AIR - Air NZ.

[thestg]

Major Shareholders Provide Loan Facility to Virgin Australi 10:47am, 21 Mar 2016 | GENERAL Air New Zealand advises that it has agreed to support Virgin Australia Holdings Limited (Virgin Australia or the Company) by providing a new unsecured term loan facility.

Air New Zealand (NZX: AIR), Etihad Airways, Singapore Airlines (SGX: SIA) and Virgin Group will each separately provide funding via of a new loan facility to Virgin Australia. This is an initial step in strengthening Virgin Australia’s liquidity while the Company commences a review of its capital structure. The review will include an assessment of the appropriate mix of debt and equity capital and operational initiatives to enhance Virgin Australia’s cash flow and profitability.
The facilities are for an aggregate amount of AUD425 million with pro rata participation from each shareholder based on their relevant interest. The facilities are for a term of 12 months and are based on arm’s length commercial terms.
Air New Zealand’s portion of the loan facility to be funded to Virgin Australia is AUD131.2 million (approximately NZD146.5 million).
Virgin Investments Limited will provide the loan facility. Virgin Group’s shareholding in the Virgin Australia Group is held by Corvina Holdings Limited.
Ends

[Beagle]

First impressions. I'm not too pleased with this. IF VAH isn't already making good money when the fuel costs are so low why not ? The fact that they say its an initial step...suggests further investment is required :eek2:

On the other hand its good that they're looking at operational initiatives to enhance cash flow and profitability and I suspect that review will be very thorough. Maybe VAH's CEO needs to step down if he can't cut the mustard and regularly needs external shareholders assistance ? Note AIR increased their investment in VAH in 2014. How much more will be required and maybe this is what's behind Friday's SP plunge ? Return on AIR's investment to date has been very poor and memory of Ansett fiasco lingers and I suspect in some people's minds remains the default setting until proven otherwise. Sometimes in a quieter moment I wonder about this whole VAH investment strategy... Sorry folks...more questions than answers from me on the VAH matter. I suppose we can take some comfort from Chris Luxon being on the board. P.S. VAH is also well served with very good intellectual horsepower from key representatives of its other airline shareholders.

[Hoop]

12.5% drop in share price for Virgin, right on 5 pm local time Friday 18 March. Over 5 million shares traded, much higher than usual. No apparent reason for this drop, and nothing in the Media or on Hotcopper. Seems strange given the stunning positive results released just a week ago. The only negative in the results was the lack of guidance for the coming year. But 12.5% drop in one day???

It will be interesting to see if this has any effect on the AirNZ share price on Monday, given they own 26% of VAH.

Hmmm....Announcement released at 10.47am Monday NZT


Air New Zealand (NZX: AIR), Etihad Airways, Singapore Airlines (SGX: SIA) and


Virgin Group will each separately provide funding via of a new loan facility


to Virgin Australia. This is an initial step in strengthening Virgin


Australia's liquidity while the Company commences a review of its capital


structure. The review will include an assessment of the appropriate mix of


debt and equity capital and operational initiatives to enhance Virgin



Australia's cash flow and profitability.


MR Market sees nothing sinister in this announcement as AIR is still up 2c this morning.....

No announcement yet on the ASX so was VAH Friday's 12.5% drop a result of insider trading..

[Beagle]

And now we are seeing the SP come under some pressure from this announcement...what a surprise...(NOT) Disc I let some freight off at $2.86..will look to reload later.

VAH set to open at 38.5 cps, up 10% so at least the Australian market sees this as a positive for VAH. Although this is a loan not further capital at this stage, the requirement for possible further capital is clearly hinted at in the news release so I'd like to see the operational review of VAH be radical and far reaching. Really their level of profitability when oil is so low is woefully inadequate for the amount of shareholders funds already involved. I am pretty sure the other shareholders in VAH would agree with that viewpoint.

[thestg]

Same here - sold 40% of my holdings @ $2.84 also with the intention to reload later.

[777]

Looks like VAH will open back up at 38.5c.

[skid]

My wife often complains its too hot or too cold and I'm usually feeling the exact opposite in exactly the same environment...just saying.

if you had been on the fight I was on i think you would not say that--It was literally like sitting outside on an unsettled winter day----I think it is far more likely that they couldnt get a consistent temperature throughout the plane----just as a sidebar ,Ive never had that problem on any other flights on different carriers.--Is the AK-Vancouver route the last of the older planes?(My wife is not the kind who shy's away from diplomatically trying to sort those kind of things out,but I dont know all the details)

Ive had some pretty uncomfortable waits at some airports though.

funny enough ,my worst experience was on a bus in the tropics(Cambodia)..thought I was going to get Pneumonia!

[777]

The oldest of 777-200s are only just over 10 years old. Hardly old in aircraft terms.

[Beagle]

Skid - Maybe bleating like a lamb lost from its mother would have seen her shifted to another part of the aircraft...maybe even upgraded ? Agree with 777 on the age thing.

Of more interest, tourism continues to grow at 10% in the year to the end of February 2016. http://www.sharechat.co.nz/article/8e2890e7/nz-continues-to-post-record-net-migration-with-67-400-gain-in-february-year.html?utm_medium=email&utm_campaign=NZ%20continues%20to%20post%20record%2 0net%20migration%20with%2067400%20gain%20in%20Febr uary%20year&utm_content=NZ%20continues%20to%20post%20record%20 net%20migration%20with%2067400%20gain%20in%20Febru ary%20year+CID_d0c9147708169bfd4f8845fd1e0d79b1&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle8e2890e7nz-continues-to-post-record-net-migration-with-67-400-gain-in-february-yearhtml

I suppose all those new migrants which are additional to the tourism growth want to travel around their new country too and have their visitors come and stay in the future. They might even fly VAH part of the way...looks like it could do with the help.

[winner69]

The only odd bit from those travel stats today was -'overseas travel by New Zealanders fell sharply in February' (Westpac)

[Raz]

http://www.stuff.co.nz/business/industries/78098060/air-new-zealand-provides-virgin-australia-a1312-million-loan

There is our dividend

[Snow Leopard]

http://www.stuff.co.nz/business/industries/78098060/air-new-zealand-provides-virgin-australia-a1312-million-loan

There is our dividend

Wait till Virgin decide how much new equity they need.

Best Wishes
Paper Tiger

[Nasi Goreng]

Meanwhile, the market seems to have shrugged off the quick sell down and is now at intra day high. Nice bullish sign.

[iceman]

Roger has been indubitable about a special divie. Maybe this s where it went !


http://www.stuff.co.nz/business/industries/78098060/air-new-zealand-provides-virgin-australia-a1312-million-loan

There is our dividend

[Beagle]

Wait till Virgin decide how much new equity they need.

Best Wishes
Paper Tiger


Roger has been indubitable about a special divie. Maybe this s where it went !

That's it...there's our special divvy gone right down the **** hole that is AIR investing in Australian airlines...not happy, electric cars that don't give a decent return on capital, now our special divvy gone for a burton...what's next, AIR investing $50m in new uniforms that trap staff carbon emissions ? I'm very annoyed, sold 2/3 rd's of my holding now and yet the SP goes up...go figure ????????

[macduffy]

Don't say that Warren Buffett didn't warn the world about investing in airlines! Trading is a different matter, of course.

;)

[Beagle]

In case people think I am kidding about there goes our special divvy, I'm not. Fact is AIR's gearing was close to the top of their 55% self imposed limit as at 31 December 2015, within about 1.5% of that if I remember correctly and with big ongoing capex this calendar year this investment in Virgin really has dramatically diminished our chances of a special divvy this year. Not impossible but now looking unlikely. Have to admit with all my work on this company I never saw this coming. Love these sort of surprises :eek2:

[brend]

In case people think I am kidding about there goes our special divvy, I'm not. Fact is AIR's gearing was close to the top of their 55% self imposed limit as at 31 December 2015, within about 1.5% of that if I remember correctly and with big ongoing capex this calendar year this investment in Virgin really has dramatically diminished our chances of a special divvy this year. Not impossible but now looking unlikely. Have to admit with all my work on this company I never saw this coming. Love these sort of surprises :eek2:

and most likely the reason this months divy was only 1/3 of EPS

[Beagle]

and most likely the reason this months divy was only 1/3 of EPS

Agreed. Stingy final last year too. Really if Virgin can't stand on its own two feet in the current low oil price environment then...

Only consolation I take from this is that all the other well respected airlines that are shareholders in VAH are also contributing, so maybe seeing as they all see merit in it, its not quite the Ansett black hole we think it could be ?

I'm still very grumpy though...hate seeing my special dividend sailing off to some foreign shores, down some deep dark black hole it might never come out of again :(:(:(

And yet the SP tracks higher on this news...bizarre ????????

[stoploss]

The only odd bit from those travel stats today was -'overseas travel by New Zealanders fell sharply in February' (Westpac)

I don't fine this as odd , Feb is always the best month for weather so many plan to have it here and stay at home .

[couta1]

Agreed. Stingy final last year too. Really if Virgin can't stand on its own two feet in the current low oil price environment then...

Only consolation I take from this is that all the other well respected airlines that are shareholders in VAH are also contributing, so maybe seeing as they all see merit in it, its not quite the Ansett black hole we think it could be ?

I'm still very grumpy though...hate seeing my special dividend sailing off to some foreign shores, down some deep dark black hole it might never come out of again :(:(:( I got out this morning at a lower price than now but I don't really care, I'm guessing some punters think this loan is going to help generate bigger profits for Virgin hence the bizarre increase in the SP this arvo but I wouldn't hold my breath on that one. Besides all that other extra green stuff of late don't impress me much anyways.

[iceman]

Ditto. Out this morning at $ 2.88. Not impressed with AIR green and Virgin approach


I got out this morning at a lower price than now but I don't really care, I'm guessing some punters think this loan is going to help generate bigger profits for Virgin hence the bizzarre increase in the SP this arvo but I wouldn't hold my breath on that one. Besides all that other extra green stuff of late don't impress me much anyways.

[Beagle]

"This is an initial step in strengthening Virgin Australia's liquidity"
This bit, (emphasis added), should concern any shareholder who remembers the Ansett fiasco. I don't blame you guys...recent announcements and dividend level's have really disappointed me.

Why are they having issues with liquidity ?...last time I checked people paid for their flights before they flew and the price of fuel was close to ten year lows.

[Mickey]

Ditto. Out this morning at $ 2.88. Not impressed with AIR green and Virgin approach

Out at $2.88 as well. I wasn't entirely happy with the electric cars but this was enough to send me to the 'sell' button.

[Beagle]

Hi Mickey. An unkind person (realist ?) might put mouse on the end of your user name and say that sums up recent announcements by AIR pretty well.

[Raz]

That's it...there's our special divvy gone right down the **** hole that is AIR investing in Australian airlines...not happy, electric cars that don't give a decent return on capital, now our special divvy gone for a burton...what's next, AIR investing $50m in new uniforms that trap staff carbon emissions ? I'm very annoyed, sold 2/3 rd's of my holding now and yet the SP goes up...go figure ????????

Thats what i was suggesting..was just in a hurry..family matter meant i got the news late, God smiling on me allowed me to sell well this pm..go figure.

[winner69]

At this rate no final dividend - just joking

You need to trust Tony and Chris - they have things under control

It's all part of collaboratively enhancing go forward scenarios to make AIR and Virgin stronger so they can make even more money

[Beagle]

Right.... enough venting now, (right or wrong you folks will never die wondering what big Rodge thinks :lol: :lol:)...I shall go and eat another juciy scales apple and count my many blessings.

[Snow Leopard]

You guys have all bailed (hopefully with your parachutes on) because of this?

Because you might get less divvy this year and next year than you expected?

What a fickle bunch you are!

Looking ahead, I do not see what has really changed.

Best Wishes
Paper Tiger

[winner69]

When masses sell often good time to buy

That $3 barrier has to be eventually broken through for an extended period.

Maybe this is the catalyst

Bugger - won't get in at $2.69 now

[iceman]

The big change for me PT is that instaed of getting contribution from Virgin, we are contributing. Fickle ? Maybe but think my cash is better parked elsewhere rigth now


You guys have all bailed (hopefully with your parachutes on) because of this?

Because you might get less divvy this year and next year than you expected?

What a fickle bunch you are!

Looking ahead, I do not see what has really changed.

Best Wishes
Paper Tiger

[Beagle]

I still hold some but the truth is $145m pushes them right to the edge of their maximum self imposed leverage position (55%) and dramatically reduces the chances of a special dividend so fundamentally changes the forecast dividend yield and they are throwing trucks loads of our cash down green holes and black holes with little immediate prospect of any commercial payback but you can't see that anything has changed PT ? I can recommend a very good optometrist just up the road here...might even test tiger's eye's for all I know :)

The distinct prospect of further equity required to be injected is grounds for concern too. Any wonder prudent risk averse investors have been reviewing their positions quickly...

Opps so sorry, does that amount to further venting :blush:

[winner69]

How much have AIR invested in Virgin now

Just a bit lazy at the moment.

[Nasi Goreng]

I agree with what Winner is saying although might need some caution. Someone was buying today despite all the commotion at midday and share traders running for the hills.

[Beagle]

How much have AIR invested in Virgin now

Just a bit lazy at the moment.

Bad lazy dog... in the corner with you :) See note 12 from 2015 accounts, looks like $360m.

[winner69]

Bad lazy dog... in the corner with you :) See note 12 from 2015 accounts, looks like $360m.

I assume its been a profitable investment over the years

[Beagle]

No mate it hasn't but is coming right and I think AIR's share of half year profit to 31 December 2015 was about $15m.

