No comparison really, QAN made a loss of $2.8 billion last year and this half it only made a tiny profit of just over $50m, (its first since the GFC) on its international operations. The vast majority of the profit came for domestic op's.
OTOH we have AIR's superb track record of growth in the last 2-3 years.

Next let's look at underlying earnings per share before tax for the half year
Qantas $367m / 2196m shares = 16.71 cps
AIR N.Z. $230m (excl VAH loss) / 1121m shares = 20.52 cps

Next let's look at statutory net profit after tax for the half year
Qantas $206m / 2196m shares = 9.4 cps
AIr N.Z. $133m / 1121m shares = 11.86 cps

Finally let's look at the outlook, dividends and growth
Qantas expects capacity to increase 1.5 - 2.0% this year but no dividend as they are rebuilding their balance sheet which one presumes implies its a bit stretched and no profit outlook which implies less confidence
AIR expects significant capacity growth, has increased the dividend by 44% and stated in the conference call that's because that's where they see growth in profitability for the year and obviously they seem very confident about their prospects for the foreseeable future.

Yet despite the above Mr market says Qantas SP deserves to trade at a premium to AIR's SP...go figure ??? A brave man would short QAN and double down on AIR :D

[mikeybycrikey]

Mate its a hard one to figure out. First let's look at their relative track record in recent years. No comparison really, QAN made a loss of $2.8 billion last year and this half it only made a tiny profit of just over $50m, (its first since the GFC) on its international operations. The vast majority of the profit came for domestic op's.
OTOH we have AIR's superb track record of growth in the last 2-3 years.

Next let's look at underlying earnings per share before tax for the half year
Qantas $367m / 2196m shares = 16.71 cps
AIR N.Z. $230m (excl VAH loss) / 1121m shares = 20.52 cps

Next let's look at statutory net profit after tax for the half year
Qantas $206m / 2196m shares = 9.4 cps
AIr N.Z. $133m / 1121m shares = 11.86 cps

Finally let's look at the outlook, dividends and growth
Qantas expects capacity to increase 1.5 - 2.0% this year but no dividend as they are rebuilding their balance sheet which one presumes implies its a bit stretched and no profit outlook which implies less confidence
AIR expects significant capacity growth, has increased the dividend by 44% and stated in the conference call that's because that's where they see growth in profitability for the year and obviously they seem very confident about their prospects for the foreseeable future.

Yet despite the above Mr market says Qantas SP deserves to trade at a premium to AIR's SP...go figure ??? A brave man would short QAN and double down on AIR :D

The other side of that is that Qantas made their recent underlying profit ($367m) on revenue of $8.1 billion. Air NZ got their profit of $230 on revenue of $2.4 billion. So net profit margin (or whatever you might call it) is 4.5% for Qantas and 9.6% for Air NZ.

Air NZ has better management which deserve those figures but there is only so high that the margin can be pushed.

Also, for sake of argument, assume that fuel cost drops by a third for H1 16 (which is really just assuming that it doesn't going back up again since H1 15 doesn't include much benefit from the current reduction in fuel price), profit for Qantas would be $721m higher and profit for Air NZ would $190m higher.

Based on the number of shares shown above, that would give:
Qantas $367m+$721m / 2196m shares = 49.5 cps
Air NZ $230m + 190m / 1121m shares = 37.4 cps

Obviously these are very rough figures and assume no other effects on profit between now and next year but they are just illustrating the point. The biggest opportunity for profit growth right now for both airlines is the falling oil price. And Qantas will benefit more from that than Air NZ.

I don't think it's unreasonable that Qantas should be priced as it is right now, although I won't be putting any money into them.

[Beagle]

Good point. No question Qantas is a very highly leveraged company so there's more leverage to the upside if their recovery plan goes well.
Qantas Equity from their latest accounts is $2.73 billion. Net assets are $17.7 billion so equity ratio is only 15.4% :eek2:
Looks like all those years where they staunchly defended their market share at all costs have taken a toll. Only just had their credit rating outlook improved from negative to stable this month.
Plenty of possibility for things to go wrong with leverage like that as we saw last year with their loss of $2.8 billion. I'm not surprised you won't be putting any money into them, I wouldn't either with extreme leverage like that.
AIR by comparison look pretty conservative for an aviation business with approx. 50 - 50 debt / equity funding their assets.

[mikeybycrikey]

Roger, interesting point about the equity ratio. That looks pretty bad for the red kangaroo. Certainly makes it a more risky bet.

Another one in the minus column for Qantas: it seems that the union thinks the airline is running as a charity. Now that there is a profit, the madness of job cuts must end! says the Transport Workers Union. Good luck with that.

http://www.theguardian.com/business/2015/feb/26/qantas-called-on-to-halt-job-cuts-following-return-to-net-profit

[Beagle]

Thanks for the link mate, good bit of dry humour for the day. The militancy of Australian unions is legendary to say the least. What a bloody gall they have. The company posted a $2.8 billion dollar loss last year for goodness sake. One year's more loss like that and it would wipe out the entire equity of the company !!!! As soon as there's a modest profit they put their hand out. What part of being reasonable don't they understand ? It would appear they've learned nothing from their colleagues in way the AMWU have bankrupted Ford and Holden into imminently shutting down.

Interestingly as an aside I crunched the numbers a while back and found the average worker at AIR N.Z. makes $104,000...not too shabby is it !!...any wonder they're an employer of first choice for so many people :) Classic case of all stakeholders benefiting from this IMHO. Now all we have to fix is those 17.8 inch width seats on the new Dreamliners and all will be well in the AIR world...or is this a cunning plan to encourage larger people to lose weight thereby doing their best for people's wellbeing... it seems to be working for me lol

[IAK]

Good article from Brian Gaynor on Air NZ and the SOE gentailers. "Stellar outcome for Government-controlled firms a notable exception"

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11409400

[Beagle]

Market seems content to price AIR on the basis that the oil price tailwind will persist for current year and maybe some of next year and who knows for the 2017, 2018 and 2019 years ? Market seems to think you can't put a value on those potential oil price tailwinds for future years but what if oil prices around $70 are the new normal ?
Current futures price for oil Dec 2018 at $68, (mid point of AIR's 2019 financial year) are pricing in big tailwinds for the foreseeable future !!
Implications for the potential for SP upside appear to be very good but to be honest its anyone's guess how sticky these lower oil prices will be.
http://www2.barchart.com/charts/futures/CLZ18

[brend]

Market seems content to price AIR on the basis that the oil price tailwind will persist for current year and maybe some of next year and who knows for the 2017, 2018 and 2019 years ? Market seems to think you can't put a value on those potential oil price tailwinds for future years but what if oil prices around $70 are the new normal ?
Current futures price for oil Dec 2018 at $68, (mid point of AIR's 2019 financial year) are pricing in big tailwinds for the foreseeable future !!
Implications for the potential for SP upside appear to be very good but to be honest its anyone's guess how sticky these lower oil prices will be.
http://www2.barchart.com/charts/futures/CLZ18

in otherwords still alot of potential for + in the SP

[Zaphod]

There are some interesting comments in the article below about UA looking at establishing an SFO-AKL sector and AA looking at the LAX-AKL sector (as unlikely as either might be), along with some other interesting tidbits.

http://www.stuff.co.nz/business/industries/66820757/air-new-zealand-faces-transpacific-competition

[Beagle]

Yep sure is mate but no matter, (within reason) where oil goes Air are well positioned with a very young and fuel efficient fleet.
They are very pleased with all the operational aspects of the new generation Dreamliners and they're getting fantastic customer feedback on them so accordingly I'd expect they'll exercise all their remaining options in due course leading to a fleet of 18 of these fancy new aircraft !!
We're "very well positioned"...do I need to pay Percy a royalty for using that expression :D

[brend]

Yep sure is mate but no matter, (within reason) :D

would you continue to accumulate today?

[Beagle]

Mate I'm maxed out at my self imposed 20% portfolio allocation limit so won't be buying more but I am very happy to hold at full allocation level.
Shares are ex the 6.5 cent fully imputed divvy Wednesday next week and its paid shortly thereafter, (IIRC on the 20th March).
People are really paying $2.825 ex divvy buying today at $2.89.

I see fair / good value based on all known information at this time, (inclusive of VAH's prospects improving as evidenced by their SP appreciation to circa 50 cents) at $3.40 - $3.50.
Considerable upside exists from this value if oil settles somewhere around $70 on a protracted basis and VAH really gets cranking along....but can't put a value on those aspects at this stage.

P.S. Consensus EPS for 2016 now up to 40 cps, not sure if all brokers have upgraded yet, will check back next week.
http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/revisions/

[nzspeak]

I haven't been in this forum long enough to see a lot of the highly recommended stocks turn to custard (I’m assuming on probabilities this has happens half the time (perhaps not in this bull market however) But the two biggest stocks I’ve seen championed over the last year (as far as I’ve noticed) have been Air New Zealand and Heartland and they’ve both been gold. I’ve never invested in Heartland because I’m worried about a NZ banking collapse (Ireland etc small chance I know) but I’ve invested significantly in Air New Zealand. In spite of Roger’s rando Ebola rant, I would just like to thank him for making a lot of us here a lot of money by championing those two stocks. I think the stock picking competition shows a lot of his influence.

[Beagle]

You're most welcome mate. HNZ and AIR, my two biggest positions, still solid value at current prices (notwithstanding recent strong SP performance).

[Biscuit]

Not taking anything from Roger's contributions that are always insightful and well worth reading, but many of us who have made money out of AIR over the years owe a thanks to modandm for pointing out the underlying value years ago and for sharing his analysis with us.

[Beagle]

Not taking anything from Roger's contributions that are always insightful and well worth reading, but many of us who have made money out of AIR over the years owe a thanks to modandm for pointing out the underlying value years ago and for sharing his analysis with us.

Thanks mate. 100% agree. Thanks Mod. I think I might have to get some special drinks into the fridge for when the SP hits $3.00 :)

[samdaman]

I gotta say that roger and mod have made it very easy to make unbias decisions on air.nz. Just gotta say thanks again for all the input

[IAK]

I gotta say that roger and mod have made it very easy to make unbias decisions on air.nz. Just gotta say thanks again for all the input

Agree, thanks again.

[Beagle]

Divvy ex date Wednesday 11 March, payment date Friday 20 March. Nice and quick with no mucking about that's what I like. You'd be forgiven for thinking the company has heaps of cash or the Govt like their money quickly, or both :)

[KiwiGekko]

I gotta say that roger and mod have made it very easy to make unbias decisions on air.nz. Just gotta say thanks again for all the input

Completely agree, thanks for your input guys! :-)

Strong day today, hope you've got your fridge stocked up Roger. :D

[Marilyn Munroe]

Is this the end of the golden weather for Cullen Airlines?

Is the cloud of dust on the horizon and the sound of bugles the US Cavalry riding to rescue travelers who have circled the wagons against Cullen Airlines monopoly pricing on North American routes?

http://www.stuff.co.nz/business/industries/66820757/air-new-zealand-faces-transpacific-competition

Boop boop de do
Marilyn

[Beagle]

Already posted earlier, nothing new here. But no inclusion in your post that the airline should be sold to a competitor this time ?...I suppose you can't make your agenda blindingly obvious... Why am I not surprised that you seem to delight at every possible opportunity to post something that might be negative ?

[RTM]

Already posted earlier, nothing new here. But no inclusion in your post that the airline should be sold to a competitor this time ?...I suppose you can't make your agenda blindingly obvious... Why am I not surprised that you seem to delight at every possible opportunity to post something that might be negative ?

Must be a delicate balance for AIR to price their fares high enough to be extremely profitable....but low enough to make it unattractive to competitors. Is that even possible ? Maybe yes if the extremely is removed. My budget conscious son recently returned to NZ for a wedding and extended his travel time significantly by going through Brisbane. So maybe the fares are a bit high ? I feel myself a bit conflicted as a traveller and a shareholder !
Competition is probably a good thing for everyone I suspect.

[Arbroath]

I recently flew to London on Etihad for $2850 at quite late notice leaving a week after I booked. Air NZ was $3800 for similar times. Both very good airlines so a no brainer as 200 airpoints dollars does not make up for an extra $950 on the fare.

Air definitely pushing it but it but they will be very profitable the next 2 years. Still holding for $3.30-3.50

[slimwin]

And if anybody wants to challenge a route, 1.3 Bil cash and lowish gearing allows for quite a dogfight...

[Beagle]

I recently flew to London on Etihad for $2850 at quite late notice leaving a week after I booked. Air NZ was $3800 for similar times. Both very good airlines so a no brainer as 200 airpoints dollars does not make up for an extra $950 on the fare.

Air definitely pushing it but it but they will be very profitable the next 2 years. Still holding for $3.30-3.50

Just out of curiosity has anyone ever tried ringing them and asking them to match another full service carrier in similar circumstances ?

[iceman]

Yes I did last year flying back from London. They didn't budge and I flew Qantas for about $700 cheaper for a one way fare at very short notice at the time !


Just out of curiosity has anyone ever tried ringing them and asking them to match another full service carrier in similar circumstances ?

[Beagle]

Oh well never mind...a little birdie tells me AIR had a HUGE February and bookings for March / April are REALLY STRONG. :t_up::t_up:

[Zaphod]

I recently flew to London on Etihad for $2850 at quite late notice leaving a week after I booked. Air NZ was $3800 for similar times. Both very good airlines so a no brainer as 200 airpoints dollars does not make up for an extra $950 on the fare.

Air definitely pushing it but it but they will be very profitable the next 2 years. Still holding for $3.30-3.50

Other Airlines do offer cheaper deals but there's also an inevitable trade-off. From memory, it's three stops with Etihad from AKL through to LHR. You'd be able to confirm that.

[Arbroath]

Other Airlines do offer cheaper deals but there's also an inevitable trade-off. From memory, it's three stops with Etihad from AKL through to LHR. You'd be able to confirm that.

Correct - but the total trip duration was only about 3 hrs longer and they are both quality airlines so no big deal. After I booked I realized I could have gone Cathay (one stop in HK) for under $3000 also.

Don't get me wrong I'm a happy AIR holder from the mid-$1's and think they have done a great job - probably the best run airline in the world and with a unique domestic monopoly franchise that has been challenged and defended successfully several times over the past 20yrs. But I do think on some routes profiteering will hurt their brand. It s a little like Cadbury making small changes that over time are defendable but erode your brand strength. For an airline pricing seen as "fair" is a key aspect of brand whether you are a low-cost carrier, national icon, or full service premium brand.

[iceman]

Agree with all of that Arbroath. Air NZ is a great airline and my preferred choice to travel with. But too often in the last 2-3 years do I find their long haul fares unjustifiably high against comparable full service competitors.
The NBR today suggesting AIR monopoly on direct routes between NZ-US may well come under pressure soon from AA.


