AIR - Air NZ.

[Beagle]

Pretty sure it was 44 cents a little while back, could be wrong...not much in it either way. We have two brokers with a buy, two with an outperform rating and two with a hold recommendation.

[couta1]

http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/consensus/

Consensus FY16 EPS now 45 cps. On tomorrow's theoretical ex divvy price, ($2.54 less dividend $.095) = $2.445, that's a FY16 PE of ($2.445 / $0.45) 5.43 !!..."horribly expensive" eh !! :D
We live in "interesting times" so notwithstanding the compelling metrics I have parked the truck up for now and am content to hold a reasonable sized allocation to AIR. Looks like I'm alone in the XXXL division then, never mind I reckon it's Just What I Needed.

[sb9]

......with a $3.80 - $3.90 price target. :)

Love your optimism..more than half full glass guy!!!:t_up:

[Beagle]

Looks like I'm alone in the XXXL division then, never mind I reckon it's Just What I Needed.

Yes, large positions are not good for my blood pressure...just doesn't suit my personality type. (Getting more conservative as I get older)....BUT I reserve the right to change my mind if it gets belted down for no good reason.

[couta1]

Yes, large positions are not good for my blood pressure...just doesn't suit my personality type. (Getting more conservative as I get older).
Big divvy is a nice bonus in tough times, I've decided I won't be putting anymore money into the share market for a long while now as it can be like owning a boat(Chucking money into a black hole) Will see what becomes of my current holdings and build up a cash/TD nest egg for a while.

[Beagle]

Big divvy is a nice bonus in tough times, I've decided I won't be putting anymore money into the share market for a long while now as it can be like owning a boat(Chucking money into a black hole) Will see what becomes of my current holdings and build up a cash/TD nest egg for a while.

I think quite a few people are taking a fairly circumspect view on the short term prospects of the market. AIR a good strong and well managed company that's been around for 75 years and in another 75 years time it'll still be flying and still be paying out solid dividends every six months. Hopefully we're both around to enjoy celebrating their centenary year. I'll earmark some of this dividend to a useful purpose, come down and have a beer or two with you sometime this summer mate. Gotta have a ride in that high powered Jag of your's :)

[couta1]

Sounds like a good plan Roger, as an aside you do have life insurance now don't ya? :eek2:. PS- No need to worry it doesn't take corners at high speed well at all so any speed will be in a straight line.

[ddrone]

Hey guru's, given we're EX tomorrow. Should we expect a drop in the range of 9.5c or 14.5 to include the ICs?

[Beagle]

Closed at $2.53, theoretical ex divvy price $2.435.

[Bjauck]

Hey guru's, given we're EX tomorrow. Should we expect a drop in the range of 9.5c or 14.5 to include the ICs?
I am not a guru but I will add my 2 penn'orth - depending on how America behaves overnight and all things being equal etc. - the ICs usually end up in Her Majesty's coffers so I think that the drop will reflect the net dividend payment. Now over to the gurus...

[Bjauck]

I think quite a few people are taking a fairly circumspect view on the short term prospects of the market. AIR a good strong and well managed company that's been around for 75 years and in another 75 years time it'll still be flying and still be paying out solid dividends every six months. Hopefully we're both around to enjoy celebrating their centenary year. I'll earmark some of this dividend to a useful purpose, come down and have a beer or two with you sometime this summer mate. Gotta have a ride in that high powered Jag of your's :) Hopefully another Ansett type event won't occur. If Qantas bankroll a loss making airline in NZ for long enough and take international traffic could it make a bit of a dent?

[stoploss]

Hopefully another Ansett type event won't occur. If Qantas bankroll a loss making airline in NZ for long enough and take international traffic could it make a bit of a dent?

I don't think Qantas will have the stomach to bankroll a loss making entity for a long time .... It was only a year ago they had this shocker ......

http://www.theaustralian.com.au/business/aviation/qantas-dives-to-record-28-billion-annual-loss/story-e6frg95x-1227039576970

[couta1]

Closed at $2.53, theoretical ex divvy price $2.435.
A shame to see it close so low before going Ex, an irrational price IMO. Impossible to say how it will behave going Ex, in a rational market it wouldnt drop at all because its already heavily discounted(Ive seen that happen a few times with other stocks) however it's a different market at the moment so it could get hammered back into the $2.30 ish area again in a day or two, toss a coin to decide the correct outcome.

[Nasi Goreng]

You may think the market is being irrational but I don't see it that way. Airlines are in a high risk cyclic industry and all stars have been aligned which is enabling great profit growth. You have to ask the question, is FY15/16 as good as it gets? You would need very rose tinted glasses to be confident that Air NZ can deliver these kind of profits for the next 10 years without any downturns.

I don't think its a bad investment but my gutometer says stay away.

[Beagle]

Hopefully another Ansett type event won't occur. If Qantas bankroll a loss making airline in NZ for long enough and take international traffic could it make a bit of a dent?
Well, there is an Ansett of sorts, called Virgin. There's two sides to this story. At last year's annual meeting I asked Chris Luxon when he expected Virgin to be profitable and he said in the FY17 year. They're now expecting it to be profitable in FY16 so while its fair to say Jetstar will be nibbling away at AIR's share of the market here, (and probably costing QAN money), Virgin will be nibbling away at QAN's market share in Australia and making AIR money :)


A shame to see it close so low before going Ex, an irrational price IMO. Impossible to say how it will behave going Ex, in a rational market it wouldnt drop at all because its already heavily discounted(Ive seen that happen a few times with other stocks) however it's a different market at the moment so it could get hammered back into the $2.30 ish area again in a day or two, toss a coin to decide the correct outcome.
Yes its a little frustrating mate. Christopher Luxon a little frustrated with analysts on the recent conference call and not without some grounds I feel. Analysts are forecasting EPS for FY17 of only 36 cps,a steep fall from FY16's consensus estimate of 45cps. Presumably this is based on the expectation that we are at the peak of the cycle in FY16, (how anyone in their right mind could call the current economic conditions a peak of any sort I have no idea whatsoever), and that economic conditions and oil prices will conspire against AIR in FY17. Curiously analysts in Australia are not predicting this same cyclical phenomenon with QAN earnings at all, go figure ? I would have thought they are roughly at the same stage of the economic cycle and with the Australian economy mainly commodity based are exposed to not dissimilar macro and micro economic factors as AIR.

Nasi Goreng. - You need to keep in mind that the ten year average PE for AIR is 10 and the current PE based on consensus broker estimates for FY16 is 5.4 so clearly the market is not expecting the current year profit to be repeatable ad infinitum. The real question is whether the current circa 50% discount to average PE is warranted, i.e. will profits halve going forward ? Even using the conservative broker forecasts of 37 cps next year its clear they won't halve. The market is clearly sceptical that AIR can fill their planned 11% capacity increase this year with business and consumer confidence plumbing multi year lows. For me I draw my answer from sheeting this question back to the quality of the management and the marketing team. Do I have upmost confidence the CEO and senior management team can navigate their way through the challenges they will face this year and into the future. For me that's an emphatic YES but its up to others to draw their own conclusions.

Perhaps others who haven't met the team will draw some comfort in these interesting times from recalling that this company and its Chairman won the prestigious company of the year and Chairperson of the year awards at last year's Deloitte annual company awards. Clearly other individual's at the highest level's in N.Z. business circle's are extremely impressed with the way this company is being managed.
Imagine how well they'd do in Fy17 if the economy recovered and oil stayed low...those conservative analysts might have to change that 37 to a 47 cps EPS...Couta1, I and others might even get our $3.50 then :D Regardless of how it pans out I'm in this for the long haul. Some will recall the projected dividend yield I recently talked about recently over the next couple of years...

[Snow Leopard]

I pay Air New Zealand so little attention that I had not even bothered to read the financial results for a number of years.

But given the rave reviews that they have been getting here of late I thought I ought to be open to giving the accounts a quick once over.

So did you know that there was a big jump in 'interesting bearing liabilities' during FY2015?

So did you know that, cumulatively, over the last six years (FY2010 to FY2015) AIR have spent slightly more on capital investments (planes etc) than they received from operations (moving people on planes)?
and they currently say that they will spend another $2.6B on planes and things over the next four years.

Still definitely not an investment for me.

Best Wishes
Paper Tiger

[h2so4]

I pay Air New Zealand so little attention that I had not even bothered to read the financial results for a number of years.

But given the rave reviews that they have been getting here of late I thought I ought to be open to giving the accounts a quick once over.

So did you know that there was a big jump in 'interesting bearing liabilities' during FY2015?

So did you know that, cumulatively, over the last six years (FY2010 to FY2015) AIR have spent slightly more on capital investments (planes etc) than they received from operations (moving people on planes)?
and they currently say that they will spend another $2.6B on planes and things over the next four years.

Still definitely not an investment for me.

Best Wishes
Paper Tiger

$1.3B siting in bank and short term deposits.

[Beagle]

Yes PT they've been investing in an expanded and far more modern fleet and investing in Virgin. Gearing is still only just a tad over 50% including capitalising operating leases which is very conservative for an airline that's growing and modernising their fleet. Have you had a look at QAN's accounts :eek2:

[couta1]

Yep spend money to make money, Qan will have a lot to spend in the not too distant future when they retire all their old 747s or are they going to bring them to NZ like the rest of their old dogs. Woof Woof. PS- I quite like 747s because they have 4 engines but they are about as fuel efficient as my big block V8.

[Snow Leopard]

$1.3B siting in bank and short term deposits.

About $90M up on last year - AIR seem to keep their advance payments in liquid form.


Yes PT they've been investing in an expanded and far more modern fleet and investing in Virgin. Gearing is still only just a tad over 50% including capitalising operating leases which is very conservative for an airline that's growing and modernising their fleet. Have you had a look at QAN's accounts :eek2:

Qantas FY2015 report hits a low on page 5 (part picture shown - what was he thinking?):

7593

and then gets better


Yep spend money to make money, Qan will have a lot to spend in the not too distant future when they retire all their old 747s or are they going to bring them to NZ like the rest of their old dogs. Woof Woof. PS- I quite like 747s because they have 4 engines but they are about as fuel efficient as my big block V8.

They have the budget allocated.

Best Wishes
Paper Tiger

Disc: QAN is not for me either

[Beagle]

LOL PT, maybe Joyce had a bad hair day and hair just been forced to sit through his kids school play that didn't go well :)

I had a quick look back through the annual reports to look at gearing over the last 6 years. Its typically been 45-47% range in all those years with the exception of 2014 when it got down to 42.9%.
One of the reasons it got that low in 2014 was the very high $Kiwi so when the accountants crunched the numbers on capitalising their international foreign currency operating leases, which they're required to do under generally accepted accounting principles the $Kiwi translation of same was fairly low. Obviously there's two sides to that coin so that when our currency drops a lot like it did towards the end of FY15 the translation to $Kiwi is materially higher.

Factor in too that they took delivery of 3 new Dreamliner's in FY15 and a host of other smaller planes plus paid advance deposits on more aircraft early to gain additional discounts from Boeing. Further, they paid out a special divvy last year. Gearing was 52.4% as at 30 June 2015. From memory their stated policy is they keep gearing in the 45-55% range.

The other side to this lower $Kiwi is that overseas sales account for approx. 45% of sales so obviously the translation affect of those going forward is better into $Kiwi.
Not trying to talk you into it mate, just setting the record straight and explaining how the capitalisation of overseas leases works and its effect on gearing when translated to $Kiwi.

[h2so4]

PT- Further to what Roger said about paying for planes in FY15. If you take an average for CE over the last 3 years I think it would be about half of what FY15 was.

[sb9]

Not being loved atm....

[couta1]

Not being loved atm.... Let them sell, good to shake out all the sheeple and non believers.

[Baa_Baa]

NBR reporting Qatar Air "possibility of flights".

If you're a monopoly making big uncontested profits, it's only a matter of time before every man and his flying dog wants a piece of the action. And regardless of the NZ Govt owning a goodly portion of AIR, the Minister will welcome the competition with open arms.

[couta1]

NBR reporting Qatar Air "possibility of flights".

If you're a monopoly making big uncontested profits, it's only a matter of time before every man and his flying dog wants a piece of the action. And regardless of the NZ Govt owning a goodly portion of AIR, the Minister will welcome the competition with open arms.
This is old news Baa Baa, the idea was floated prior to and again in 2013 with nothing coming of it and if it did come to fruition it would be a two way agreement allowing Air to fly to Qatar so of benefit to both airlines, competition is a fact of life for all companies but that doesn't stop the well managed ones from driving increasing profits and dividends.

[Baa_Baa]

This is old news Baa Baa, the idea was floated prior to and again in 2013 with nothing coming of it and if it did come to fruition it would be a two way agreement allowing Air to fly to Qatar so of benefit to both airlines, competition is a fact of life for all companies but that doesn't stop the well managed ones from driving increasing profits and dividends.

No, it's NBR news today Couta. Just pointing out an NBR article, you devotees can ride AIR down the cyclical elevator/escalator as long as you want, but continual optimistic postings won't hold the SP up by themselves. I was questioned for bailing out at $2.83 after over three years gradually buying when I could, I only made 48% on my complete exit when it was obvious what was happening. How's it going for you?

[couta1]

No, it's NBR news today Couta. Just pointing out an NBR article, you devotees can ride AIR down the cyclical elevator/escalator as long as you want, but continual optimistic postings won't hold the SP up by themselves. I was questioned for bailing out at $2.83 after over three years gradually buying when I could, I only made 48% on my complete exit when it was obvious what was happening. How's it going for you? It may have been in today but its nothing new as I have highlighted and if things go ahead it will also benefit Air, its going fine for me because I've got forward vision, a couple of months ago my SPK holding was down 40k but I could see it wasn't going to stay that way and its exactly the same for Air, I don't worry about being in the red, even substantially as long as its a good company with good management driving increasing profits and dividends, cheers

[Snow Leopard]

I spend the equivalent of several months a year, most years, travelling on assorted airlines, staying in hotels of widely varying quality and sometimes passing many a day on the far side of nowhere.

Amongst the items that are part of my kit are an Air New Zealand toiletries bag which is at least 10 years old and a Qatar Air bag of some considerable, but unknown age, which holds my front line medicine kit.

Both do a good job and look like they have a few more years of adventure in them.

This proves that buy and hold of the goodies that quality airlines give you is an excellent idea.

Best Wishes
Paper Tiger

Disc: still do not want to own an airline.

[Baa_Baa]

It may have been in today but its nothing new as I have highlighted and if things go ahead it will also benefit Air, its going fine for me because I've got forward vision, a couple of months ago my SPK holding was down 40k but I could see it wasn't going to stay that way and its exactly the same for Air, I don't worry about being in the red, even substantially as long as its a good company with good management driving increasing profits and dividends, cheers

Well good luck with that Couta, you'll be blessed some day when the cycle reverses and few years have gone by after that, to recover your losses. I'll be back in again on that reversal as well, I agree this is a good .. no, great company, but right now it's killing it's shareholders. Better I think to be managing capital than absorbing the losses on the hope that quality isn't exposed to cyclical down trends. Imho of course.

[couta1]

It won't take years for the price to get back to $2.57 Baa Baa, would you be keen for a wager on that one? :cool:

[Baa_Baa]

It won't take years for the price to get back to $2.57 Baa Baa, would you be keen for a wager on that one? :cool:

No thanks Couta, appreciate the offer but I've said my piece.

[Master98]

It may have been in today but its nothing new as I have highlighted and if things go ahead it will also benefit Air, its going fine for me because I've got forward vision, a couple of months ago my SPK holding was down 40k but I could see it wasn't going to stay that way and its exactly the same for Air, I don't worry about being in the red, even substantially as long as its a good company with good management driving increasing profits and dividends, cheers
Dear couta, I don't think what has happened on SPK will repeat on AIR as they are very quite different, SPK is much less risk and stable income business and on other hand AIR is very high risk and cyclical business, anyway good luck to you.