Quizzing C.L. after the annual meeting in 2014 he thought it wouldn't be profitable until FY17 so as its turned out they're a year ahead of that, albeit helped in no small way by the very low fuel price.

I might have over-reacted a bit today but talk about being blindsided and references to this being an initial assistance package to assist with liquidity isn't a good look. Maybe Tiger airways bleeding a bit and a bit lame... ? Maybe we should send Paper Tiger over there to give their overheads a really good mauling and teach the executives how to survive and thrive on skim milk :)

I would have thought VAH would have been strong enough and have enough momentum to fly under its own power by this stage ? Ansett Mk2 anyone ?

[Zaphod]

if you had been on the fight I was on i think you would not say that--It was literally like sitting outside on an unsettled winter day----I think it is far more likely that they couldnt get a consistent temperature throughout the plane----just as a sidebar ,Ive never had that problem on any other flights on different carriers.--Is the AK-Vancouver route the last of the older planes?(My wife is not the kind who shy's away from diplomatically trying to sort those kind of things out,but I dont know all the details)

Ive had some pretty uncomfortable waits at some airports though.

funny enough ,my worst experience was on a bus in the tropics(Cambodia)..thought I was going to get Pneumonia!

This particular route is one that I fly often. I haven't personally experience the issue you've outlined above, but sometimes those around me (both on this route and other non-NZ serviced routes) have complained of being too hot or too cold, sometimes at the same time! My advice would be to politely ask the cabin crew if something can be done, or ask to be seated elsewhere even if for a little while to see if a cooler area can be found.

Everyone feels heat differently, everyone is dressed differently and everyone is seated slightly differently so despite the air being a consistent temperature when it leaves the vents, the experience can vary wildly.

[RTFQ]

VAH are major contributors' to AIR's Trans Tasman operation, 3 to4 wide bodies every day from SYD to AKL and they are running at 90% full. I suggest the latest financial injection is to rattle QF's cage.

[winner69]

Going from memory i think AIR paid 48 cents for the last lot they bought.

[Zaphod]

I would have thought VAH would have been strong enough and have enough momentum to fly under its own power by this stage ? Ansett Mk2 anyone ?

Tongue in cheek, I know..... :) Ansett showed far less long-term viability than VAH did at this point in its lifecycle.

Given the fundamentals of AIR hasn't changed, I'm not sell any my holding based on this. Would pay to keep a keen eye on the VAH financials though.

[winner69]

Virgin - Another few hundred million of debt on top of the $3.1 billion they already have isn't a big thing

[Raz]

Virgin - Another few hundred million of debt on top of the $3.1 billion they already have isn't a big thing

Well it is if the brand is not perceived well in its market place and it still struggling with this economic tail wind...now I'm wondering....

AIR share price has not performed well in the past twelve with its best results to date..take away the dividend premium potential and it become a trade share for me...simple.

[couta1]

Well it is if the brand is not perceived well in its market place and it still struggling with this economic tail wind...now I'm wondering....

AIR share price has not performed well in the past twelve with its best results to date..take away the dividend premium potential and it become a trade share for me...simple. Yes I have come to the same conclusion. Winner the market is rampant with greed currently, a few selling out of Air is neither here nor there, perhaps it's time to sell down in general and wait for the fear to return which it will as sure as winter is coming. PS-I love winter and all its trimmings:cool:

[Ggcc]

Nice to see you back couta. I can say I miss your posts

[winner69]

Had a quick look at Virgin financials.

Last 1/2 year was pretty abysmal seeing airlines are meant to be creaming it. Operating cash flow was only $10m and after capex etc negative free cash flow of $250m odd.

Debt over $3.1 billion with equity less than $1 billion - highly leveraged. See why they need a few hundred million extra cash in light of current cash burn.

AIR will never see the amount lentagain. I suspect that it will end up as equity along with a another decent injection of capital before years end.

This 'connection' with Virgin must be vitally important to AIR - yes?

[Beagle]

Had a quick look at Virgin financials.

Last 1/2 year was pretty abysmal seeing airlines are meant to be creaming it. Operating cash flow was only $10m and after capex etc negative free cash flow of $250m odd.

Debt over $3.1 billion with equity less than $1 billion - highly leveraged. See why they need a few hundred million extra cash in light of current cash burn.

AIR will never see the amount lentagain. I suspect that it will end up as equity along with a another decent injection of capital before years end.

This 'connection' with Virgin must be vitally important to AIR - yes?

Thanks for looking at VAH's balance sheet, saved me a little job this morning and more than happy to rely on your figures. I suspect the amount lent will get converted to equity towards the end of the review. I think this extra equity is enough to put VAH on a reasonable footing. If VAH with further profit this half can get to a debt : equity ratio of 2:1 that's not too bad a not far off QAN's level of capitalisation either.

I need to apologise to you good folks for a mistake I made yesterday, (realising that the odd person on here relies on me to crunch the numbers properly). Yes the current level of gearing was about 53.5% as at 31 December 2015 and this is fairly low by international standards for this capital intensive business which is why AIR is one of the few airlines in the world to have an investment grade credit rating.

Yes they have a self imposed ceiling of 55% but I think this is a glass ceiling and is moveable to some extent.

Yesterday I made the mistake that this short term loan to VAH would change the gearing ratio and in the cold light of a new day I realise this is a mistake and it won't. It will simply change one asset class, cash for another, short term advance to VAH so the gearing ratio won't change. Apologies to those that relied on my statement on gearing yesterday and I hope this wasn't a major factor in your decision to sell.

This is speculative on my part but I think its likely that this short term loan to VAH will get converted to an equity investment due course, hopefully after a very thorough review of VAH's operation but again this will not change AIR's gearing as again this simply transfers the money into another asset class, investment in associate company as opposed to loan to associate company.

Perhaps I should unpack the whole finance lease and operating leases issue for those that don't know and how that's translated into the balance sheet footings so that people can be more informed on how this works. All future lease liabilities both operating and finance leases, primarily in overseas currency, are converted into debt as at the exchange rate prevailing as at balance date. What this means is that if our currency is lower like it was as at 31 December 2015, approx. 65 cents U.S. the $N.Z amount of those liabilities is higher and thus their gearing at balance date reflects that. That's to the best of my knowledge how I understand it anyway but please DYOR.

If we see the $Kiwi head up toward 70 cents U.S. as we head towards 30 June 2016 and taking into account profit for the current half we could see gearing under 50% and room for a modest special dividend.
Its too early to say. Gordon Gekko in Wall Street famously said, "Don't get emotional about stocks" (I must keep that in mind).

Overall I have a neutral view on AIR at this stage. There are strong headwinds coming in the form of significant extra competition and the pricing of some of the discount carriers such as AIR Asia X is fairly disruptive but AIR has a good brand and a good business model so should do well over the long haul and is enjoying strong tailwinds from robust tourism growth.

Those selling yesterday at $2.88 ex divvy got close to effectively $3 on a cum divvy basis given they just got that 10 cent dividend so not too bad a result and given all the circumstances including the VAH matter i'm not displeased I regularised the size of my investment in AIR from a heavily overweight position.

I might look to add a bit more freight if there's another correction down towards $2.75 at some stage, depending how their monthly operating stat's pan out over the next few months.

[winner69]

There was a Dreamliner parked up at Wellington the other night

It had United Arab Emirates written down the side but wasn't in the normal Emirates Airlines livery

Another airline thinking of coming to NZ? Or just some government delegation from UAE.

[Raz]

There was a Dreamliner parked up at Wellington the other night

It had United Arab Emirates written down the side but wasn't in the normal Emirates Airlines livery

Another airline thinking of coming to NZ? Or just some government delegation from UAE.

Actually it was both.

[Nasi Goreng]

I look at it in a rather simplistic way, if Air NZ was to pay a special divi of $150M, then this would ex divi have a $0.135 impact on share price.

The fact is, that this $150M has not gone up in smoke, it is an investment and I trust that the management team at Air NZ have thought it through. So the impact on share price right now should be nil unless some punters were holding out for a super dividend later in the year.

I'm not sure how long I will hold this for but yesterday's announcement is not really sending any alarm bells.

[dobby41]

Another rather simplistic view is that last week Management were the best thing since sliced bread and $3+ was just around the corner.
Now they suck and AIR is doomed?
That is what I have just gleaned in the last day reading this.

[Nasi Goreng]

lol I kind of got that too. Its a pity they didn't have that epiphany when the price was well north of $3.

[Raz]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11609851

Good week for uncertainty around AIR.

[winner69]

I'm getting blinded by the brightness of Luxon's halo - a halo we have seem to have created here

Hope the halo doesn't start to fade any day soon

Dobby41 re your last post - Six months ago i posted that

The Halo Effect by Philip Rozenzweig is a fascinating book

This seems to be the sharetrader view (sort of)- The book considers a succession of cases where companies were described as well-led, customer focused and innovative when their share price increased, but as soon as their fortunes changed suddenly “became” complacent, reckless or outdated in the eyes of commentators, or vice versa.

[workingdad]

Sold my holdings at $2.88. I like the AIR management and think the company is doing well overall with the operating stats but this and the electric car thing is not giving me confidence in the short term. Might come back in if the SP drops again but I can see it coming under some selling pressure in the short term.

[sb9]

Sold my holdings at $2.88. I like the AIR management and think the company is doing well overall with the operating stats but this and the electric car thing is not giving me confidence in the short term. Might come back in if the SP drops again but I can see it coming under some selling pressure in the short term.

Agree, got out y'day some of it at day high of 2.885 and rest at 2.88.

[blockhead]

Slipped out myself today @ 2.88, been looking @ SCL but they might be getting a bit heady just now I reckon

[percy]

I see VAH as a hugely important beachhead to Australia for AIR.
AIR's security of NZ routes, feeders to and from Australia, and growing alliances hinge on VAH.
AIR, and the other major shareholders have the opportunity to put VAH on a sound footing.
Forgoing a "special" one off dividend for a better VAH, is a small price to pay for the very real benefits a strong VAH will provide all AIR shareholders for years to come.
I have not thought of selling my shares.

[workingdad]

I see VAH as a hugely important beachhead to Australia for AIR.
AIR's security of NZ routes, feeders to and from Australia, and growing alliances hinge on VAH.
AIR, and the other major shareholders have the opportunity to put VAH on a sound footing.
Forgoing a "special" one off dividend for a better VAH, is a small price to pay for the very real benefits a strong VAH will provide all AIR shareholders for years to come.
I have not thought of selling my shares.

medium to long term it could prove a good move but how much more will they throw at it? For me, AIR has never been a buy and hold, plenty of opportunity with the 30c SP swings it has and not hard to get a quick 5-10% profit each time it happens. I had anticipated holding for longer than I had this time around but just wonder if sentiment is for the negative at the moment. ASB securities has 73,000 buyers and 450,000 sellers which is a limited gauge I know but an indication of some sort

[percy]

medium to long term it could prove a good move but how much more will they throw at it? For me, AIR has never been a buy and hold, plenty of opportunity with the 30c SP swings it has and not hard to get a quick 5-10% profit each time it happens. I had anticipated holding for longer than I had this time around but just wonder if sentiment is for the negative at the moment. ASB securities has 73,000 buyers and 450,000 sellers which is a limited gauge I know but an indication of some sort

I often buy with the view of never selling.
With very experienced shareholders backing VAH their future will be excellent.
A strong VAH will benefit all VAH shareholders,AIR most probably the most.
I do not see AIR contributing funding to VAH as a negative.
Therefore I have no reason to sell.

[Beagle]

Updating today's trans-Tasman cricket match today we have Roger retired after taking a line ball left field bouncer on the chin and enjoying a very well earned rest and drink in the pavilion, Percy has arrived at the stumps showing truly stoic defence against some spirited deliveries and the umpire (ACCC) changing his mind yet again on the rules. Meanwhile AIR's coach is said to be furiously pawing through the umpires new decision with a view to appealing this as blatant under-arm bowling. Perhaps an appeal to the third umpire is in order but can their impartiality be trusted ?

In the background the bean-counters are busy wondering if that $3m AIR were originally awarded in costs might have to be given back to the ACCC plus plenty more besides. (In the cheap seats some punters were heard to mutter that they were pleased there was some useful information in this commentary) Certain cynics in the crowd were overheard to be muttering aloud if it was some sort of coincidence that the day after foreign shareholders propped up Qantas's major competitor, the federal court cried fowl against AIR N.Z ? Some even muttered that they don't believe in coincidences. Complicated game...one bystander was heard to mutter that he wasn't entirely convinced this game is being played on a completely level playing field...

[IAK]

I often buy with the view of never selling.
With very experienced shareholders backing VAH their future will be excellent.
A strong VAH will benefit all VAH shareholders,AIR most probably the most.
I do not see AIR contributing funding to VAH as a negative.
Therefore I have no reason to sell.

I'm with you Percy. Also, I like the electric cars. http://www.stuff.co.nz/business/money/78141342/electric-cars-more-likely-to-cut-carbon-footprint-than-solar-power-report
Doesn't look like solar power will be subsidised anytime soon, potentially good news for the Gentailers?

[workingdad]

I'm with you Percy. Also, I like the electric cars. http://www.stuff.co.nz/business/money/78141342/electric-cars-more-likely-to-cut-carbon-footprint-than-solar-power-report
Doesn't look like solar power will be subsidised anytime soon, potentially good news for the Gentailers?