Correct - but the total trip duration was only about 3 hrs longer and they are both quality airlines so no big deal. After I booked I realized I could have gone Cathay (one stop in HK) for under $3000 also.

Don't get me wrong I'm a happy AIR holder from the mid-$1's and think they have done a great job - probably the best run airline in the world and with a unique domestic monopoly franchise that has been challenged and defended successfully several times over the past 20yrs. But I do think on some routes profiteering will hurt their brand. It s a little like Cadbury making small changes that over time are defendable but erode your brand strength. For an airline pricing seen as "fair" is a key aspect of brand whether you are a low-cost carrier, national icon, or full service premium brand.

[Beagle]

I did a random search the other day on webjet and was quite surprised that AIR actually came up as one of the cheaper airlines to fly to London in May. (Was thinking about flying to London to organise a cheap supercharged F Type Jaguar but that's another story). Fares circa $2k return were on offer.

Anyway on another subject I had a quick look through the half year's financial report which arrived today and who knew under general disclosures 2(d) the company has renewed its on market buyback authority for a programme for up to 3% of the company's stock, up to 33m shares or $66m whichever is the lower in the year to 29 Sep 2015, (none done in the half year period and none to date otherwise it would have been announced to the market). When I get more time I'll have a thorough read and see what other little golden nuggets of information are contained therein.

[Joshuatree]

That reminds me ; i remember fares to London in 1983 being re $23-$2400!! 32 years later its cheaper.:ohmy:

[Marilyn Munroe]

But no inclusion in your post that the airline should be sold to a competitor this time?

My leaving-out of the usual appeal for John Key to sell AirNZ to Etihad was an oversight on my part. Though you regard it as an irritating troll it is my genuine conviction.

As an investment savvy person you will be aware of the Greenspan Put. A belief the US Central Bank will not allow the "to big to fail" banks to go under. If they come under pressure the Central Bank will flood the market with liquidity allowing the tbtf banks to escape their folly.

The New Zealand taxpayer is in the gun under a similar arrangement, the Cullen Put. Tax payer’s money will be used to keep AirNZ’s head above water if it gets into serious trouble. This has happened before which is why I call it the Cullen Put.

Airlines are a tough game with frequent financial reverses. Aviation history is littered with the corpses of failed airlines. Anyone remember ANSETT? What if Virgin in the recent capacity war and cash burn had faced an opponent led by someone that actually knew what they are doing?

Taxpayers should not have the risk of paying large amounts of cash unexpectedly. What say we could off load-this burden to someone else. Who is already a partner with AirNZ in Virgin? Who is buying up airlines all over the place, even plunking down cash for that old has-been Alitalia?. Who is headquarted is a sand state with petro-dollars to throw around in uncertain ventures?

Memo to John Key: Sell AirNZ to Etihad.

Boop boop de do
Marilyn

[Beagle]

Okay I'll take the bait and debate the political and national interest aspects of this.

1. I haven't got the time to review the 2001 recapitalisation in great detail but from a brief look there was a $885m package involved of which $300m was preference shares, since repaid. With the benifet of hindsight after repayment of preference shares their net investment was $585m.

2. For most of the last 14 years healthy level's of dividends have been paid to the government, e.g. last years final dividend, (just one of manyover the years, including the special translated into a $92m payment to the Govt) as well as the company paying full taxation to the N.Z. government every year.

3. The company presently employs approx. 10,500 Kiwi's and I worked out the average salary is $104,000, that's nearly $1.1 billion dollars in wages and the vast majority of those employees are N.Z. residents and liable for N.Z. taxation at an average rate of somewhere around 30 cents on the dollar that's $330m in PAYE remitted to the N.Z. Govt each and every year !!

4. Lets have a look at how the airline has performed over the years. According to Craigs the average return inclusive of dividends for the last 10 years has been 12% per annum compounding. Very, very few other stocks have double digit average 10 year returns. There's a little gold nugget of information I'll bet very few people realised, especially you. Despite being a cyclical industry and the last 10 year period encompassing arguably one of the most difficult periods in the companies 75 year history, (the global financial crisis), long term holders have enjoyed compound returns of 12% per annum !!

5. Notwithstanding the Government selling some of its stake down in November 2013 and getting most of its original investment back ($365m), the present value of the Govt's remaining 53% stake is a whopping $1.75 billion dollars !!!!!

6. Kiwi's enjoying domestic airfares that are ostensibly unchanged from what they were a decade ago i.e. in real inflation adjusted terms they're actually about 30% cheaper. God knows what domestic airfares would be if Etihad or some other foreign carrier dominated the market but you can bet you last dollar they wouldn't be as reasonable as they are now.

7. There's also the national interest to think about. Why would you put some other foreign governments national interests ahead of our own by selling to some other foreign owned airline who would run the airline purely in their own national interests ? Governments owning some / all of their national airline is not a new concept by any means and many governments understand the importance of protecting their own national interest...why is this concept so difficult for you to understand ?

Even leaving aside the national interest debate I believe I've shown most emphatically that the N.Z. Govt has done exceptionally well out of its investment in AIR as have other shareholders and employees who are generally very well paid. I'd call that a win all round for all Kiwi's.

[brend]

add in the fact AIR promotes New Zealand as destination that helps fuel tourism, hospitality etc.

A foreign airline wouldn't do the same level of promotion AIR does.

I see AIR as a worldwide ambassador for NZ.inc in some ways. The journey starts and finishes with them for most tourists.

[Beagle]

Well said mate.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11412780 Fair enough in my opinion. The vast majority of customers opted out anyway. Rumour has it there aren't that many lawyers who didn't realise you needed to opt out :) (Recall that the complainant was a lawyer who made multiple bookings and incurred costs without realising he needed to opt out...this from a professional who's in the business of dotting I's and crossing T's...go figure? )

[Beagle]

http://www.airnewzealand.co.nz/press-release-2015-air-new-zealand-to-launch-apple-watch-app

[Baa_Baa]

Almost sold AIR today, it's had a great run, needed the cash. Sold WYN and TME instead, but even at these lofty levels I think AIR has upside potential for FA reasons, but the pace of gains will slow down before the cycle reverses. If it was just TA, then it would be gone .. declining volume on a rising sp is a great signal for consolidation (exit) and at least a retest of 2.68 in due course.

jmho, BAA

[nzspeak]

Almost sold AIR today, it's had a great run, needed the cash. Sold WYN and TME instead.

jmho, BAA

I sold WYN shares to buy AIR NZ shares just before Christmas. And slightly off topic...most of my finance reading recently has been about defensive stocks- I piled into defensive stocks in the middle of last year (I know AIR isn't one of them) before I actually researched the evidence of 'defensive stocks'. It seems at the height of bull runs (perhaps like we are now?) skeptical investors pile into defensive, dividend paying stocks artificially inflating there prices, so when the crash happens they get hammered worse than growth stocks in many cases (like so called consumer staples companies like Johnson and Johnston). Anyway, I sold WYN because I was worried that out of all NZX shares they would get hit the hardest- I still think this is the case but be wary of selling them for 'defensive stocks' (I'm basing this on the S&P financial crises research I've read). Anyway, I think selling WYN instead of AIR is a fantastic move, I hope it works out for you like it did for me. I've done too many trades to exit my defensive stocks this financial year- I hope I don't get burned for it.

[Beagle]

Almost sold AIR today, it's had a great run, needed the cash. Sold WYN and TME instead, but even at these lofty levels I think AIR has upside potential for FA reasons, but the pace of gains will slow down before the cycle reverses. If it was just TA, then it would be gone .. declining volume on a rising sp is a great signal for consolidation (exit) and at least a retest of 2.68 in due course.

jmho, BAA

On the contrary from what I've observed with the recent strong run volumes have been very good on average. I'm no TA expert but one or two day of volume slightly below the average wouldn't be enough for me to call it as declining volume. Buying late in the afternoon has consistently been strong lately which could indicate solid overseas interest coming out of Asia. I think you sold the right shares :)

[Baa_Baa]

On the contrary from what I've observed with the recent strong run volumes have been very good on average. I'm no TA expert but one or two day of volume slightly below the average wouldn't be enough for me to call it as declining volume. Buying late in the afternoon has consistently been strong lately which could indicate solid overseas interest coming out of Asia. I think you sold the right shares :)

Point taken, the volume is above its MA. I was referring to the rising share price divergence against the reducing daily volume.
7192
Not a big deal in itself, though most TA indicators are also stretched or overbought. Still own AIR though, prerogative to ignore my own analysis LOL.

BAA

[samdaman]

Im personally ok if the price goes down a bit. It ran up pretty quick after the announcement so I'd expect some selling off before another run. Possibly a bounce of a 50 EMA?

[Beagle]

I'm a very happy holder. I've been reflecting on the fact that AIR has generated long term compound returns of 12% per annum for the last decade, (Source Craigs) notwithstanding the really traumatic years of the GFC. Makes a bit of a mockery of the old adage of not becoming attached to an airline stock doesn't it !!! I'm ready to marry AIR :D
AIR trades on only a fraction over 7 times consensus 2016 earnings of 40 cps.
Notwithstanding Qantas' very highly leveraged balance sheet, (read extra risk), it also trades on just over 7 times consensus 2016 earnings which by coincidence are also 40 cps and the consensus analyst price target is $3.61 and that's with almost no capacity growth !! http://www.4-traders.com/QANTAS-AIRWAYS-LIMITED-6491449/consensus/
AIR is growing capacity at 5% per annum for the next half decade...maybe we need some of those Aussie analysts to value AIR....$4.00 anyone ?

[KiwiGekko]

For reasons I would rather not share with the entire Internet I have sold my shares down today at close for $2.865. Taking into account the $0.065 divvy which is on its way I sold for a modest 19% bump since I purchased in December. Honestly I wanted to hold them longer and think the outlook is bright for AIR but I have sold and I wish I didn't have to. That however is another story.

I would like to personally thank modandm and Roger for your research, advice and banter - I owe you both quite a few beers. Thanks also to everyone else on this forum, it really is an asset to investors and I certainly appreciate the time people put into providing advice to complete strangers. I will obviously still participate here and I will be back (hopefully this year, depending on my piggy bank) - but for now, I will have a nice cold beer and relax. :)

[Beagle]

You're welcome Kiwigekko.

Looks like the U.S. is well and truly running out of oil storage capacity...which plays very nicely into my key investment theme for AIR, Oil lower for longer.
http://www.pantagraph.com/business/oil-overflow-u-s-running-out-of-crude-storage/article_a04b8376-3a92-5ff5-b4aa-8c8589e3bf0c.html

[KiwiGekko]

Looks like the U.S. is well and truly running out of oil storage capacity...which plays very nicely into my key investment theme for AIR, Oil lower for longer.
http://www.pantagraph.com/business/oil-overflow-u-s-running-out-of-crude-storage/article_a04b8376-3a92-5ff5-b4aa-8c8589e3bf0c.html

Yep, I saw this a few days ago and agree it is looking pretty dire for Oil at present. My concern is what domino effects this may have down the line but unless supply reduces I think this is a long term positive for large Oil consumers.

[KiwiGekko]

Spotted this interesting tweet in my canvassing of the internet this afternoon: https://twitter.com/philiplyth/status/576219941961011200 - this could potentially be interpreted as a vote of confidence from the Government that they don't expect AIR to be the cheapest carrier? :)

Also wasn't mentioned here so thought I should this was an interesting article today: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11416360

Of course because I sold the SP has gone up, YVMW have a great weekend everyone. :p

[Beagle]

I can't see too many punters lining up for Air AsiaX especially after their very recent crash and them trying before and failing. People can already get very cheap airfares across the Tasman if you don't mind flying with next to no service in old aircraft with extremely cramped 29 inch pitch seats with your knees in constant pain jammed against the seat in front, (AKA cramming people in like sardines in a can & Jetstar).

Cheapest is usually the worst...often by a very long way.

[Snow Leopard]

I can't see too many punters lining up for Air AsiaX especially after their very recent crash and them trying before and failing. People can already get very cheap airfares across the Tasman if you don't mind flying with next to no service in old aircraft with extremely cramped 29 inch pitch seats with your knees in constant pain jammed against the seat in front, (AKA cramming people in like sardines in a can & Jetstar).

Cheapest is usually the worst...often by a very long way.

AirAsia/AirAsiaX is good value and dynamic - never write them off.

Best Wishes
Paper Tiger

[Beagle]

I love the smell of av gas...ssshhhh, keep it quiet :D

[Beagle]

So folks.... what are we planning to do with our AIR divvy cheque due on 20 March ?
Here's a good idea and of course if you go you're compelled to fly AIR N.Z. to get there :)
http://www.tepapa.govt.nz/WhatsOn/exhibitions/Pages/AirNewZealand75Years.aspx
Looks like a very comprehensive exhibition to me and well worth a journey back in time.
Another relevant idea, there's also a good book out at Whitcoulls commemorating the 75th anniversary of our national airline $39.95.

[Carpenterjoe]

So folks.... what are we planning to do with our AIR divvy cheque due on 20 March ?
Here's a good idea and of course if you go you're compelled to fly AIR N.Z. to get there :)
http://www.tepapa.govt.nz/WhatsOn/exhibitions/Pages/AirNewZealand75Years.aspx
Looks like a very comprehensive exhibition to me and well worth a journey back in time.
Another relevant idea, there's also a good book out at Whitcoulls commemorating the 75th anniversary of our national airline $39.95.


Just dont fly Air New Zealand, Dunedin to Sydney.

They hit me over $700 dollars for a one way flight
2 hour delay, it took over nine hours of travel.
Couldn't serve food and drinks as my credit card was not working (or their machine)
They wouldnt accept cash

Last month my bag was lost for three days, couldn't get hold of anyone at lost baggage in chch,
had to use their Facebook page to get a response.

Tried to discuss the pricing issue, they gave me a crap response. So I booked my next flight Sydney to Santiago with Qantas.
Now I'll try my best to fly anyone but Air New Zealand. They really pissed me off on this one and their attitude to small town NZ.

[Marilyn Munroe]

Carpenterjoe: Do you realise that Queer and Nasty Airlines flights between SYD --> SCL often overfly Dunedin as part of the great circle route track deep into the Southern Ocean.

Perhaps on the day of your flight you can arrange for them to scoop you up from the top of Mt Cargill with some sort of sky hook arrangement.

I agee with you about the lack of international flights from Dunedin, depending on where you are in Otago it is often better to fly out through Queenstown.

Boop boop de do
Marilyn

[Carpenterjoe]

Carpenterjoe: Do you realise that Queer and Nasty Airlines flights between SYD --> SCL often overfly Dunedin as part of the great circle route track deep into the Southern Ocean.

Perhaps on the day of your flight you can arrange for them to scoop you up from the top of Mt Cargill with some sort of sky hook arrangement.