[Bjauck]

Dear couta, I don't think what has happened on SPK will repeat on AIR as they are very quite different, SPK is much less risk and stable income business and on other hand AIR is very high risk and cyclical business, anyway good luck to you.

In addition, AIR still has a substantial Crown shareholding. The government are unlikely to do anything major at the moment to undermine taxpayer investment in the company. However, if the history of SPK/TEL is anything to go by, when that Crown holding is sold off to private NZ individuals and NZ institutions, the government will adopt a new-found zeal for competition, regulation and re-regulation and continually decimate shareholder value.

[couta1]

Hi everyone.

I'm not around much, and given my new responsibilities at work I feel posting in these forums regularly has become inappropriate.

I haven't sold a single share, and am pleased with the way AIR is going.

While the strength of this years result is well expected, I expect stronger revenue growth than consensus for FY16 (less PRASM decline (loads/yields)). Partly because FX is now supporting yields - see the July stats. Although NZD weakness is a medium term negative for costs, the company have good hedging in place for the next 12 months. On top of this the oil price continues to weaken, and Virgin is set to improve next year. Lastly AIR has cost saving programs which should show a contribution next year.

In summary, consensus expects c.40c EPS next year, falling back to 30ish in FY17. I think c.50c is possible, falling to c.40c. There is no reason AIR can't sustainably earn 30-40cps into the medium term. Conditional on demand/fx/fuel (the usual). On top of this I feel the strength of balance sheet/competitive position/fleet/stake in VAH worth 40cps etc is not reflected in the share price.

I still think the company is worth $4.00 per share today, maybe $3.50 after a big special dividend in September 2016. Until then I we should continue to pick up nice divi's, on the way. Thought it must be a good time to put Mods last post up again, a post with excellent forward vision, notice the bit at the top where he says he hasn't sold a single share, have a nice day:cool:

[Beagle]

In addition, AIR still has a substantial Crown shareholding. The government are unlikely to do anything major at the moment to undermine taxpayer investment in the company. However, if the history of SPK/TEL is anything to go by, when that Crown holding is sold off to private NZ individuals and NZ institutions, the government will adopt a new-found zeal for competition, regulation and re-regulation and continually decimate shareholder value.

Yes good post mate and a timely reminder that the Govt is behind shareholders in this company in a meaningful way (53%).
AIR being priced like we're going into a world-wide recession. John Key doing a good job as the Minister of Tourism and tourism is up 7%, so strongly in fact that RBNZ mentioned it as one of the growth factors underwriting 2% GDP growth in the economy.
Curiously Australia is on the verge of recession and yet QAN, (whose price was neck and neck with AIR some months back), has now blown out to a circa $1.20 premium to AIR.

Some irrational selling is going on, probably Asian holders bailing out fearing further losses from the downward trajectory of the $Kiwi, (always seems weakest in the mid afternoon).

[ddrone]

Looking at the relatively small volumes traded over the past few days and the complete lack of depth on both sides my feeling is that the movements are being driven by retail investors, not institutions. No one is compelled to buy and no one is compelled to sell. It's an unusual mix.

[couta1]

Ive been watching the pattern over the last while and its only small retail fish selling out from Asia or where ever.(Gee ddrone we had the same thoughts at the same time)

[Beagle]

http://www.sharechat.co.nz/article/b33adbe7/nz-spending-on-debit-credit-cards-rises-in-august-as-retail-sales-advance.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+11+S eptember+2015

Latest spending data provides assurance people are still going about their daily lives, spending, living, eating, enjoying themselves, even travelling :)

Only 2 weeks and 2 days ago the CEO and CFO on the call sounded super confident about prospects for a substantial rise in earnings in FY16 and since then we've had the Chairman buying in decent volume...and yet some here and some sellers would now say because of more recent events or whatever other reason these guys at AIR know nothing, and they as complete outsiders completely unaware of forward bookings and demand can predict a severe downturn coming...the market and some sellers are irrational or they're prophets and can predict the future better than the top brass at AIR...you be the judge who's right and who might be taking an unnecessarily pessimistic approach.

I suspect that sellers and most on here are completely unaware that AIR has the ability and mandate within its constitution to buy its own shares back...opps is that letting the cat out of the bag ? You think if the Chairman puts his own money on the line to buy shares obviously thinking they're very good buying at circa $2.50, how long before the board follows suit with some of its $1,321 million cash ?

[ddrone]

To illustrate the point, current depth is:
BUYS down to 235 - 41k across 8 buyers
SELLS up to 244 - 40k across 8 sellers

Pretty clear spread in favour of sellers right now.

[allfromacell]

To illustrate the point, current depth is:
BUYS down to 235 - 41k across 8 buyers
SELLS up to 244 - 40k across 8 sellers

Pretty clear spread in favour of sellers right now.

Can you share how to view the full depth? I only know how to view the ASB book. Cheers.

[Beagle]

Its been a tough few weeks to be a AIR shareholder so while we wait for brighter days ahead please enjoy these video's and remember that you are part of a world class company, so keep your head up and be proud to be an Air New Zealander


https://youtu.be/xwssGNeXYXo

https://youtu.be/xwssGNeXYXo

https://youtu.be/NhtRt03mmuU

https://youtu.be/NhtRt03mmuU

https://youtu.be/pmHGqZr482g

[skid]

i havnt checked the SP,but that post :mellow cant be good news:(

[skid]

i havnt checked the SP,but that post cant be good news:(

[sb9]

With the price stuck around that $2.40 mark, seem Analysts and Big Instos twisting AIR's arm. Could that lead to an element of any surprise (positive) announcement at ASM?

[Beagle]

See last paragraph of post #3314. Apart from that possibility I don't see anything unusual happening at the ASM...hopefully they put on a more impressive spread than last year.
Reading through the full annual shareholder review document on the weekend it seems they are very pleased with forward bookings on the new routes.

[sb9]

"I suspect that sellers and most on here are completely unaware that AIR has the ability and mandate within its constitution to buy its own shares back...opps is that letting the cat out of the bag ? You think if the Chairman puts his own money on the line to buy shares obviously thinking they're very good buying at circa $2.50, how long before the board follows suit with some of its $1,321 million cash ?"

Got that Roger, missed that post somehow?

[Beagle]

I reckon 99% of people, (100% of sellers), are unaware of this buy-back option. See note 18 in the financial statements.

[sb9]

Got that nice looking Annual Report the other day in mail, should spend time in reading through...

[Beagle]

Its a good read mate.

[winner69]

"I suspect that sellers and most on here are completely unaware that AIR has the ability and mandate within its constitution to buy its own shares back...opps is that letting the cat out of the bag ? You think if the Chairman puts his own money on the line to buy shares obviously thinking they're very good buying at circa $2.50, how long before the board follows suit with some of its $1,321 million cash ?"

Got that Roger, missed that post somehow?

Sb, most of that $1.321 billion cash isn't really AIRs cash

Even on the day we bailed AIR out many years ago they had a cash pile of $1billion

[Crackity]

Sb, most of that $1.321 billion cash isn't really AIRs cash

Even on the day we bailed AIR out many years ago they had a cash pile of $1billion

Hey Winner - any interesting trips by you over the last week adding to revenue? :)

[Beagle]

Sb, most of that $1.321 billion cash isn't really AIRs cash

Even on the day we bailed AIR out many years ago they had a cash pile of $1billion

Actually my friend it is their cash as most fares are non refundable. With the average age of their fleet approaching a record low they're superbly positioned to honour all their flight obligations, including mine :)

Much is made of the bailout 14 years ago by some on here for reasons unknown (but possibly related to left political leanings), but really the Sept 11 2001 event was pretty cataclysmic by anyone's yardstick and yet look at last year, they navigated the Ebola crisis and invested an extra $200m+ into Virgin no problems whatsoever.

[winner69]

Actually my friend it is their cash as most fares are non refundable. With the average age of their fleet approaching a record low they're superbly positioned to honour all their flight obligations, including mine :)

But they need to buy the fuel and all that stuff to get me to where I have already paid for to go

Hate to be stranded somewhere

[Beagle]

Fuel is very cheap now mate. I am sure they'll look after you.

[mikeybycrikey]

Much is made of the bailout 14 years ago by some on here for reasons unknown (but possibly related to left political leanings), but really the Sept 11 2001 event was pretty cataclysmic by anyone's yardstick and yet look at last year, they navigated the Ebola crisis and invested an extra $200m+ into Virgin no problems whatsoever.

According to Wikipedia, Air NZ tried to sell Ansett to Qantas for $1 on Sept 10, so Sept 11 has nothing to do with the collapse.

I think that people keep bringing up the Air NZ collapse because it shows how quickly an airline can go from hero to bankrupt. It's less likely now but anything is possible.

[Snow Leopard]

Actually my friend it is their cash as most fares are non refundable...

[An accountant approaches an Air New Zealand baggage drop station and places suitcase on weighing conveyor.]

Check-in Operative: "And where are you hoping to go today, sir?"

Accountant: "Brisbane."

Check-in Operative: "Well sir, we have cancelled the flight, sorry."

Accountant: "Oh, can you put me another Air New Zealand flight to Brisbane?"

Check-in Operative: "No, sir. We have cancelled all our flights."

Accountant: "Can you get me on another airline?"

Check-in Operative (laughing): "Of course not sir."

Accountant: "I would like my money back then."

Check-in Operative: "Sorry sir, your ticket is non-refundable, remember?"

Accountant: "Oh yes. Well I will go home and wash the car then."

[Accountant turns around and walks away.]

Check-in Operative: "Sir, sir, SIR. You have forgotten your suitcase."

Best Wishes
Paper Tiger

[winner69]

Fuel is very cheap now mate. I am sure they'll look after you.

And probably the ratbags still have a fuel 'surcharge' built into the current fares

[Beagle]

According to Wikipedia, Air NZ tried to sell Ansett to Qantas for $1 on Sept 10, so Sept 11 has nothing to do with the collapse.

I think that people keep bringing up the Air NZ collapse because it shows how quickly an airline can go from hero to bankrupt. It's less likely now but anything is possible.

Hardly worth debating but from what I've read a lot of people were extremely reluctant to travel after Sept 11. Look honestly, all business's face issues from time to time. People can be negative and focus on the one instance in the whole 75 years when AIR needed assistance from the Govt or choose to focus on the Erebus crash or whatever other negative thing they like but for me I see a company that's performing extremely well on compelling metrics that helps 40,000 passengers a day with their journey. By my calculations, in the last year alone the Govt received back $147m in company tax, $96m in dividends and approx. $330m in PAYE from employees. $573m in one year alone. Not to shabby for just one year's return considering the size of their investment fourteen years ago is it !


And probably the ratbags still have a fuel 'surcharge' built into the current fares

Mate just relax and enjoy your holiday. Just drink a little more on the flight back and you can get your perceived over-charging back.

[brend]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11508152

Mr Gaynor wrote about this 2 weeks ago.

[Robomo]

Interview with Chris Luxon on AirNZ's sustainability launch.

I completely agree with what he says. Companies that engage with the broader community become part of that community. I like to think of AirNZ as "my airline", not just a profitable company that I use to fly from place to place.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11514106

[Joshuatree]

Still think they are ripoff Artists esp with provincial(I'm in Tauranga) airfares, fuel surcharges and double dipping credit card fees. Chris looks like he is a Serko extra:t_up:. Luckily i bought my AIR shares with a reasonable safety margin re $2.40 and future divs and hopefully S/P rise will compensate unlike w69.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11512525

I'm all for sustainability and efficiency as long as there's a reasonable economic case for it. Apparently they put in a really massive solar array at Auckland last year and are now moving to a fleet of electric vehicles.
Interesting last paragraph. There's been hints that the new Dreamliners were exceeding their manufacturers efficiency improvement design spec of 20% and now we see what the number really is.

Joshuatree - Plenty of people in Westport and Kaitaia through they were being ripped off too...turns out the Airline was losing $1m a month of those little 19 seat planes and now those regions are now "enjoying" old, slow, often single engine, single pilot operations with all the inherent extra risks involved in that. Motto, be careful what you wish for. Do you want to get left with no other option that Sunair ?

[Joshuatree]

As long as they are safe and fares similar any option is fine with me(n NZ) other than the cool old tiger moth which cracks the sky around here.But of course AIR are raking it in elsewhere so wheres the NZ community support ehh?.As i say owning aIR is my compensation(hopefully):D

Sounds Air are my fave ;small plane across Cook Strait flying low, very scenic and just before landing near Picton pulling a 45 degree swifty turn up to compensate for crosswinds before dumping down on the runway.

[Beagle]

Okay so here's a look at three different operators on three different routes of not dissimilar distance than an AIR Auckland to Tauranga flight. Sunair Tauranga to Gisborne $290 each way. Sounds AIR, (single engine single pilot operation) Westport to Wellington service is $190 each way. Gt Barrier Airlines Auckland to Kaitaia $180 each way, (if all the local's allow you to land and take-off).

I then jumped on the AIR website for a theoretical quick break away this weekend, (note the very short advance booking timeframe which usually adversely affects the price on the AIR booking system) and I could fly AKL to Tauranga Saturday morning for $139 and fly back on Sunday afternoon for $179. Business hours trips next week were generally slightly cheaper. AIR short haul flights overpriced just a wrong perception or reality ?, you be the judge.

[Zaphod]

Okay so here's a look at three different operators on three different routes of not dissimilar distance than an AIR Auckland to Tauranga flight. Sunair Tauranga to Gisborne $290 each way. Sounds AIR, (single engine single pilot operation) Westport to Wellington service is $190 each way. Gt Barrier Airlines Auckland to Kaitaia $180 each way, (if all the local's allow you to land and take-off).

I then jumped on the AIR website for a theoretical quick break away this weekend, (note the very short advance booking timeframe which usually adversely affects the price on the AIR booking system) and I could fly AKL to Tauranga Saturday morning for $139 and fly back on Sunday afternoon for $179. Business hours trips next week were generally slightly cheaper. AIR short haul flights overpriced just a wrong perception or reality ?, you be the judge.

Adding to this, in North America many towns and cities of similar sizes to ours don't even have airports, so in many respects we are very lucky.

[Beagle]

Adding to this, in North America many towns and cities of similar sizes to ours don't even have airports, so in many respects we are very lucky.

Completely agree. Mid July 2015 I booked a flight to Napier a few weeks ahead and flew Auckland to Napier for $55 each way and that was before Jetstar's launch. What's wrong with that price ! I couldn't drive my car there and back in petrol for that and that's before we start talking about 5 hours of arduous driving each way and the wear and tear on the vehicle. In many parts of the world you'd have no choice but to spend 10 hours driving your car. I don't know how others feel after spending five hours driving but I'm very tired so there's issues around productivity after travelling to consider too.

Most people book well ahead and get flights for cheaper prices that I gave in the example above and the reality is if you're booking flights for almost immediate effect its probably business related in which case you're doing some business that makes the inability to book weeks ahead and get a cheaper flight, worthwhile. After the regional airfare outcry around the election time last year and many calls for price controls and government intervention Air did some international comparative research and IIRC I believe they found that we have the most efficiently priced regional network in the world. Doesn't stop "the bleaters" from bleating likes lambs lost from their mother though does it !

People want to consider this when we are talking about monopolistic pricing. Who's ripping who off ?, someone paying $55 to fly Auckland to Napier on AIR or the same person paying $39 just to park their car at Auckland airport for the day.