This mornings breakfast program had a women from ?Norway (cant recall) outlining the benefit of electric cars. They have 200,000 of them on the roads and a similar size country to NZ and although she was an advocate for them she did say without government incentives the cost of them versus petrol/diesel cars including outlay and costs in the long term were more than that of the good ol internal combustion engine and that was comparing cheaper little cars not the ones AIR just bought. mutter mutter mutter :)

[percy]

Electric cars.Just trying to show they are a responsible citizen.Means a great deal to some of their customers.
The "Fat Lady" has not sung yet.
Today AIR's sp is $2.875.
The EMAs are as follows,50day $2.73,100day $2.57,200 day $2.15 and the 400 day $1.79.
For me to consider selling the sp would have to go below $2.15,and stay below it for a few days.Then before selling I would have to reassess the company,and its prospects.

[winner69]

Is this ACCC thing anything to do with that US class action where AIR and Air India are the last 2 standing?

More millions at risk?

[winner69]

And guys and gals - don't forget that AIR is a cyclical stock

[Snow Leopard]

I still hold some but the truth is $145m pushes them right to the edge of their maximum self imposed leverage position (55%) and dramatically reduces the chances of a special dividend so fundamentally changes the forecast dividend yield and they are throwing trucks loads of our cash down green holes and black holes with little immediate prospect of any commercial payback but you can't see that anything has changed PT ? I can recommend a very good optometrist just up the road here...might even test tiger's eye's for all I know :)

The distinct prospect of further equity required to be injected is grounds for concern too. Any wonder prudent risk averse investors have been reviewing their positions quickly...

Opps so sorry, does that amount to further venting :blush:

So...

Who needs their eyes testing now Magoo?

Best Wishes
Paper Tiger

[workingdad]

Is this ACCC thing anything to do with that US class action where AIR and Air India are the last 2 standing?

More millions at risk?

As we know the herald never gets it wrong but this is in todays regarding the ACCC.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11610088

[Beagle]

You guys have all bailed (hopefully with your parachutes on) because of this?

Because you might get less divvy this year and next year than you expected?

What a fickle bunch you are!

Looking ahead, I do not see what has really changed.Best Wishesh
Paper Tiger

People thought Virgin could fly under its own steam and are disappointed it can't. The spotlight has been shone on Virgin's stretched balance sheet and people are wondering how much more money goes down that hole, possibly never to be seen again.

Competition keeps hotting up. Air Asia X starts flights tomorrow and offers a no kids zone...what a great idea, a travel agent once told me there are really only two classes of travel, with kids and without
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11609986

[percy]

It was not that long ago AIR needed to be recapped.The NZ Govt footed the bill.
VAH does not have govt backing,but their major shareholders, including AIR,are very successful airlines.
Therefore, they know what financial structure needs to be put in place for VAH to thrive.
VAH is a very important "beachhead" for them.

[Beagle]

But Percy, why did AIR need recapitalisation in 2001 ?...when you answer that you have your answer why people are nervous.

[percy]

Maybe?
However I see this as a great opportunity for the major shareholders to put VAH on a sound footing.
It is vital for AIR's future.Without VAH Air will go backwards quickly.They need Australia.

[Beagle]

I'm wondering about Virgin's CEO. If he can't make that bird fly properly with the current velocity of tailwinds with existing resources... Will make for a fascinating discussion point at the next annual meeting along with the payback period on those fancy new electric cars.

[mikeybycrikey]

Roger, as an accountant (I think), do you have any thoughts on what VAH means when the company says they are planning to "review of its capital structure"? I'm assuming that they are looking at changing the debt/equity ratio. Is there anything I'm missing here?

I've just downloaded financial report for VAH and going to have a close look through. I'm pretty unclear on whether this loan is a good or bad thing at the moment. Doesn't look like a great sign but I'm not sure we're got enough information to know for sure.

Interesting the see so many holders here bailing out on two events that I don't consider that major (although Virgin could obviously turn into a major issue).

On an unrelated note, looks like oil is back over the $40 mark, up from $30 about a month ago. Highest price so far this year.

[winner69]

I'm wondering about Virgin's CEO. If he can't make that bird fly properly with the current velocity of tailwinds with existing resources... Will make for a fascinating discussion point at the next annual meeting along with the payback period on those fancy new electric cars.

Apparently Virgin fuel hedging hasn't worked for them, esp relative to the gains that qantas/air have been able to capture.

Emphasis seems to be on creating a full service / two class airline to attract the business traveller(from Qantas) -that seems where the cash keeps going

Wonder how Tiger Air going?

[winner69]

Going to be a +ve day for the AIR share price I reckon

[stoploss]

Going to be a +ve day for the AIR share price I reckon

looks like it all the weak holders are out :)

[Beagle]

I need to spend some more time on this but based on a really quick look at VAH's presentation and financials today for the period ended 31 Dec 2015 I observed :-

1. Still losing money on international flight op's ($30.8m)
2. Tiger Air is barely profitable
3. Their target is to get financial leverage down to 4x - 4.5x by FY17, currently looks quite stretched.
4. $934m equity on total assets of $5,848 so gearing is approx. 84%, a bit less if you offset unrestricted cash against current liabilities like some people do.
5. Unrestricted cash balance as at 31 Dec $544m down from $719m in pcp
6. Current assets as at 31 Dec 2015 $1.5b, current liabilities including unearned flight income of over $800m was $2.36b
7. 89 leased aircraft v 70 owned.

Those are not numbers that impress this bean counter.

As for how much AIR could be on the hook for here to strengthen VAH's balance sheet...having had a quick and dirty look at the balance sheet I'd have to reluctantly now say that the crutch they lent VAH may be just the start of it.

Disc - Still holding one third of original AIR shareholding...clinging on by the skin of my teeth.

[Hoop]

Roger...Our stars are starting to align....That's spooky..eh:D

[Beagle]

Maybe?
However I see this as a great opportunity for the major shareholders to put VAH on a sound footing.
It is vital for AIR's future.Without VAH Air will go backwards quickly.They need Australia.

Well having now had a quick look at VAH's stretched balance sheet they will get that opportunity that's for sure. I reckon a sound footing is no more than a 2:1 debt to equity and on that basis VAH would need ~ $A1 billion, (AIR's share $A260m or just under $Kiwi300m)..lent them one crutch, convert that to equity and then make it another. Just as well AIR are enjoying the tailwinds and can afford it.

Caveat - this based on a real quick look. Have to find time to run the ruler over it properly really soon.

[winner69]

Roger - whats AIRs 'unrestricted cash'?

Is it disclosed?

[Beagle]

That's not a term I've ever seen AIR use mate.

[oldtech]

Hi all, I'm new to these forums - I've been reading and learning for the past few months but this is my first post, so please bear with me if my question is breathtakingly stupid! :blush:

Last November I bought a small number of AIR shares (1000) with the intention to buy and hold (I'm just beginning my journey into investing in shares, so decided to start small and learn the ropes before investing larger amounts). Now my underlying intention is still to buy and hold; but as I see the share price start to climb above the 50 day and 200 day EMA I started wondering - why wouldn't you sell at a higher price, take the profit (making sure that I do actually sell at a profit after brokerage fees are accounted for), and wait until the share price falls again to buy back in?

The risk that I see is that the share price may NOT fall back to what I see as the current "normal" level, and may establish a new higher level - which would kind of scuttle my "buy back in" plans. :scared:

But taking that risk into account, is there some reason that I'm missing (entirely possible) why you wouldn't do this?

Thanks all for your contributions to these forums, I have learned a huge amount over the past few months from simply reading the posts (but still have so much more to learn!)

[Onion]

Hi all, I'm new to these forums - I've been reading and learning for the past few months but this is my first post, so please bear with me if my question is breathtakingly stupid! :blush:

Last November I bought a small number of AIR shares (1000) with the intention to buy and hold (I'm just beginning my journey into investing in shares, so decided to start small and learn the ropes before investing larger amounts). Now my underlying intention is still to buy and hold; but as I see the share price start to climb above the 50 day and 200 day EMA I started wondering - why wouldn't you sell at a higher price, take the profit (making sure that I do actually sell at a profit after brokerage fees are accounted for), and wait until the share price falls again to buy back in?

The risk that I see is that the share price may NOT fall back to what I see as the current "normal" level, and may establish a new higher level - which would kind of scuttle my "buy back in" plans. :scared:

But taking that risk into account, is there some reason that I'm missing (entirely possible) why you wouldn't do this?

Thanks all for your contributions to these forums, I have learned a huge amount over the past few months from simply reading the posts (but still have so much more to learn!)


Why not? Because you may miss out on future SP appreciation.

E.g. from my experience. In September, thinking I was smart (a bad sign with share investing) I sold off my EBO shares at $11.60 for a nice little profit. The SP is now $16.35. That nice little profit would be a nice BIG profit if sold now.

My guess that the SP would retreat and allow a cheaper re-purchase was way off target!

[winner69]

That's not a term I've ever seen AIR use mate.

Just wondered when you said this handout to Virgin was only 10% of AIRs cash - probably a lot higher % of their 'unrestricted cash'

[winner69]

That's not a term I've ever seen AIR use mate.

Googled 'unrestricted funds' - seems to be a common term in Not For Profits / Charity accounting

Seems appropriate for Virgin

[Beagle]

Must be the Easter spirit then eh mate...AIR's cash being the sacrificial lamb to atone for the virgin's sins. Given the season I suppose one must be charitable and say that one hopes VAH's senior exec's are truly worthy of redemption.

[Raz]

Must be the Easter spirit then eh mate...AIR's cash being the sacrificial lamb to atone for the virgin's sins. Given the season I suppose one must be charitable and say that one hopes VAH's senior exec's are truly worthy of redemption.

Had a look also, Virgin's labour set up is also interesting..although more interesting is AIRs price reaction to date.

[Beagle]

Had a look also, Virgin's labour set up is also interesting..although more interesting is AIRs price reaction to date.

You're suggesting its not just some of the older aircraft engines that need an overhaul ?

Any way you slice and dice this VAH just scraping a miserly profit, (just a fraction above break-even) when almost every other airline in the world has booming profits suggests the entire operation really does need a very comprehensive review. They have the intellectual horsepower on the board so one can only hope they do a very thorough job.

Until proven otherwise, In my opinion people can be forgiven for worrying about this as some sort of potential Ansett MK2.

[Beagle]

Roger...Our stars are starting to align....That's spooky..eh:D

Yeah, Percy asked to borrow my rose tinted glasses so what's a guy to do :)

[oldtech]

Thanks for your comment Onion.

I think I'm maybe falling into the trap of thinking I'm smart and trying to dreamg up ways to beat Mr Market. Don't know why I'm falling into that trap, reading the posts here shows me just how much I have to learn!

Anyway, having risen slightly this morning, AIR now seems to be sticking firmly around $2.90, and I had already decided that if I was going to sell it would have to reach $2.95 for it be worth my while, so currently I'm holding, watching, and continuing to learn (hopefully).

[percy]

Thanks for your comment Onion.

I think I'm maybe falling into the trap of thinking I'm smart and trying to dreamg up ways to beat Mr Market. Don't know why I'm falling into that trap, reading the posts here shows me just how much I have to learn!

Anyway, having risen slightly this morning, AIR now seems to be sticking firmly around $2.90, and I had already decided that if I was going to sell it would have to reach $2.95 for it be worth my while, so currently I'm holding, watching, and continuing to learn (hopefully).

oldtech.
Welcome to Sharetrader.
Try to buy shares with the view you will never sell them.
Makes you focus.

[oldtech]

Thanks Percy.

My primary intention is indeed to buy and hold shares, and despite what I said above about considering selling AIR to make a profit (albeit rather a small one) that still holds true. But I'm curious if you can have it both ways?

As an example, I look back to January when the share price climbed briefly to $3.225 on the 26th before descending again down to $2.69 two weeks later. When I bought AIR it was at $2.78, so in a perfect world where I'd timed the exit and re-entry perfectly (which I know I couldn't do, but you get my point) even on my small holding I'd have made just under $400 profit after brokerage fees were taken out, and be able to buy back in at a lower price than I originally paid. When I compare that to the dividend I received last week there's a considerable difference!

I'm just starting out with looking at shares as a serious investment vehicle - my wife and I have held several small parcels of shares for years, but they've been very much buy-and-forget (usually on those offers where mum and dad investors were targetted) - so I consider myself very much a beginner and looking to learn. At this stage I'm very much looking to buy and hold rather than trade, but just pondering if one can occasionally take advantage of momentary peaks and troughs as above.

[Raz]

You're suggesting its not just some of the older aircraft engines that need an overhaul ?

Any way you slice and dice this VAH just scraping a miserly profit, (just a fraction above break-even) when almost every other airline in the world has booming profits suggests the entire operation really does need a very comprehensive review. They have the intellectual horsepower on the board so one can only hope they do a very thorough job.

Until proven otherwise, In my opinion people can be forgiven for worrying about this as some sort of potential Ansett MK2.

Just had a look to see what hurdles they faced to restructure as the financials are self evident, they have a few hurdles on that, so I'm out for now, VAH is not a short term turnaround me thinks.

[Beagle]

Just had a look to see what hurdles they faced to restructure as the financials are self evident, they have a few hurdles on that, so I'm out for now, VAH is not a short term turnaround me thinks.

Yeap she's a pretty deep and dark hole that one and now with the ACCC ruling against them and having already settled with the N.Z. Com Com on the same freight matter AIR might be digging a hole for themselves by not settling the civil litigation on the same matter in the States. One or two headwinds have emerged but according to some, nothing's changed :ohmy:

[percy]

Thanks Percy.

My primary intention is indeed to buy and hold shares, and despite what I said above about considering selling AIR to make a profit (albeit rather a small one) that still holds true. But I'm curious if you can have it both ways?