I agee with you about the lack of international flights from Dunedin, depending on where you are in Otago it is often better to fly out through Queenstown.

Boop boop de do
Marilyn

Sounds perfect, I could just parachute out somewhere over SCL. Queenstown was around 650-700 one way,
Air New Zealand are taking the piss with those that can't book well in advance or wait for sales.
Even if you have a relative pass away unexpected, the heartless buggers charge U full dime. (I had this situation last year, another awful discussion with ANZ)
I feel its been a downward slide over the last five years regarding the product/service they offer.
Looking forward to any possibility of increased local Competition.

[Beagle]

Sounds perfect, I could just parachute out somewhere over SCL. Queenstown was around 650-700 one way,
Air New Zealand are taking the piss with those that can't book well in advance or wait for sales.
Even if you have a relative pass away unexpected, the heartless buggers charge U full dime. (I had this situation last year, another awful discussion with ANZ)
I feel its been a downward slide over the last five years regarding the product/service they offer.Looking forward to any possibility of increased local Competition.

Everyone is entitled to their opinion but when you start spreading factually incorrect information your credibility goes downhill pretty fast.
http://www.airnewzealand.co.nz/compassionate-fares
Generally according to CEO Chris Luxon domestic airfares are much unchanged from what they were 10 years ago. How many other products and services do you know of that are still charging the same prices they were 10 years ago ?

[Carpenterjoe]

Everyone is entitled to their opinion but when you start spreading factually incorrect information your credibility goes downhill pretty fast.
http://www.airnewzealand.co.nz/compassionate-fares
Generally according to CEO Chris Luxon domestic airfares are much unchanged from what they were 10 years ago. How many other products and services do you know of that are still charging the same prices they were 10 years ago ?


Cool Roger, but when I spoke to them on the phone last year, they did not offer me anything.
It may have changed that's fine or the person on the phone might have had a bad day.
"In each case we require documentation to support that your request for Compassionate Fares or Compassionate Flexibility relates to an Immediate Family member and an unexpected critical medical situation or recent bereavement."
Documentation I hope they Don't mean death certificate.

I might only take five or six international flights a year with air new Zealand, I've noticed a slide in their usually high service and quality,
I've flown Air New Zealand, Virgin, Qantas, Lan and Argentinian Airlines in the last five months, I think Qantas and especially Lan where outstanding,
Still no doubt Air New Zealand is superior to any American airline I've ever flown.

I have no idea about domestic fares as in the past I could fly direct to Australia, no need to fly/pay the extra domestic flight.
Last week it was cheaper to fly Auckland/Sydney, than Dunedin/Auckland.

The way the company operates is great for shareholders, profits and anyone in a major city.

Just my two cents

[Beagle]

Most airlines around the world work the same way. Book at the last minute and basically you're going to pay through the nose as most people travelling on that basis are assumed to be travelling on business. That's where they make their money. There's basically zero profit in AIR selling $39 airfares on grabaseat to fly half way around the country, (its essentially a share of fuel and landings fees cost recovery exercise at that price), but that didn't stop one canny traveller grabbing a couple of airfares from Auckland to Wellington for $78 return next month to see the AIR N.Z. exhibition at Te Papa. A little bit of forethought and genuine value is there on offer for domestic travellers. That cunning individual might even be able to shout his wife a decent lunch and dinner out from the savings of such cheap airfares. Should make for a very pleasant day out :)

[Zaphod]

Cool Roger, but when I spoke to them on the phone last year, they did not offer me anything.
It may have changed that's fine or the person on the phone might have had a bad day.
"In each case we require documentation to support that your request for Compassionate Fares or Compassionate Flexibility relates to an Immediate Family member and an unexpected critical medical situation or recent bereavement."
Documentation I hope they Don't mean death certificate.

From what I was told by the airline staff they regularly have people trying to game them, hence the requirement for documentation. This doesn't have to be a death certificate though.

[Zaphod]

Most airlines around the world work the same way. Book at the last minute and basically you're going to pay through the nose as most people travelling on that basis are assumed to be travelling on business. That's where they make their money. There's basically zero profit in AIR selling $39 airfares on grabaseat to fly half way around the country, (its essentially a share of fuel and landings fees cost recovery exercise at that price), but that didn't stop one canny traveller grabbing a couple of airfares from Auckland to Wellington for $78 return next month to see the AIR N.Z. exhibition at Te Papa. A little bit of forethought and genuine value is there on offer for domestic travellers. That cunning individual might even be able to shout his wife a decent lunch and dinner out from the savings of such cheap airfares. Should make for a very pleasant day out :)

Just to add to this, like many (no doubt) I've purchased a Grab-a-seat fare for $39-$79 for the outbound sector, but then paid full price for the return sector so that I could return at a much more convenient time, thereby averaging down the cost of travel. So the airline could also be gaining under this scenario, as I would not have flown at all it had been full fare for both sectors.

I'm also looking forward to the Te Papa exhibition when I get there next month!

[Gunny]

Can someone explain why the Investor update for the month which came out a few days ago on the ANZ share trading site is still not on the AIR web site. Is this delay normal?

Results seem to continue to be positive with the Asia/Japan market kicking in with Singapore and increase in Tokyo flights. Slight decrease in margin increase year on year from that of January report, perhaps the new capacity rampup impacted. Also noticing comments in news sites from the tourism industry on how busy everyone is in NZ which should fair well fro AIR by extension.

On another note will be travelling back to NZ from West Indies late in the year and note if I try and book through a local travel agent who generally support AA they try force me on one set of fights or via Australia with Qantas and say they can't book AIR for me. Of course I will be booking AIR myself online from US to NZ and separate from here to US to get around it. Interesting to see how the business works though.

Gunny

PS: In heart of West Indies, go Blackcaps. Have NZ full size flag ready to fly on front on building on Monday (I am subtle like that). Locals are not expecting to win.

[IAK]

World's most dangerous airlines named: AirAsia included on list but Malaysia Airlines scores above average for safety. Really?


http://www.dailymail.co.uk/travel/travel_news/article-2908531/Ranking-world-s-dangerous-airlines-includes-troubled-AirAsia-Malaysia-Airlines-scores-highly-safety.html

[Beagle]

I don't about you guys but there's no way I'd fly Malaysian airlines or Air AsiaX at any price, in fact even if they paid me !!
Looking through the list of some of those other tim-buck-too airlines is scary stuff :eek2:
Don't want to put the hoodoo on it but when I flew to Chrischurch on Jetstar last year on a fine cloudless morning with that huge runway the Chinese pilot had to do a go-around and have two go's at landing WTF ? He then blamed it on air traffic control keeping him too high on approach...yeah whatever.... Makes you think a bit doesn't it ???...I couldn't help wondering how he'd get on with landing at Queenstown's short runway with its really difficult valley approach on a cloudy / rainy day :eek2:

[vin]

Not a fan of this slow SP decline with both AIR & HNZ :(.

disc: holding novice trader

[tzbang]

Looks like good top up opportunities to me

[KiwiGekko]

Looks like good top up opportunities to me

Yep, will be interesting to see where the new support is - It could be $2.68 - in which case it would be a great time to top up.

Disc: Not holding *sad face*

[Beagle]

Not a fan of this slow SP decline with both AIR & HNZ :(.

disc: holding novice trader

A bit on consolidation is quite normal after the recent strong run both these stocks have had. Anyone who's been in for more than a few months has enjoyed a tremendous run and will be looking forward to ongoing growth over the medium term.

[percy]

Not a fan of this slow SP decline with both AIR & HNZ :(.

disc: holding novice trader

You may be happier with a faster decline?
Try TTK or CAV.
Otherwise sit tight as both AIR and HNZ are in strong uptrends,both shares trading above their 50day and 200 day EMA [moving averages].The market is holding HNZ back so Roger and I will get more shares with Dividend reinvestment.!!!

[Beagle]

Dead right mate :) and seeing as AIR doesn't have a dividend reinvestment scheme you just buy more on market with your dividend or before you get it if you're really cunning :D

[vin]

Cheers for the affirmation/insight! In with AIR at around $1.80, got in pretty good with HNZ too. It's been a good run, can't complain :rolleyes:

[dingoNZ]

Not a fan of this slow SP decline with both AIR & HNZ :(.

disc: holding novice trader


Mate, I sold almost completely out of AIR in early October when it was around $1.75 (worst investment decision of the YEAR on my part), sit tight, its having a hell of a run :)

[Beagle]

Mate, I sold almost completely out of AIR in early October when it was around $1.75 (worst investment decision of the YEAR on my part), sit tight, its having a hell of a run :)

Ouch that must hurt, bloody Ebola scared the crap out of me too and cost me a bit exiting at ~ $1.95 on the way down to mid 170's...but I decided to get back in at ~$2.00 just afterwards on the way back up. Best investment decision of 2014 I made.

[stoploss]

Made a visit to Te Papa today to see the exhibition . Well worth a look . Many couples there reminiscing about old times , fun trips away etc . Some great photos and a good history of the development of aviation and tourism in New Zealand .

[Beagle]

Made a visit to Te Papa today to see the exhibition . Well worth a look . Many couples there reminiscing about old times , fun trips away etc . Some great photos and a good history of the development of aviation and tourism in New Zealand .

Thanks mate, now I'm really looking forward to my trip down there, flying Air Zealand of course :)

[Baa_Baa]

Divi tomorrow.

[theace]

Should the divi have hit the bank a/c today? ... nothing yet (ASB)

[Derain]

The payment is made today, but I think you will not see these until tonight/Monday as that is when the bank processes their payment.

[BlackPeter]

Interesting article on NBR: http://www.nbr.co.nz/opinion/opinion-air-new-zealand-challenges-loyal-customers-move-elsewhere?utm_source=newsletter&utm_medium=email&utm_campaign=NBR%2520Last%2520Call

They say that Air New Zealand suddenly and unexpectedly dumped BNZ as partner for their air point credit cards - forcing roughly 100.000 customers to either change their bank within the next 6 weeks (the new elected bank apparently is Westpac), or alternatively cease to earn Air New Zealand air points by using their credit card. Just wondering: if I would be one of these customers - maybe I would just change the airline instead?

From personal experience - unless you need to travel within NZ, there are many better alternatives to Air NZ around, like e.g. Singapore Airlines or Emirates. Admittedly - there are as well inferior options (like Qantas), but at least they didn't dump their air point partners.

Seriously - can anybody of the on this thread resident fans explain how it can be good for Air New Zealand to annoy 100.000 loyal customers for no good reason?

Discl: frequent flyer with Singapore Airlines, Emirates, Qantas and Air New Zealand, though latter was due to their contract with my previous company.

[Beagle]

Hi BP,

Poorly research article which does little more than outline people's resistance to change.
If the author had done his homework he would have learned that this change is a major benefit to customers with a significantly higher Airpoints earning rate per $100 spent.

See link below. In summary at present on a standard credit card, (rewards vary with Gold, Platinum and business cards but in all cases are superior for customers with the enhanced Westpac arrangement)
- BNZ Globalplus Classic Credit Card presently gives 1 airpoint for every $150 spent
- Westpac standard credit card will give 1 airpoint for every $120 spent (It should be noted that the annual credit card fee is the same $55 for the above two cards).

Airpoint rewards are a big deal for a lot of people so AIR has been working on this enhancement to its credit card rewards programme for customers benefit. The author suggests in complete ignorance that this is another cut-back. P.S. Jetstar's domestic and Tasman aircraft have the very tightest seating in the aviation industry with an incredibly cramped 29 inch pitch.
Anyone over 6 ft tall or 100 kg's is in for a world of hurt...its actually physically painful flying on their aircraft, I'm 6 ft and my knees were jammed so hard into the seat-back in front it was quite painful.
You want cut-backs, try flying Jetstar.

Those who are too lazy to change from the National Australia bank, (used correct name for the bank because this Australian owned bank masquerades as the Bank of New Zealand whereas Air New Zealand really is New Zealand owned), will enjoy whatever rewards system the NAB propose.

With any change there is always a level of resistance but it should be noted first and foremost that this change is aimed at significantly improving the reward rate for customers who enjoy their credit card airpoints system. AIr new Zealand also have credit card partnership programmes with Kiwibank, (a genuine N.Z. owned bank), American Express and ANZ.

http://www.airnewzealand.co.nz/airpoints-direct-earn-credit-card-comparison-table?utm_source=edm&utm_medium=email&utm_campaign=20150319_Airpoints

P.S. Mate no offence intended but most Kiwi's that are born and bred here enjoy showing some parochial favouritism to AIR New Zealand simply because they've known the airline all their lives, they trust flying on their aircraft and know its New Zealand owned.

[BlackPeter]

Hi BP,

Poorly research article which does little more than outline people's resistance to change.
If the author had done his homework he would have learned that this change is a major benefit to customers with a significantly higher Airpoints earning rate per $100 spent.

See link below. In summary at present on a standard credit card, (rewards vary with Gold, Platinum and business cards but in all cases are superior for customers with the enhanced Westpac arrangement)
- BNZ Globalplus Classic Credit Card presently gives 1 airpoint for every $150 spent
- Westpac standard credit card will give 1 airpoint for every $120 spent (It should be noted that the annual credit card fee is the same $55 for the above two cards).

Airpoint rewards are a big deal for a lot of people so AIR has been working on this enhancement to its credit card rewards programme for customers benefit. The author suggests in complete ignorance that this is another cut-back. P.S. Jetstar's domestic and Tasman aircraft have the very tightest seating in the aviation industry with an incredibly cramped 29 inch pitch.
Anyone over 6 ft tall or 100 kg's is in for a world of hurt...its actually physically painful flying on their aircraft, I'm 6 ft and my knees were jammed so hard into the seat-back in front it was quite painful.
You want cut-backs, try flying Jetstar.

Those who are too lazy to change from the National Australia bank, (used correct name for the bank because this Australian owned bank masquerades as the Bank of New Zealand whereas Air New Zealand really is New Zealand owned), will enjoy whatever rewards system the NAB propose.

With any change there is always a level of resistance but it should be noted first and foremost that this change is aimed at significantly improving the reward rate for customers who enjoy their credit card airpoints system. AIr new Zealand also have credit card partnership programmes with Kiwibank, (a genuine N.Z. owned bank), American Express and ANZ.

http://www.airnewzealand.co.nz/airpoints-direct-earn-credit-card-comparison-table?utm_source=edm&utm_medium=email&utm_campaign=20150319_Airpoints

P.S. Mate no offence intended but most Kiwi's that are born and bred here enjoy showing some parochial favouritism to AIR New Zealand simply because they've known the airline all their lives, they trust flying on their aircraft and know its New Zealand owned.

Hi Roger, Thanks for this clarification - I am sure you would have done a much better job than the professional communication managers at Air New Zealand. Unfortunately - it looks like they didn't do their job and ruffled some feathers with some customers, but time will tell. Not really my concern - though I am still sitting on some Air NZ air point / dollar account ....