[winner69]

Share price up today, good close for week

Just had to say something, can't let thread die

[Beagle]

Share price up today, good close for week

Just had to say something, can't let thread die

No danger of that while I'm around :D
Nice little bounce in consumer confidence today according to the latest survey. What do you know...the world isn't going to end. People are still spending money on things they enjoy and love, like travel. Must be that whopping FY16 PE of 5.4...really expensive stock eh :)

[Beagle]

Well i'm fully loaded now after topping up big time at $2.53( Fell a few cents more but that's life) My average is now $2.57 for over 180k shares (I won't say what percentage of my portfolio that is as it may frighten some even Roger) IMHO the current price is completely irrational and has come about through a mix of things like plain fear/the shepple effect/stop losses being hit etc etc ,will become oversold soon ( If not already) so expecting a bounce and of course there's that nice fully imputed divvy which is on a par with the Spark divvy. Anyway I reckon there's a lot of upside in this share, that's my story and I'm sticking to it.

Congrats mate you're in the money now taking into account the stock is now trading ex a 9.5 cent fully imputed dividend. You and Chairman Tony Carter buying up large just before the dividend. Cunning :D

[Snow Leopard]

No danger of that while I'm around :D
Nice little bounce in consumer confidence today according to the latest survey. What do you know...the world isn't going to end. People are still spending money on things they enjoy and love, like travel. Must be that whopping FY16 PE of 5.4...really expensive stock eh :)

Why I even embarked on this exercise I am not sure, but foolishly I did, and I have learnt a few things along the way.

After some effort I have come to the conclusion that valuing airlines is somewhat difficult and I would not rely on my own numbers to make fundamental buy and sell decisions.

It appeared to me to be possible to get widely varying results by taking different combinations of perfectly reasonable assumptions on a ten year time frame.
Whilst value variation on assumptions is true for each and every company it is more true for an airline than most others.

As a result of this I took the liberty of using my connections to have a chat about this with an analyst with one of the banks round here.
She basically agreed with me.

It is quite amazing the range of valuations out there for some airlines, the one I most often fly with, the highest valuation is three times larger than the lowest with a good scattering between (but it is not in the greatest financial shape).

So has a result here is the first and probably the last Paper Tiger valuation of Air New Zealand based on averaging out a number of scenarios

19-Sep-15 (current) value:
$2.925

30-Jun-16 value:
$3.007

Best Wishes
Paper Tiger

Disc: This is definitely not a buy, sell, hold or even fly with recommendation

[Snow Leopard]

Has your disclosure been approved for distribution by the PR dept of TIGER airlines?

I have actually never flown with TigerAir (http://www.tigerair.com/my/en/),

Though I have flown with the world's only one star airline (http://www.airlinequality.com/ratings/1-star-airline-ratings/) who play videos of the Moranbong band (https://www.youtube.com/watch?v=iPpgqZuQ8Yo) whilst you sit on the tarmac for forty minutes with the cabin air-con off.

Best Wishes
Paper Tiger

[percy]

How can you complain about the Moranbong band.?
Barry Manilow I could understand.!!!

[QOH]

Doing my bit to help Jetstar lose money, currently have five flights booked with them adding up to the grand sum of $65.

[Beagle]

Doing my bit to help Jetstar lose money, currently have five flights booked with them adding up to the grand sum of $65.

LOL Don't forget to pack the full 7 kg's of carry on luggage each time so they burn more fuel.

[couta1]

LOL Don't forget to pack the full 7 kg's of carry on luggage each time so they burn more fuel.
Why limit yourself to 7kg, I had 10kg in my hand luggage flying with Air today so I'd say go for 15kg with Jetstar (Fishing sinkers take little room but punch above their weight) PS- Roger I thought because I'm so overweight in Air a little extra cabin weight would be acceptable, besides you can't chop ski boots in half easily:cool:

[Beagle]

Why I even embarked on this exercise I am not sure, but foolishly I did, and I have learnt a few things along the way.

After some effort I have come to the conclusion that valuing airlines is somewhat difficult and I would not rely on my own numbers to make fundamental buy and sell decisions.

It appeared to me to be possible to get widely varying results by taking different combinations of perfectly reasonable assumptions on a ten year time frame.
Whilst value variation on assumptions is true for each and every company it is more true for an airline than most others.

As a result of this I took the liberty of using my connections to have a chat about this with an analyst with one of the banks round here.
She basically agreed with me.

It is quite amazing the range of valuations out there for some airlines, the one I most often fly with, the highest valuation is three times larger than the lowest with a good scattering between (but it is not in the greatest financial shape).

So has a result here is the first and probably the last Paper Tiger valuation of Air New Zealand based on averaging out a number of scenarios

19-Sep-15 (current) value:
$2.925

30-Jun-16 value:
$3.007

Best Wishes
Paper Tiger

Disc: This is definitely not a buy, sell, hold or even fly with recommendation

Your value is suspiciously close to the consensus broker value of $2.94. If one were to take a cynical view you could say you've lived up to your user name and not been a real tiger at all, no offence intended mate.

Thing is you're right in some respects. Its a low margin high turnover business so future profit projections can vary wildly depending upon what assumptions analysts model into their DCF valuation.

I have a view that N.Z. analysts are being excessively conservative with FY17 and FY18 estimates and accordingly believe the stock is mispriced. Essentially N.Z. analysts are calling FY16 EPS the peak of the cycle based on low oil prices and a strong economy (go figure on the latter point).

Its interesting to compare consensus broker forecasts for the years ahead for AIR and QAN (QAN in brackets) All information off 4 traders

FY15 Actual 29.1 (25.4)
FY16 Forecast 44.8 (52.5)
FY17 Forecast 36.9 (52.4)
FY18 Forecast 33.8 (59.8)

Note the big sea change difference between these forecasts in the latter two years for two fairly closely related commodity based economies and airlines operating in a similar region.

Analysts for QAN are not pricing in this as the peak of the cycle and are saying that notwithstanding the prospect for cheap oil to be a temporary matter, QAN with its older less fuel efficient fleet will increase earnings going forward.
On the other hand AIR with its more fuel efficient fleet and despite wearing the first year costs of establishing new routes to Houston and South America this year will materially decrease earnings going forward and notwithstanding the economy presently weak they are saying this is the peak of the cycle.

I put it to you my friend and others that none of these analysts would have the foggiest clue what either of these airlines will make in FY18 and further out so their DCF models are just absolute guesswork and therefore almost meaningless.

For what its worth consensus broker valuation for AIR is $2.94 and QAN $4.47.

I think its simply a case of removing the net effect of the present oil price tailwind, (I say net effect because other airlines are discounting airfares so AIR won't get the full circa $280m worth by any stretch of the imagination), and apply a 10 year average PE to the airline of your choice.

Couta1 - Mate if it was up to me I reckon you should be allowed 180 kg's of luggage :)

[skid]

I have actually never flown with TigerAir (http://www.tigerair.com/my/en/),

Though I have flown with the world's only one star airline (http://www.airlinequality.com/ratings/1-star-airline-ratings/) who play videos of the Moranbong band (https://www.youtube.com/watch?v=iPpgqZuQ8Yo) whilst you sit on the tarmac for forty minutes with the cabin air-con off.

Best Wishes
Paper Tiger

Reminds me of the ole Areofloat Airlines -not even sure if they still operate(Russian)--------the plane got us there ok but the service!---this is back in the full service days--when I asked the stewardess if I could get a cup of coffee ,she said ''NO'' and simply walked away down the aisle (and that was it)--(at least they cant be accused of beating around the bush)

On an Air Asia flight (many years later)I noticed something being held by duct tape on the wing--(Its actually not a bad airline and Im sure it was nothing important--but not a real good look)--(I think I even have a photo of it somewhere)

[skid]

Your value is suspiciously close to the consensus broker value of $2.94. If one were to take a cynical view you could say you've lived up to your user name and not been a real tiger at all, no offence intended mate.

Thing is you're right in some respects. Its a low margin high turnover business so future profit projections can vary wildly depending upon what assumptions analysts model into their DCF valuation.

I have a view that N.Z. analysts are being excessively conservative with FY17 and FY18 estimates and accordingly believe the stock is mispriced. Essentially N.Z. analysts are calling FY16 EPS the peak of the cycle based on low oil prices and a strong economy (go figure on the latter point).

Its interesting to compare consensus broker forecasts for the years ahead for AIR and QAN (QAN in brackets) All information off 4 traders

FY15 Actual 29.1 (25.4)
FY16 Forecast 44.8 (52.5)
FY17 Forecast 36.9 (52.4)
FY18 Forecast 33.8 (59.8)

Note the big sea change difference between these forecasts in the latter two years for two fairly closely related commodity based economies and airlines operating in a similar region.

Analysts for QAN are not pricing in this as the peak of the cycle and are saying that notwithstanding the prospect for cheap oil to be a temporary matter, QAN with its older less fuel efficient fleet will increase earnings going forward.
On the other hand AIR with its more fuel efficient fleet and despite wearing the first year costs of establishing new routes to Houston and South America this year will materially decrease earnings going forward and notwithstanding the economy presently weak they are saying this is the peak of the cycle.

I put it to you my friend and others that none of these analysts would have the foggiest clue what either of these airlines will make in FY18 and further out so their DCF models are just absolute guesswork and therefore almost meaningless.

For what its worth consensus broker valuation for AIR is $2.94 and QAN $4.47.

I think its simply a case of removing the net effect of the present oil price tailwind, (I say net effect because other airlines are discounting airfares so AIR won't get the full circa $280m worth by any stretch of the imagination), and apply a 10 year average PE to the airline of your choice.

Couta1 - Mate if it was up to me I reckon you should be allowed 180 kg's of luggage :)

I agree ,airlines are notoriously hard to value.
One would have to argue that cheap fuel and and quite a bit of money around (rock star economy? overvalued share market?) at the time of alot of the bookings could be something that is subject to change.
I mentioned some months back i would report back on my MAL flight--They seemed to be pretty full both ways--It was roomy-good food and service (still like Thai better) so no complaints ,especially for the price. (and I firmly believe that the majority still go for price ,to a large extent,as is verified by some of out dedicated posters flying Jetstar---Personally Im happy with budget for short hauls---long hauls is where I draw the line)
Having said that,my friend has just flown AIR AK-LA and apparently he was told before the plane was full--so lots of people are flying.
Ill be interested to hear how he got on with the seating configuration.

BUT there are some real doubts on the state of the economy in general now,so I guess the question is ,if things get tight,will vacation flights be the first to go?
In general I think airline shares are ones that one should certainly keep an eye on--they are changeable by nature,and not really the best candidates for the ''buy and hold'' strategy if you are that way inclined

PS--Im always amazed at how much extra carry on luggage people get away with!

[Beagle]

I think the rock star band has been "off Key", for most of cy 2015 and they keep filling their planes so we're all good. Latest consumer confidence survey out last week showed renewed signs of life and GDP for the June quarter was 0.4% growth and three increases in the GDT auction price seem to have warded off immediate threats of a recession. Set the autopilot and steady as she goes and that ludicrous FY16 PE of 5.4 means this is the bargain buy of the market...too many people scared off by the prospect of a recession and sold out ?

[Hoop]

...that ludicrous FY16 PE of 5.4 means this is the bargain buy of the market...
Could also be a warning ...It may be that Mr Market thinks the E in PE is not going to be that flash in 2016...

[mikeybycrikey]

I think the rock star band has been "off Key", for most of cy 2015 and they keep filling their planes so we're all good. Latest consumer confidence survey out last week showed renewed signs of life and GDP for the June quarter was 0.4% growth and three increases in the GDT auction price seem to have warded off immediate threats of a recession. Set the autopilot and steady as she goes and that ludicrous FY16 PE of 5.4 means this is the bargain buy of the market...too many people scared off by the prospect of a recession and sold out ?

I would think that airline flights are a lagging indicator if the economy is going south. You probably wouldn't cancel this years big overseas trip if the economy is looking a bit shaky, but you might think twice about booking something for next year.

Having said that, it makes sense that by the time AIR's monthly stats start showing a decline, the decline in forward bookings will be well underway, if the economy really has had but butter and cream knocked out of it.

[Beagle]

Yes Hoop Mr Market is sceptical that they can keep filling the planes in a softer economy with an 11% capacity increase in FY16. OTOH the company is confident it can and is very pleased with forward bookings on the new routes and is forecasting a SIGNIFICANT increase in earnings this year, (laboured the word because they did in the conference call). Time will tell. We await the next few months of operating stat's with keen interest.

[sb9]

Nice juicy divvy in the bank last night, waiting now for ASM in Oct.

[Beagle]

Nice juicy divvy in the bank last night, waiting now for ASM in Oct.

I think our friend Couta1 might have noticed a "slight" change in his bank account too :)

[couta1]

I think our friend Couta1 might have noticed a "slight" change in his bank account too :)
Yeah I got the shock, I mean surprise about 9pm last night:cool:

[Beagle]

Yeah I got the shock, I mean surprise about 9pm last night:cool:

You don't need to go on that off the grid course KW was talking about yesterday, as somewhat tempting as it is.... bet you're feeling at peace with the world today :cool:
I might sign up and then I might have balls of steel like you or, (flip a coin), on the other hand might end up giving it all away to some Tibetan monks :lol:

[couta1]

You don't need to go on that off the grid course KW was talking about yesterday, as somewhat tempting as it is.... bet you're feeling at peace with the world today :cool:
I might sign up and then I might have balls of steel like you or, (flip a coin), on the other hand might end up giving it all away to some Tibetan monks :lol:
Still tired after a balls out ski week last week but definitely at peace. Mind you it takes a lot to keep me down for long no matter how bad the markets are ( Or my paper losses) I always come back to what really matters in life and for me that's Faith/Family and Friendship.

[Beagle]

Still tired after a balls out ski week last week but definitely at peace. Mind you it takes a lot to keep me down for long no matter how bad the markets are ( Or my paper losses) I always come back to what really matters in life and for me that's Faith/Family and Friendship.

Good on ya mate.

[blockhead]

Nice juicy divvy in the bank last night, waiting now for ASM in Oct.

Did you get an email notification of the said juicy divy ?, need it for tax at years end .

[sb9]

Did you get an email notification of the said juicy divy ?, need it for tax at years end .

I did get an email advising about the divvy payment with an attachment, alternatively you can access the details thro' link market investor centre.

[blockhead]

I did get an email advising about the divvy payment with an attachment, alternatively you can access the details thro' link market investor centre.

Thanks sb9, I have "electronic notification" ticked in my Link Market Service details but obviously something didn't work

[Sideshow Bob]

Thanks sb9, I have "electronic notification" ticked in my Link Market Service details but obviously something didn't work

junk mail?

[blockhead]

junk mail?

Looked there too SSB, not there either, in "the cloud" I think, one of the ones that went through in the last southerly !

[vin]

Divvy looks good :cool: Timed well with my flight to Wellington with AIR for World of Wearable Arts. Our company is running a photography solution for AIR, will go well.

[stoploss]

Nice work shareholders.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11517236

[couta1]

Nice work shareholders.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11517236
I will be following the Crowns lead and making myself exempt from this scheme, after all I don't fit into the small retail investor category with the size of my holding:cool: PS-I see Air is working with none other than Derek Handley on this Gividend idea, I'm not impressed.

[Beagle]

When all staff earning over $200K and all directors volunteer to surrender half their pay into sustainability and environmental projects I'll match that with half my dividends. I might be bold enough to suggest this at the ASM, could be good for a laugh :D

[couta1]

When all staff earning over $200K and all directors volunteer to surrender half their pay into sustainability and environmental projects I'll match that with half my dividends. I might be bold enough to suggest this at the ASM, could be good for a laugh :D
Seems a bit rich mate Air targeting retail investors with 10k shares or less, these people are in the group of shareholders most likely to need their dividends to supplement their income. Please suggest your above idea strongly at the ASM.