As an example, I look back to January when the share price climbed briefly to $3.225 on the 26th before descending again down to $2.69 two weeks later. When I bought AIR it was at $2.78, so in a perfect world where I'd timed the exit and re-entry perfectly (which I know I couldn't do, but you get my point) even on my small holding I'd have made just under $400 profit after brokerage fees were taken out, and be able to buy back in at a lower price than I originally paid. When I compare that to the dividend I received last week there's a considerable difference!

I'm just starting out with looking at shares as a serious investment vehicle - my wife and I have held several small parcels of shares for years, but they've been very much buy-and-forget (usually on those offers where mum and dad investors were targetted) - so I consider myself very much a beginner and looking to learn. At this stage I'm very much looking to buy and hold rather than trade, but just pondering if one can occasionally take advantage of momentary peaks and troughs as above.

Nothing is perfect in this world.I hung onto a share for 10 years.Gave up on it, and it tripled in price 6 months after I sold .
Usually when I buy a share it will do one of three things;
1] Go down.
2] Go up.
3] Stay at the same price.
The more research you do the more likely your share will go up.May take a bit of time.
So it pays to start off buying a small position,then adding to it as the performance of the company confirms the reasons you brought the shares are correct.
You don't have to be right every time.I think if you get 6 out of 10 right you will make money.I would think the more experienced posters on Sharetrader would get about 9 out of 10 right. If you realise your research was flawed sell.
Using moving averages helps with you timing.But the best way is to understand the company really well that you invested in.Then when an announcement is made you can quickly work out what that means to the company.You then can buy/sell on facts,rather than noise.

[oldtech]

Nothing is perfect in this world.I hung onto a share for 10 years.Gave up on it, and it tripled in price 6 months after I sold .


Ouch! That's gotta hurt ...

[percy]

Ouch! That's gotta hurt ...

Certainly did.!!
In the next month or so, I may find out whether my long term view of a company I started investing in, on April 15th 2009 is right or not.
Some things take time.!!!
If I am right I will buy more.If I am wrong I may have to put off my retirement another 35 years.!! lol.

[Hoop]

Thanks Percy.

My primary intention is indeed to buy and hold shares, and despite what I said above about considering selling AIR to make a profit (albeit rather a small one) that still holds true. But I'm curious if you can have it both ways?

As an example, I look back to January when the share price climbed briefly to $3.225 on the 26th before descending again down to $2.69 two weeks later. When I bought AIR it was at $2.78, so in a perfect world where I'd timed the exit and re-entry perfectly (which I know I couldn't do, but you get my point) even on my small holding I'd have made just under $400 profit after brokerage fees were taken out, and be able to buy back in at a lower price than I originally paid. When I compare that to the dividend I received last week there's a considerable difference!

I'm just starting out with looking at shares as a serious investment vehicle - my wife and I have held several small parcels of shares for years, but they've been very much buy-and-forget (usually on those offers where mum and dad investors were targetted) - so I consider myself very much a beginner and looking to learn. At this stage I'm very much looking to buy and hold rather than trade, but just pondering if one can occasionally take advantage of momentary peaks and troughs as above.

Cyclical stocks are poor buy and hold investments.. much better if bought at the bottom but very bad if one has bought towards the top of its cycle...

Where abouts is AIR in it's cycle???..no body knows for sure where this top is...but we know for sure where the last bottom was..around 85c for a period of the first 6 months of 2012....so AIR is +300% within its present cycle, definitely well of its bottom..eh!!!

I'm not trying to put you off buying AIR...I'm trying to tell you to use a different discipline to manage your AIR stocks in your portfolio...

[oldtech]

I'm not trying to put you off buying AIR...I'm trying to tell you to use a different discipline to manage your AIR stocks in your portfolio...

I'm all ears, what would you recommend Hoop? As a beginner, I really know very little about the various strategies and the different ways they can be utilised ... so trying to learn from the experts. :D

[Beagle]

http://www.nzherald.co.nz/businessvideos/news/video.cfm?c_id=1503215&gal_cid=1503215&gallery_id=158971

AIR Asia X commenting on their arrival into Auckland this week. Completely different price bracket to what AIR can manage.

What concerns me with the crash they had, was it 2014 ?, was that questions were raised regarding the adequacy of their pilot flight training methodologies. That and tiny sardine can 16.5 inch width seats would put me off but what about others looking for cheap circa $300-$400 no frills flights to / from Asia ?

[Raz]

http://www.nzherald.co.nz/businessvideos/news/video.cfm?c_id=1503215&gal_cid=1503215&gallery_id=158971

AIR Asia X commenting on their arrival into Auckland this week. Completely different price bracket to what AIR can manage.

What concerns me with the crash they had, was it 2014 ?, was that questions were raised regarding the adequacy of their pilot flight training methodologies. That and tiny sardine can 16.5 inch width seats would put me off but what about others looking for cheap circa $300-$400 no frills flights to / from Asia ?

I would not fly with them for this reason however a lot of people are very price sensitive. Jetstar would not exist if that wasn't the case.

A client commissioned market research report of disposable income focused on the detailed Auckland market came across my desk this week...made interesting reading, the levels of high disposable income for families (sufficient for the service my client provides) is very concentrated and is a small overall percentage in Auckland, no surprise there however it showed many demographics are being squeezed in Auckland on the disposable income front. Price will matter even more in time if currency drops further as intended by the powers that be, for overseas trips. Asia overall can make it price wise a good option for these people for a holiday...

Will Air Asia X help expand the market or cannibalise AIR current sales.

[Robomo]

http://www.nzherald.co.nz/businessvideos/news/video.cfm?c_id=1503215&gal_cid=1503215&gallery_id=158971

AIR Asia X commenting on their arrival into Auckland this week. Completely different price bracket to what AIR can manage.

What concerns me with the crash they had, was it 2014 ?, was that questions were raised regarding the adequacy of their pilot flight training methodologies. That and tiny sardine can 16.5 inch width seats would put me off but what about others looking for cheap circa $300-$400 no frills flights to / from Asia ?

Some people will just grit their teeth, be prepared for a few hours of discomfort, close their eyes, get off and then start enjoying their holiday. They are the ones that fly Jetstar and AirAsia.
For others, like me, the journey is just as important as the holiday. I love the buzz of the airport, relaxing in the lounge, the anticipation of the travel, admiring the planes waiting to go to exotic destinations, fiddling with the entertainment unit, having a little luxury (Premium Economy is my choice), chatting with the cabin crew and other aviation buffs on the plane, soaking up the views and culture of the destination. Coming home, I love the easy familiarity of the Kiwi crew, the Kiwi accent, the silver fern (oops, sorry - still the Union Jack), the watchable safety video (bring back the bikini girls!) and admiring the big black 777-300. Yep, I remember the getting there and back just as much as what we did whilst away. Air NZ can count on my patronage, even if they do cost a bit more.

One day I'll meet Roger and we can see who can talk up ANZ more!

[h2so4]

I would not fly with them for this reason however a lot of people are very price sensitive. Jetstar would not exist if that wasn't the case.

A client commissioned market research report of disposable income focused on the detailed Auckland market came across my desk this week...made interesting reading, the levels of high disposable income for families (sufficient for the service my client provides) is very concentrated and is a small overall percentage in Auckland, no surprise there however it showed many demographics are being squeezed in Auckland on the disposable income front. Price will matter even more in time if currency drops further as intended by the powers that be, for overseas trips. Asia overall can make it price wise a good option for these people for a holiday...

Will Air Asia X help expand the market or cannibalise AIR current sales.

I wouldn't fly with Air Asia. My observation is that out of all the airlines that fly out of Gold Coast Air Asia has the lowest and slowest climb rate. Probably doesn't mean anything just an observation.

[winner69]

Some people will just grit their teeth, be prepared for a few hours of discomfort, close their eyes, get off and then start enjoying their holiday. They are the ones that fly Jetstar and AirAsia.
For others, like me, the journey is just as important as the holiday. I love the buzz of the airport, relaxing in the lounge, the anticipation of the travel, admiring the planes waiting to go to exotic destinations, fiddling with the entertainment unit, having a little luxury (Premium Economy is my choice), chatting with the cabin crew and other aviation buffs on the plane, soaking up the views and culture of the destination. Coming home, I love the easy familiarity of the Kiwi crew, the Kiwi accent, the silver fern (oops, sorry - still the Union Jack), the watchable safety video (bring back the bikini girls!) and admiring the big black 777-300. Yep, I remember the getting there and back just as much as what we did whilst away. Air NZ can count on my patronage, even if they do cost a bit more.

One day I'll meet Roger and we can see who can talk up ANZ more!

Jeez mate - that's one of the sweetest posts i have read

[Beagle]

Some people will just grit their teeth, be prepared for a few hours of discomfort, close their eyes, get off and then start enjoying their holiday. They are the ones that fly Jetstar and AirAsia.
For others, like me, the journey is just as important as the holiday. I love the buzz of the airport, relaxing in the lounge, the anticipation of the travel, admiring the planes waiting to go to exotic destinations, fiddling with the entertainment unit, having a little luxury (Premium Economy is my choice), chatting with the cabin crew and other aviation buffs on the plane, soaking up the views and culture of the destination. Coming home, I love the easy familiarity of the Kiwi crew, the Kiwi accent, the silver fern (oops, sorry - still the Union Jack), the watchable safety video (bring back the bikini girls!) and admiring the big black 777-300. Yep, I remember the getting there and back just as much as what we did whilst away. Air NZ can count on my patronage, even if they do cost a bit more.

One day I'll meet Roger and we can see who can talk up ANZ more!

100% agreed mate and amen to the highlighted part especially :) Nice post. I reckon the same principle applies with holiday resorts and hotel rooms, some people have to chose the cheapest and nastiest and thankfully I'm not one of them.

Interesting post RAZ. On the AIR Asia X thing as an experiment I went onto their website and priced a couple of random flights at their regular price. By the time you add luggage and a meal the price wasn't all that much different to flying our national airline when their airfares are on special. (Acknowledge I'm comparing apples and oranges). That said there's definitely a market for cheap flights and I expect that we'll see some modest loss of market share for AIR but mostly growth in the overall size of the market.

Happy Easter everyone... for your viewing pleasure... https://www.youtube.com/watch?v=q0tkeGPG_8Q

[Beagle]

And wrapping up the week on things that chip and chew away at AIR's cash, (as if we needed it after the VAH and ACCC matters), I just noticed under general disclosures page 12 of the interim report that arrived this week, note 2(B) is pretty interesting. Yet another reason for the modest interim dividend.

[winner69]

And wrapping up the week on things that chip and chew away at AIR's cash, (as if we needed it after the VAH and ACCC matters), I just noticed under general disclosures page 12 of the interim report that arrived this week, note 2(B) is pretty interesting. Yet another reason for the modest interim dividend.

Nice to see staff getting rewarded before shareholders

They will be double nice to robomo up there on Premium Economy now

[Beagle]

Nice to see staff getting rewarded before shareholders

They will be double nice to robomo up there on Premium Economy now

I doubt the 106 staff earning more than $400,000 per annum need it and the top earners especially which would have been the main beneficiaries of the $21,000,000 share buy-back for their share incentive scheme.

Maybe they should incentivise the extremely hard working junior flight attendants instead that do the real hard donkey work for about a tenth of that at circa $40K per annum ? They're probably struggling to put food on the table for their families at that rate.

Even more controversial later this year will be fat bonus's paid to senior staff because of the record profit...much of which is simply because of cheap fuel. Better be a record dividend too otherwise some very pithy comments might be forthcoming at the next annual meeting.

Its been an "interesting" week. 13 cps of shareholders money down the Virgin rat hole when almost every other airline in the world is making record profits and nearly 2 cps of shareholders money buying up shares to honour lucrative and extremely generous senior staff share incentive schemes to staff that are mostly earning over $1m per annum. That's 15 cps of shareholders money in one week of interesting disclosures plus the other somewhat questionable investments in green initiatives. No wonder shareholders got a comparatively miserable 10 cps dividend despite 30 cps earnings for the last half !

Oh yes how could I forget, we had salt rubbed into the wound with the ACCC freight decision this week too so that's Australians taking more of our money...hope next week doesn't bring more bad news.

[Snow Leopard]

"Heaven has no rage like love to hatred turned, Nor hell a fury like a woman scorned"

is from Act III, Scene VIII of The Mourning Bride written in 1697 by William Congreve.

This quote is sometimes mistakenly attributed to that other Bill, William Shakespeare.

Best Wishes
Paper Tiger

[percy]

"Heaven has no rage like love to hatred turned, Nor hell a fury like a woman scorned"

is from Act III, Scene VIII of The Mourning Bride written in 1697 by William Congreve.

This quote is sometimes mistakenly attributed to that other Bill, William Shakespeare.

Best Wishes
Paper Tiger

May be "the nature of the beast."
1678.J.Ray's Collection of English Proverbs.

[Beagle]

Not hatred PT / Percy, just objectiveness and a sense that developments this week were anything but positive.

On a much needed positive note I see AIR are expanding to daily flights to Housten in the summer of 2016/7 to meet peak seasonal demand.

To ensure I remain objective and balanced I shall try and squeeze in some viewing time when out at Auckland airport tomorrow to watch a few of my planes take off and land.

Disc - Still holding a modest long position.

[Snow Leopard]

"May be the nature of the beast."
1678.J.Ray's Collection of English Proverbs.

Not "May be the nature of the beast" but
'May be "the nature of the beast" ' may be?