Apologies for proposing on this thread that there might possibly be better airlines than Air New Zealand, but believe me, if you circled the globe as often as I did, than comfort, good service and good connections do count. In terms of comfort and service have I seen Air NZ sometimes as better and sometimes as worse than others, and yes, I agree - any carrier I know beats Jetstar (well, I haven't yet tried some of these Russian and Central African airliners, and to be honest - some of the local US carriers come close ...).

In terms of connections do I try to avoid any carrier which forces me to go through Heathrow into Europe, which excludes Air New Zealand. Lost already too much time at this hostile and highly chaotic place - and life is too short for that. Funny thing is - 2 decades ago Air New Zealand was able to fly to other European airports as well (at least they offered code shared flights to a number of European centers). Does not seem to work anymore (well, not last time I asked - maybe 2 years ago).

OK - I don't want to rain too much into the party - so I leave you to it. Just thought it might be interesting for AIR share holders to learn, that there are still some things other carriers do better than their company. Might be an opportunity to improve?

[percy]

My divie is in my bank.

[mikeybycrikey]

Either Air NZ or BNZ has dropped the ball here, and I'm guessing that it's Air NZ.


I find this all a little odd. Cards that earn Airpoints are currently issued by American Express, Kiwibank and ANZ (I think). So why has the dropping of BNZ been so closely linked to the addition of Westpac, by Air NZ?


This doesn't make any sense apart from Air NZ getting their PR of this change completely wrong. Customers change their airline much readily than their credit card, except in domestic where there is no competition.

For most people this will be forgotten pretty quickly, unless you're one of the 100,000 card holders. Many of them will likely think twice about booking Air NZ if there are other options.

[Harvey Specter]

My take on this is Westpac wanted it, so offered AIR a lot of money. To get benefit though they needed the opportunity to steal BNZ customers. So they paid more to AIR to ditch BNZ and even more to blind side them as any warning would give them time to put in place another attractive scheme.

[iceman]

I agree with this HS. I think this is the real reason. Don't forget that BNZ has always been able to offer GlobalPlus home loans so people get Airpoints with their mortgages. No doubt Westpac will do the same so this is more than just about credit cards.
I changed my card from ANZ Visa Platinum to Air NZ (issued by Kiwi Bank) Mastercard Platinum a few months ago and get more Airpoints and Status Points than I did before and a same annual fee. If you are making a decision on credit card solely to earn Airpoints, forget Westpac and go to the Air NZ (Kiwi Bank) card !




My take on this is Westpac wanted it, so offered AIR a lot of money. To get benefit though they needed the opportunity to steal BNZ customers. So they paid more to AIR to ditch BNZ and even more to blind side them as any warning would give them time to put in place another attractive scheme.

[Beagle]

I logged onto internet banking with the BNZ this morning to check my divvy came though okay, (yes), and noticed that BNZ have replaced airpoints with cash back rewards on a dollar for dollar basis so really this is a storm in a teacup and BNZ customers are no worse off. Further, they've upped the dollar reward rate through to 1 November 2015 temporarily to match Westpac's new arrangement which gives people plenty of time to make the credit card change if they want to so there's no reason for anyone to feel aggrieved.

I also agree with Harvey, this is a commercial deal by Westpac to try and poach customers and as Iceman quite correctly notes there's more to this than credit cards and many people enjoy significant rewards on their globalplus home loans which the BNZ are also now transiting into cash back rewards. I can't help making this observation though which is well off topic but nonetheless possibly worth a mention. BNZ are making a huge meal with their promotional thrust about being "good with money" which as we all know means being responsible and prudent, BUT on the other hand the bigger your mortgage the more global plus airpoints rewards you get which seems a counter intuitive rewards programme for a bank that's making a major thrust about telling people to be good with money doesn't it !!
It seems another lifetime ago but in the early days of the airpoints global plus programme when we had a big BNZ globalplus mortgage we used to enjoy trips across the Tasman for free on a reasonably regular basis, sorry I digress.

Blackpeter, you are far too kind. I am sure the AIR N.Z. marketing team are just getting into their stride with their promotion of the enhanced reward programme and will do a much better job that I could. All we have at this point is press reports that appear to be designed to be "sensational" to grab attention.

No need to apologise about your carrier observations mate. I haven't travelled nearly as much as I'd like too but I think there's a pretty widespread understanding that Singapore and Emirates are top notch airlines and while I enjoy being parochial if they were offering airfares to Europe for several hundred dollars less I'd be seriously tempted to fly on them if I was going, especially on Emirates with their all A380 service.

Air as everyone knows is investing heavily in new generation aircraft and they're getting excellent feedback on their new dreamliner's of which there should be six in the fleet by the end of 2015.
I expect them to exercise their remaining options in due course and would be surprised in they didn't end up with a fleet of 18 of these superb new super comfortable aircraft in due course. (Their range, efficiency and size seem ideal for the airline). They also have 3 brand new A320's arriving for their domestic fleet before the end of June 2015.

I see the red kangaroo is back on top with its SP...must be just about time for me to start working a short programme with QAN :)

[iceman]

AIR's recent deal with SIA has made a huge difference in well priced options between NZ & Europe, especially for people like me that prefer Air NZ to maximize Airpoints and Status Points earnings. Much better than other alliances such as that with Cathay Pacific and Virgin.


I logged onto internet banking with the BNZ this morning to check my divvy came though okay, (yes), and noticed that BNZ have replaced airpoints with cash back rewards on a dollar for dollar basis so really this is a storm in a teacup and BNZ customers are no worse off. Further, they've upped the dollar reward rate through to 1 November 2015 temporarily to match Westpac's new arrangement which gives people plenty of time to make the credit card change if they want to so there's no reason for anyone to feel aggrieved.

I also agree with Harvey, this is a commercial deal by Westpac to try and poach customers and as Iceman quite correctly notes there's more to this than credit cards and many people enjoy significant rewards on their globalplus home loans which the BNZ are also now transiting into cash back rewards. I can't help making this observation though which is well off topic but nonetheless possibly worth a mention. BNZ are making a huge meal with their promotional thrust about being "good with money" which as we all know means being responsible and prudent, BUT on the other hand the bigger your mortgage the more global plus airpoints rewards you get which seems a counter intuitive rewards programme for a bank that's making a major thrust about telling people to be good with money doesn't it !!
It seems another lifetime ago but in the early days of the airpoints global plus programme when we had a big BNZ globalplus mortgage we used to enjoy trips across the Tasman for free on a reasonably regular basis, sorry I digress.

Blackpeter, you are far too kind. I am sure the AIR N.Z. marketing team are just getting into their stride with their promotion of the enhanced reward programme and will do a much better job that I could. All we have at this point is press reports that appear to be designed to be "sensational" to grab attention.

No need to apologise about your carrier observations mate. I haven't travelled nearly as much as I'd like too but I think there's a pretty widespread understanding that Singapore and Emirates are top notch airlines and while I enjoy being parochial if they were offering airfares to Europe for several hundred dollars less I'd be seriously tempted to fly on them if I was going, especially on Emirates with their all A380 service.

Air as everyone knows is investing heavily in new generation aircraft and they're getting excellent feedback on their new dreamliner's of which there should be six in the fleet by the end of 2015.
I expect them to exercise their remaining options in due course and would be surprised in they didn't end up with a fleet of 18 of these superb new super comfortable aircraft in due course. (Their range, and size seem ideal for the airline).

I see the red kangaroo is back on top with its SP...must be just about time for me to start working a short programme with QAN :)

[modandm]

AIR's recent deal with SIA has made a huge difference in well priced options between NZ & Europe, especially for people like me that prefer Air NZ to maximize Airpoints and Status Points earnings. Much better than other alliances such as that with Cathay Pacific and Virgin.

Good to hear - I expect the alliance to be a big success. Unfortunately short term this means AIR is diluting yields as we saw in the last stats (still likely making a small profit on the route). Competitively this must be putting some (small) hurt on Emirates, China Southern, and the other players NZ-Europe. It's important that AIR leverage their strengths like this.

I expect to see a nice uplift in 'ancillary revenue' in FY16 post this new cc deal. Along with the airpoints mastercard they have now fully reorganized their cc schemes and relationships.

[Beagle]

11% growth in revenue passenger kilometre's flown was pretty impressive for February though wasn't it and yields are still up 2% for the year to date removing currency fluctuations from the equation. When was the last time AIR boosted RPK's like that !!

[Zaphod]

They say that Air New Zealand suddenly and unexpectedly dumped BNZ as partner for their air point credit cards - forcing roughly 100.000 customers to either change their bank within the next 6 weeks (the new elected bank apparently is Westpac), or alternatively cease to earn Air New Zealand air points by using their credit card. Just wondering: if I would be one of these customers - maybe I would just change the airline instead?

That's a good point.

If you want to earn the equivalent of Airpoints Dollards (APD) and Status Points (SP) on the competition using a CC, you have no choice (that I know of) other than the recently watered-down ANZ Qantas Visa cards. This card doesn't earn rewards as competitively as the AirNZ cards and because reward booking classes are extremely limited on Qantas (as opposed to being able to book any seat using APD on AirNZ) booking a reward can be exceptionally difficult. Add to this the lack of Qantas/Jetstar flights into the regions and things become even less competitive for alternative reward schemes. This means AirNZ enjoy a very strong competitive position in the flight-rewards market and are unlikely to be unseated by this change.

We will probably see a number of people revert back to the cash-back rewards schemes and potentially use these to purchase flights or top up their APD balances. The only downside will be those with marginal levels of status requalification who need the SP boost from the credit cards.

It'll be interesting to see how this affects the AirNZ balance sheet but as Modandm notes below, overall it will most probably increase ancillary revenues received.

[samdaman]

my dividend still hasn't come in (ASB) is this something I should be chasing up? Give it a couple more days?

[mikeybycrikey]

my dividend still hasn't come in (ASB) is this something I should be chasing up? Give it a couple more days?

I had mine paid into ASB on Friday. Might be worth chasing up, assuming that you owned the shares on the ex date (11 March). Could either check with ASB or with the registry (Link Market Services, http://www.linkmarketservices.co.nz)

[samdaman]

I had mine paid into ASB on Friday. Might be worth chasing up, assuming that you owned the shares on the ex date (11 March). Could either check with ASB or with the registry (Link Market Services, http://www.linkmarketservices.co.nz)

yea I did and I got a letter through link only today asking if I'd like it paid on the 20th, I brushed over it because it wasn't really much help considering it came after payment day. A lot of help that is. I'll chase it up tomorrow cheers

[theace]

Good time to reinvest the divi? Thoughts?

[Beagle]

^^ Oil is staying low, currency is up strongly in the last few days, latest monthly release showed demand very strong with revenue passenger kilometres flown up a whopping 11%, new planes arriving, consensus estimate for EPS for 2016 40 cps puts the stock on a forward PE of only 7 times earnings, 75th anniversary year enhances prospects of a special divvy, (although personally speaking I am happy if they don't and use the cash this year to strengthen their balance sheet), new proposed alliance with Air China announced today. We are very well positioned. Either buy some shares or use the divvy to go and see the AIR N.Z. Te Papa exhibition or if you're really cunning, do both :)
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11421775

[vin]

my dividend still hasn't come in (ASB) is this something I should be chasing up? Give it a couple more days?

I'm also ASB and divvy hasn't cleared.. hmm

[samdaman]

I actually recieved a cheque because they havent got a bank recorded for me apparently. Yours might be on the way

[vin]

Got a bit ahead of myself, my cheque also arrived today _b

[KiwiGekko]

I actually recieved a cheque because they havent got a bank recorded for me apparently. Yours might be on the way

Same here, promptly walked down to the bank on Monday to bank my Cheque & updated my bank details on file so that (hopefully) doesn't happen again.

[777]

I actually recieved a cheque because they havent got a bank recorded for me apparently. Yours might be on the way

They are not mind readers. It is up to the holder of shares to give details of method of payment. In may be a good idea to check all your other holdings. It is a simple process.

[KiwiGekko]

So, the SP seems to have weakened today quite suddenly am I right in thinking the reason is this: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11422290 / https://nzx.com/companies/AIA/announcements/262217

Thoughts?

[biker]

I think the market may be a bit wary, and rightfully so, that competition is inevitable on the AKL-LAX route. This route must currently be a cash cow for AIR which is great, but the downside is that one of their major profit centres is vulnerable to attack at any time.

[Baa_Baa]

Sold @ $2.83 today, been a reasonable run over 4 months, ~+16% inc divi. Should have flagged the divi and sold the MACD cross down 13 Mar, another lesson maybe, AIR has had a good run and seems to have just got ahead of itself a bit. Daily chart says $2.76 is testing the steep uptrend from Nov14 and the 50EMA is just under at $2.71, with further horizontal support at $2.68. Might be back in if those hold and bounce.

[Beagle]

I think the market may be a bit wary, and rightfully so, that competition is inevitable on the AKL-LAX route. This route must currently be a cash cow for AIR which is great, but the downside is that one of their major profit centres is vulnerable to attack at any time.

They're looking to expand services to America, Houston and Detroit are the two favourites apparently.
I'm not "buying" the technical analysis on this stock anymore. Hasn't worked for me in the past. Fundamentally this is a stock now trading on less than 7 times 2016 consensus analyst earnings and they're growing their top line and have plans for capacity expansion for 5% per annum for the next half decade, have efficient modern aircraft a dominant domestic position. In a absolute sea of fully priced / over-priced NZX stocks this one sticks out as genuine value. My biggest position.

[gv1]

Why would you want to sell the golden geese.

[Beagle]

Exactly gv1 and to invest in what that is better value and has better prospects ?

http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/news/Air-New-Zealand--NewZealand-supports-Tourism-2025-20067659/

[iceman]

I think if AIR do things well, they have a real opportunity with Asian travelers going to South America when AIR starts their Buenos Aires flights. Tourism from China to South America is growing fast and currently most of them travel via Europe. Going via NZ is a good option, except maybe the fact that they still need visitor visas (I think), even when in transit !


Exactly gv1 and to invest in what that is better value and has better prospects ?

http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/news/Air-New-Zealand--NewZealand-supports-Tourism-2025-20067659/

[Beagle]

Agreed. Must admit the Andes looked absolutely stunning in that recent infamous Top Gear special. Gotta be careful with your number plate eh mate :)

P.S. Just announced a sale

Buenos Aires, the most popular tourist city in South America, is on sale now with Economy fares from just $899* one way from Auckland, Wellington or Christchurch.

Rich in history and culture, you can spend days exploring the famous barrios, shop for bargains in one of the many craft and antique markets, enjoy fine wines and the world famous barbequed meats at a local parrillada restaurant.

The city is also a perfect stepping stone for those who want to go on to explore more of South America with a non-stop flight from Auckland to Buenos Aires, 3 times a week.