[Beagle]

Seems a bit rich mate targeting retail investors with 10k shares or less, these people are in the group of shareholders most likely to need their dividends to supplement their income.

I couldn't agree more mate. Mum's and Dad's trying to do a little something proactive for their retirement while senior pilot's and management, (many of whom are on north of $400,000 per annum), collect pay increases faster than the rate of inflation...hmmmm Green sustainability and environmental issues gone more than a little OTT I reckon. I am hoping their capex decisions in this area are more rationally and soundly based.

[BeeBop]

I had to re read and re read the article as I couldn't believe the cheekiness of the proposal! Currently, I have an automatic monthly deduction from my NZ account for my donations, it is not an insignificant amount and forms a portion of my outgoings. I have chosen to donate and I use my dividend income to support this. AIR.NZ do not need to get me to give up my dividend. And yes, all employees should give up a portion of their salaries into the scheme. I second the comment that many mum and dad investors will be using the dividends for much needed income! I am not impressed. Although, I would like to add that people with the means should be donating on a regular basis...time and / or money (there are many different avenues).

[sb9]

Couldn't agree more BeeBop..its not AIR's business to donate mum and dad's divvies for their cause. We all do our bit to support community causes in one way or other. And its very cheeky to target mum and dad investor in my opinion.

[Beagle]

Couldn't agree more BeeBop..its not AIR's business to donate mum and dad's divvies for their cause. We all do our bit to support community causes in one way or other. And its very cheeky to target mum and dad investor in my opinion.

Cheeky AND disingenuous in as much as this is an airline company, (heavy environmental polluter) where many senior management and pilot's are vastly better placed with income many times the national average income to make more worthwhile financial contributions to environmental causes. The company has clearly stepped outside its operational mandate. It is never for a company to suggest to its owners what to do with their dividends. Shame on them for ramming this environmental B.S. down shareholders throats. Fine if they want to buy electric vehicles and build a big solar array as long as the economic fundamentals mean they're not being green just for the sake of being politically correct, i.e. there's a genuine business case for it.
As Beebop has suggested above, many people have their own charitable causes or religious beliefs which they support financially, with their time, or both. I'll be suggesting to management they spend more time doing something productive like I dunno...here's a good idea....working on ways to keep the planes full...this suggestion and emoji is for AIR's management..get back to work on useful projects that are properly within the scope of the companies activities :p

On a brighter note, at first glance the August 2015 operating stat's look fine. Taking into account the company on average appears to hold about 2.5 months of sales / total forward flight bookings at any one time, I would assume on average most of August flight bookings were made well into the 2015 calendar year and its now clear from the GDP data in the March and June quarters that most of 2015 has been economically quite soft with very low growth. Despite these softer economic conditions prevailing for 2015, all of this year's monthly operating stat's have been just as firm as 2014's were when economic times were better, hmmm, interesting. Maybe now that flights are arguably cheaper in real terms than ever before demand is less susceptible to softer economic conditions ? (All of the monthly operating stat's to date in 2015 suggest this looks like the case). With record low mortgage rates and slightly lower fuel prices maybe Mr and Mrs Joe average are happy to book ahead and enjoy the cheap flights often on offer irrespective of how the dairy farmers are faring ?

[Jaa]

The company has clearly stepped outside its operational mandate. It is never for a company to suggest to its owners what to do with their dividends.

Agree entirely with your comment above Roger. Absolutely appalling for them to try to use the dividends of their poorest shareholders for a corporate green washing exercise. Let management contribute their own fat salaries and options to causes only they get to decide if they are so passionate about them.

Air NZ should spend more time walking the walk of sustainability through lean operations and cleer engineering led solutions. Less time and resources on flashy reports, consultants (Derek Handley!) and invite only functions where everyone can feel better about themselves and then drive home in big expensive cars or fly back to where ever they came from.

And I consider myself a greenie!

Re operating stats: still looking good, the real test will be from December when Jetstar start flying regionally and AIR NZ's two big new routes are operational.

[777]

From what I read it is voluntary participation.

[brend]

As long as it's not rammed down our throats then I don't care

[Jantar]

From what I read it is voluntary participation.
It would have to be voluntary, otherwise IRD would be interested. No-one would be able to claim they are buying AIR as an investment for dividends if they were not able to receive any dividends.

[777]

So why the agro in the above posts?

[couta1]

So why the agro in the above posts?
Targeting the small fry investors as they have stated they will is wrong and that's worth standing up against. It's not agro from my viewpoint but rather a strong show of disaproval at an out of place idea.

[777]

Has AirNZ stated that or is it simply the journalist who wrote the article? The latter I think. He/she decided the cutoff for being a small shareholder as having 10000 or less shares. How the hell did that come up with that.

I doubt that there will be much take up of the scheme so it will be a waste time anyway.

[Beagle]

Has AirNZ stated that or is it simply the journalist who wrote the article? The latter I think. He/she decided the cutoff for being a small shareholder as having 10000 or less shares. How the hell did that come up with that.

I doubt that there will be much take up of the scheme so it will be a waste time anyway.

Indeed, lets move on and agree its simply a bloody stupid idea and a waste of time. Obviously there's some well intentioned but misguided greenies lurking somewhere in AIR's management ?. Perhaps they could spend more time looking at ways to make air travel more realistically priced for families during the school holidays ? I'm looking at flying to the South Island next week with my family and got the shock of my life when I looked at the prices :eek2:

[blockhead]

Indeed, lets move on and agree its simply a bloody stupid idea and a waste of time. Obviously there's some well intentioned but misguided greenies lurking somewhere in AIR's management ?. Perhaps they could spend more time looking at ways to make air travel more realistically priced for families during the school holidays ? I'm looking at flying to the South Island next week with my family and got the shock of my life when I looked at the prices :eek2:

Blimmin heck Rog, how cheap do you want them, not sure where you live but I can see flights next Wednesday AKL - QNST for $109 with 1 checked bag, thats not too bad in my book, cost a bit more than that to drive the Audi down.

[Beagle]

Blimmin heck Rog, how cheap do you want them, not sure where you live but I can see flights next Wednesday AKL - QNST for $109 with 1 checked bag, thats not too bad in my book, cost a bit more than that to drive the Audi down.

Flying AKL to Christchurch next Thursday. One way for 3 pax AIR $597, Jetstar $297, has to be a mid morning flight... just unlucky I guess.

[Snow Leopard]

Your value is suspiciously close to the consensus broker value of $2.94. If one were to take a cynical view you could say you've lived up to your user name and not been a real tiger at all, no offence intended mate.


But offence taken anyway.

Look out your window - do you actually remember having an orange and black striped lawn ornament before?



Thing is you're right in some respects. Its a low margin high turnover business so future profit projections can vary wildly depending upon what assumptions analysts model into their DCF valuation.


Buying those new plastic airplanes has really eaten up the free cash flow and will do so to a lesser degree over the next few years.



I have a view that N.Z. analysts are being excessively conservative with FY17 and FY18 estimates and accordingly believe the stock is mispriced. Essentially N.Z. analysts are calling FY16 EPS the peak of the cycle based on low oil prices and a strong economy (go figure on the latter point).

Its interesting to compare consensus broker forecasts for the years ahead for AIR and QAN (QAN in brackets) All information off 4 traders

FY15 Actual 29.1 (25.4)
FY16 Forecast 44.8 (52.5)
FY17 Forecast 36.9 (52.4)
FY18 Forecast 33.8 (59.8)

Note the big sea change difference between these forecasts in the latter two years for two fairly closely related commodity based economies and airlines operating in a similar region.

Analysts for QAN are not pricing in this as the peak of the cycle and are saying that notwithstanding the prospect for cheap oil to be a temporary matter, QAN with its older less fuel efficient fleet will increase earnings going forward.
On the other hand AIR with its more fuel efficient fleet and despite wearing the first year costs of establishing new routes to Houston and South America this year will materially decrease earnings going forward and notwithstanding the economy presently weak they are saying this is the peak of the cycle.


Qantas and Air New Zealand are different airlines in different stages and to necessarily expect there results to be in lockstep would be 'misguided'.



I put it to you my friend and others that none of these analysts would have the foggiest clue what either of these airlines will make in FY18 and further out so their DCF models are just absolute guesswork and therefore almost meaningless.


This is, to a degree, true of all educated guesses on any company and your guess hopefully is actually better than theirs.

Though it might not be.


For what its worth consensus broker valuation for AIR is $2.94 and QAN $4.47.

I think its simply a case of removing the net effect of the present oil price tailwind, (I say net effect because other airlines are discounting airfares so AIR won't get the full circa $280m worth by any stretch of the imagination), and apply a 10 year average PE to the airline of your choice.

...

The question would be to apply the 10 year average PE to what?
The 10 year average of 'real' earnings?

Best Wishes
Paper Tiger

[Jay]

Have just booked flights for 4, for school holidays in April 2016 to Brisbane, for just a shade over $255 each all up, as my wife said, do you think you will get them any cheaper, on AirNZ - and they were the only airline which the flight time times best suited, any other airline we looked at was, the same price, more expensive, not at a suitable time or any combination there of, none were cheaper - admit did not look at JetStar, but then did not want a no food, no nothing flight especially with two primary school age ones.
Hang on just checked JetStar Total cost $0.00 - oops I see why so cheap, have to swim! (no flights available)

[tony64peter]

From a tech perspective, could this graph be a double head and shoulders????

[Joshuatree]

Flying AKL to Christchurch next Thursday. One way for 3 pax AIR $597, Jetstar $297, has to be a mid morning flight... just unlucky I guess.

Are muh eyes deceivenn me or is Roger even considering Flying Jeststar(Jetheap his words !!!! )Tell me it isn't so lol,.Tell me it is lol

[h2so4]

Are muh eyes deceivenn me or is Roger even considering Flying Jeststar(Jetheap his words !!!! )Tell me it isn't so lol,.Tell me it is lol

Yeh he probably has a bunch of Q flying points he wants to use.

[bluesideup]

tony64peter, is this what you're looking at? New to TA here, just trying to get a feel for it...

Also, excuse the amateur hour with the chart...

7618

[Beagle]

Once a year its good for the soul to slum it with one's mode of transport just to remind oneself how it is for the poor unfortunates who must always choose the cheapest option. Didn't they teach you folks that at your private school :p

[Joshuatree]

Am forwarding all your trash talk re Jet heap to cabin crew. Beware of hidden ejection seats and the floor sliding back in the toilet and toilet suction set on extreme.:)

[Beagle]

Am forwarding all your trash talk re Jet heap to cabin crew. Beware of hidden ejection seats and the floor sliding back in the toilet and toilet suction set on extreme.:)

:lol: :lol:

[tony64peter]

tony64peter, is this what you're looking at? New to TA here, just trying to get a feel for it...

Also, excuse the amateur hour with the chart...

7618
Looking at the 1yr chart. Your thoughts?

[iceman]

Once a year its good for the soul to slum it with one's mode of transport just to remind oneself how it is for the poor unfortunates who must always choose the cheapest option. Didn't they teach you folks that at your private school :p

I pull out my tissues for you poor JAFAs mate.
Us " poor unfortunates who must always choose the cheapest option" know how you feel.
I am returning to Nelson from overseas soon, $363 one way Auckland-Nelson. Then my 2 daughters go Hamilton-Nelson return for school holidays, $560 & $745 respectively.
And it was our cheapest option indeed. Bring on the competition. It can not come soon enough.
Then they ask me to donate my divies as well !!!!!!

[Sideshow Bob]

Flight watch......

Been on 13 flights AIR NZ flights in the last 3 weeks with 4 trips to the north island, mainly Dunedin to Welly or North Palmerston, usually via Chch. All were at least 85-90% full, except one coming into Dunnos on a Monday night. All were a good $500-600 for the privilege. Thankfully I wasn't paying!

Plenty of people still flying in my experience.

[Hoop]

Looking at the 1yr chart. Your thoughts?

Drew a few patterns and events in for fun :)..Could've added a few more but the chart is cluttered already...

The Head & Shoulder pattern (H&S) you refer to (GREEN) isn't quite a mirror image but has neckline this generalised pattern is bearish..

H&S are very reliable patterns for predictions.

H&S patterns are common, many go unrecognised ...see the sloping H&S pattern (BLACK) this type of pattern often gets missed .. note the spooky neckline break.

Support lines that get in the way of a pattern does affect the probability of the predicted bearish outcome.

http://i458.photobucket.com/albums/qq306/Hoop_1/AIR%2024092015.png (http://s458.photobucket.com/user/Hoop_1/media/AIR%2024092015.png.html)

[Beagle]

Flight watch......

Been on 13 flights AIR NZ flights in the last 3 weeks with 4 trips to the north island, mainly Dunedin to Welly or North Palmerston, usually via Chch. All were at least 85-90% full, except one coming into Dunnos on a Monday night. All were a good $500-600 for the privilege. Thankfully I wasn't paying!

Plenty of people still flying in my experience.

Any average load factor of 80% or more is smashing the ball right out of the park and AIR have been doing all last year and early signs for FY16 are just as good. Yields are solid and fuel is dirt cheap. The company is extremely confident about prospects for FY16 and load factors have held up extremely well in a softer economy. Tourism continues to grow and the lower $Kiwi will assist that further. 60,000 new migrants last year, the highest ever boosts demand as they travel and their relatives travel e.t.c.

Thanks Iceman. I feel a lot better about my $99 fares to Chch on Jethole now. I'll take my own snacks and bottled water and won't even look at the grumpy battle axe flight attendants. Hope the pilot can land on first attempt this time and I can walk after being kneecapped by their 29 inch pitch seats. Next year's slum it experience will be taking the bus home rather than the Mercedes-Benz loan car when I drop off my S Class Mercedes for its service :)

[Beagle]

Flight watch......

Been on 13 flights AIR NZ flights in the last 3 weeks with 4 trips to the north island, mainly Dunedin to Welly or North Palmerston, usually via Chch. All were at least 85-90% full, except one coming into Dunnos on a Monday night. All were a good $500-600 for the privilege. Thankfully I wasn't paying!

Plenty of people still flying in my experience.

Any average load factor of 80% or more is smashing the ball right out of the park and AIR have been doing that all last year and early signs for FY16 are just as good. Yields are solid and fuel is dirt cheap. The company is extremely confident about prospects for FY16 and load factors have held up extremely well in a softer economy. Tourism continues to grow and the lower $Kiwi will assist that further. 60,000 new migrants last year, the highest ever boosts demand as they travel and their relatives travel e.t.c.

Thanks Iceman. I feel a lot better about my $99 fares to Chch on Jethole now. I'll take my own snacks and bottled water and won't even look at the grumpy battle axe flight attendants. Hope the pilot can land on first attempt this time and I can walk after being kneecapped by their 29 inch pitch seats. Next year's slum it experience will be taking the bus home rather than the Mercedes-Benz loan car when I drop off my S Class Mercedes-Benz for its annual service :)

[Bjauck]

Next year's slum it experience will be taking the bus home rather than the Mercedes-Benz loan car when I drop off my S Class Mercedes-Benz for its annual service :) Good to hear you bought from an honest German - as far as we know!

[bluesideup]

Drew a few patterns and events in for fun :)..Could've added a few more but the chart is cluttered already...

The Head & Shoulder pattern (H&S) you refer to (GREEN) isn't quite a mirror image but has neckline this generalised pattern is bearish..

H&S are very reliable patterns for predictions.

H&S patterns are common, many go unrecognised ...see the sloping H&S pattern (BLACK) this type of pattern often gets missed .. note the spooky neckline break.