...On a much needed positive note I see AIR are expanding to daily flights to Housten in the summer of 2016/7 to meet peak seasonal demand....

It is Houston my dear boy, Houston


...To ensure I remain objective and balanced I shall try and squeeze in some viewing time when out at Auckland airport tomorrow to watch a few of my planes take off and land...

I looked at her gleaming body,
lit by the last light of the day,
then with a roar like thunder, my divvie flew away.

Best Wishes
Paper Tiger

[Poet]

Not "May be the nature of the beast" but
'May be "the nature of the beast" ' may be?



It is Houston my dear boy, Houston



I looked at her gleaming body,
lit by the last light of the day,
then with a roar like thunder, my divvie flew away.

Best Wishes
Paper Tiger

You're straying very close to a demarcation dispute here, would you like it if I suddenly started doing share analysis?, thought not

[Poet]

So looks like AIR looking to sell holding in VAH. I'm picking this is good news for AIR shareprice, we'll see I guess

[kiwichick]

This is an interesting development:

Air New Zealand reviews its financial investment in Virgin

https://www.nzx.com/companies/AIR/announcements/280020 (https://www.nzx.com/companies/AIR/announcements/280020)

[Nasi Goreng]

Nice volume to kick things off. I'm glad I didn't sell on the back of the loan announcement.

[Mickey]

It's all a bit confusing. A few days ago AIR is lending money to prop VAH up. Now they are looking at pulling out of their shareholding and Luxon immediately removes himself from the board. Did they have fisticuffs at the cocktail party or something? Seems quite strange given how close together both of these events are.

[Nasi Goreng]

It will be interesting to see what price VAH opens at after the trading halt. It might give an indication of what Air NZ may get for their holding in VAH, surely they won't get the current market price for it?

[sb9]

It's all a bit confusing. A few days ago AIR is lending money to prop VAH up. Now they are looking at pulling out of their shareholding and Luxon immediately removes himself from the board. Did they have fisticuffs at the cocktail party or something? Seems quite strange given how close together both of these events are.

Just beat me by few seconds, mine are same thoughts too. Billion dollar question now is, do they still give loan to VAH as indicated earlier or is it a no go now?? Calling Roger......

[Fox]

I'm confused as well. Why would you give a loan to an entity then proceed to potentially sell your portion of it? My thoughts are that by selling their investment in VAH, they don't have confidence in the future ability and profitability of the airline, which would negatively impact their loans. Unless of course they truly believe they can invest that capital in their own fleet to achieve a higher return.

[nzspeak]

I imagine they wanted to get the 'house in order' before the sold it- seems reasonable. The obviously calculated that putting Virgin in better financial footing would bring them more $$$ in long run. It was a syndicated loan too- it wasn't just AIR NZ.

[Beagle]

Just beat me by few seconds, mine are same thoughts too. Billion dollar question now is, do they still give loan to VAH as indicated earlier or is it a no go now?? Calling Roger......

The loan has been made and I have written off the 13 cps in my valuation of AIR. I am very pleased they are reviewing their shareholding. Anyone with an in-depth knowledge of the aviation industry knows they don't need to own stakes in airlines they have an alliance with and VAH's performance has been anything but stellar so it makes common sense for them to review their stake given the woeful financial performance in the prevailing highly assistive environment. This announcement makes it crystal clear that AIR will not invest further funds into VAH and they're not on the hook for another 13 cps in capital which is what I think the VAH balance sheet needs as a minimum. In effect if if the CEO Borgetti wants more capital he can "go fish" as far as AIR is concerned and that suits me just fine.

I can't go on record with what I have a strong suspicion about in regard to C.L.'s confidence in the CEO Borghetti but I think you can read a fair bit more into his immediate resignation from the board of VAH than the official reason given.

[winner69]

Good move - no more AIR cash down a big black hole.

Maybe have realised that there really isn't much future for Virgin (at least a profitable one). The current strategy with the huge increase in capex and expense base hasn't hurt Qantas much.

Lets hope they get a decent price for their 25% odd share

[Snow Leopard]

Air New Zealand have finally accepted the wisdom of

"Never invest in airlines"

Best Wishes
Paper Tiger

[Fox]

Lets hope they get a decent price for their 25% odd share

Could this be our special divvy?

[winner69]

Vin, you still around

That $3 beckons - maybe tomorrow just in time for year end for sum

[Beagle]

Ansett MK2 is in the process of being avoided. Common sense is in the process of prevailing.

[Snow Leopard]

The loan has been made and I have written off the 13 cps in my valuation of AIR....

There was a young airline, eN Zee,
who met a sheila of great purity.
After the affair,
he said with despair,
"My wallet seems rather empty"

Best Wishes
Paper Tiger

[Beagle]

There was a young airline, eN Zee,
who met a sheila of great purity.
After the affair,
he said with despair,
"My wallet seems rather empty"

Best Wishes
Paper Tiger

Love it PT. I'm sending you a "virtual pat" for that :cool:

[Traderx]

Hi all

A little confused by this move,

-VAH sp is at recent lows
-What "alternative uses of capital" are there? (that we are being prevented from taking up in any case?)
-What has changed since the minority investment was taken up (as to its desirability)
-While Air NZ "Remain commmitted" to the alliance doesn't this move raise the possibility of losing it in future (i.e control of VAH is gone)
-Isn't the VAH aliiance a strategic pillar for Air NZ?

I'm hoping that AIR has a specific buyer lined up for the stake, at a very high premia, with guarantees for alliance longevity and an excellent alternative capital utilisation plan, rather then just change for change sake.

First big test for Mr Luxon's strategic nous, he's great at the operational efficiency game, now we'll get to see what the long term vision really is..

Interesting times.

disc - small long

[Beagle]

Hi all

A little confused by this move,

-VAH sp is at recent lows
-What "alternative uses of capital" are there? (that we are being prevented from taking up in any case?) Code speak for we are totally underwhelmed by the return on capital we're getting.
-What has changed since the minority investment was taken up (as to its desirability) Any way you slice and dice it the financial performance of VAH by any measure compared to almost any other airline in the world is most underwhelming
-While Air NZ "Remain commmitted" to the alliance doesn't this move raise the possibility of losing it in future (i.e control of VAH is gone) Possibly but the alternative is potentially far worse...another few hundred million dollars Australian into an un-proven performer that AIR's board appear to have lost confidence in
-Isn't the VAH aliiance a strategic pillar for Air NZ? No, much as one said its a beachhead, its not in my opinion.

I'm hoping that AIR has a specific buyer lined up for the stake, at a very high premia, with guarantees for alliance longevity and an excellent alternative capital utilisation plan, rather then just change for change sake. I wouldn't hold your breath on that front.
First big test for Mr Luxon's strategic nous, he's great at the operational efficiency game, now we'll get to see what the long term vision really is.. I'd say he's passed already. He's prepared to accept the strategy with VAH in its present form isn't working. Mark of good leadership is to admit your mistakes, fix them and move on.

Interesting times. Airlines are a fascinating investment and its always interesting

disc - small long, Likewise with a bias too the upside

Hope that helps. I can't help wondering if AIR's major shareholder didn't have a little word in the board's ear expressing their concerns. Sign of the mixed ownership model working well ?...you be the judge.

[workingdad]

Hi all

A little confused by this move,

-VAH sp is at recent lows
-What "alternative uses of capital" are there? (that we are being prevented from taking up in any case?)
-What has changed since the minority investment was taken up (as to its desirability)
-While Air NZ "Remain commmitted" to the alliance doesn't this move raise the possibility of losing it in future (i.e control of VAH is gone)
-Isn't the VAH aliiance a strategic pillar for Air NZ?

I'm hoping that AIR has a specific buyer lined up for the stake, at a very high premia, with guarantees for alliance longevity and an excellent alternative capital utilisation plan, rather then just change for change sake.

First big test for Mr Luxon's strategic nous, he's great at the operational efficiency game, now we'll get to see what the long term vision really is..

Interesting times.

disc - small long

Without even considering the specifics, I am confused by the sudden turnaround. Bizarre :confused:

[sb9]

Without even considering the specifics, I am confused by the sudden turnaround. Bizarre :confused:

May be there were reading ST members views here ;)

[dobby41]

Hope that helps. I can't help wondering if AIR's major shareholder didn't have a little word in the board's ear expressing their concerns. Sign of the mixed ownership model working well ?...you be the judge.

You would trust the Govt to get it right there?
Big call!

[Beagle]

You would trust the Govt to get it right there?
Big call!

The board appear to have been listening to someone and as much as I'd like to think that's me I seriously doubt it. The reality is probably the board themselves are extremely disappointed In VAH and this recent request for further assistance given the current extremely favourable business conditions is the straw that's broken the camel's back. I'm a little surprised the early price action in the Australian market for VAH shares hasn't been more negative, down 1 cent when I looked a few minutes ago.

[Beagle]

May be there were reading ST members views here ;)

You never know, several people including myself weren't afraid to air their views in a frank and forthright manner.

[sb9]

Interesting snippet from NBR today:

"Air NZ holds a 25.9% stake in Virgin worth about $A344 million ($NZ384 million), which it has increased in recent years despite the Australian airline making a loss.
According to its annual report, Air NZ has invested a total of $422 million in Virgin, excluding a recent commitment to lend a further $145 million to the Australian-based airline."

So their $422 ml stake is only worth $384 ml now, no wonder they want to get out!!!

[mikeybycrikey]

Since someone mentioned Ansett Mk II earlier in the thread, I did notice that they never explicitly ruled out a takeover of Virgin.

This is sale proposal certainly is an interesting development. I guess the bottomless and neverending money pit that is Virgin might have just become too much for AIR to keep shovelling money in to.

We don't know the details yet but it's good to see something happening with this investment, even if it is just getting out at a loss. It'll also be interesting to see what other investment opportunities they are looking at.

What's AIR's stake in VAH worth now? About $400m or so? What'll that buy? A couple of Dreamliners? Another airline somewhere?

[winner69]

Interesting snippet from NBR today:

"Air NZ holds a 25.9% stake in Virgin worth about $A344 million ($NZ384 million), which it has increased in recent years despite the Australian airline making a loss.
According to its annual report, Air NZ has invested a total of $422 million in Virgin, excluding a recent commitment to lend a further $145 million to the Australian-based airline."

So their $422 ml stake is only worth $384 ml now, no wonder they want to get out!!!

Paid 48 cents for the last lot of shares they got

[sb9]

You never know, several people including myself weren't afraid to air their views in a frank and forthright manner.

Good on ya Roger.

The price movement this arvo post the announcement suggests there is still lot of uncertainty around details or is it due to American Airlines launching their service today in alliance with QAN.

[winner69]

Bloomberg note suggested a Chinesec airline cold be interested in Airs stake in Virgin

Same note said Branson is also keen to quit oart or all of Virgin America - prob a bit worred about in his 10% in Virgin Aust

[couta1]

Too many fishhooks and unknowns for me in this stock at current price, will probably buy some more at $2.75 or below, more volatility a certainty I reckon.

[blockhead]

Tip a whole lot of cash in one week and talk about baling a week later ?????

Too puzzling for me, not unhappy I swapped them for Scales last week.

[percy]

AIR signalling their near 26% is/could be for sale means VAH share register is now unstable.
This could create a wonderful opportunity for a major airline to expand into the land of opportunity.
We certainly live in interesting times,

[Baa_Baa]

AIR signalling their near 26% is/could be for sale means VAH share register is now unstable.
This could create a wonderful opportunity for a major airline to expand into the land of opportunity.
We certainly live in interesting times,

That is true and it will unfold agonisingly slowly for unsettled shareholders. Perhaps it is more a case of 'we live in interestingly uncertain times'.

[Raz]

That is true and it will unfold agonisingly slowly for unsettled shareholders. Perhaps it is more a case of 'we live in interestingly uncertain times'.

strategically embarrassing...also looking at AA product offering : Auckland - LAX and related price points they better get on point.

[Marilyn Munroe]

I feel like a parent who constantly nags a child to tidy up for themselves who then becomes mystified when they actually do what you ask.

Is Cullen Airlines stake in Virgin(Underarm Bowlers Division) a controlling interest under Aussie securities law and becuse of this Cullen Airlines are obliged to inform the market when they recieve a credible approach?

Boop boop de do
Marilyn

[Jantar]

Tip a whole lot of cash in one week and talk about baling a week later ?????

Too puzzling for me, not unhappy I swapped them for Scales last week.
But didn't AIR loan Virgin the money? That means AIR will continue to receive a return on those funds even after they sell their holding. How much return has AIR received for owning part of the company?

[iceman]

Bloomberg note suggested a Chinesec airline cold be interested in Airs stake in Virgin

Same note said Branson is also keen to quit oart or all of Virgin America - prob a bit worred about in his 10% in Virgin Aust

I also wondered about that winner. I have read in the last week that Alaskan Airlines is negotiating a takeover of Virgin America after VA has expanded quite a bit in the USA.
I do not understand why AIR would loan the large amount of money to VAH just before they announce they want to pull out. I am glad I sold out of AIR after the loan announcement as this is now far too uncertain for me. How much will AIR write off from this foray and how much has it really helped their Australian access ?

This from Tony Carter is baffling. "Mr Carter says Air New Zealand does not want a large minority equity position in Virgin Australia as it focuses on its own growth opportunities". They willingly invested in VAH to be a large minority shareholder. What has changed ?

[777]

This from Tony Carter is baffling. "Mr Carter says Air New Zealand does not want a large minority equity position in Virgin Australia as it focuses on its own growth opportunities". They willingly invested in VAH to be a large minority shareholder. What has changed ?