Hurry, sale ends midnight 7 April 2015.

[brend]

I would love to see AIR get more aggressive into Guangzhou China as China Southern increase capacity. I know their HKG flight services that area I'm sure they could target it directly more?

[iceman]

Just received an email from Air NZ advising their flights to BA will start on 4 December and opens for bookings today. Compared AIR & LAN for flights over there in December and back in Jan. Cheapest economy is $1,900 cheaper with AIR and Business Class in $ 1,800 cheaper. I think they are onto a winner with this one ! Can't wait !


Agreed. Must admit the Andes looked absolutely stunning in that recent infamous Top Gear special. Gotta be careful with your number plate eh mate :)

[Beagle]

SP decline in reaction to slight uptick in oil price looks well overdone to me.
http://tvnz.co.nz/national-news/air-nz-tightens-flight-deck-rules-after-germanwings-crash-6271437
Air tightens flight deck rules...good operators these guys.

[dingoNZ]

SP decline in reaction to slight uptick in oil price looks well overdone to me.
http://tvnz.co.nz/national-news/air-nz-tightens-flight-deck-rules-after-germanwings-crash-6271437
Air tightens flight deck rules...good operators these guys.

Oil pricing is still very much to the downside, I expect this whole Yemen situation to fall over in a few days/a week and then oil will continue back down to where it was (Brent $52ish and WTI $43ish), then you will see some positive movement from AIR again. I imagine this is good buying down here, just my 2c.....

[KiwiGekko]

Oil pricing is still very much to the downside, I expect this whole Yemen situation to fall over in a few days/a week and then oil will continue back down to where it was (Brent $52ish and WTI $43ish), then you will see some positive movement from AIR again. I imagine this is good buying down here, just my 2c.....

I found some pocket money under the couch and have been buying a little - I agree with Roger that the sell down looks overdone, time will tell huh.

[iceman]

I take a different view Roger and am disappointed they have been this slack on safety for so long. This should have been done a long time ago like many other airlines did



http://tvnz.co.nz/national-news/air-nz-tightens-flight-deck-rules-after-germanwings-crash-6271437[/url]
Air tightens flight deck rules...good operators these guys.

[Beagle]

Oil pricing is still very much to the downside, I expect this whole Yemen situation to fall over in a few days/a week and then oil will continue back down to where it was (Brent $52ish and WTI $43ish), then you will see some positive movement from AIR again. I imagine this is good buying down here, just my 2c.....
Couldn't agree more. Anything around the $50 a barrel mark for WTI and $60 for Brent and AIR are enjoying a fantastic tailwind. I see oil is down 6% overnight which bodes well for a recovering SP on Moday:t_up:


I take a different view Roger and am disappointed they have been this slack on safety for so long. This should have been done a long time ago like many other airlines did
I respect your opinion mate. I think a lot of it comes down to the psychological testing and profiling that an airline does on its pilots in the first instance and Air came out yesterday and said there's is intense.
On CNBC this morning they interviewed a leading aviation security expert and after this tragedy and the Malaysian airlines one last year he was calling for more thorough psychological and mental health testing as part of pilots periodical medical's. Seems logical to me.

[iceman]

Agree Roger and am sure AIR is good with this. But as a SH and a frequent flyer, I expect absolutely best safety practise. Nothing less is acceptable




I respect your opinion mate. I think a lot of it comes down to the psychological testing and profiling that an airline does on its pilots in the first instance and Air came out yesterday and said there's is intense.
On CNBC this morning they interviewed a leading aviation security expert and after this tragedy and the Malaysian airlines one last year he was calling for more thorough psychological and mental health testing as part of pilots periodical medical's. Seems logical to me.

[biker]

I take a different view Roger and am disappointed they have been this slack on safety for so long. This should have been done a long time ago like many other airlines did

Totally agree Iceman

[Beagle]

Its a really sad world we live in when nutters think they can deliberately crash a plane. Its absolutely outrageous that it appears this is the second year in a row this has happened but can anyone remember when something like this happened before the Malaysian tragedy last year ???

Its an interesting debate, have a look at this article http://www.smh.com.au/business/aviation/germanwings-australia-still-deciding-on-two-in-cockpit-rule-20150327-1m99h3.html

Extract
Careful consideration needs to be made following thorough investigation to ensure that altering current procedures does not open other potential vulnerabilities. Our two major international and domestic airlines are undertaking their own safety and security risk assessments of cockpit procedures following the recent tragedy."What they appear to be suggesting here is that opening up the flight deck to another crew member brings a new risk ? Perhaps what they're suggesting is that some burly purser, (remember they're probably not subject to as rigorous medical or psychological testing / profiling as pilot's), with a major psychological issue might overpower the remaining pilot and knock them out or otherwise incapacitate them and then lock the door and crash the plane themselves ?


Agree Roger and am sure AIR is good with this. But as a SH and a frequent flyer, I expect absolutely best safety practise. Nothing less is acceptable

[slimwin]

Its shocking. Its out of the ordinary. Gutted for the families, but its not the norm. New measures are in place. Flying is still safe.

If you want to worry about slack, don't ride in a bus without a seat belt.

[Yoda]

It seems to be men crashing planes.... May be we need more women pilots. .?:)

[Beagle]

Qantas closed today at $3.01 ~ 10% higher than AIR yet they have ostensibly the same earnings outlook on an EPS basis. Factor into account also that QAN has huge leverage, (read substantially higher risk and obstinate / obstructive / entrenched unions that are already calling for a cessation to QAN's rationalisation plans) Doesn't make sense, go figure...

[samdaman]

Im hoping we'll see some SP gusto after it closing around or even possibly over the 50EMA, might see another leg up this week but who knows I'm no psychic

[winner69]

This is what would happen if I bought some AIR. A plane would crash and I would be to blame

From ASX today Skydive the Beach, which more than doubled at its sharemarket debut on Friday, lost 14.1 per cent to 33.5¢ following the news that two people died in an accident at its Byron Bay jump site shortly after the company floated

[modandm]

I see there is a fair bit of hand wringing going on... why? Because the SP is down 5% post the dividend... who cares. This often happens I have noticed. Has anything fundamental changed? Not really so keep calm and carry on.

[Beagle]

That's a pretty dark crystal ball you have there Winner :)

[winner69]

That's a pretty dark crystal ball you have there Winner :)

I have this premonition that will happen and I would have hundreds of people being killed on my conscious forever. Some might be my friends, maybe even you when you come to te papapa

No AIR shares for me ever and no Lufthansa or Qantas or Delta or any other airline.

Felt sad for those killed in that sky diving accident. What a shock for all their new shareholders, but then again most punters just buy a ticker code and watch the prices and have no idea what companies do.

[Beagle]

You've watched the Final Destination movie series haven't you mate :D Fair enough then, you are herby excused from enjoying the fantastic profits and dividends that AIR is rewarding it shareholders with :)

[Beagle]

Oil falls nearly 7% Where are they going to put it now that most of the oil storage facilities are nearly full ? More declines to come ?
http://www.cnbc.com/id/102567899

Consensus EPS for Qantas for 2015 23cps, 2016 41 cps
Consensus EPS for AIr N.Z. for 2015 30cps, 2016 40 cps

Qantas as previously mentioned has extremely high gearing and is currently not paying dividends and is unlikely too anytime soon and has the additional burden of a predominantly intransigent unionised workforce and it is widely acknowledged that the Australian economy is not in as good shape as the N.Z. one and yet their SP is currently $3.32 and AIR is currently $2.79. WOW, go figure that pricing difference... Consensus 12 month price target for QAN $3.72, AIR $2.91. N.Z. stockbrokers airline analysts a bunch of pussies ?

[vin]

Nice to hit the $2.80 mark.

[Beagle]

New route to America being announced tomorrow. Chicago or Houston are the two rumoured favourites. Anyone want to bet a beer on the outcome, I bet Chicago.

[dingoNZ]

New route to America being announced tomorrow. Chicago or Houston are the two rumoured favourites. Anyone want to bet a beer on the outcome, I bet Chicago.


Makes sense to have a Midwest hub, I'm inclined to agree. Houston is only a short flight from LA/SF wouldn't be a 'game changer' to direct flights there.

[skid]

But Chicago is a bit of a stretch--I wouldnt see that happening---What ever happens ,if it avoids LA it would be a +++:)

[skid]

Oil falls nearly 7% Where are they going to put it now that most of the oil storage facilities are nearly full ? More declines to come ?
http://www.cnbc.com/id/102567899

Consensus EPS for Qantas for 2015 23cps, 2016 41 cps
Consensus EPS for AIr N.Z. for 2015 30cps, 2016 40 cps

Qantas as previously mentioned has extremely high gearing and is currently not paying dividends and is unlikely too anytime soon and has the additional burden of a predominantly intransigent unionised workforce and it is widely acknowledged that the Australian economy is not in as good shape as the N.Z. one and yet their SP is currently $3.32 and AIR is currently $2.79. WOW, go figure that pricing difference... Consensus 12 month price target for QAN $3.72, AIR $2.91. N.Z. stockbrokers airline analysts a bunch of pussies ?

In answer to your question---They will simply cap the well and leave it in the ground,until needed.

[dingoNZ]

Don't exactly agree with picking Houston over Chicago, however AIR management know a lot more than it do so I'll trust them!

Fantastic news, however, great to see a new additional route which will open up the US Midwest and connect AIR to the United Airlines central hub!

http://www.stuff.co.nz/business/67786640/air-new-zealand-to-fly-auckland-to-houston-direct

[dingoNZ]

Thin news? Hardly - US crude stocks were expect to rise by 4.1m barrels (according to a survey of oil analysts) but only rose 1.3m, I would say this is pretty significant as the oil price was built/traded around the US having 3m barrels they didn't so it's a shock which the market reacted to.

As per CNBC, oil is at its highest level for the current year - http://www.cnbc.com/id/102587037

[Beagle]

Monkeys throwing darts would have at least as good a chance of getting the future direction of oil prices right as the "experts" CNBC has interviewed since the dramatic decline started.
Fact is despite the slight overnight increase oil is still only circa half the price it was in June - July last year.

There was a report that Chicago would have challenged the range of aircraft flying back to N.Z. into the prevailing headwinds. Houston Texas is also all good for AIR's growth :)

[dingoNZ]

Monkeys throwing darts would have at least as good a chance of getting the future direction of oil prices right as the "experts" CNBC has interviewed since the dramatic decline started.
Fact is despite the slight overnight increase oil is still only circa half the price it was in June - July last year.

There was a report that Chicago would have challenged the range of aircraft flying back to N.Z. into the prevailing headwinds. Houston Texas is also all good for AIR's growth :)


Absolutely, I agree and I still see oil prices with risk to the downside rather than the upside, another positive for AIR

[samdaman]

I'm a little confused, is this little jump in price due to oil going up or the announcement of the new routes? I thought oil up was a negative for AIR?

[dingoNZ]

I'm a little confused, is this little jump in price due to oil going up or the announcement of the new routes? I thought oil up was a negative for AIR?


It is, but the news is obviously more positive than the negativity of the oil pricing moving up.

[Beagle]

Tourism NZ and Air NZ will push new Houston destination in joint US marketing campaign
http://www.sharechat.co.nz/article/d43cc8b0/tourism-nz-and-air-nz-will-push-new-houston-destination-in-joint-us-marketing-campaign.html?utm_medium=email&utm_campaign=Tourism+NZ+and+Air+NZ+will+push+new+H ouston+destination+in+joint+US+marketing+campaign&utm_content=Tourism+NZ+and+Air+NZ+will+push+new+Ho uston+destination+in+joint+US+marketing+campaign+C ID_0e680456f10ab6f53d064f65634f4d62&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticled43cc8b0touris m-nz-and-air-nz-will-push-new-houston-destination-in-joint-us-marketing-campaignhtml

[Zaphod]

IAH provides NZ with excellent links to major and minor cities in the US via UA and its UA Express subsidiary. It's certainly a far more convenient and pleasant option for travel to the Eastern seaboard than from LAX, with far greater depth of direct connections.

ORD has a similar number of connections, however from what I have been told NZ doesn't see as many transferring via ORD as it does already to IAH.

It's a long trip though at 14hrs 30min on the return sector. That's 30 min's more than YVR-AKL which already feels like an eternity!

[Beagle]

http://www.sharechat.co.nz/article/97fd5441/air-nz-s-houston-service-paves-the-way-for-partnership-with-united-airlines-analysts-say.html?utm_medium=email&utm_campaign=Air+NZs+Houston+service+paves+the+way +for+partnership+with+United+Airlines+analysts+say&utm_content=Air+NZs+Houston+service+paves+the+way+ for+partnership+with+United+Airlines+analysts+say+ CID_8f9a10aeae24a77e3d8ebbec831a0395&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle97fd5441air-nz-s-houston-service-paves-the-way-for-partnership-with-united-airlines-analysts-sayhtml

Analysts very positive on new route.

[KiwiGekko]

Analysts very positive on new route.

Your comment was posted a bit late to influence the market close. ;-) But all the same very good signs ahead. Got your special bevvy in the fridge waiting for $3 mate?

[Beagle]

Your comment was posted a bit late to influence the market close. ;-) But all the same very good signs ahead. Got your special bevvy in the fridge waiting for $3 mate?

Mate, afraid to admit I'll have to get some more in :)

[KiwiGekko]

Mate, afraid to admit I'll have to get some more in :)

Well, if its already gone it can't be too special now can it? Might need to go looking for an upgrade on the last bottle. Have a good weekend. ;)

[Beagle]

Well, if its already gone it can't be too special now can it? Might need to go looking for an upgrade on the last bottle. Have a good weekend. ;)

Thanks mate, yeah fair point, you too.

http://gallipoli.tepapa.govt.nz/

Air N.Z. shareholders now have an additional reason to visit Te Papa while the reportedly excellent 75th anniversary AIR N.Z. exhibition is on.
Unknown to me when I booked flights some time back for next Wednesday, they have now opened the Gallipoli scale of our war exhibition which is also free entry and is reported to have cost Weta Workshop over $8m to create.

Seeing as my grandfather fought in the first world war it will be an interesting and sobering time of remembrance, perhaps made a little more poignant by visiting only 3 days before the 100th anniversary.
We've never been to Te Papa before and are really looking forward to our day trip next week. I love flying AIR N.Z. and I couldn't possibly think of a better way to spend some of my recent dividend.
Just thought I'd post that its a great opportunity to enjoy the fruit of one's investment, see two fantastic free exhibition's and put some money back into your favourite airline :)

[iceman]

I do not share the excitement with the new route. I don't think Texas offers many exciting opportunities for NZ traveleres nor much inbound tourism.
I would have preferred New York or Orlando via Tahiti or Honolulu. I give this route 2 years before being scrapped but would be very happy to be proven wrong :mellow:

[skid]

Don't exactly agree with picking Houston over Chicago, however AIR management know a lot more than it do so I'll trust them!