Support lines that get in the way of a pattern does affect the probability of the predicted bearish outcome.

http://i458.photobucket.com/albums/qq306/Hoop_1/AIR%2024092015.png (http://s458.photobucket.com/user/Hoop_1/media/AIR%2024092015.png.html)

Thanks Hoop!

[Beagle]

But offence taken anyway.

Look out your window - do you actually remember having an orange and black striped lawn ornament before?
No but I hear if you change your diet to be a vegetarian its good for your skin, it grows thicker :)

Buying those new plastic airplanes has really eaten up the free cash flow and will do so to a lesser degree over the next few years.
AIR's growing their capacity of this all new generation carbon fibre aircraft a lot quicker than QAN and customer feedback has been extremely positive

Qantas and Air New Zealand are different airlines in different stages and to necessarily expect there results to be in lockstep would be 'misguided'.
You're missing my point, Analysts on this side of the Tasman are suggesting that AIR's earnings will normalise once the oil price tailwind eases off whereas those in Australia are suggesting QAN is immune to this notwithstanding their older less fuel efficient fleet.

This is, to a degree, true of all educated guesses on any company and your guess hopefully is actually better than theirs.
Though it might not be.Both are guesses, happy to back my own judgement and I am happy with where AIR's management are taking this company with its modern fleet, average age keeps coming down, and they're setting the company to be profitable with $120 Oil if such a thing happens. I wonder how QAN would cope with that ?

The question would be to apply the 10 year average PE to what?
The 10 year average of 'real' earnings?

I'm looking at sustainable earnings going forward. If they can earn 45 cps this year in a soft economy this augers very well for the future. Pick your own PE and EPS but I see real value at the current SP and a fantastic gross dividend rate going forward.

Best Wishes
Paper Tiger

Time will tell PT but I think any further weakness is a fantastic buying opportunity.

[couta1]

I don't care what the charts say historically the current price is nuts for such a well run company with great forward earnings guidance oh and an increasing divvy to boot.

[Beagle]

Yes totally agree couta1 and people seem to be forgetting that Virgin is forecast to be profitable this year after last year's loss so that turnaround will materially add to AIR's earnings going forward.

[Hoop]

I don't care what the charts say historically the current price is nuts for such a well run company with great forward earnings guidance oh and an increasing divvy to boot.
Forward earnings is a prediction based on historic data....Mr Market is saying its not sure AIR can reach its forward earnings goals....Mr Market is not always right ..but do you really want to go against the trend to prove Mr Market wrong.

[Beagle]

Forward earnings is a prediction based on historic data....Mr Market is saying its not sure AIR can reach its forward earnings goals....Mr Market is not always right ..but do you really want to go against the trend to prove Mr Market wrong.

You should have listened in on the conference call and heard how confident the CEO and CFO are. They're best placed to know.

[sb9]

You should have listened in on the conference call and heard how confident the CEO and CFO are. They're best placed to know.

It'll be a fascinating ASM in about 10 days time (7 Oct).

[couta1]

Forward earnings is a prediction based on historic data....Mr Market is saying its not sure AIR can reach its forward earnings goals....Mr Market is not always right ..but do you really want to go against the trend to prove Mr Market wrong.
I'm in boots and all and calling Mr Market to show his cards on this one.(I think his hand is a weak one)

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11518850

[Hoop]

I'm in boots and all and calling Mr Market to show his cards on this one.(I think his hand is a weak one)

Only calling?? ...if Mr Market is doing a poker bluff...then why aren't you raising the ante :D

[Arbroath]

I'm in boots and all and calling Mr Market to show his cards on this one.(I think his hand is a weak one)

What concerns me is how much revenue they will give up due to increased competition. Flights from New Plymouth to Auckland have halved in price since Jetstar's arrival - that's 8 flights a day with 50% less revenue, Nelson, Napier and PN all similar - add those together and that's a collection of small beers, plus the prospects of more LA-Akld competition and Asian carriers direct to Auckland. Low oil price emboldens Qantas to be more obstructive? Although I like AIR, and it might feel cheap on earnings, the revenue will be eroded by these factors and if there is more of a slowdown in Asia/Australia then although AIR will still be profitable and is very well run they may struggle to meet the expectations for stellar earnings in 2016 & 2017. Forward PE of 6 might become more like 8-9 and then for an airline its fairly valued....

[Beagle]

You've grossly exaggerated the size of the price change. I flew AKL to Napier in August before the Jetstar domestic announcement and it was $55 each way. Domestic fares have reduced slightly on routes that Jetstar service but its nothing like half. You don't think Virgin aren't doing the same thing to Qantas in Australia ?

[couta1]

What concerns me is how much revenue they will give up due to increased competition. Flights from New Plymouth to Auckland have halved in price since Jetstar's arrival - that's 8 flights a day with 50% less revenue, Nelson, Napier and PN all similar - add those together and that's a collection of small beers, plus the prospects of more LA-Akld competition and Asian carriers direct to Auckland. Low oil price emboldens Qantas to be more obstructive? Although I like AIR, and it might feel cheap on earnings, the revenue will be eroded by these factors and if there is more of a slowdown in Asia/Australia then although AIR will still be profitable and is very well run they may struggle to meet the expectations for stellar earnings in 2016 & 2017. Forward PE of 6 might become more like 8-9 and then for an airline its fairly valued.... Your forgetting that increased competition via cheaper flights will also encourage many to take extra flights they wouldn't normally take and others to fly where they may have driven previously so there is an offsetting factor in play here. International competition will be offset by the strategic alliances Air has formed over the last few months and of course they are an outstanding airline to fly with both nationally and internationally as compared to others I could mention so all in all I see nothing concrete to justify the current market weakness.

[ace5715]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11518850

Cant wait to check out the new business class lounge Sunday week when I fly to Shanghai for work.

School holidays and golden week in China helping loading to Shanghai, week starting the 4th of October only full economy on the Sunday and Monday, business only Tuesday thru Friday and fully booked on the Saturday. Then it settles down a bit.

[Beagle]

http://www.nzherald.co.nz/airports/news/article.cfm?c_id=114&objectid=11519102

Wow - The #1 read story on the N.Z. Herald online site today.
China Southern Airlines, what a bloody disgrace !! Be warned. Even if you do get flown to the proper destination without a hiccup according to a good friend of mine the seats are absolutly diabolically small and so are the meals.

[Jantar]

Don't worry about what the passengers think, Read what the professional pilots think of them http://www.pprune.org/south-asia-far-east/560834-china-southern-wannabes.html
They are not an airline I would choose to fly with.

[Robomo]

Don't worry about what the passengers think, Read what the professional pilots think of them http://www.pprune.org/south-asia-far-east/560834-china-southern-wannabes.html
They are not an airline I would choose to fly with.

Interesting website. The comments about Jetstar aren't very complimentary either.

[WingingIt]

Nice refresh to the booking engine, rolled out today or earlier.

[Beagle]

Flight of fancy or the next big thing, you be the judge.
http://www.cnbc.com/2015/09/23/is-this-the-future-of-aviation.html

[Onion]

Flight of fancy or the next big thing, you be the judge.
http://www.cnbc.com/2015/09/23/is-this-the-future-of-aviation.html

If they use cannabis seeds they will fly even higher:p

[modandm]

Model update

Been through the FY15 results in detail now, I have to say operating expense growth was higher than I expected, while the costs of the new fleet are proving lower - good deal those 787s!

I have re-adjusted my assumptions line by line, and also incorporated higher growth rates for labour costs, 6% and 5%, reflecting capacity increases, rate increases, and the bonuses staff are now getting (well deserved!). I have also slightly boosted the contribution from VAH expected, and the tax rate to reflect VAH contribution.

For fuel costs this year I use 70 USD bbl, into wing (includes crack and delivery). For NZD/USD on this calc I use 72c which is somewhere between spot and the hedges (80c). I use 70 bbl and 63c for FY17. I include hedging costs/losses.

I then use 3 scenarios for pax revenue growth (which reflects capacity and group wide yield after FX)

Bear case 4% then 2% gives EPS 44c then 35c
Base case 6% then 2% gives EPS 48c then 40c
Bull case 8% then 3% gives EPS 54c then 48c

At this stage in the year we are tracking at 10.1% growth so ahead of bull case. I expect this to fall as comps toughen post December, but this will be offset by FX gains and Argentina too so who knows exactly where we end up. Blue sky 10% gives 57c in EPS.

My valuation is now set 1 year out at 8x Base case FY17 giving $3.30 target price plus 25c in dividends = 40% upside. For longer term holders like myself there is further special dividend potential in FY17 and FY18.

Lets hope operating stats remain strong.

All the best

-mod

[Leftfield]

Model update

My valuation is now set 1 year out at 8x Base case FY17 giving $3.30 target price plus 25c in dividends = 40% upside. For longer term holders like myself there is further special dividend potential in FY17 and FY18.

Lets hope operating stats remain strong.


-mod

Thank you for sharing Modandm.

[winner69]

Model update

Been through the FY15 results in detail now, I have to say operating expense growth was higher than I expected, while the costs of the new fleet are proving lower - good deal those 787s!

I have re-adjusted my assumptions line by line, and also incorporated higher growth rates for labour costs, 6% and 5%, reflecting capacity increases, rate increases, and the bonuses staff are now getting (well deserved!). I have also slightly boosted the contribution from VAH expected, and the tax rate to reflect VAH contribution.

For fuel costs this year I use 70 USD bbl, into wing (includes crack and delivery). For NZD/USD on this calc I use 72c which is somewhere between spot and the hedges (80c). I use 70 bbl and 63c for FY17. I include hedging costs/losses.

I then use 3 scenarios for pax revenue growth (which reflects capacity and group wide yield after FX)

Bear case 4% then 2% gives EPS 44c then 35c
Base case 6% then 2% gives EPS 48c then 40c
Bull case 8% then 3% gives EPS 54c then 48c

At this stage in the year we are tracking at 10.1% growth so ahead of bull case. I expect this to fall as comps toughen post December, but this will be offset by FX gains and Argentina too so who knows exactly where we end up. Blue sky 10% gives 57c in EPS.

My valuation is now set 1 year out at 8x Base case FY17 giving $3.30 target price plus 25c in dividends = 40% upside. For longer term holders like myself there is further special dividend potential in FY17 and FY18.

Lets hope operating stats remain strong.

All the best

-mod

Good stuff mo

Written like a real pro - you work for a broker / investment house or something?

[h2so4]

So FY2016 are we looking at a 50-100% increase in NPAT?

My stars!!!

[freddagg]

Thanks mod
You are the best

[mikeybycrikey]

It seems Air NZ have learnt little from the Hawaii fiasco last year:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11523594

Broken down plane in Hong Kong. Not enough accommodation found for passengers and rather poor communication from airline.

At least this time passengers are only likely to be stranded for 1 day rather than 3 days.

I accept that it's hard to sort these things out in a foreign city at short notice but this sort of bad PR hurts.

[winner69]

Roger- back from my journeys. Here is what I thought of the aircraft.

Flight 1 - Air NZ to Singapore - a noisy thing that rattled and creaked all the way. A bit of a dunger I reckon
Flight 2 - Singapore Air to London - fantastic flight on a quiet smooth A388. Most impressed
Flight 3 - Virgin to Hong Kong on a b787. Not too bad but if the Dreamliner is the future of the airline travel winner thinks they are over hyped
Flight 4 - Air NZ Hong Kong to Auckland - even noisier and rattled more than the one to Singapore and had old entertainment systems (mine was shocking). Probably the plane stuck in Hong Kong at the moment

So it appears as if Air NZ are using these old dungers to get punters to and from Singapore and Hong Kong for onward flights to Europe. Probably good for shareholders as they must be cash cows but not a great experience.

Next year I think I will look at alternatives to Air NZ and get some decent long haul aircraft. Wonder how many others who don't want to go via America feel this way.

And service etc is not a differentator either - of the 3 airlines this time Singapore first and Virgin / Air NZ 2nd equal. At the end of the day 30 hours to get to London is a necessary evil and service doesn't really matter that much

Air NZ got my money but as an airline a bit disappointing.....so shareholders should feel happy this year.

[winner69]

Hong Kong story in Herald

Tony Carter, the chairman of the Air NZ board, is one of the passengers who spent the night in the terminal.

"He's not very impressed. He's sent very strongly-worded emails to a variety of people at the airline, including the chief executive."


Jeez I wouldn't be sending strongly worded emails to our man Christopher - I would be yelling at him down a phone to get this sorted pronto

I caught that flight the other day ... after a 12 hour flight from London. Wonder how many did that before getting stuck?

[winner69]

It's the second time in two days NZ80 has been delayed, after Thursday night's flight was 8 1/2 hours late in taking off.

NZ Herald

[tony64peter]

It still looks like a double head and shoulders heading south.

[brend]

So it appears as if Air NZ are using these old dungers to get punters to and from Singapore and Hong Kong for onward flights to Europe. Probably good for shareholders

These 'dungers' (fleet of 777-200) have almost finished their 18 month refurb program so they still have a lot more flying in them. Lolz.

[777]

In reality they are as old as the Singapore A380's on average.

[Beagle]

Welcome back Winner. You must have got one of the last remaining 777-200's that haven't been refurbished.
Singapore run a very good operation with their A380's and have the widest seats in the industry and the least number of seats on an A380 of any of the carriers so there's no question that there's plenty of room for passengers on board and their service is second to none. That said they're consistently one of the most expensive carriers to Europe so there's no free lunch on offer there, so too speak.

The ASM on Wednesday could be interesting. Might be fun to ask the chairman if he thinks AIR have learned anything from their Hawaii fiasco last year or if there's still more lessons to be learned :)

P.S. Just got an earlybird U.K. and Europe sale from AIR for next year. $999 economy each way isn't too bad in terms of price. Singapore probably close to double that.

[sb9]

Are you going to the ASM Roger, appreciate your insight if you're there on that day.

[winner69]

Roger, not that I know much about planes but the AKL-Singapore one was a B772 - a refurb I believe but boy was it noisy and ratted and creaked

And the service was not second to none.

Good news for shareholders if my impressions are correct - AIR squeezing every dollar they can out of punters and I would say a careful balance between passenger 'expectations' and actual delivery (ie just give them enough but not much more)

Heck $999 pretty good price - but I thought you fly premium/business.

[Joshuatree]

lol Roger flies Jetstar if they are cheaper ; you've missed a few coming out threads w69:)

[Beagle]

lol Roger flies Jetstar if they are cheaper ; you've missed a few coming out threads w69:)

LOL Once a year humility pill, you should try it, it does wonders for the soul to see how the other half have to live.

Winner - All planes vibrate a bit when they get older. You should try flying a 30 year old Cessna :ohmy: I can't bring myself to pay for business class but its very nice if someone else is picking up the tab.

Sb9 - Yep mate, planning on going and happy to share any info I glean.

[Marilyn Munroe]

The ASM on Wednesday could be interesting. Might be fun to ask the chairman if he thinks AIR have learned anything from their Hawaii fiasco last year or if there's still more lessons to be learned.
.

My understanding is the responsibility for dealing with passengers on cancelled flights is outsourced to the ground handling contractor. I further understand the payment made to the contractor for this is a fixed annual fee, motivating the contractor to do as little as they can get away with so as to trouser as much of the fee as they can.

Boop boop de do
Marilyn

[Beagle]

Outsourcing of heavy maintenance on those engines might be an issue too. I think its better to control as many aspects of your business as you can. Outsourcing always has the potential to come back and bite you in the backside. I'll direct my question to Tony Carter to see if he's happy with those aspects of the airlines operational performance. He'll be the one with the sore buttocks at present :)

[Sideshow Bob]

My understanding is the responsibility for dealing with passengers on cancelled flights is outsourced to the ground handling contractor. I further understand the payment made to the contractor for this is a fixed annual fee, motivating the contractor to do as little as they can get away with so as to trouser as much of the fee as they can.