CEO's.......

[blockhead]

But didn't AIR loan Virgin the money? That means AIR will continue to receive a return on those funds even after they sell their holding. How much return has AIR received for owning part of the company?

I guess AIR's biggest return is the punters feeding into them off the Virgin flights, the loot AIR lent Virgin was done as "an arms length transaction" whatever that means

[biker]

One could presume that CL, having been on the VAH board for about 20 months has had enough time to either not like what he has seen and/or has realised his strategy for improving VAH profitability (and no doubt some agressive ideas) has not, will not, or refuses to be, embraced.
This is a major shift in policy for AIR. One of its four pillars for profitability and growth ( according to CL in the past) is about to be removed.
The loan by AIR to VAH (on arms length commercial terms) was obviously needed as an interim measure to provide some solidity to the balance sheet thereby protecting VAH's share price from temporary collapse and ipso facto AIR's investment. The loan is only for 12 months and with AIR contemplating a sale of their interest in VAH, seems like a very good move.

[Beagle]

Pretty sure CL has been on the board for longer than that, in fact my recollection from my discussion with him after the 2014 annual meeting in late 2014 was that he'd already been to one or two board meetings.
Rumour has it that AIR's bean counters have been over there having a good look under the hood and it seems clear they're unimpressed by what they've seen.
Hopefully they can extricate themselves from VAH without too much of a haircut.

[biker]

Pretty sure CL has been on the board for longer than that, in fact my recollection from my discussion with him after the 2014 annual meeting in late 2014 was that he'd already been to one or two board meetings....

Quite right Roger. He was appointed 4 July 2014. I was a year out. I have amended my post accordingly but it doesn't change what I was trying to say.

[vin]

Vin, you still around

That $3 beckons - maybe tomorrow just in time for year end for sum

Sure am mate. Doesn't feel like it's going to settle at $3 anytime soon, but we'll see.

Watching AIR, SCL, THL & CAV like a hawk :)

[stoploss]

Looks like a race to the bottom ...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11614053

[Hoop]

Theoretically a very good time to sell it's 26% stake of Virgin (at a loss)...



...............There are some good Authors around which touch on the subject of valuing cyclical stocks...One is the University textbook Valuation Measuring and Managing the value of Companies published by McKinsey & Company. Their authors are their consultants in their respected fields...I have the older 5th Edition the 6th Edition is out...On page 755 Chapter 35 Valuing Cyclical Companies They research the data and behaviour of Management (CEO's) of Cyclical stocks...

One amazing find is the management is one major factor causing a company to be cyclical in nature...Quote: "......
Still, based on conversations with these executives, we believe that
the herding behavior is caused by three factors: First, it is easier to invest when
prices are high, because that is when cash is available. Second, it is easier to
get approval from boards of directors to invest when profits are high. Finally,
executives are concerned about their rivals growing faster than themselves
(investments are a way to maintain market share).
This behavior also sends confusing signals to the stock market. Expanding
when prices are high tells the financial market that the future looks great (often
just before the cycle turns down).
.....How could managers exploit their superior knowledge of the cycle? The
most obvious action would be to time capital spending better. Companies could
also pursue financial strategies, such as issuing shares at the peak of the cycle or
repurchasing shares at the cycle’s trough. The most aggressive managers could
take this one step further by adopting a trading approach, making acquisitions
at the bottom of the cycle and selling assets at the top. Exhibit 35.7 shows the
results of a simulation of optimal cycle timing. The typical company’s returns
on investment could increase substantially.
Can companies really behave this way and invest against the cycle? It is
actually very difficult for a company to take the contrarian view. The CEO must
convince the board and the company’s bankers to expand when the industry
outlook is gloomy and competitors are retrenching. In addition, the CEO has
to hold back while competitors build at the top of the cycle. Breaking out of
the cycle may be possible, but it is the rare CEO who can do it.
........

from my post #5056 page 338 3rd March 2016 (http://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ/page338)

[dobby41]

Looks like a race to the bottom ...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11614053

just a teaser.
Only 200 seats

[mikeybycrikey]

Looks like a race to the bottom ...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11614053

This has been happening quite often lately:
1. Herald publishes article about low air fares.
2. AIR SP drops.

It'll be interesting to see what sort of yield AIR is getting 12 months from now. I'm expecting it will be lower but not significantly lower.

[winner69]

This day years ago

http://www.nzhistory.net.nz/teal-becomes-air-new-zealand

[Beagle]

And to celebrate AIR have some ripper specials which you'd almost think were an April fools joke on grabaseat...like under $500 return to Honolulu on a Dreamliner !

[Raz]

And to celebrate AIR have some ripper specials which you'd almost think were an April fools joke on grabaseat...like under $500 return to Honolulu on a Dreamliner !

Yes Rodger couldn't help myself...houston 749 return, see they are our best loved company...lucky for them given their mis-steps.

[Beagle]

Yes Rodger couldn't help myself...houston 749 return, see they are our best loved company...lucky for them given their mis-steps.

Sweet deal mate, congrats and enjoy...I am very tempted by Honalulu deal but comes at a very busy time of year for me so...as they say in the old Toyota advertisement, Bugger !

I sense the short term SP performance of AIR has become something of a lottery inextricably linked with how well they extricate themselves from Virgin. We could see a decent bounce if they execute well followed by a buy-back or special dividend. Pleased with what they're doing but wanting to sell and achieving a good result are clearly two separate matters and could possibly be hindered / delayed by regulatory consents.

This whole Ansett MK2 matter, (ouch... there I said it), is obviously something of considerable sensitivity, perhaps even embarrassment to AIR's board and management as its extremely unusual for them to decline to take any questions or interviews from the media after an announcement of that significance. Might save up one or two curly questions myself for the next annual meeting...

[Raz]

Sweet deal mate, congrats and enjoy...I am very tempted by Honalulu deal but comes at a very busy time of year for me so...as they say in the old Toyota advertisement, Bugger !

I sense the short term SP performance of AIR has become something of a lottery inextricably linked with how well they extricate themselves from Virgin. We could see a decent bounce if they execute well followed by a buy-back or special dividend. Pleased with what they're doing but wanting to sell and achieving a good result are clearly two separate matters and could possibly be hindered / delayed by regulatory consents.

This whole Ansett MK2 matter, (ouch... there I said it), is obviously something of considerable sensitivity, perhaps even embarrassment to AIR's board and management as its extremely unusual for them to decline to take any questions or interviews from the media after an announcement of that significance. Might save up one or two curly questions myself for the next annual meeting...

The number of times NZ executives think they can sort something in Australia...Rodger how did you feel about the accountants profession merging with the aussies or should I say takeover...

[freddagg]

I see Craigs have 2017 EPS of 40c and Morningstar 64c. I hope Morningstar are the more accurate.

[percy]

I see Craigs have 2017 EPS of 40c and Morningstar 64c. I hope Morningstar are the more accurate.

I am happy with either.
Craig's have 2017 eps of .53 cents,and PE 2016 of 5.3 and 2017 PE of 7.1 and steady yield of 7.7%.

[Beagle]

The number of times NZ executives think they can sort something in Australia...Rodger how did you feel about the accountants profession merging with the aussies or should I say takeover...

Yeah its a shocker mate and FAR more times than not ends up a mess.

Sorry, I can't put my thoughts into writing regarding that other matter, hope you understand why.

Analyst consensus is still 55 cps earnings for FY16 and FY17. http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/financials/

Dividend yield nearly 8% net fully imputed, that's 11% gross, excluding the possibility of any special divvy or buy-back which may be on the cards again once they extricate themselves from the Australian ****.

PE of 5 so any potential buy-back would be highly EPS accretive.

[Regi]

Most loved firm... can't complain.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11614783

[Beagle]

Mean I know calling it Ansett but they should have known better so deserve it and I might yet make mention of Ansett MK2 fiasco at the next ASM, we will see.

So what's my wish list for the period between now and the annual meeting.

1. A clean and complete exit from Virgin that includes repayment of that short term loan they recently advanced to them. If they have to take a haircut on their misadventure then so be it but I'd like the exit to be clean, tidy, complete and executed before the next annual meeting.

2. A deal that includes an ongoing alliance between the two carriers, code sharing on flights in a way that's mutually beneficial.

3. Anything more than $350m Kiwi provided its clean and tidy is something I would see as a reasonable exit from this mess.

4. Continue to execute well and deliver an underlying profit of not less than $900m before tax for the year.

5. Last and by no means least - Pay out the full proceeds of the Virgin sale to shareholders

Until they can prove they can clean up this mess in a satisfactory manner I think the shares are fair value at around $2.85.

Disc - I presently hold only a modest position.

[Poet]

Mean I know calling it Ansett but they should have known better so deserve it and I might yet make mention of Ansett MK2 fiasco at the next ASM, we will see.

So what's my wish list for the period between now and the annual meeting.

1. A clean and complete exit from Virgin that includes repayment of that short term loan they recently advanced to them. If they have to take a haircut on their misadventure then so be it but I'd like the exit to be clean, tidy, complete and executed before the next annual meeting.

2. A deal that includes an ongoing alliance between the two carriers, code sharing on flights in a way that's mutually beneficial.

3. Anything more than $350m Kiwi provided its clean and tidy is something I would see as a reasonable exit from this mess.

4. Continue to execute well and deliver an underlying profit of not less than $900m before tax for the year.

5. Last and by no means least - Pay out the full proceeds of the Virgin sale to shareholders

Until they can prove they can clean up this mess in a satisfactory manner I think the shares are fair value at around $2.85.

Disc - I presently hold only a modest position.

It seems to me they could achieve that objective by simply distributing their shares in VAH to the current shareholders of AIR.

[Beagle]

Poet. In theory yes but there's very little in the way of a free float in Virgin, vast majority is tied up by airline shareholders who bought in for their own reasons.

If we all tried to dump our Virgin shares on the Aussie market guess what would happen to the price :eek2:

Some Chinese airlines are growing capacity to Australia by 50% this year so hopefully one of them will take this motley canine off AIR's hands at something like fair value.

[777]

Have a read.

http://www.afr.com/business/transport/aviation/virgin-shareholder-spat-sparks-aviation-shakeup-20160331-gnvds9

[winner69]

Poet. In theory yes but there's very little in the way of a free float in Virgin, vast majority is tied up by airline shareholders who bought in for their own reasons.

If we all tried to dump our Virgin shares on the Aussie market guess what would happen to the price :eek2:

Some Chinese airlines are growing capacity to Australia by 50% this year so hopefully one of them will take this motley canine off AIR's hands at something like fair value.

Motley canine - very linguistic of you

[boysy]

Interesting article 777 lets just hope an existing or new shareholder is happy to pay up for air nz stake

[Beagle]

Yes it is a fascinating read, thank you 777. This has been building for some time I believe. About this time last year was when the cracks in the relationship between Borghetti and Luxon first appeared in public. C.L. came out in the media and basically said that Virgin should be making a profit already and in a thinly disguised manner was critical of management for not achieving it, (by early 2015).

Been some interesting articles on this matter behind the paywall on NBR too...not quite a juicy as this one but interesting nonetheless. Basically AIR is better doing their own thing and they should pay out the Virgin sale money in the manner I suggested or an on market buy-back. Govt will be happy to see a special dividend no doubt whatsoever about that.

[mikeybycrikey]

And to celebrate AIR have some ripper specials which you'd almost think were an April fools joke on grabaseat...like under $500 return to Honolulu on a Dreamliner !

And if you had got on the bus to Hawaii, you could've got to Honolulu for even less: https://www.facebook.com/AirNewZealand/videos/10153515909580777/

This is Air NZ's marketing team at its best. Forgetting all the noise here about Virgin, electric cars and everything else, this sort of video is part of what make AIR such a great company.

[Hoop]

Some good posts around the time of AIR buying the VAH stake..some had doubts as to why ... some thought it was a good strategic protective and gain access move....
see those posts starting at page 33 (http://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ/page33)

TA's OBV indicator thought it was just plain dumb!! see chart below

Also some posters doubted the TA.... see screen grab below
In all fairness Jaa's postings around this time were very informative

http://i458.photobucket.com/albums/qq306/Hoop_1/VAH%2002042016.png (http://s458.photobucket.com/user/Hoop_1/media/VAH%2002042016.png.html)

http://i458.photobucket.com/albums/qq306/Hoop_1/VAH%2002042016%20st.png (http://s458.photobucket.com/user/Hoop_1/media/VAH%2002042016%20st.png.html)

[RTFQ]

From the AFR 30Mar16

Air New Zealand could sell its stake to either Etihad or Singapore Airlines if minority shareholders supported the move. It could also mount a full takeover of the airline or sell the stake to a third partly, possibly a Chinese or American airline seeking to expand in the region

Read more: http://www.afr.com/business/transport/aviation/air-new-zealand-flags-350m-sale-of-its-virgin-australia-stake-20160330-gnu0fw#ixzz44ikfcpn8


Roger what do think of the Takeover chances suggested in the above?

Regards

[Beagle]

RTFQ - Pretty clear AIR want to sell and crystal clear Chris Luxon no longer has confidence in Borgetti. Sorry folks in advance if this post is a bit fractured / disjointed but this is a collection of my thoughts on this matter over the last few days.

No chance whatsoever of AIR taking over Virgin if that's what you are asking me. They simply don't have the balance sheet strength to execute the deal without materially compromising their own position, risks vastly outweigh the rewards. No way the N.Z. Govt as major shareholder would approve that and extremely unlikely that they could convince the other airline partners in VAH its a good idea and / or getting approval from Canberra to take their stake above 49%.