Fantastic news, however, great to see a new additional route which will open up the US Midwest and connect AIR to the United Airlines central hub!

http://www.stuff.co.nz/business/67786640/air-new-zealand-to-fly-auckland-to-houston-direct

I dont think there is any point for AIR to fly over most of the US to connect with their hub-There are plenty of domestic airlines in the States to do that.
What they would want to do is end up in a place that is still within range ,that has the most possibilities for onward travel with a partner airline.
My guess is that Houston provides the greatest no. of airlines to tie in with.

I dont think it is about Houston as a final destination that has been the driving force in this move.

[iceman]

I dont think there is any point for AIR to fly over most of the US to connect with their hub-There are plenty of domestic airlines in the States to do that.
What they would want to do is end up in a place that is still within range ,that has the most possibilities for onward travel with a partner airline.
My guess is that Houston provides the greatest no. of airlines to tie in with.

I dont think it is about Houston as a final destination that has been the driving force in this move.

Agree with Houston not being the final destination skid. So what does AIR achieve with this route that it can not achieve from LA or San Fransisco. Central America ? That could be done via the new route to Buenos Aires in my view.

[Beagle]

Agree with Houston not being the final destination skid. So what does AIR achieve with this route that it can not achieve from LA or San Fransisco. Central America ? That could be done via the new route to Buenos Aires in my view.
http://www.stuff.co.nz/business/67786640/air-new-zealand-to-fly-auckland-to-houston-direct

Most of the answers are in the link Skid posted and in the previous link I posted wherein analysts are very positive. I'm not concerned in the slightest and see this as a positive. You can bet your last dollar and thousands more besides that they've undertaken extensive market research before initiating this new route and while they haven't said as much in the official press release they'll only increase frequency as demand grows. I have tremendous respect for the commercial judgement of management.

Fact is aircraft loadings to North America have been very high for quite some time.

For the benefit of yourself and others that missed last year's annual meeting Chris Luxon assured shareholders that they don't throw on capacity willy nilly, they're a demand focused company.

[Beagle]

Thanks mate, yeah fair point, you too.

http://gallipoli.tepapa.govt.nz/

Air N.Z. shareholders now have an additional reason to visit Te Papa while the reportedly excellent 75th anniversary AIR N.Z. exhibition is on.
Unknown to me when I booked flights some time back for next Wednesday, they have now opened the Gallipoli scale of our war exhibition which is also free entry and is reported to have cost Weta Workshop over $8m to create.


I think Air exhibition finishes 7 June so the opportunity for visiting and seeing both these superb free exhibitions at the same time is fairly limited but if you can't get along you may find this interesting.
Move the aircraft along the horizontal axis to view various aspects of AIR's history over the decades
http://theflyingsocialnetwork.com/flyingsocial/airnz75/our-journey?utm_source=TC_NZ_SPECIAL_OFFER_1_image&utm_medium=Email&utm_campaign=PRETRAVEL_b&cid=ad5019bb-f876-31bc-98e3-c52fb26942ca

SUM shareholders flying to Wellington on 30 April might be interested to know that exact date was the morning exactly 75 years ago the very first Trans Tasman flight took place....9 hours to get across the Tasman at only 142 knots per hr. Visit the exhibitions in the morning and SUM ASM in the afternoon might be a good idea.

[tim23]

Just visited AIR exhibition today excellent & free although I paid $99 for a Dreamliner model, happy shareholder!

[Beagle]

Just visited AIR exhibition today excellent & free although I paid $99 for a Dreamliner model, happy shareholder!

Hi Tim,

Did you get a chance to look through the new Gallopli scale of our war exhibition ? Thoughts ?
You might enjoy this http://www.newairplane.com/787/dreampass/?cm_re=March_2015-_-Roadblock-_-787+Dreampass

[Zaphod]

Agree with Houston not being the final destination skid. So what does AIR achieve with this route that it can not achieve from LA or San Fransisco. Central America ? That could be done via the new route to Buenos Aires in my view.

UA's Houston hub services a far greater number of domestic routes than either LAX or SFO, especially into the Southern states.

[iceman]

I have no doubt that the astute management at AIR NZ would have undertaken extensive market research. I hope my concerns will be proven to be unfounded and their plans will be achieved. Time will tell.


http://www.stuff.co.nz/business/67786640/air-new-zealand-to-fly-auckland-to-houston-direct

Most of the answers are in the link Skid posted and in the previous link I posted wherein analysts are very positive. I'm not concerned in the slightest and see this as a positive. You can bet your last dollar and thousands more besides that they've undertaken extensive market research before initiating this new route and while they haven't said as much in the official press release they'll only increase frequency as demand grows. I have tremendous respect for the commercial judgement of management.

Fact is aircraft loadings to North America have been very high for quite some time.

For the benefit of yourself and others that missed last year's annual meeting Chris Luxon assured shareholders that they don't throw on capacity willy nilly, they're a demand focused company.

[tim23]

Roger - I had limited time so no big queues too! Did go to Saturday night to night Anzac show at National Memorial, wonderful!

[Beagle]

https://nzx.com/companies/AIR/announcements/263352

Very strong demand RPK's up a whopping 14%. Really high load factors and yields holding up well in the face of lower oil prices. The cash register must be going into overdrive :D
Nice to see significant new capacity going into the Auckland to Queenstown route for FY16.

[Bilbo]

UA's Houston hub services a far greater number of domestic routes than either LAX or SFO, especially into the Southern states.

I for one will be using the Houston service. Love the ease with which you can fly anywhere in the eastern/central US from there, and will do anything to avoid travelling through LAX. No interest in spending time in Houston though.

[Beagle]

http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/news/Air-New-Zealand--Recruitment-drive-for-Air-NZ-cabin-staff-20230360/

[modandm]

A very important and reassuring set of operating stats, after relative weakness in February. The yield pick-up was most important, and if sustained bodes very well. Dilution of yield by the new route to Singapore is not as bad as feared. With capacity growth really picking up, new fleet arriving, the outlook is very positive. 30-32c EPS this year with 40-45c next year my current expectations.

Positive surprises that neither I nor analysts are modelling which I think could come: (besides fuel/fx/demand which are the majors)
- cargo revenue could pick up (I model flat)
- ancillary revenue should pickup from new cc agreement (hopefully by a lot!)
- labour costs, through a training bubble, and with new cabin crew on lower wages than past agreements, could we see costs under control and rising <4% p.a (for once...)
- other cost item beats (maintenance maybe?)

The question for investors is will FY16 be peak, or can we go higher, what fade or can they sustain earnings, and how fast do we get cash back via dividends. After figuring these out, its what multiple are we using, PE 8,9? EV/EBITDA 4? How will the market value the stock?

I have been good at forecasting earnings improvement, but am less confident about my ability to forecast how the market will respond and value the stock given questions above.

At this time I'm staying in with a full position, I still see >25% upside over 1 year, and until I see dark clouds forming I'm going to stay on-board (1A please)...

-mod

[noodles]

A very important and reassuring set of operating stats, after relative weakness in February. The yield pick-up was most important, and if sustained bodes very well. Dilution of yield by the new route to Singapore is not as bad as feared. With capacity growth really picking up, new fleet arriving, the outlook is very positive. 30-32c EPS this year with 40-45c next year my current expectations.

Positive surprises that neither I nor analysts are modelling which I think could come: (besides fuel/fx/demand which are the majors)
- cargo revenue could pick up (I model flat)
- ancillary revenue should pickup from new cc agreement (hopefully by a lot!)
- labour costs, through a training bubble, and with new cabin crew on lower wages than past agreements, could we see costs under control and rising <4% p.a (for once...)
- other cost item beats (maintenance maybe?)

The question for investors is will FY16 be peak, or can we go higher, what fade or can they sustain earnings, and how fast do we get cash back via dividends. After figuring these out, its what multiple are we using, PE 8,9? EV/EBITDA 4? How will the market value the stock?

I have been good at forecasting earnings improvement, but am less confident about my ability to forecast how the market will respond and value the stock given questions above.

At this time I'm staying in with a full position, I still see >25% upside over 1 year, and until I see dark clouds forming I'm going to stay on-board (1A please)...

-mod
Thanks mod, Always value your input.

Average eps expectations are 40c. Given the fact that out of date reports will still make up the average, we could easily see your 40-45c eps in FY16.

The most recent report actually gave an eps=49c for FY16. Well above your range. Unfortunately, I don't have the report of know who did it. So the question is, are you being too conservative?

[Zaphod]

I for one will be using the Houston service. Love the ease with which you can fly anywhere in the eastern/central US from there, and will do anything to avoid travelling through LAX. No interest in spending time in Houston though.

Yes, it's a great destination for connections and I agree with your sentiments regarding LAX.

Additionally this will help us avoid having to select red-eye connecting flights, and hopefully will mean less chance of encountering west to east flight restrictions during times of heavy east-coast air traffic. I've struck the latter issue a few times and it has resulted in delays of 2-5 hours, resulting in 3am-6am arrival times.

[samdaman]

So the bulk of posters on this thread seem to be quite bullish. I'm loving the forecasts of these EPS that are coming from other posters which makes me a happy holder. I was wondering what some other people may see as some risks for the next year or two for AIR?

[Marilyn Munroe]

I was wondering what some other people may see as some risks for the next year or two for AIR?

Did someone dog whistle me?

There are a couple of area of concern Samdaman. Furious scribblers in the economic profession have often observed a company making good profits attracts competitors. Cullen Airlines is making good coin in a couple of areas which could attract competitors

The cosy duopoly profits for flying across the ditch excluding Auckland, between Cullen Airlines and Queer and Nasty Airlines could attract the attention of passing carnivores. There are lot of idle and underemployed A320's in the near abroad, these could be deployed in buccaneering raids on the duopolies profits.

Aoteoroa to North America is a Cullen Airlines monopoly with monopoly pricing. What if Fiji Airlines established Nadi as hub aggregating Kiwis and Underarm Bowlers for onward flights to North America at competitive prices. Fly 737 to Nadi a night in hotel with a pool and then onwards in A330's. Cullen Airlines provides thrombosis class cabin layouts on these routes. If someone flew A380's in opposition passengers would desert in droves.

None of this may come to pass but it is still possible.

Boop boop de do
Marilyn

[Beagle]

^^ Or...far more likely they will keep hitting the ball right out of the park. I flew down to Te Papa today and was very impressed with the staff's professionalism and friendliness. Really there is no comparison between Air N.Z. and Jetheap.

Air run a very slick and highly professional operation, planes both ways were chock-a-block full and airports were extremely busy. For those with an interest in AIR's 75 year history the exhibition is well worth a visit. Highlights for my wife and I were the walk in interior of the solent flying boat, jet engine from I believe a 737, watching the the various different advertising programs from over the decades, the future of flight, new seats for the Dreamliner e.t.c.
Watching the various interesting safety briefings over the years was good too, I liked the Bear Grills one but for some strange reason my wife seemed mildly annoyed that I wanted to play the safety in paradise video twice, I wonder why :D

The new Gallopoli scale of our war exhibition really blew us away, this is an absolute must see.

Really I think these guys are having a wonderful golden year and are doing everything right to really make the 75th anniversary of this wonderful airline a special year. All the little things impressed, like the coffee cups on the way down with pictures of the six original air hostesses hired for the first flight in 1940 on them. The lift doors at Te Papa had been painted up outside and inside to look like the doors to an aircraft e.t.c.

Even the Kia Ora inflight magazine has a splendid looking and quite lengthy section celebrating the airlines rich history..;.this airline that took us from be an extremely isolated nation at the bottom of the world and connected us.
I am really proud to be a shareholder in AIR and love flying with them. Investment metrics look extremely compelling at 45-50 cps for 2016 wouldn't surprise me and I wouldn't be surprised to see average broker targets for 2015 of 30 cps easily beaten, perhaps by a considerable margin. Trading on a FY 2016 PE of circa 6 I believe the investment case is truly compelling. I hold heaps, (my biggest position), and I am thinking of adding more !! Many of you will know I've commented on this before but I see Qantas are now trading at quite a substantial premium to AIr N.Z. There is nothing to warrant this IMO, in fact I rate this the other way round. Really AIR should now be $3.30 - $3.40 and looking to gain altitude from there.

[Beagle]

http://www.nzherald.co.nz/air-new-zealand/news/article.cfm?o_id=5&objectid=11436283

[modandm]

Thanks mod, Always value your input.

Average eps expectations are 40c. Given the fact that out of date reports will still make up the average, we could easily see your 40-45c eps in FY16.

The most recent report actually gave an eps=49c for FY16. Well above your range. Unfortunately, I don't have the report of know who did it. So the question is, are you being too conservative?

Yes that was the Macq analyst Nick Mar last week, big upgrade to 50c for next year. I think its possible, looking through his assumptions versus mine, he is just a little higher on revenue growth via yield. Roughly same on costs and then I am higher on the Virgin contribution (which I think could be $100m next year).

I can't understate how sensitive the model is to revenue assumptions. 1% translates to around 5c in eps. The cost base is pretty fixed, so any improvement or deterioration in yield/load factor pretty much falls straight to PBT.

I would suggest using 40-45c is fair, and maybe if we continue to see good results, and better clarity on cost performance in the full year I can revise to 45-50c. The PRASM optionality to take us towards 60c is genuine, I just don't think its sensible to get carried away at this stage tantalizing as it is.

I'm really glad these good stats came out, in these quiet patches where the SP doesn't move its easy to get impatient, or twitchy. I am reassured there is upside to $3.50, plus potentially 30-35c in dividends coming our way in the next 12-18 months, that's 40-50% upside.

Major risks are fuel/fx/and demand (translating to loads/yields)
I see little risk of new competition on domestic, trans-tasman or routes to the US despite profits. Asia will remain an okay but not great business overall.

[Zaphod]

Air NZ selects new engines for Airbus fleet

Air New Zealand has selected a next generation Pratt and Whitney engine for its new Airbus fleet in a move that it says will help secure the future of its Christchurch Engine Centre.

The airline said the centre is set for a period of strong growth after this morning announcing it had selected the PurePower PW1100G-JM for its 13 new Airbus A320neo and A321neo aircraft which are due to join its fleet from 2017.

Air New Zealand chief operations officer Bruce Parton said that means the centre will be one of the first facilities in the world with the capability to support the repair and overhaul of the new generation engines.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11437846

Hopefully this will also mean further business for the Christchurch Engine Centre from other airlines.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11438313
Small airlines fly in as Air New Zealand pulls out.

I guess losing $1m a month on the uneconomic routes was simply too much.

Mod - Don't forget to factor in $12m more profit from no longer subsidising the remote regions.