Boop boop de do
Marilyn

Couple of years ago we got held up a day in HK on Air NZ because of a mechanical on the inbound plane. The ground staff were distinctly unhelpful, and certainly the impression that contractors dressed in Air NZ uniforms. The big difference in this case very little accommodation in HK and people had to sleep in the airport, hence getting in the news.

As an aside, we gave the ground staff heaps. We got us transferred onto Cathay, which they hate doing as costs them. Came into Chch from Sydney on Qantas, snow closed airport behind us. No rental cars, roads closed.

Airport reopened mid evening and just got ourselves onto the last ATR flight of the day. Thought no way going to get out of Chch but they did and apologised for the late arrival into Dunedin. Just about kissed the hostess!

[troyvdh]

I totally concur...I travel a bit...how Air nz gets accolades bets me...a bloke I know who worked for them once stated that management et al were like a govt department...slow clumsy and arrogant...

[winner69]

I totally concur...I travel a bit...how Air nz gets accolades bets me...a bloke I know who worked for them once stated that management et al were like a govt department...slow clumsy and arrogant...

The power of marketing and self promotion eh troy

Perception isn't always reality, in practice

[Zaphod]

Back in 2010 I had an issue with a significantly delayed NZ7 (SFO-AKL) flight. We boarded the plane at 8pm and sat at the gate for 2 hours at which point an announcement was made that there were some engineering issues and that we would be delayed.

At 11pm they announced that there were issues with the brakes and that the United ground staff were on strike and would not fix the issue, additionally due to the baseball world series being played that weekend there were also no hotel rooms available, and to compound things further the TSA had refused permission for the passengers to re-enter gate lounge.

A decision was therefore made that they would offload fuel and stop in Hawaii. The truck that was sent by United was too small and we had to wait for another truck to be dispatched, by which time it was 12am. At 1 am I watched as the baggage containers were offloaded and after another 30 min's at 1.30am we pushed back which was when the Captain announced that all baggage had also been offloaded and that we did not have permission to land in Hawaii, therefore we would have a 3 hour stop-over in Fiji.

To Air NZ's credit communication was on the whole good and the multitude of issues were handled well. This incident bears some resemblance to that which occurred on NZ80, given that the engineering issue was compounded by a typhoon, a Chinese public holiday, contracted staff (remember, HKG is not an Air NZ hub), and aircrew working up to their maximum hours before the flight even departed. From what I have heard so far from a colleague, communication could have been better, however from what I have been told the situation is being blown out of proportion somewhat.

[Sideshow Bob]

Most people are understanding, and sometimes cluster-f**** just happen. Just the way it is handled and communicated.

[Beagle]

Seems yesterday was beat-up on AIR day. Reality is some issues are beyond their control and they have to use contractors for some aspects of their operation.
Another reality as I found out to my detriment on Saturday night was that when accommodation is fully booked you really are completely snookered if something goes wrong with one's original plan / accommodation.
I am sure customers were well compensated for their inconvenience, IIRC passengers got $1,200 each for the Hawaii fiasco, a family of four would have had a significant portion of their holiday paid for by AIR.

I have listed below all the others blue chip companies on the NZX trading on a FY 16 prospective PE of under 6....oh wait...there isn't any.
I remain of the opinion that analysts have NFI what they'll make in EPS in FY17 and beyond and all that really matters at this stage is current year indications from the company and they're extremely confident of a significant increase in EPS and that in a year when the economy is relatively soft. No need to over-think this investment, the cash register is ringing like crazy in a soft economy and the current PE at $2.48 is 5.5 based on consensus forecast EPS of $0.45. Imagine how well they'd be going if the economy really was a rock star.

You think the enhanced freight capabilities of the 787-9's, (three times that of the replaced 767's) might come in handy with extra freight with the TPP :)

I have a strong bias towards increasing my investment after tomorrow's ASM.

[winner69]

Roger - it wasn't beat up day

General conclusion was -

1 - AIR doing great marketing and self promotion to ensure they are seen as a very good airline, when in fact they are if one is in a good mood on par with competitors. Perception does not always equal reality

2 - Shareholders should be pleased that they do just enough and no more to keep most punters happy

3- AIR extract as much as they can from their assets. Good for shareholders again.

Essentially they do a good job in flying punters around in the most efficient and profitable way. Flying is a 'commodity' these days, not an experience to look forward to.

No there's a buy recommendation

[Beagle]

Fair enough mate. Shame you didn't get to try out one of their new Dreamliner's on your trip. According to AIR customers surveyed have expressed a very high level of satisfaction with the flight experience...proof that perception can be reality ?

[winner69]

Fair enough mate. Shame you didn't get to try out one of their new Dreamliner's on your trip. According to AIR customers surveyed have expressed a very high level of satisfaction with the flight experience...proof that perception can be reality ?

The Virgin London / Hong Kong was a Dreamliner. As I said it did not live up to its hype, I was underwhelmed. Perception definitely not reality in this case. Doubt whether AIR ones are any better

Hated the lighting that was simulated night time even though it was afternoon outside. Probably a ploy to get punters to sleep longer and cutdown on service. But brekkie at 3pm local time is ridiculous

Long haul is a pain eh.

[Snow Leopard]

...I remain of the opinion that analysts have NFI what they'll make in EPS in FY17 and beyond...

So:
brokers, Tigers and modandms efforts totally worthless;
future valuations a load of dingo's kidneys;
the 20% upside to broker consensus is completely imaginary;
AIR is an incredibly speculative share and you are better putting your money somewhere safer.

Best Wishes
Paper Tiger

PS: I have told you about the two times I had tickets for and turned up for flights that did not exist?

[skid]

So:
brokers, Tigers and modandms efforts totally worthless;
future valuations a load of dingo's kidneys;
the 20% upside to broker consensus is completely imaginary;
AIR is an incredibly speculative share and you are better putting your money somewhere safer.

Best Wishes
Paper Tiger

PS: I have told you about the two times I had tickets for and turned up for flights that did not exist?

Only thing worse than that is being on a flight that does not exist--(think I might have seen something like that on the Twilight Zone) a rerun of the US classic.:)

[Beagle]

So:
brokers, Tigers and modandms efforts totally worthless;
future valuations a load of dingo's kidneys;
the 20% upside to broker consensus is completely imaginary;
AIR is an incredibly speculative share and you are better putting your money somewhere safer.

Best Wishes
Paper Tiger

PS: I have told you about the two times I had tickets for and turned up for flights that did not exist?

I was referring to the fact that analysts have a consensus forecast for FY17 and FY18 that is materially lower than FY16. The company is not saying this. Effectively analysts are saying we're now at the peak of the cycle...funny thing is from everything going on in this economy and neighbouring ones it feels like a trough in the cycle to me.
The best guide to future performance is last year and current year performance as guided by the company themselves.

[Snow Leopard]

I was referring to the fact that analysts have a consensus forecast for FY17 and FY18 that is materially lower than FY16. The company is not saying this. Effectively analysts are saying we're now at the peak of the cycle...funny thing is from everything going on in this economy and neighbouring ones it feels like a trough in the cycle to me.
The best guide to future performance is last year and current year performance as guided by the company themselves.

7652
Heavens to Murgatroyd !

What does the company say about 2016? Their analyst presentation (https://nzx.com/files/attachments/219369.pdf) gives some information and analysts take what the company says into account when doing their valuations.

What does the company say about 2017? [This space intentionally left blank]

And what does the company say about 2018? [This space also intentionally left blank]

And what do the broker/analysts and others see that to them is blindingly obvious but you can not see?

FY2016 is a year when a lot of ducks line up for Air New Zealand and everybody expects them to have scattered to some degree or other after that.

Analysts are saying FY2016 is an abnormal year on the good side and normal service will be resumed thereafter.

Why not have a go at doing an valuation or three of AIR? Consider some alternative scenarios.

Best Wishes
Paper Tiger

[Kelvin]

I see American Airlines announcing LAX-AKL within the next several months...

[banter]

For 2016, I took AIR's figures for 2015, and added 10% for inherent growth, added fuel savings ($363m), subtracted currency losses ($70m), took off 28% tax from the fuel and currency adjustments, and added $27m, for Virgin to break even.

For 2017 I assumed fuel cost and the exchange rates remained the same as those used in AIR's 2016 projections.
And added another 10% for inherent growth. VA to break even again.

Those assumptions give the following:




15a
16
17


npat ul 1)
357

623

459



eps ul
0.319
0.556
0.410


po %
50%
50%
50%


gdps
0.222

0.388

0.286


gy%
8.9%
15.6%
11.5%





As to historic PE - since 2007 the median annual low PE is 8.4; median annual high is 12.7.
Mid point is 10.6
Morningstar figures used.

If those figures are right, it would seem reasonable for the market to 'look through' the abnormally high 2016 profit and use some estimate of 2017 profit to value AIR - with due allowance for a special div of say 15cps in 2016.

A PE of 10 on the 2017 eps would give $4.10 in 2017.
Or say $3.38 now (discount $4.10 at 10% for two years), plus 15c = $3.53.

[couta1]

However you crunch the numbers the current price is a bargain based on upside potential and forward divvy payments.

[Beagle]

7652
Heavens to Murgatroyd !

What does the company say about 2016? Their analyst presentation (https://nzx.com/files/attachments/219369.pdf) gives some information and analysts take what the company says into account when doing their valuations.

What does the company say about 2017? [This space intentionally left blank]

And what does the company say about 2018? [This space also intentionally left blank]

And what do the broker/analysts and others see that to them is blindingly obvious but you can not see?

FY2016 is a year when a lot of ducks line up for Air New Zealand and everybody expects them to have scattered to some degree or other after that.

Analysts are saying FY2016 is an abnormal year on the good side and normal service will be resumed thereafter.

Why not have a go at doing an valuation or three of AIR? Consider some alternative scenarios.

Best Wishes
Paper Tiger

Thank you for posting the analyst presentation but I've already studied that in great detail.

What I am saying in a nutshell is blind freddy can tell you we have an oil price tailwind this year but we also have a currency headwind, a soft economy, trading partners have very soft economies and more specifically I am saying nobody can reliably predict what the profit will be in FY17, almost two years before the actual result. There are simply too many variables. What we do know now, with a reasonable degree of probability about AIR and VAH indicates to me that AIR is materially under-priced based on historical norms. My best guess, (which I reckon is as good as anyone else's) is current years earnings have circa 7-8 cents net oil price tailwind so I reckon we're at basically 37-38 cps x a PE of 11. I use 11 because while the historical average is just over 10, we have interest rates which are generally the inverse of PE ratio's at 50 year lows and the airline in growth mode. I see fair value at $4.12. I think this is conservative in as much as if we have oil lower for longer due to subdued worldwide economic growth, (something that's highly likely), Oil in the 50 - $70 barrel might become the new norm...but who can reliably say...
I think implied suggestions we're at something of a peak in the cycle, (consensus FY18 earnings are 33 cps) are absolutly nonsensical. Its quite obvious almost all our trading partners are struggling to generate any meaningful growth in their economies. If oil rebounds strongly based on economic demand such that all the oil price tailwind is removed in FY18, (which is what appears to be suggested by analysts FY18 forecasts) then demand growth along with quite significant route expansion and frequency will replace that oil price tailwind and we could easily see EPS of 45-50 cps in FY18.

I'm with Couta1 - any way you slice and dice this thing, the stock is very, very cheap trading at one third of the average NZX50 forward PE. You think a ratio of only one third of the average NZX50 more than compensates you for airline risk ? (The answer to this question is intentionally left blank) :)

[skid]

It would be interesting if someone came up with a formula to show just how ''soft'' an economy would have to get before it starts affecting bums on seats.
In terms of ''peak in the cycle'' I suppose it could depend a bit on whether we are seeing this with the economy in general (we just dont know at this stage)
The SP certainly got some legs from Oct to June but has taken a ''breather'' since.It has'nt exactly been a steady upward trajectory.
Im not predicting, but just making the case that it is possible to slice and dice and still end up with just a cut finger--
No matter how you slice and dice this--airlines are always going to have a speculative element.--(which can be great if your on the right side of the ledger)--best of luck but keep doing that homework on both the share and outside markets.

[sb9]

Hope you're all set for the ASM this arvo Roger, with all your notes!

[couta1]

With only a handful of shares traded so far today looks like holders are keenly awaiting a positive AGM:cool:

[Beagle]

Hope you're all set for the ASM this arvo Roger, with all your notes!

Looking forward too it.

[sb9]

From ASM Slides presentation of Chairman's Address:
"We are very pleased with the first quarter
performance of the 2016 financial year and the business is on target to exceed profit before tax of $400 million for the first half of this financial year.
This excludes any equity earnings from Virgin Australia."

Sounds very positive, am sure Roger can add more once he's back from ASM.

[IAK]

SP up +2% must have been a great lunch eh Roger!

[vin]

Yep, sounds like positive news!

[brend]

Roger to go for double down (not kfc :p)

laugh of the day went to the guy having a go at Tony about the Hong Kong incident....never believe NZherald.

[blockhead]

Rogers ramblings tonight may not be as lucid as a financial advisor would recommend investment decisions should be made on

[Beagle]

https://nzx.com/companies/AIR/announcements/271404

I think in this case I'll just let the company's forecast for the six months to 31 December 2015 do all the talking.

[stoploss]

https://nzx.com/companies/AIR/announcements/271404

I think in this case I'll just let the company's forecast for the six months to 31 December 2015 do all the talking.

you even get a mention Rog !!! "Roger has played an instrumental role in Air New Zealand ever since then, and hiscontribution to the company cannot be overstated. He has been a wise counsel to the board andexecutive over a very long time. On behalf of everyone here today I would like to sincerely thankRoger for his contribution. "

[Beagle]

LOL...they are of course talking about the director with the same name that's retiring but I did have a good chat with Tony Carter after the meeting and left him with something to think about and I also grilled them with a few good questions during the AGM. As Brend who was there will be happy to confirm Tony said to me after the meeting that in all the years he chaired meetings that's the best question he's been asked.
The question is what was that question ?...well you shareholders should have been there....some info is simply too good to share :sneaky2:
Double down's at KFC are no good for your health whereas OTOH...:D

[mis chief]

The question is what was that question ?...well you shareholders should have been there....some info is simply too good to share :sneaky2:


Really? And here was me thinking this site was about sharing..... not every shareholder can attend every meeting.

[couta1]

EXCEPTIONALLY WELL POSITIONED that's all I've got to say:cool:

[Hoop]

LOL...they are of course talking about the director with the same name that's retiring but I did have a good chat with Tony Carter after the meeting and left him with something to think about and I also grilled them with a few good questions during the AGM. As Brend who was there will be happy to confirm Tony said to me after the meeting that in all the years he chaired meetings that's the best question he's been asked.
The question is what was that question ?...well you shareholders should have been there....some info is simply too good to share :sneaky2:
Double down's at KFC are no good for your health whereas OTOH...:D

Ummm..Roger,...there's no mention of competition in the addresses nor in the 2016 Outlook...have they all gone away?

EDIT: yesterdays chart saw a couple of buy signals and bullish divergences..Haven't seen todays chart yet but I would say todays price increase will trigger some more buy signals..

[Beagle]

Really? And here was me thinking this site was about sharing..... not every shareholder can attend every meeting.

I need to crunch the numbers and work out my forecasts for FY16 and FY17 and then I'll share some more.

[winner69]

So if they make $95m in second half they beat last years earnings

[winner69]

And share price will double

[sb9]

I need to crunch the numbers and work out my forecasts for FY16 and FY17 and then I'll share some more.