Most likely outcome in my opinion is AIR selling its stake pro rata to remaining airline shareholders...they could well have pre-emptive rights to acquire same anyway.

Second most likely outcome is outright sale to another airline outside of existing shareholders, probably one of the Chinese airlines that are growing capacity into Australia 50% this year.

An in-specie distribution to AIR shareholders is also highly unlikely as it would leave the crown with a large stake in an airline that the board have lost confidence in.

I think we and especially I, need to take a deep breath here and reflect.

1. Neither Chris Luxon or Tony Carter were at the helm when the initial stake was taken in Virgin.

2. This is pure speculation on my part but I think its highly likely that the reason they lent Virgin the money a little over a week ago was because they had a pre-existing contractual obligation to do so.
Often partners have signed heads of agreement that if their baby need s further support they have a legal obligation to act in their associate companies best interests on a pro rata basis.

3. Chris Luxon has been rooting for better financial performance for quite some time. He was on record about a year ago basically saying their financial performance wasn't good enough. I said the same thing on here at the time.

4. Other airline partners are prepared to take a longer view and are prepared to continue to back the CEO Borghetti so there was little C.L. could do and I think basically his position on the board became untenable after he called Borgetti out and the other shareholders wouldn't back him.

5. Good that we have Tony Carter who strikes me as an absolute gentleman to come to the rescue and calm the waters and hopefully that still means AIR and VAH can enjoy a mutually beneficial alliance going forward.

Been thinking about this a lot this weekend. Chris Luxon is a relatively young CEO and obviously has plenty of fire in his belly. I like that he's taken an aggressive approach here and won't tolerate mediocrity which is probably what Borgetti represents.

Bottom line is Australian unions are extremely powerful and have long outdated work practices and unless the CEO is prepared to take them on head to head like QAN's CEO did and get a wage freeze, costs of labour will be extremely high. Any wonder why a spokesman of the pilot's union in Australia said things are good at Virgin ?...they probably are very good for the senior pilots and other senior workers but not for the shareholders that's for sure !

C.L. isn't happy with the return on equity that Virgin is returning to AIR and neither am I. No way with Borghetti's track record the company deserves more capital, risks outweigh potential rewards.

Someone has to clean up Rob Fyfe's mess and Mr Luxon and Mr Carter are in my opinion the right men for the job. If they did nothing AIR, as I suggested the other day would be on the hook for potentially another $A300m further equity as their share to get VAH to a 2:1 debt to equity balance sheet, which is far from robust so that's the minimum really. Someone has to stand up and say enough's enough... VAH's performance is pathetic at a time when most other airlines in the world have record profits and I am pleased Chris Luxon had the courage to do it. Tony Carter is the perfect diplomat to patch things over and help retain a mutually beneficial alliance notwithstanding the potential forthcoming sale.

I always thought those two would work well together...Tony the calmer older gentleman and Chris Luxon the fire in his belly CEO ruthlessly pursuing efficiency and greater profitability and growth.
I will give them the benefit of the doubt as to why they advanced that loan to VAH and will assume its because for one commercial reason or another they had no choice.

I'd be curious to know how others feel who have sold because of the loan now they know AIR have put their stake in VAH on the market ? Does the decision to sell change your view of management ?
Worth giving the team at AIR a chance to clean up Rob Fyfe's mess ? What happens if AIR makes an announcement in due course they've sold and contemporaneously announces a special dividend of 15 cps fully imputed and a $150m on market buy-back and you have no shares ?

As for me, I might look to accumulate back some of the shares sold on any further weakness and / or depending on monthly operating stat's in due course and get back to a normal balanced sized shareholding for my portfolio, (neither underweight nor overweight).

[RTFQ]

Thanks as always for your thoughts Roger Cheers

[IAK]

More on the Air NZ/ Virgin sell off from today's herald.... http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11616215

[iceman]

More on the Air NZ/ Virgin sell off from today's herald.... http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11616215

I think this article hits the nail on the head. AIR last week announced that it wanted out of Virgin which one has to assume they have lost faith in VAH’s strategy or at least the time it is taking. AIR says the codesharing will continue. But the remaining issue is that VAH needs more cash and where will it come from. Etihad and SIA could of course continue providing loans but that is not likely forever. They can not buy the AIR stake without making a takeover offer. So who is the potential buyer of the AIR stake. Another airline, maybe a Chinese one. If so, they will be more likely to want codesharing VAH with their own airlines, not AIR. Or it could be an American based airline but which one. It won’t be American Airlines which is increasing its footprint in our part of the World but works with Qantas in OneWorld.
Could we possibly see a Star Alliance (AIR, United, Singapore) takeover bid or is that too far fetched ? I think at the moment AIR is vulnerable with its extraction from VAH as the Australian market is very important to AIR. Certainly will be interesting to watch this closely. Happy to be out of AIR for now

[Beagle]

I guess the other possibility is if AIR can't get a satisfactory price they simply refuse to inject further capital into Virgin and either dilute their shareholding as the company is forced to issue shares elsewhere or perhaps AIR is playing a long game here and will pressurise its airline partners to dump Borghetti and have a really intensive review of the entire operation of VAH. What's the bet Borghetti is losing friends at a pretty fast rate of knots... Happy to hold a modest stake while this intriguing corporate drama plays itself out.

[winner69]

Might the Australia government / politics play a part?

Virgin i think have some exemptions about foreign ownership - which Qantas not all happy with

Dont know the ins of outs of such things but just wondering

[winner69]

A bidding war for Virgin would be a great outcome

Never underestimate how much 'strategic value' is worth, no matter how perilous the financials look

Roger, Luxon's halo is starting to shine again

[Beagle]

Rumour has it mate that he's been cleaning out a lot of the old dead wood at AIR...suppose a brave man would say Virgin the biggest piece of all :)

[winner69]

Rumour has it mate that he's been cleaning out a lot of the old dead wood at AIR...suppose a brave man would say Virgin the biggest piece of all :)

As long as he keeps his Chief Pilot he be right

Great story on Morgan in the Herald the other day on him

http://www.nzherald.co.nz/business/news/video.cfm?c_id=1503079&gal_cid=1503079&gallery_id=159217

[Snow Leopard]

Looks like Luxon might have to go.


Best Wishes
Paper Tiger

[Beagle]

I strongly disagree PT. Luxon has made a bold call that VAH as an investment is toxic for AIR and I agree 100%. Rumour has it their senior bean counters, one of whom won the coveted CFO of the year at last year's Deloitte top 200 business awards had a good look under the hood for themselves and aren't impressed. Luxon can be a stroppy bugger...you need a bit of fire in your belly to run an airline and I think the 60 year old Borghetti hasn't got it. If you can't get rid of the dead wood Borghetti then the next best thing is to get rid of their stake in VAH.

I Borghetti position at VAH is tenuous at best.

[couta1]

I strongly disagree PT. Luxon has made a bold call that VAH as an investment is toxic for AIR and I agree 100%. Rumour has it their senior bean counters, one of whom won the coveted CFO of the year at last year's Deloitte top 200 business awards had a good look under the hood for themselves and aren't impressed. Luxon can be a stroppy bugger...you need a bit of fire in your belly to run an airline and I think the 60 year old Borghetti hasn't got it. If you can't get rid of the dead wood Borghetti then the next best thing is to get rid of their stake in VAH.

I Borghetti position at VAH is tenuous at best. Yep looking under the VAH bonnet is like when I looked under the bonnet of my big block V8 and discovered Id been driving around with a spark plug lead off, but in Virgins case they probably discovered a couple of leads completely missing:cool:

[Beagle]

Yep looking under the VAH bonnet is like when I looked under the bonnet of my big block V8 and discovered Id been driving around with a spark plug lead off, but in Virgins case they probably discovered a couple of leads completely missing:cool:

Worse than that mate, the whole engine is stuffed, the chassis bent and the drivers are vastly over-paid union workers milking the business for all they can while they can...that's how I see and I suspect AIR's management and directors agree.

[couta1]

Worse than that mate, the whole engine is stuffed, the chassis bent and the drivers are vastly over-paid union workers milking the business for all they can while they can...that's how I see and I suspect AIR's management and directors agree. I was trying to be a little kind Mate as the engine is still running albeit like a dog.

[Marilyn Munroe]

I am wondering if the troubles of Virgin(Under Arm Bowlers Division) are a demonstration of the intrinsic power of the incumbent in the domestic market.

If my speculation is correct it is even more remarkable because sometimes it appeared Queer and Nasty Airlines was being run by someone whose management style resembled the script of a Sir Les Patterson skit.

Boop boop de do
Marilyn

[Teeps]

A little bird has told me a new route to be announced in 1-2 weeks.... definitely NOT in South America due to all of the issues they encountered whilst setting up Buenos Aires (very hard set up apparently, but going well). No indication as to where just yet. My pick is another Asian route - probably Manila given they have talked about the interest in the Philippines previously when announcing Vietnam...

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11615316

Seems like a longer version of the Captain David Morgan story...a very good read. Extract "and Christopher Luxon has brought commercial intensity".

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11616679

And even more airline routes to N.Z.

[Snow Leopard]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11615316

Seems like a longer version of the Captain David Morgan story...a very good read. Extract "and Christopher Luxon has brought commercial intensity"...

Ignoring the failings of Luxon the important quote is this:

"co-ordinating with the flight service manager when meals may be served and how turbulence may affect this"

I knew they did it deliberately.

Best Wishes
Paper Tiger

[Sideshow Bob]

The old 'turbulence button' for when they served coffee! :scared:

[Raz]

I strongly disagree PT. Luxon has made a bold call that VAH as an investment is toxic for AIR and I agree 100%. Rumour has it their senior bean counters, one of whom won the coveted CFO of the year at last year's Deloitte top 200 business awards had a good look under the hood for themselves and aren't impressed. Luxon can be a stroppy bugger...you need a bit of fire in your belly to run an airline and I think the 60 year old Borghetti hasn't got it. If you can't get rid of the dead wood Borghetti then the next best thing is to get rid of their stake in VAH.

I Borghetti position at VAH is tenuous at best.

Well being timely is more important..how long was he on the Board...around 18 months, he new what was happening and they they will get out of this investment through good lucky not good management obviously. Happy to be out for now, never rely on luck to make an investment work. If you get a special dividend then thats great however it will be based on luck.

[WingingIt]

People's thoughts on AirNZ's lack of Facebook and Instagram logo/link displayed somewhere more obvious on the site? They do a hell of a lot of marketing and showcasing the brand on these channels, you've currently got to go the Help & Contact tab and then Stay Connected to find any reference.

Currently doing a marketing assignment on AirNZ and cant help but think it would be an easy thing to do and surely beneficial.

[Beagle]

I'm not sure where you are coming from Raz ? How did AIR get lucky ? Other airlines with a material stake have their representatives on the board.
Its been clear for about a year C.L. is not happy with the financial performance of VAH and that's only what's been said in public...
Happy for you to unpack your point of view more but luck doesn't seem to have much to do with it from what I can see. The way I see it C.L. has made a bold call that VAH has serious systemic issues and he's very unhappy with the way the CEO is managing the company.

Even if AIR just tagged along for the ride and propped VAH up some more what guarantee would they have that they'd get an acceptable commercial return on a say a further $A300m equity injection, (that's just their share) to get VAH's gearing down to 67% ? That C.L. undoubtedly backed by the AIR board made the call that enough is enough is a good sign in my opinion that they are prepared to act decisively to extricate themselves from this company and clean up this mess with the minimum possible damage, before it gets any worse. I'm not too fussed one way or the other with the special divvy although it would be nice in due course if it happens, but sending huge sum's of AIR's money to prop up an Australian company that seems both leadership challenged and riddled with systemic issues...that would be a very bad idea in my opinion and one I'm pleased they've emphatically rejected.

[kiora]

Interesting
https://nz.finance.yahoo.com/news/alaska-air-buy-virgin-america-124810628.html

[Raz]

I'm not sure where you are coming from Raz ? How did AIR get lucky ? Other airlines with a material stake have their representatives on the board.
Its been clear for about a year C.L. is not happy with the financial performance of VAH and that's only what's been said in public...
Happy for you to unpack your point of view more but luck doesn't seem to have much to do with it from what I can see. The way I see it C.L. has made a bold call that VAH has serious systemic issues and he's very unhappy with the way the CEO is managing the company.

Even if AIR just tagged along for the ride and propped VAH up some more what guarantee would they have that they'd get an acceptable commercial return on a say a further $A300m equity injection, (that's just their share) to get VAH's gearing down to 67% ? That C.L. undoubtedly backed by the AIR board made the call that enough is enough is a good sign in my opinion that they are prepared to act decisively to extricate themselves from this company and clean up this mess with the minimum possible damage, before it gets any worse. I'm not too fussed one way or the other with the special divvy although it would be nice in due course if it happens, but sending huge sum's of AIR's money to prop up an Australian company that seems both leadership challenged and riddled with systemic issues...that would be a very bad idea in my opinion and one I'm pleased they've emphatically rejected.

The luck is management depending on a larger airline to come along and buy their stake as a strategic position at this moment. I think they have got their timing wrong on this, should have happened earlier. The financial exposure is less material to the other strategic partners in VAH unlike AIR so their perspective may well be different as a consequence. It is a limited market out there and if true others are keen to offload, they will have already chatted to possibles in the market. Just weakens AIR negotiating position further.

[Raz]

Interesting
https://nz.finance.yahoo.com/news/alaska-air-buy-virgin-america-124810628.html

Air Alaska is a very well run airline, great service even on its budget routes, if they go full international they will be a presence.