[modandm]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11438313
Small airlines fly in as Air New Zealand pulls out.

I guess losing $1m a month on the uneconomic routes was simply too much.

Mod - Don't forget to factor in $12m more profit from no longer subsidising the remote regions.

Makes good business sense, but very small in the scheme of things. No doubt will be redundancy costs, and asset impairments to offset savings short term.

On the plus side its money saved in future years, and they won't be putting another dollar of investment into a weak business. A sign the new CEO is leading a commercially driven, performance orientated company. I'm looking forward to hearing about their next targets, since the are now set to meet prior aspirations.

[Beagle]

I quite like the little Beechcraft 1900's but they are certainly starting to look pretty tired, (outside and interior), and very close to the end of their economic life. I would think their remaining book value would be very low and it's possible they could be sold to a small regional airline elsewhere in the world while they have some remaining economic life, so maybe Mod, not too much of a write-down, maybe even a very modest profit on disposal ? and I note AIR are trying to redeploy Eagle personnel within AIR itself wherever possible.

Totally agree that Chris Luxon makes an excellent CEO.

The little Beechcraft certainly make quite "the impression" on take-off with raucous and very strong acceleration. Worth going for another ride on one before this particular aspect of the show is over, in my opinion.

Some history on Eagle for those interested.

http://en.wikipedia.org/wiki/Eagle_Airways

[Beagle]

Happy Birthday too AIR New Zealand:t_up:
75 years ago this morning the first flight of a Solent flying boat owned by Tasman Empire Airlines Limited (TEAL which subsequently became AIR N.Z), took off from Mechanics bay in the Waitemata harbour for a nine hour flight to Sydney.
If you love history, planes, aviation, this company or all of the above you'd be mad to miss the exhibition at Te Papa. Why bother investing if you can't shout yourself a trip to Wellington and have a good day out !! Go on, you know you deserve it :)

[Marilyn Munroe]

Virgin(Under Arm Bowlers Division) continues to burn cash and drag down Cullen Airlines.

http://www.asx.com.au/asxpdf/20150501/pdf/42y996b7lmfh4l.pdf

Though to be fair they are now burning $10 notes rather than $100 notes.

Boop bop de do
Marilyn

Memo to John Key. Sell Cullen Airlines to Eithad.

[tzbang]

Why this continual downward trajectory, seems oversold and under valued. Lack of news? Oil prices creeping up? I'm tempted to buy more but I am over weight with this stock already. :-/

Edit - ( Looks like Marilyn posted the answer just before the question )

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11441744

Tough week watching the SP go down and my invitation to this event must have gone astray in the mail :(
Video at the end worth a look.
I'm a little underwhelmed / unconvinced by Virgin's performance, I would have thought they'd be turning a buck or two in the black by now.
Keeping the faith...not much oil price tailwind left in the SP now...what if oil falls back to $50 again ?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11440977
Air's exhibition coming to Auckland's Museum on 20 November.

I think AIR need to look after shareholders this year...I've changed my mind on the special divvy, I reckon 7.5 cents would be nice + a normal sized final divvy and they should do something special for the ASM...Aucklkand's turn this year...I'm thinking holding it at one of the AIR N.Z. hangers and for goodness sake put on a decent spread and drinks this year and then taking shareholders for a scenic flight around Auckland / Northland in that all black fancy Dreamliner. Maybe a nice low and slow pass over Cape Reinga would be nice... You hearing me Chris ?
And yeah, if you would have some of your most attractive young flight attendants modelling some of the uniform fashions down through the decades that might provide a good ambience.

[brend]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11441744

Tough week watching the SP go down and my invitation to this event must have gone astray in the mail :(
Video at the end worth a look.
I'm a little underwhelmed / unconvinced by Virgin's performance, I would have thought they'd be turning a buck or two in the black by now.
Keeping the faith...not much oil price tailwind left in the SP now...what if oil falls back to $50 again ?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11440977
Air's exhibition coming to Auckland's Museum on 20 November.

I think AIR need to look after shareholders this year...I've changed my mind on the special divvy, I reckon 7.5 cents would be nice + a normal sized final divvy and they should do something special for the ASM...Aucklkand's turn this year...I'm thinking holding it at one of the AIR N.Z. hangers and for goodness sake put on a decent spread and drinks this year and then taking shareholders for a scenic flight around Auckland / Northland in that all black fancy Dreamliner. Maybe a nice low and slow pass over Cape Reinga would be nice... You hearing me Chris ?
And yeah, if you would have some of your most attractive young flight attendants modelling some of the uniform fashions down through the decades that might provide a good ambience.

Thanks for the info Roger...will definitely make an attendance at the Shareholdings meeting.

[Beagle]

You never know mate, I might just pluck up the courage and be cheeky enough to cut and paste that last paragraph and send it too C.L. You never know do you but one things for sure, if you don't ask you don't get :D

[winner69]

Don't AIR have some of these things

http://www.smh.com.au/it-pro/business-it/boeing-warns-all-787s-should-be-turned-off-and-on-again-to-avoid-potential-crash-20150503-1mz51i.html

[Beagle]

Don't AIR have some of these things

http://www.smh.com.au/it-pro/business-it/boeing-warns-all-787s-should-be-turned-off-and-on-again-to-avoid-potential-crash-20150503-1mz51i.html

Yeah but they're all good and not a problem.

[dingoNZ]

Yeah but they're all good and not a problem.

I don't see this being an issue... I fly AIR NZ to Shanghai next week on one, looking forward to it.


Operators of Boeing 787 Dreamliners are being told to shut down the plane's electrical power periodically after Boeing discovered a software error that could result in a total loss of power.


Boeing found during laboratory testing that the plane's power control units could shut down power generators if they were powered without interruption for 248 days, or about eight months, the US Federal Aviation Administration said on Thursday. The findings were published in an airworthiness directive..

[KiwiGekko]

On the up today...

[Beagle]

http://www.cnbc.com/id/102639920

[KiwiGekko]

http://www.cnbc.com/id/102639920

To be fair Roger, the analysts have been saying it'll go up / down or sideways for a while now... A lot of the analysis I read even said it should be going down, while it was rallying! Its fair to say I have given up putting too much weight on these comments.

That being said, a pull back to $50 / barrel would be nice. :t_up:

[Beagle]

Yep have to agree. Monkeys throwing darts have probably been more accurate :)

[vin]

Up 4% today... Am I missing something?

[noodles]

Yep have to agree. Monkeys throwing darts have probably been more accurate :)
Only Allah knows about oil prices: Saudi oil chief
http://www.cnbc.com/id/102647881

[Beagle]

Only Allah knows about oil prices: Saudi oil chief
http://www.cnbc.com/id/102647881

I hereby appoint you as our official representative to ask him then :D

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11443737

[modandm]

2 more dreamliners arriving soon... got me dreaming about what I wish management would do to boost our returns.

1. Sell a 49% stake in the airpoints program - could get at least $400m for it
2. Sell the dreamliners on lease-backs, boost the gearing from current 51% towards 75%, could generate c.$1bn
3. Reduce the cash on balance sheet to $500m from $1.1bn

Return $2bn to shareholder's through a $1.80 per share special dividend.

And doing this would have minimal effect on the stock price because we all value on forward PE or forward EBITDAR or dividend yield...

This stock is bloody undervalued I tell you, if Airpoints is worth $800m which I think it is, and Virgin stake what $400m, and cash on balance sheet of $1b... you are paying $1bn for a company earning well over $250m (ex AP)... So the core business is trading on 4x earnings...

Does anyone want to help me take it private? Jokes aside, if this was run by US management and not government controlled, the CFO would be fired, someone aggressive hired, and the stock double through basic financial engineering that is rife in the US. American Airlines is buying back stock, despite gearing of over 150%...

[Jay]

All ways appreciate your knowledge modandm.
Question, why have they purchased the planes rather than lease -backs as you suggest - are there tax advantages, better deal on price, cheaper overall???

[Beagle]

2 more dreamliners arriving soon... got me dreaming about what I wish management would do to boost our returns.

1. Sell a 49% stake in the airpoints program - could get at least $400m for it
2. Sell the dreamliners on lease-backs, boost the gearing from current 51% towards 75%, could generate c.$1bn
3. Reduce the cash on balance sheet to $500m from $1.1bn

Return $2bn to shareholder's through a $1.80 per share special dividend.

And doing this would have minimal effect on the stock price because we all value on forward PE or forward EBITDAR or dividend yield...

This stock is bloody undervalued I tell you, if Airpoints is worth $800m which I think it is, and Virgin stake what $400m, and cash on balance sheet of $1b... you are paying $1bn for a company earning well over $250m (ex AP)... So the core business is trading on 4x earnings...

Does anyone want to help me take it private? Jokes aside, if this was run by US management and not government controlled, the CFO would be fired, someone aggressive hired, and the stock double through basic financial engineering that is rife in the US. American Airlines is buying back stock, despite gearing of over 150%...

Best ramp I've seen for quite a while...good on you mate :D

[winner69]

Mo .....most of that $1 billion or whatever in cash isn't really theirs is it. Most is prepaid fares

Even at the time ofbthebbig bail out they prided themselves no the billion in the bank

[Beagle]

Mo .....most of that $1 billion or whatever in cash isn't really theirs is it. Most is prepaid fares

Ssssh, quietness from the cheap seats please...I was having fun until some nosey bugger put a fly in the ointment :)

[winner69]

Ssssh, quietness from the cheap seats please...I was having fun until some nosey bugger put a fly in the ointment :)

Some of that billion is mine mate .....hope they deliver on the promise

And not cheap seats either

[mikeybycrikey]

2 more dreamliners arriving soon... got me dreaming about what I wish management would do to boost our returns.

1. Sell a 49% stake in the airpoints program - could get at least $400m for it
2. Sell the dreamliners on lease-backs, boost the gearing from current 51% towards 75%, could generate c.$1bn
3. Reduce the cash on balance sheet to $500m from $1.1bn

Return $2bn to shareholder's through a $1.80 per share special dividend.

And doing this would have minimal effect on the stock price because we all value on forward PE or forward EBITDAR or dividend yield...

This stock is bloody undervalued I tell you, if Airpoints is worth $800m which I think it is, and Virgin stake what $400m, and cash on balance sheet of $1b... you are paying $1bn for a company earning well over $250m (ex AP)... So the core business is trading on 4x earnings...

Does anyone want to help me take it private? Jokes aside, if this was run by US management and not government controlled, the CFO would be fired, someone aggressive hired, and the stock double through basic financial engineering that is rife in the US. American Airlines is buying back stock, despite gearing of over 150%...

Financial engineering like this often fills me with a sense of dread since it seems like a short term gain leading to a longer-term cost. Nothing you have suggested seems that extreme though. And it certainly provides a different way of looking at the company.

I do have a couple of questions though:
1. What does selling off an air points gain? I see that Virgin sold off 35% of their programme a while back. How much profit does AP make and can this reasonably be increased by selling it off? Can profit be increased without annoying customers since incentives have now diverged?

2. How sensible is AA's gearing of 150% that you mentioned? Airlines are a low-margin yet volatile business. Profits are can easily be turned to losses by dropping load factor from 85% to 75% (I think). Yet increasing gearing turns a risky business into a very risky business.

[Marilyn Munroe]

News: Emirates has had another good financial year with East Asia and Australasia being the best regions.

THE SCENE: In a plush skyscraper office overlooking a sand dune.

Sheik of Emirates(into intercom): "Salaam Chief Bean Counter."

Chief Bean Counter(from intercom): "Greetings Your Excellency."

Sheik of Emirates: "I have all these new A380's, where should I fly them to get the most revenue per rivet/kilometer?"

Chief Bean Counter: "New Zealand Excellency."

Sheik of Emirates: "But won't that be bad for those sheep shaggers who run Cullen Airlines?"

Chief Bean Counter: "It is Allah's will Excellency."

Sheik of Emirates: "Very well lets do it."

Chief Bean Counter: "May I give you some frank advice Excellency?"

Sheik of Emirates: "Yes."

Chief Bean Counter: "It is risky for an Arab to raise the topic of unnatural sexual practices"

CLICK!!


Boop boop de do
Marilyn

[Beagle]

http://tvnz.co.nz/national-news/surf-s-up-dude-air-nz-hits-beach-latest-safety-video-6312753

New safety video released today. I see they've done their best not to objectify women by having equal measures of young adults and different races. Bound to have been filmed under strict orders to keep the PC nutters happy.

I still prefer the safety in paradise one for some strange reason :D https://youtu.be/q0tkeGPG_8Q

Anyway speaking of strange, I see QAN had a big investor day this week and its put a rocket up their SP and the spread over AIR's SP is now out to a whopping 90 cents. This seems absolutely crazy to me...maybe AIR's management need to do a better job of keeping the investment community aware of their projected outperformance this year and next ?

[modandm]

Very good investor day presentation from Qantas. Exactly what the pro's are looking for. Taking a play out of the Delta playbook. Drive WACC lower, drive ROIC higher... it's so simple. Personally I don't believe Qantas international can justify much investment, less still the billions required to replace the 747 fleet in 5 years, then the a380 fleet in 10... Of course they can age the fleet and boost the SP for the next 3 years, then retire hero's.

Now when you are 50% government owned are you going to be so... how should I put it? Commercial? I have my doubts, but hope to be surprised - I will be communicating as such with IR/management when we next chat.
Until then, be patient, enjoy the Qantas updraft. Air's fleet is in incredible shape, and such a strong position with orders and options. Under-appreciated YES!

-mod

[Beagle]

Yes I suspect its too politically sensitive to shout one's commercial attributes too loudly lest they draw fire from the greenies / lefties screaming "ITS A MONOPOLY" and we demand social accountability and responsibility and Westport to Wellington fares for $29 return..opps oh wait, no they can't do that anymore as its proven the route is uneconomic with twin engine two pilot operations even at AIR's allegedly extortionate / monopolistic price.

Suppose they had to hand it over to someone else flying single engine, single pilot operations...those "well informed" lefties probably think single engine / pilot operations are more environmentally friendly and wouldn't have a clue about the extra risk. I suppose you could call that a "win-win"

Thoughts on a special divvy this year Mod ? Apparently is all the rage now to run really high leverage, (just witness QAN's SP), so seeing as AIR is 50/50 debt-equity and they can finance / lease planes at ultra low international interest rates they might as well pay out 100% of earnings this year, yes ?

[KiwiGekko]

Watching Qantas SP ramp up has been pretty crazy, I haven't been able to make sense of it and have been a bit envious of our maaates across the ditch. I guess that's the price AIR pays for being 50% government owned?

No bother though, it looks like the AIR SP is getting close again to that magical $3.00 mark. Roger, you got a special bottle of something in the fridge?

[Beagle]

Watching Qantas SP ramp up has been pretty crazy, I haven't been able to make sense of it and have been a bit envious of our maaates across the ditch. I guess that's the price AIR pays for being 50% government owned?