Fair enough Roger, can you share that question you asked Tony in the meantime pls.

[sb9]

Very good article from NBR article today, not paid content.

http://www.nbr.co.nz/article/air-nz-forecasts-85-jump-first-half-pretax-earnings-400m-b-179786

Interesting to note that all 7 directors didn't accept pay rise despite being approved by shareholders, leading by example....great stuff guys!!!

[Beagle]

I am pretty sure Tony Carter was being a gentleman and many have asked more insightful questions over the years. But for what its worth I asked three questions in the meeting.
I'll post the first one and their response now and the others later when I get more time.

During the review of the FY15 financial results and FY16 outlook part of the meeting after complimenting them on their hard work and the financial performance of the company I asked them how is it that the company is going from strength to strength and more specially in light of the bullish current year profit guidance how is it that customer demand is so robust when almost every other day we have reports in the media from expert commentators that the economy is weak, business and consumer confidence are plumbing multi year lows and now we have the IMF coming out and saying the world is on the brink of slipping into a recession. Its seems something of a mystery ?

Chris Luxon gave an elongated reply. Heavily paraphrasing as best as I can recall he basically said a large portion of their customers see travel as an aspirational thing to do and weren't deterred by economic conditions.
I feel he didn't answer the question all that well and he answered it better in the article that's reported in the October 2015 Australian aviation magazine. (Worth buying a copy at Whitcoulls if people are interested)
Basically a large percentage of their customer base will travel regardless of economic conditions. Demand is strong against the backdrop of weak economic conditions both in N.Z. and also with most of our trading partners.
The naysayers will have to get used to being disappointed their negative expectations will not be met. The profit forecast in a weak economic environment says it all.

More on the other questions later. In the meantime here's a juicy titbit...the Dreamliners cost them $150m each and they're exceeding the companies high expectations of them both in terms of operational efficiency and customer feedback has been extremely positive. IIRC the retail on these is $260m. WOW what a discount !!!!! I wish I could buy a new boat with that sort of discount. They have 5 online now and one more to come later this month.
https://en.wikipedia.org/wiki/Boeing_787_Dreamliner Edit, according to Wikipedia the retail on a 787-9 is $U.S264m so it appears they got a whopping 43% discount on retail !!

[winner69]

Roger - I would hazard a guess and say those who fly (here and overseas) wouldn't even know what a 'recession' or 'slowing economy' looks like.

As they as they have a job (or spending their retirement money) they are happy (unaware of any recession or whatever) and will still fly.

In other words there isn't really an answer to your question because economy has little impact on demand - Luxon's reply is thus spot on.

Share price to rocket today?

[garfy]

A very sincere "Thank You" to Roger and Modandm for their input into this thread. Their well-reasoned positivity is appreciated. I enjoyed reading the report of the ASM, and, to date, I am giving more credence to the management of AIR than I am to the nay-sayers.

I am concerned for the 'worrier' of AIR's handling of the "Hong Kong incident", and politely suggest he sell his AIR holding, and perhaps reinvest in Qantas.

AIR is one of NZ's best companies - and David is coping very well with Goliath(s)!

[Beagle]

Roger - I would hazard a guess and say those who fly (here and overseas) wouldn't even know what a 'recession' or 'slowing economy' looks like.

As they as they have a job (or spending their retirement money) they are happy (unaware of any recession or whatever) and will still fly.

In other words there isn't really an answer to your question because economy has little impact on demand - Luxon's reply is thus spot on.

Share price to rocket today?

That's essentially it mate. As reported in the Australian Aviation article in the Oct 2015 edition he says a large part of their customer base demand doesn't change with charging economic conditions.
Tourism is booming... up 7% last year, demand has grown essentially in line with that as has their seat capacity.
The company is growing at its strongest rate in its 75 year history and they're doing that off essentially a static cost base, (they had 11,000 employees in 2013 and they still do in the FY16 year).
Fuel is cheap, labour relations are in good shape, international finance and operating lease rates are very low on the back of 50 year low interest rates, they have a very modern fuel efficient fleet, streamlined aircraft types e.t.c.
Just dumping the inefficient 19 seat Beechcraft planes saves them $1m a month.
Staff retention is very good. People simply don't want to leave. They are N.Z. most popular employer, (little wonder when the average salary is over $100,000 amongst 11,000 staff) and of the 1,000 positions that were filled last year, (indicates an average staff tenure of over 10 years) they had 55,000 applicants so they can easily pick and chose the cream of the crop.

Other snippets while they're fresh on my mind. All the old 133 seat 737's are now retired and Chris said the new 168 seat $50m A320's are only slightly more expensive to run but offer 26% more capacity.
ATR aircraft I understand are an accountants dream in terms of their operational efficiency. Chris Luxon talked a lot about the operational benefits of simplifying and streamlining the fleet.

He went on to say the company has never been in better shape and they are not afraid of competition at all. He said demand on the new routes is excellent, (a stronger adjective than what's used in the official text of the NZX press release).
I understand they are especially pleased with demand out of Australia for the new routes.

Still working on refining my EPS calc's for the next two years. Thanks Garfy, you're welcome. I suspect Mod will be hard at work on his revised projections. His bull case looks too conservative to me.

[Beagle]

Okay some preliminary calculations. Key point is the company has stated they are on track to EXCEED $400m before tax in the first half and that's BEFORE the positive contribution expected from Virgin.
I have assumed $430m inclusive of the Virgin contribution which is up ~ 100% on last year's $216m.

Last year with the route expansion into Singapore in the second half AIR earned just 43% of its profit in the first half. This year we have two new routes and the company is extremely bullish on sales demand on those routes and is on record as saying they'll be profitable from day 1.

Further, in this first quarter they still had some residual fuel futures contracts to work through at historical and less favourable rates. This won't be repeated in this quarter or the second half.

Nobody can reliably predict where fuel costs and exchange rates will go but based on the current rates for same being maintained this year I see no reason why with the two new routes and greater demand in the peak summer and autum seasons why the company won't make a very similar percentage of its annual profit for FY16, (57%), in the second half as it did last year.

On this basis my preliminary estimate for FY16 net profit before tax is thus $1b ($430 / 0.43) translating after full provision for company tax at 28%, (they seldom pay the full tax rate for a range of taxation reasons) to net profit after tax of $720m and based on 1,121m shares on issue this gives 64.2 cps.

I know that figure seems outrageously high but that's what the company is implicitly guiding towards based on best known currently available information.

Further, in FY17 they'll enjoy a full 12 months of the new routes (7 months this year) both international and increased capacity and frequency on domestic and with low international economic growth I see the IMF predicting we'll still have oil at $55 barrel during calendar year 2017 so assuming the currency and oil are stable around their present level's I see no visible reason at this stage why we can't enjoy 60 cps + EPS in FY17.

Going forward from there and assuming oil reverts back to $80-$100 barrel and the currency around 70 cents I see EPS of 50 cps being sustainable. Apply whatever PE you like but I'll use 11 so I can see the stock over $5 within two years when the market finally wakes up to what a massive cash flow machine this company is. $1b cash flow last year, nearly $1 a share !!

On this basis I estimate the shares are trading on a forward PE of only 4.3 for FY16. In my experience when companies are trading on ludicrously low PE's a lot of money can be made. Sure there are risks to the downside and upside but this is my best estimate of EPS at this stage.

DYOR but for what its worth I have tripled the size of my shareholding since yesterday's meeting. I think this is the stand-out opportunity on the market and the opportunities for special divvies in the years ahead along with capital price appreciation make this a compelling investment opportunity. I think the stock should currently be trading at close to or in excess of where QAN is presently priced.

I've been investing for about 30 years now and by my reckoning you'd be doing well to find a company that's better managed than this one. Directors and senior management are doing a stellar job and we are extremely well served by them. Its a true mark of the directors professionalism that despite the company growing profits strongly over the last three years and looking to approximately double last year's record profit this year they refused to take any increase in directors fees, simply enlarged the pool slightly for additional directors in the future. This company didn't win the Deloiite company of the year last year without very sound reasons, likewise Tony Carter Chair person of the year.

The company is extremely bullish on their outlook and so am I.

I'll post the other questions and answers later when I have more time.

[stoploss]

Sounds good Roger , I'm in , thanks for the detailed analysis.

[skid]

Dang Roger,you have increased the SP by 2.5% with your buying:)

[mikeybycrikey]

Okay some preliminary calculations. Key point is the company has stated they are on track to EXCEED $400m before tax in the first half and that's BEFORE the positive contribution expected from Virgin.
I have assumed $430m inclusive of the Virgin contribution which is up ~ 100% on last year's $216m.

I was amazed that they were making a prediction of $400M+ in profit for the first half, with still almost 3 months in the quarter left to run. It's a high bar but they are well positioned to reach it.

With forward bookings and hedging, I guess that much of the revenue and expenses are known in advance, but it still seems a confident move to be predicting that far ahead. Shows to me that they should be expecting $400M as a minimum and potentially a fair bit more.

Roger, thanks for your write-up of the shareholder meeting and other analysis. Keep it up.

I think your profit analysis might be a little on the high side for two reasons.

Firstly, Air NZ having a high profit doesn't play well in the NZ media. When there are headlines of a $800m FY profit, there will be questions asked about high pricing etc. Air NZ management did well to cut that off at FY by talking about lower prices to come but that can't happen indefinitely. Unfortunately, New Zealanders don't like profitable companies, especially when they are paying.

Secondly, low fuel prices lead to increased competition. Air NZ might be able to handle competition in the longer term but it will cut into the profit in the medium term. I expect to see more competition within the next 12 months. Maybe it won't eventuate though. Here's hoping.

[Beagle]

I was amazed that they were making a prediction of $400M+ in profit for the first half, with still almost 3 months in the quarter left to run. It's a high bar but they are well positioned to reach it.

With forward bookings and hedging, I guess that much of the revenue and expenses are known in advance, but it still seems a confident move to be predicting that far ahead. Shows to me that they should be expecting $400M as a minimum and potentially a fair bit more.

Roger, thanks for your write-up of the shareholder meeting and other analysis. Keep it up.

Yes I must say I was very surprised and totally unprepared for this bold and early call on profit for the first half and my read on this is the same as yours, they must see $400m as an absolute minimum with the potential for a fair bit more (excl VAH) so I feel $430 incl VAH for the first half is a fairly conservative call on my part. You also need to recall they only had one new route last year in the summer season which translated to 57% of full year profit in the second half, this year they have two new routes and they are extremely confident about bookings so while $1,000m net profit before tax is my best guess I certainly acknowledge the other points you've made and competition is an ever present factor.

They're well skilled at deflecting the politics of increasing profits and have all year to work on their next politically correct speak so they'll have all the usual angles of reinvesting in new aircraft for pax benefit, new lounges, staff training and enhancement, green initiatives and probably some new angles on it as well. Also as C.L. eluded too at the meeting they are very confident that we have some of the most competitive domestic fares of anywhere in the world.

The other two questions I asked during general business were.
1. Addressed to Tony Carter. Given the compelling metrics that the stock was trading on and the fact that you have been buying them yourself has the board considered utilising its ability, (up to 3% of issued shares or $60m whichever is the lesser) to buy back its own shares ?
Answer, that's a tricky one. He quipped, You must have been at the board meeting this morning. As you will know we have had the ability to buy back but we haven't used this ability for quite some time. We've been investing heavily in new planes and that's been our focus in recent times but its something that's under consideration for the future.
I spoke with Tony after the meeting and suggested to him there's no more profound signal to send to the market than the company buying its own shares back. He recalled the time they did that some years ago and the stock price doubled in a short period of time afterwards. I left him with that thought to think about. He explained in a round about way that at this stage their call was to put it right out there exactly where they see the profitability of the company which he said was a bold and informative move, or words to that effect and I agreed.

2. I asked Chris Luxon during general business whether he gets frustrated with analysts insistence that AIR is a cyclical stock ? (Some good probing questions...I am not sure which one Tony Carter liked the most).
C.L. explained that after many years of working for Unilever and other U.S. corporations he didn't feel making excuses about currency or fuel prices or other extraneous cost influences really cuts the mustard for shareholders. They expect us to manage those things and we do. We're running a business not an airline and we need to get on and manage that business in the most prudent manner for our shareholders. (I'm paraphrasing as best as I can recall)
He went on, naturally we're not immune to any major exogenous shock regarding one of our major input costs but where here to manage that and mitigate its effects, be flexible and adaptable and we back ourselves to be the most adaptable airline in the world.

I must say that I think he's doing a first class job at the helm of what is a very good company. I have a very high level of confidence in the management and directors.

I think my friend Couta1's very bold XXXXXL sixed position will pay huge dividends in the years ahead. For mine, I will continue to add more on any future weakness as funds allow.
That's basically a wrap on yesterday's proceedings as best as I can recall them.

How's the technical's looking Hoop ? I note today we busted through the 100 day MA to the upside on much higher volume than normal :)

[Biscuit]

Roger, you didn't ask him about the effect on profits of the burst in the Auckland property market bubble?

[winner69]

Got quite a few today ..... got sucked in my the hype and exuberance on this thread. And an accountant can't be wrong, can he

OMG Winner, what have you done? You said you would never tempt fate with an arline

I will be beside myself if one of their planes now fall out of the sky and hundreds die .... it'll all be my fault

[Beagle]

Got quite a few today ..... got sucked in my the hype and exuberance on this thread. And an accountant can't be wrong, can he

OMG Winner, what have you done? You said you would never tempt fate with an arline

I will be beside myself if one of their planes now fall out of the sky and hundreds die .... it'll all be my fault

OMG I can't believe it...I have finally talked you into investing in the best value company on the NZX. Its time for me to get out :eek2: LOL.
We'll be all good mate. Strap yourself in and enjoy the ride. I've gone XXXL with my holding and want more.

[winner69]

Are the questions included in the webcast
http://edge.media-server.com/m/p/hcz5otfo

Doesn't seem to be a fast forward button and I hate listening to chairmen and CEOs rave on how good they are - usually self indulgent bull**** to appease the audience

[Beagle]

Are the questions included in the webcast
http://edge.media-server.com/m/p/hcz5otfo

Doesn't seem to be a fast forward button and I hate listening to chairmen and CEOs rave on how good they are - usually self indulgent bull**** to appease the audience

I would say by the length of the podcast the questions definitely would be included. For anyone keen enough to listen to the whole thing that'll probably make a mockery of my recollection of the event and the way I've paraphrased their response LOL. Worth listening too for people who have the time.

By the way Winner let me be the first to welcome you aboard as an Air New Zealander. Part of your indoctrination into the company as a shareholder is listening to the whole webcast including my clumsy questioning, enjoy :D

[Baa_Baa]

AIR sent out the buy signals this week on my weekly chart -log scale, SP now above the EMA's (LT and ST) which all converged, and nicely up off the rising trend line from about 3.5 years, all indicators positive and particularly money flow moving into the positive. I would normally wait another week for confirmation, of a new high and a low/close above this weeks close. Good luck all holders/buyers, I can't join you on this flight but wish you well.

7658

[Hoop]

Yes I must say I was very surprised and totally unprepared for this bold and early call on profit for the first half and my read on this is the same as yours, they must see $400m as an absolute minimum with the potential for a fair bit more ..................

How's the technical's looking Hoop ? I note today we busted through the 100 day MA to the upside on much higher volume than normal :)

Technicals firing buy signals...The chart is showing the price rising towards resistance and the bull bear line (275) and has to break these to stop the downtrend...
I'll post a chart when I find time..

I bought some today too...but I have reservations as the NZX50 is red

[Hoop]

Technicals firing buy signals...The chart is showing the price rising towards resistance and the bull bear line (275),,,,,,,,

,,,I'll post a chart when I find time............