No bother though, it looks like the AIR SP is getting close again to that magical $3.00 mark. Roger, you got a special bottle of something in the fridge?

No mate, I'm too p@#sed-off about the QAN SP. Even $3.00 won't make me happy now. I won't be happy till the Koru is on top of the Kangaroo tail again. AIR at $4.00 and Qan where it is would see the principals of natural justice well served and keep those underarm bowlers in their rightful place. To think these two shares were duelling for who was on top a couple of months ago...the world is obviously a crazy place.

[KiwiGekko]

No mate, I'm too p@#sed-off about the QAN SP. Even $3.00 won't make me happy now. I won't be happy till the Koru is on top of the Kangaroo tail again. AIR at $4.00 and Qan where it is would see the principals of natural justice well served and keep those underarm bowlers in their rightful place. To think these two shares were duelling for who was on top a couple of months ago...the world is obviously a crazy place.

Fair enough, guess i'll be drinking alone then. On the upside, at least you didn't decide on Wednesday you were a bit too heavy on AIR and sell down a small parcel at $2.83 to balance out some other shares.

Dunno who the Plonker who did that was... :sleep:

Have a good weekend everyone!

[Beagle]

Sadly I know another bloody idiot that decided to rebalance his portfolio down to a 10% allocation to AIR very recently...that idiot being me :blush:

[gv1]

This is one stock I won't touch to sell... have $3.50 marked. Otherwise have loads of cashout.. including from hnz etc.

[tim23]

Playing a bit of catch up with Qantas, well due too! Happy holder.

[Beagle]

Fair enough, guess i'll be drinking alone then. On the upside, at least you didn't decide on Wednesday you were a bit too heavy on AIR and sell down a small parcel at $2.83 to balance out some other shares.

Dunno who the Plonker who did that was... :sleep:

Have a good weekend everyone!

Okay, you win, I'll be drinking something nice with you in spirit when it cracks $3.00 which looks like any day now...any good excuse for a bevvy or two right :)

[KiwiGekko]

Okay, you win, I'll be drinking something nice with you in spirit when it cracks $3.00 which looks like any day now...any good excuse for a bevvy or two right :)

Haha, that's the spirit! :)

[Beagle]

Haha, that's the spirit! :)

Yeah, might be top shelf spirit too :)
Something else to consider as part of our celebration of the 75th year.
http://merchandise.airnewzealand.co.nz/aircraft Clothing, ceramics e.t.c., see menu at top of page as well as aircraft models but I reckon the retro cabin bags are especially cool.

[Bjauck]

Yeah, might be top shelf spirit too :)
Something else to consider as part of our celebration of the 75th year.
http://merchandise.airnewzealand.co.nz/aircraft Clothing, ceramics e.t.c., see menu at top of page as well as aircraft models but I reckon the retro cabin bags are especially cool.

In the list of aircraft models, there is no DC-10. It used to be their flagship aircraft for some time.

[see weed]

In the list of aircraft models, there is no DC-10. It used to be their flagship aircraft for some time.

Mt Erebus might be the reason. Another reason... Didn't some DC-10's have a cargo door problem because of the tail wing engine, when in high power stretched the under belly and popped the cargo door open. Correct me if I'm wrong.

[Beagle]

You're not wrong. Erebus aside, its hardly an impeccable record and probably why they choose not to have a model of one.
http://en.wikipedia.org/wiki/McDonnell_Douglas_DC-10

[freddagg]

Looks good.
https://www.nzx.com/companies/AIR/announcements/264698

[Regi]

Looks good.
https://www.nzx.com/companies/AIR/announcements/264698

Could it be the one to finally push AIR to $3? Has to be one of these days...

[tzbang]

yeah time it gets within a Wiff of the magical $3 mark she trips up

[Regi]

yeah time it gets within a Wiff of the magical $3 mark she trips up

Tell me about it... stupidly topped up this morning when it was at $2.94... Coulda saved 4 cps if I waited lol:sleep:

[tim23]

They might have put on 4c too doesn't matter too much if its a long term buy

[couta1]

Tell me about it... stupidly topped up this morning when it was at $2.94... Coulda saved 4 cps if I waited lol:sleep:
Not stupidity just the nature of the game, you can often save and a whole lot more than 4c, think more along the lines of 50c-$1 so 4c more like a petrol voucher discount so not a problem:cool:

[skid]

I dont know if its been mentioned but alot of US airlines SP have tanked pretty badly --not sure why but could it have rubbed off?

[samdaman]

Would love to hear from roger and mod on what they think of the stats. Is there a horn I can blow to summon them?

[Beagle]

I thought this was a VERY strong set of stat's, really surprised me how strong it was. Especially pleasing were the domestic load factors given the local economy is hardly going off like a rock star economy is it.

The only very slight disappointment was the decline in group wide yield to a 0.6% increase YOY. This needs to be viewed in the context of an extremly competitive internatinal market place driven off the back of low oil prices.

e.g. latest consumer price index indicated average international airfares have fallen 15% YOY but yet AIR has been able to increase RPK yield by 0.6% while starting to enjoy much lower oil prices.

I see an extremly strong annual result coming albeit somewhat mitigated ny Virgin.

Very happy holder, top quality management, compelling valuation metrics and good growth in RPK's and load factors means this stock is well positioned for further SP gains.

I can almost smell a special divvy feed coming :)

[winner69]

Good to see your company sticks to the rules

Hope the culprit didn't get a refund and had to fly home on a delayed Jetstar flight

http://www.sharechat.co.nz/article/e1cab6b1/bob-jones-ejected-from-air-nz-flight.html?utm_medium=email&utm_campaign=Bob+Jones+ejected+from+Air+NZ+flight&utm_content=Bob+Jones+ejected+from+Air+NZ+flight+C ID_e509dcdf5cb83a7cc161c6e46b0d6a8f&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlee1cab6b1bob-jones-ejected-from-air-nz-flighthtml

[pierre]

Sir Bob jones
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11455485

Some years ago I was seated next to the very same gentleman(?) in the front row of on an Air NZ domestic flight. Sir Bob reclined his seat, placed a set of headphones on his head and proceeded deliberately to ignore numerous attempts by the stewardess to have him return his seat to the upright position before take-off. She was very frustrated and embarrassed but let him get away with it on that occasion.

I have to say that, while I enjoy much of Bob's writing and frequently agree with his views on the "nanny state" I'm very pleased that his brazen contempt for the aviation safety rules that the rest of us abide by has been properly dealt with by Air New Zealand on this occasion.

[skid]

Lets face it --he is not a nice person--ego orientated and confrontational

[winner69]

What's it like in their Roger, surely your mate Christopher has invited you to join

http://www.stuff.co.nz/travel/news/68839546/air-new-zealand-offers-secret-invite-only-elite-priority-one-lounge

[winner69]

What's it like in their Roger, surely your mate Christopher has invited you to join

http://www.stuff.co.nz/travel/news/68839546/air-new-zealand-offers-secret-invite-only-elite-priority-one-lounge

Only serves Tui though Roger

[Beagle]

What's it like in their Roger, surely your mate Christopher has invited you to join

http://www.stuff.co.nz/travel/news/68839546/air-new-zealand-offers-secret-invite-only-elite-priority-one-lounge

Yep he's been at me to join multiple times but my wife has said NO on the grounds that the air hostesses in their are far too pretty and far too attentive :D

[iceman]

Yep he's been at me to join multiple times but my wife has said NO on the grounds that the air hostesses in their are far too pretty and far too attentive :D

This elitist BS is a poor use of the company´s resources. The Koru Club and Star Alliance lounges are perfectly suitable for anyone, whatever class they travel.

[winner69]

This elitist BS is a poor use of the company´s resources. The Koru Club and Star Alliance lounges are perfectly suitable for anyone, whatever class they travel.

but you forget some people are really really special. like CEOs of our major companies and a Vice Chancellor (wonder what university eh) .... they cant mingle with the riff raff on their multi million dollar salaries.

Wonder if Bob Jones is a member?

[biker]

....

Wonder if Bob Jones is a member?

Hahaha very droll. Probably......... not.

[Zaphod]

Obviously AirNZ see it adding value to the business, despite going against the grain for many in this community. As a shareholder all I care about in this instance is that it improves the bottom line, but given the secrecy surrounding membership and the probable lack of specific financial reporting, we probably will never be able to determine this for ourselves.

[winner69]

Obviously AirNZ see it adding value to the business, despite going against the grain for many in this community. As a shareholder all I care about in this instance is that it improves the bottom line, but given the secrecy surrounding membership and the probable lack of specific financial reporting, we probably will never be able to determine this for ourselves.

Maybe the reward for getting these big companies on going business .... the perk for the big boss. Maybe the shareholders of those companies should be asking questions, is travel policy and preferred airline based on other things than the best deal

A bit like the Hi Rollers club at the casino eh.

[percy]

Maybe the reward for getting these big companies on going business .... the perk for the big boss. Maybe the shareholders of those companies should be asking questions, is travel policy and preferred airline based on other things than the best deal

A bit like the Hi Rollers club at the casino eh.

Exactly the same as the casino Hi Rollers club.
All businesses must look after their special customers.
AIR are looking after the ones who are likely to generate $1mil worth of business.And that business will not be grab a seat.!
ps.I can't remember adding to your reputation W69,but up it came,spread it around.!!!
We must be the only sharetraders who value each others opinion???????????????????????

[Jaa]

Well said Iceman.

They should focus on winning business by providing the best service and value for money for all passengers. Not by bribing the chief decision makers.

[emveha]

Exactly, and if they expel a Bob Jones from time to time to keep the people happy, what's not to love?

[Beagle]

Exactly the same as the casino Hi Rollers club.
All businesses must look after their special customers.
AIR are looking after the ones who are likely to generate $1mil worth of business.And that business will not be grab a seat.!
ps.I can't remember adding to your reputation W69,but up it came,spread it around.!!!
We must be the only sharetraders who value each others opinion???????????????????????

This. Any astute person in business for themselves knows this. Pretty sure these extremely valuable customers wouldn't be getting the "Monika Lewinsky treatment" so the rest of us commoners using Koru club are probably not missing much other than maybe a good back massage.

[Sideshow Bob]

Indeed Rog. These people are the sort that want to feel that they are actually "extra special". Whether they get treated much better maybe a moot point, but they are away from the plebs in Koru.

Actually I think one of the guys from my work is in this. He does about 4 long haul business class trips per year with Air NZ (and varies his route to rort the travel policy), so he can go AIR. He would like to feel special......

[Mista_Trix]

Sooooooo close...

...but not quite.

[Beagle]

Sooooooo close...

...but not quite.

Dammit, I was looking forward to special drinkies tonight.

[winner69]

So John not a member of EP1 or whatever .... Air NZ have good taste, hood on them. Wouldn't want to scare off the other punters eh

http://www.stuff.co.nz/travel/news/68926951/ian-taylor-resigns-air-nzs-elite-priority-one-membership-to-defend-club

[Regi]

Dammit, I was looking forward to special drinkies tonight.

Likewise! Hooopefully I can justify end of week ones with it tomorrow! Come on AIR, you can do it! :t_up:

[winner69]

Down the local yesterday and some guys were talking about the special club. Most agreed just a way of rewarding (bribing) decision makers to ensure Air NZ is their preferred carrier.

Best quip of the night was 'that's just what FIFA officials are doing'

On reflection probably is .....funny world we live in eh

[Beagle]

Not sure what's gone on at FIFA but I'd suggest there's a big difference between AIR providing an exclusive quiet area for people to do business and a staff member to usher them through the airport's security and baggage claim quickly and the payment by certain organisations / people of multi million dollar cash bribes to FIFA officials so I think your friends attempt to draw an analogy between the two might be fuelled by excessive liquor consumption and perhaps a little tinge of the green eyed envy monster.

I wouldn't mind betting a beer that one of AIR's senior management will be calling John Key to invite him into the club very shortly....the leader of the Government which is the biggest shareholder :doh...you'd have thought he would have had an invite already...whoever is in charge of invites should be deeply embarrassed about this oversight.

There's lot of grey lines with this sort of thing though Winner. For example because I have a nice Euro car of a different brand as part of a direct marketing campaign I was offered a BMW 7 series for the weekend to evaluate and it came with an invitation to dine at any one of seven of Auckland's top restaurants with a $300 table credit. No issues with the thorough test drive opportunity but the latter part of the offer felt like a bribe to me. Others would say no, that's there way of thanking you for considering their vehicle...line ball call that one, I decided it was too uncomfortably close to the line for my wife and I. Brilliant car, I can see why the politicians have them.

Is a fancy restaurant dinner a bribe...what about tickets to a good rugby match or to the Theatre for a good show ? No question about large cash payments though is there mate !!

[mikeybycrikey]

I wouldn't mind betting a beer that one of AIR's senior management will be calling John Key to invite him into the club very shortly....the leader of the Government which is the biggest shareholder :doh...you'd have thought he would have had an invite already...whoever is in charge of invites should be deeply embarrassed about this oversight.

I doubt John Key will be invited whilst PM. As Prime Minister, I expect he already gets most of the perks of the club. Plus I doubt he travels alone and comes with quite a few hangers-on (DPS, private secretaries etc). Do you really want the PMs entourage wafting into your exclusive area? And do you really want the Minister in charge of having an opinion on everything as a member of your discrete club? I don't think so. As I saw in one of the Stuff comments: the first rule of flight club is don't talk about flight club.

Good thought-provoking comments on corruption though, Roger. Maybe EP1 is seen as a step too far in bribing the government if the PM is a member too? And poor value for the shareholders.

Think it might be on for $3 today.

[Harvey Specter]

I doubt John Key will be invited whilst PM. As Prime Minister, I expect he already gets most of the perks of the club. Exactly. I wonder how often he actually uses Koru. And I think this is only for international flights where as soon as he lands, he would get presidential treatment.

[Beagle]

I doubt John Key will be invited whilst PM. As Prime Minister, I expect he already gets most of the perks of the club. Plus I doubt he travels alone and comes with quite a few hangers-on (DPS, private secretaries etc). Do you really want the PMs entourage wafting into your exclusive area? And do you really want the Minister in charge of having an opinion on everything as a member of your discrete club? I don't think so. As I saw in one of the Stuff comments: the first rule of flight club is don't talk about flight club.

Good thought-provoking comments on corruption though, Roger. Maybe EP1 is seen as a step too far in bribing the government if the PM is a member too? And poor value for the shareholders.

Think it might be on for $3 today.

You're probably right considering the size of the usual entourage but he did seem somewhat surprised yesterday that he hadn't received an invite...but then again a cynic would argue he's making political capital out of that trying to appeal to the ordinary voter. $3 today would be a nice way to end the week wouldn't it...make for a happy start to the long weekend :)