Baa_Baa's beaten me to it:)

[winner69]

By the way Winner let me be the first to welcome you aboard as an Air New Zealander. Part of your indoctrination into the company as a shareholder is listening to the whole webcast including my clumsy questioning, enjoy :D

Ye gods, its almost as long as a long haul flight and probably as enjoyable

The Corporate B S Generator that Luxon subscribes to had this as their as the statement of the day - seamlessly syndicate market-driven total linkage

Did he use it?

Or did he use the day before one - synergistically transform mission-critical infomediaries

Cheers
By the way I will give the webcast a miss

[winner69]

I was swayed by the accountants 64 cps for FY16.

Know he was getting a bit excited, the adrenalin from asking so many great questions was still in his veins.

So I discounted by 10% which gives 58 cents

As mo keeps reminding us the more AIR make the lower the PE (cyclical see).

Heeding that advice I reckon Rogers 10 or11 is far too high at this point in the cycle. Te way Roger is going it will be 12 tomorrow. Never mind, I reckon a PE of 7 would be about right at this point in the cycle when excessive profits are being made.

So 58 X 7 is $4.06 .......as the 58 cps is in the bank the share price should follow earnings as Percy keeps reminding us and reach that 4 bucks pretty soon. Even a PE of 6 gives close to $3.50. No risk here methinks

Yep, $2.60 odd to $4.00 in less than a year is pretty good eh. Amazing really

Praying no plane crash tonight

[winner69]

Started a new chart to monitor this trade. Must try to be disciplined to lock in most of the gains I going to make.

Hope this trade keeps going for years

First step, I see 3 bucks by end of next week

[Hoop]

Started a new chart to monitor this trade. Must try to be disciplined to lock in most of the gains I going to make.

Hope this trade keeps going for years

First step, I see 3 bucks by end of next week



A showdown next week...eh Winner.....Chris Luxon v Xerof's harmonic $3 Bat (http://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ/page148)

https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQypDsFen3M_654qjVua3wjddPGuMZvx B4QT57kxY5kkU5rPc_Hhttp://www.sharetrader.co.nz/attachment.php?attachmentid=7061&d=1423982599&thumb=1

[sb9]

Good snippets from your attendance at ASM Roger, thanks for sharing.

Knew one of your questions would be about share buy back with cash chest they've.

Hopefully the analysts upgrade their forecasts and give fair value to sp, onwards and upwards from here hopefully.

Glad to see you on board winner69.

I bet couta1 would be a very happy man right now with his XXXXL holding.

[brend]

Firstly, Air NZ having a high profit doesn't play well in the NZ media. When there are headlines of a $800m FY profit, there will be questions asked about high pricing etc. Air NZ management did well to cut that off at FY by talking about lower prices to come but that can't happen indefinitely. Unfortunately, New Zealanders don't like profitable companies, especially when they are paying.

More NZherald bashing to come then? With the taxpayer being 52% shareholder, everyone should be happy (I'm sure Uncle Bill will be). Smaller planes cost more to fly because less heads to over the costs, the same reason it costs more to drive a car than taking the bus....

The thing is profit is going to go through the roof yet airfare prices have overall remained the same or decreased as they price to full capacity and take on jetstar.

We all know that profit is driven by various factors, yet the general public fail to understand this so they moan about either 1) airfares to expensive from some small town to another small town 2) service was poor 3) they didn't get their second free wine top up on that 2 hour flight to Sydney (godlord).

I found it interesting at the ASM that while the fleet simplification provides customers with a similar experience regardless of the plane, the back-end services have been made extreme efficient. In the past if they had to change planes it would take them 4 hours to change the catering equipment to suit. I don't know the cost savings here but it shows efficient this management team are.

[iceman]

Just been catching up on all the comments on here. Thanks very much Roger for your input and the work you have put into this and sharing it with us.

[iceman]

Quite a clever move from the Star Alliance to make it harder for AA and One World to compete on NZ-USA routes.
Just a shame AIR's US partner is such woefully bad airline to travel with
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11526074

[Zaphod]

Quite a clever move from the Star Alliance to make it harder for AA and One World to compete on NZ-USA routes.
Just a shame AIR's US partner is such woefully bad airline to travel with
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11526074

Yes, an all-around great strategic move. That route definitely needs further capacity increases, and the partnership will allow NZ to provide this while still allowing them the flexibility to explore new routes and/or grow capacity on the existing routes such as EZE and IAH.

[winner69]

It's not surprising AIR profits going to double his year - it's a global industry thing and not just specific to AIR.

Probably AIR are doing things better than most (efficiency wise etc) so 'outperforming'

At least the industry seems to be showing some discipline in not cutting fares as capacity increases. Shareholders need the likes of AIR to screw punters to maximise profits eh

AIR at 3 bucks soon and then 4 bucks after Xmas

[Joshuatree]

I bought my initial and smallest parcel at $2.90 yep... still holding out for that to recover. But I also bought in when it was in $2.60's prior to the Jet star announcement and I also topped up at $2.40. Quite a spread but hold a decent amount now and am confident in recovering the $2.90 soon.


Hopefully you're not far away from being in the black Regi

[Beagle]

I was swayed by the accountants 64 cps for FY16.

Know he was getting a bit excited, the adrenalin from asking so many great questions was still in his veins.

So I discounted by 10% which gives 58 cents

As mo keeps reminding us the more AIR make the lower the PE (cyclical see).

Heeding that advice I reckon Rogers 10 or11 is far too high at this point in the cycle. Te way Roger is going it will be 12 tomorrow. Never mind, I reckon a PE of 7 would be about right at this point in the cycle when excessive profits are being made.

So 58 X 7 is $4.06 .......as the 58 cps is in the bank the share price should follow earnings as Percy keeps reminding us and reach that 4 bucks pretty soon. Even a PE of 6 gives close to $3.50. No risk here methinks

Yep, $2.60 odd to $4.00 in less than a year is pretty good eh. Amazing really

Praying no plane crash tonight

Must admit I rushed back to the office after a quick chat with Tony Carter, just one lovely salmon sandwich grabbed and consumed on the way out the door, (don't want to damage their hospitality budget too much...might impact that special divvy next year), and when I did the quick back of the envelope calculation I got to your 58 cps which in itself was startling so I started buying like crazy that afternoon.

Only the next morning did I realise the full implications of their bold prediction that they were on track to exceed $400m excl VAH and then crunched my numbers on the profit split theory between first / second half. I reckon $430m is pretty conservative in the circumstances incl the contribution from VAH, I was tempted to use $450m but didn't. Regarding second half there is definitely some seasonality to their business with more tourists in summer and early autumn and they have two new routes coming on stream this summer compared to one new one last summer so I reckon sticking with a 43% / 57% first half - second half profit split for this year and keeping it the same as last year is also reasonably conservative too, especially considering the less favourable fuel hedging they had in the first quarter of Fy16, likewise assuming the full company tax rate of 28%. As outrageous as it seems I am fairly comfortable with $1,000m before tax including VAH contribution giving the 64 cps after tax but if you want to use 58 cps that's fine but I reckon its a little too conservative.

Regarding future years and the PE I chose, there's no question they are deriving some material benefit from the current fuel price tailwind, my estimate $250m but by my reckoning only about half that translates onto the bottom line as yields are compressed by competitive pressures (my estimate 2-3% x $5b), so I think the net benefit is about 10 cps, (would make a nice special divvy next year wouldn't it), so when I used the PE of 11 its based on normalised profits excluding the fuel price tailwind so 54cps x 11 = $5.94 I ran with 50 cps as a sustainable earnings rate going forward because I expect more competition to come out of the woodwork.

Choose whatever PE you like but I think the company is misunderstood by analysts and is dirt cheap. If one uses a simple PE of 10 on a sustainable earnings rate of 50 cps then it's quite feasible this is a $5 stock once analysts realise they've completely underestimated this company and it proves up FY17 earnings and FY18 outlook.

My pick is the stock price will have a 5 as the first number after the FY 17 annual meeting, say by Xmas 2017 once their FY18 outlook is clear and Couta1 will recover all his losses and look like a legend :D

I don't want to put timelines on when I think it'll hit $3...just invest for the long term and know your investing in a very high quality well managed company trading on compelling fundamental's.
You can afford to be patient when you're being paid what will probably be in excess of an average 12% gross dividend yield over the next few years incl special(s).

[couta1]

Roger I love your fairytale ending and so I've taken licence to start dreaming already, after all dreams are free. Thanks for all the hard work you've put into the stock, going well beyond what you have or need to do.

[Balance]

It's not surprising AIR profits going to double his year - it's a global industry thing and not just specific to AIR.

Probably AIR are doing things better than most (efficiency wise etc) so 'outperforming'

At least the industry seems to be showing some discipline in not cutting fares as capacity increases. Shareholders need the likes of AIR to screw punters to maximise profits eh

AIR at 3 bucks soon and then 4 bucks after Xmas

I see Macquarie has a 12 month price target of $3.10. With them and other brokers pushing that, it should get within your $3 to $4 price range within a year. What I cannot figure out is that they have upgraded their profit forecast after the AGM but has kept price target the same from several months ago.

[winner69]

Looking good for AIR shareprice today

[couta1]

I see Macquarie has a 12 month price target of $3.10. With them and other brokers pushing that, it should get within your $3 to $4 price range within a year. What I cannot figure out is that they have upgraded their profit forecast after the AGM but has kept price target the same from several months ago.
Too conservative although the high target is $3.40 and no brokers are recommending a sell as they were a month ago.

[couta1]

Brokers are all insisting this is a cyclical stock and this is the peak of the economic cycle :lol: :lol:
Mate you have to admire their boldness revising the mean to $2.99 up from $2.92, very big of them don't you think, is it too early for a Tui?

[Beagle]

A little birdie tells me two of the best analysts are away on holiday, (school holidays). Expect more upgrades next week. T.C. is on to it. His concluding remark to me after the meeting implying that the early profit announcement was sort of in lieu of a share buy-back, was, it'll be interesting to see what happens to the share price in the next few weeks. He probably already knew those analysts were away on holiday.

[Beagle]

Mate you have to admire their boldness revising the mean to $2.99 up from $2.92, very big of them don't you think, is it too early for a Tui?

Mate I thought I'd better delete that comment having a good dig at the analysts but you were too quick and copied it so its out there now and yes its too early for a Tui but seeing as you're now well and truly in the black after taking into account your jumbo divvy I give you permission to have a couple of coldies this afternoon, you've earned them :)

[winner69]

Whose the better CEO - Greenslade or Luxon?

[Regi]

Hopefully you're not far away from being in the black Regi

Haha in the green again now cheers Josh! :t_up: Smile has gotten bigger every day this week... what a good week.

And thanks Roger for all your input and optimism despite nay-sayers. Still a way off where it should be but hopefully this is the turning point.

[sb9]

Whose the better CEO - Greenslade or Luxon?

My money is 100% on Luxon, we're very fortunate someone like him among NZ inc atm. Not saying as shareholder even other wise.

[Beagle]

Winner you know my thoughts on how HNZ is being managed and how AIR is being managed. Management starts at the top and is lead by example so I'll leave your question for others to answer if they wish.

[Robomo]

I see Macquarie has a 12 month price target of $3.10. With them and other brokers pushing that, it should get within your $3 to $4 price range within a year. What I cannot figure out is that they have upgraded their profit forecast after the AGM but has kept price target the same from several months ago.

Morningstar are completely unimpressed by AirNZ's claims and keep their target at $2.80. They write...

Air New Zealand upgraded its near-term earnings guidance, flagging profit before tax (excluding equity-accounted income from Virgin Australia) for the first half of fiscal 2016 as on track to exceed NZD 400 million. The outlook commentary was positive, and the company is well positioned to benefit from lower fuel prices, improved fleet efficiency and resilient inbound tourism. We raise our fiscal 2016 earnings estimate 18% to NZD 0.47 per share, a record profit for New Zealand's flagship carrier. Nevertheless, our more bearish long-term thesis remains, and we believe the subdued outlook for the New Zealand and Australian economies will weigh on passenger demand, driving our low-single-digit revenue growth projection for the foreseeable future. We forecast that Brent crude oil will normalise at USD 70 per barrel, well above current prices, which will inflate the cost base and create margin pressure from fiscal 2017 onwards.

Our NZD 2.80 (AUD 2.60) per share fair value estimate remains intact. Air New Zealand is slightly undervalued. Our no-moat and very high uncertainty ratings are unchanged, as the company's world-class performance and cosy monopoly make it an attractive target for future competition. Air travel is largely commodified, and consumers are price sensitive. Given inevitable new capacity and competition, the balance of power will shift from the airlines back to passengers. The lack of entry barriers and minimal switching costs imply that the potential for new carriers to enter the market is extremely high, and any excess returns on capital are likely to be short-lived. Airlines are notorious for making large capital injections amidst favourable market conditions, and given our subpar economic growth expectations, we remain sceptical of Air New Zealand's aggressive NZD 2.6 billion aircraft capital expenditure pipeline and ambitious 11% capacity expansion target. We think this is an early indication of a more competitive landscape in the future.

Positively, Morningstar do say they are "well positioned"!

[stoploss]

Morningstar are completely unimpressed by AirNZ's claims and keep their target at $2.80. They write...

Air New Zealand upgraded its near-term earnings guidance, flagging profit before tax (excluding equity-accounted income from Virgin Australia) for the first half of fiscal 2016 as on track to exceed NZD 400 million. The outlook commentary was positive, and the company is well positioned to benefit from lower fuel prices, improved fleet efficiency and resilient inbound tourism. We raise our fiscal 2016 earnings estimate 18% to NZD 0.47 per share, a record profit for New Zealand's flagship carrier. Nevertheless, our more bearish long-term thesis remains, and we believe the subdued outlook for the New Zealand and Australian economies will weigh on passenger demand, driving our low-single-digit revenue growth projection for the foreseeable future. We forecast that Brent crude oil will normalise at USD 70 per barrel, well above current prices, which will inflate the cost base and create margin pressure from fiscal 2017 onwards.

Our NZD 2.80 (AUD 2.60) per share fair value estimate remains intact. Air New Zealand is slightly undervalued. Our no-moat and very high uncertainty ratings are unchanged, as the company's world-class performance and cosy monopoly make it an attractive target for future competition. Air travel is largely commodified, and consumers are price sensitive. Given inevitable new capacity and competition, the balance of power will shift from the airlines back to passengers. The lack of entry barriers and minimal switching costs imply that the potential for new carriers to enter the market is extremely high, and any excess returns on capital are likely to be short-lived. Airlines are notorious for making large capital injections amidst favourable market conditions, and given our subpar economic growth expectations, we remain sceptical of Air New Zealand's aggressive NZD 2.6 billion aircraft capital expenditure pipeline and ambitious 11% capacity expansion target. We think this is an early indication of a more competitive landscape in the future.

Positively, Morningstar do say they are "well positioned"!

I would just like to point out an error in Morningstar analysis . They are saying oil to stabilise around $ 70 a barrel . However whats is to stop AIR.NZ hedging 3 years forward at current prices ?????
Morningstar struggle to forecast NZ shares .....I give up if they are an expert on world oil prices !!!!!

[couta1]

Morningstar negative analysis must be another strong buy indicator going by their track record:t_up:

[Beagle]

Thanks Robomo - Probably a healthy thing to have a reality check of some sort although everyone knows Morningstar had a sell recommendation on Ryman for years while it quadrupled in price and that's before we start talking about all their other wrong calls.

[vin]

Thanks again to roger & all those who have contributed/researched. Topped up some more today, abit overweight.

Winner now that you've bought in i hope you're not renoun for jynxing with your plane crash scare mongering:confused: haha