[dobby41]

Interesting
https://nz.finance.yahoo.com/news/alaska-air-buy-virgin-america-124810628.html

47% premium is huge.

[winner69]

47% premium is huge.

As I said the other day - Never underestimate how much 'strategic value' is worth, no matter how the financials look

[percy]

I think we often do not realise the value of "gates"/ "slots" at some airports.
I would think in Australia, they would be of considerable value at Sydney and Melbourne airports.

[Beagle]

Well being timely is more important..how long was he on the Board...around 18 months, he new what was happening and they they will get out of this investment through good lucky not good management obviously. Happy to be out for now, never rely on luck to make an investment work. If you get a special dividend then thats great however it will be based on luck.

The most important thing as far as I am concerned is that AIR have drawn a line in the sand as said to Borghetti, you will not get a single dollar more of AIR's money. VAH have already sucked about $A400m out of AIR and 5-6 years is more than enough time to prove the business model is successful and it isn't. When you've got bad cards the worst thing you can do is double down on a losing hand. C.L. is obviously familiar with the Kenny Rogers song and knows the hand Rob Fyfe organised isn't strong. Enjoy what would possibly make a good theme song at this year's annual meeting. https://www.youtube.com/watch?v=kn481KcjvMo If they take a $100m haircut so be it, not much in the context of a $900-$1,000m operating profit before tax this year and avoids VAH leeching hundreds of millions of dollars of them in the years ahead. Lets be honest, VAH is a pup...someone had to say it and its good C.L. isn't scared of making the bold calls and augers well for his capabilities as a leader going forward.

In my view the business model of Virgin is systemically flawed. They are trying to be all things to all customers through their various product offers and are weighed down by massive royalties to Sir Richard Branson for the use of the name Virgin. Him, senior management and senior pilots are the only ones making any decent money out of the airline.

[Sideshow Bob]

47% premium is huge.

Flew a number of American airlines last year. Virgin USA were excellent, especially for American airlines (and also had a safety video very similar to Men In Black, prior to this being launched) Alaska also above average. Together could be quite a force if can merge effectively.

[Beagle]

Normalised the size of my holding today as I don't see any point in mucking about and don't want to be caught short when the market reacts positively to the announcement of AIR's exit from VAH and at the same time announces a large on market buy-back and fully imputed special dividend :)

The market is obviously relieved that VAH will no longer be a leech sucking AIR's blood and AIR will have a nice unencumbered flight path going forward.

[Master98]

Normalised the size of my holding today as I don't see any point in mucking about and don't want to be caught short when the market reacts positively to the announcement of AIR's exit from VAH and at the same time announces a large on market buy-back and fully imputed special dividend :)

The market is obviously relieved that VAH will no longer be a leech sucking AIR's blood and AIR will have a nice unencumbered flight path going forward.
chopped half of my holding the other day and happy to hold the remaining, wait and see the real outcome before making decision.

[Beagle]

chopped half of my holding the other day and happy to hold the remaining, wait and see the real outcome before making decision.

And fair enough too. I'm back to half my previous overweight position now and happy to do nothing more in the meantime until we get further visibility on how things are progressing. Historical dividend yield based on last two, (some would say very conservative dividends) amount to 19.5 cps / 288 = 6.77% net. Its fully imputed so is 9.4% gross. Earnings growth should lift dividends going forward and a special is now very much back in play now too. One could take the view of looking through the current noise and saying this company can pay a very high sustained dividend yield, (management talked about the potential for tremendous free cash flow later this decade in their recent conference call). I think this is another perspective on the stock and one I feel is more pertinent now the flight path is in the process of becoming unobstructed.

[kiora]

Who wants it ?
https://nz.finance.yahoo.com/news/singapore-air-good-fit-virgin-082726416.html

[winner69]

Who wants it ?
https://nz.finance.yahoo.com/news/singapore-air-good-fit-virgin-082726416.html




Never underestimate how much 'strategic value' is worth, no matter how the financials look

[Jay]

Yes heard you the first time winner :-) and agree

The fact that Singapore said "Anything else would be speculative at this point." rather than no we are not interested or similar points to they are interested and looking hard imho.

[winner69]

Jay - just reminding some that there could be a decent one off bonus for share holders in this

Some seem rather despondent/have doubts about holding AIR. I reckon no better time to hold than now and see how this pans out

Whether its a special dividend or a share buyback if there isa big win thats good - if no big win AIR will still be making heaps this year

[Jay]

Couldn't agree more w69
I'm relatively new to the party, but still holding my modest lot.

[Beagle]

Jay - just reminding some that there could be a decent one off bonus for share holders in this

Some seem rather despondent/have doubts about holding AIR. I reckon no better time to hold than now and see how this pans out

Whether its a special dividend or a share buyback if there isa big win thats good - if no big win AIR will still be making heaps this year

Agree 100%. In general Chinese airlines are looking at a 50% expansion of capacity to Australia this year, (source QAN most recent half year report) so at least one of them is probably gagging to get their hands on a stake in VAH.

[777]

From

http://www.gmanetwork.com/news/archives/just_in/4

And nothing announced here yet. Embargo's obviously don't apply to the Phillipines.


Direct flights from Manila to New Zealand coming in December
Published April 5, 2016 4:54pm
Filipinos will soon be able to book direct flights from Manila to Auckland, New Zealand and back beginning December.

Air New Zealand announced on Tuesday that it will begin offering direct flights between the Philippines and New Zealand.

“The Filipino population in New Zealand has more than tripled since 2001 and is now the third largest Asian ethnic group, with around 40,000 Filipinos resident in New Zealand,” Air New Zealand Chief Executive Officer Christopher Luxon said.

“As the only non-stop service between New Zealand and the Philippines, our flight will be quicker and more convenient for travellers than the fastest current option which flies indirect, potentially saving up to two and a half hours each way,” Luxon added.

Trips to New Zealand is expected to be popular on both ends with flights three times a week via Boeing 767-300 aircrafts with flight time of around 10 and a half hours each way.

“The number of visitors from the Philippines is also continuing to grow rapidly, up more than 20 percent in the past year alone so we’re anticipating that demand for this service will be steady in both directions,” Luxon said.

Tickets are expected to go on sale by mid-2016 subject to government and regulatory approvals. —Joseph Tristan Roxas/JST, GMA News

- See more at: http://www.gmanetwork.com/news/story/561567/money/companies/direct-flights-from-manila-to-new-zealand-coming-in-december#sthash.tELWRl4X.dpuf

[Raz]

Agree 100%. In general Chinese airlines are looking at a 50% expansion of capacity to Australia this year, (source QAN most recent half year report) so at least one of them is probably gagging to get their hands on a stake in VAH.


Understand more activity around this than media commentary would even suggest so have added back into my portfolio, haha at this price highest buy in for me ever although it matches the lowest price i have every sold...will take a punt on this.

[mikeybycrikey]

Agree 100%. In general Chinese airlines are looking at a 50% expansion of capacity to Australia this year, (source QAN most recent half year report) so at least one of them is probably gagging to get their hands on a stake in VAH.

Would the sale of this to a Chinese airline (or any other foreign group) require Australian government approval? I think that might make it harder for a Chinese airline to buy in to Virgin if that is the case.

[Raz]

Yes also saw that, surprised not mention here yet

[Raz]

Would the sale of this to a Chinese airline (or any other foreign group) require Australian government approval? I think that might make it harder for a Chinese airline to buy in to Virgin if that is the case.

Agree , don't think the Australian government would be keen.

[Beagle]

Thanks 777. Nice to see them giving those old 767's some more work. Oil's cheap so they're clearly still economic to fly.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11617859

[winner69]

AIR has a good day - solid increase in share price

That $3 beckons ......another couple of good days and we there

[percy]

Agree , don't think the Australian government would be keen.

The Australian government would have to welcome such a deal.
All part of their free trade deal with China,their biggest buyer of Australian minerals.
Just think how it would benefit NZ relations with China,being the nice friendly people who sold them the 26% corner stone shareholding.!! lol.
Final payback for the Australian government forcing AIR to buy Ansett...utu,!!

[Beagle]

Yep..the market is saying pretty emphatically and with solid volume there's plenty of interest in AIR's stake in VAH and they have the highly competent First N.Z. looking after them so a very good result is certainly possible. Was only a few days ago it traded at $2.81 intraday.

AIR is more than capable of progressing its own flight path's without a stake in VAH but its good that Tony Cater has already reached agreement with VAH's chair that their mutually beneficial association including code sharing where applicable will continue. WIN- WIN... bring on the on market buy-back and special dividend.

That halo of C.L.s to make a very quick reappearance eh Winner :) Very pleased indeed I normalised my holding yesterday.

[mikeybycrikey]

Yep..the market is saying pretty emphatically and with solid volume there's plenty of interest in AIR's stake in VAH and they have the highly competent First N.Z. looking after them so a very good result is certainly possible. Was only a few days ago it traded at $2.81 intraday.

I assumed that the bump in the share price this week was more related to the new destination of Manila, rather than because of VAH. (Down on news of other airlines starting new routes. Up on news of our airline starting new routes).

The two year low in the SP of VAH is telling me that there isn't much demand for AIR's stake.

Although I admit that I've really got no idea and unfortunately we won't know anything until AIR announces who they have sold to. And we've got no idea how long that will be.

It has only been a week so far but I would be getting worried if this process were to drag on too long.

[iceman]

Yep..the market is saying pretty emphatically and with solid volume there's plenty of interest in AIR's stake in VAH and they have the highly competent First N.Z. looking after them so a very good result is certainly possible. Was only a few days ago it traded at $2.81 intraday.

AIR is more than capable of progressing its own flight path's without a stake in VAH but its good that Tony Cater has already reached agreement with VAH's chair that their mutually beneficial association including code sharing where applicable will continue. WIN- WIN... bring on the on market buy-back and special dividend.

That halo of C.L.s to make a very quick reappearance eh Winner :) Very pleased indeed I normalised my holding yesterday.

I did same Roger and bought back in. Am pleased to see them extracting themselves from ongoing cash contributions to VAH. But remain concerned about who gets the stake and what effect it will have on AIR's Australian operations. Surely the codesharing will be up for review with any new stakeholder.
Any significant new stakeholder in VAH will need a Government approval and may even initiate a full takeover requirement.

[Beagle]

I did same Roger and bought back in. Am pleased to see them extracting themselves from ongoing cash contributions to VAH. But remain concerned about who gets the stake and what effect it will have on AIR's Australian operations. Surely the codesharing will be up for review with any new stakeholder.
Any significant new stakeholder in VAH will need a Government approval and may even initiate a full takeover requirement.

Welcome back on board mate. It has been reported that Tony Carter has apparently agreed with the VAH chair that the codeshare is to continue. This will be on the basis that its mutually beneficial. I wouldn't be concerned by this aspect as its common practice as you know to have alliances, code sharing, even revenue sharing ones with airlines in which you don't have an investment stake.

[Jay]

Weren't AIR and Qantas code sharing at one stage
I seem to remember my (who is a NZ'er but considered herself an Aussie as she had been there for 40 odd years) booking on a Qantas flight only to find she boarded an AIR NZ plane when coming over her for a visit.
So it's being going on for quite sone time and cannot see why it would not continue, as you say Roger mutually beneficial

[Regi]

$3.... again :t_up:

[couta1]

$3.... again :t_up: Id be selling right about now if I was holding, your table can be cleared quickly with this stock and you may be left holding just your cutlery, speaking from experience of course.:cool:

[Beagle]

I think this is far more than the announcement of new flights to Manila. I think Mr market has come around to seeing this from C.L.'s point of view and will be well pleased to see AIR's share of the somewhat mismanaged capital hungry pup in someone else's kennel. A nice clean exit at a good price could see a further re-rating. Happy to hold and enjoying being back on board :)

Mr market is saying the word is out and there's keen interest in AIR's stake in Virgin.

[Marilyn Munroe]

I think this is far more than the announcement of new flights to Manila.

The thriller to Manila.

Boop boop de do
Marilyn

PS To those who see this post as not making a useful contibution to the discussion I applogise I couldn't help myself Er......um, to torture good taste even more could I refer to the Luxon Borghetti parting of the ways as the "rumble in the jungle".

[Snow Leopard]

The thriller to Manila.

Boop boop de do
Marilyn

PS To those who see this post as not making a useful contibution to the discussion I applogise I couldn't help myself Er......um, to torture good taste even more could I refer to the Luxon Borghetti parting of the ways as the "rumble in the jungle".

I have been refraining from talking about Air New Zealand modifying their flight envelope, until now.

But I am still not going to do the:

Some people have done 2 U-turns on their AIR positions so fast that they have bought shares off of themselves.

Best Wishes
Paper Tiger

[vin]

Back over $3, wow. Major rollercoaster of emotions with this company. Hopefully stays above this mark for a good period of time.. at least.

[Nasi Goreng]

$2.95 seemed to be quite a stubborn resistance point and it got to $3 quite quickly after it got past $2.95. If it can hold $3 today, then we potentially have 2 resistance levels, $3 then $2.95.

[Beagle]

I have been refraining from talking about Air New Zealand modifying their flight envelope, until now.

But I am still not going to do the:

Some people have done 2 U-turns on their AIR positions so fast that they have bought shares off of themselves.

Best Wishes
Paper Tiger

LOL - and tigers never change direction when they're chasing their next feed and the company itself hasn't done a flip-flop over their support for VAH. Too early for a Tui ?

[dobby41]

$2.95 seemed to be quite a stubborn resistance point and it got to $3 quite quickly after it got past $2.95. If it can hold $3 today, then we potentially have 2 resistance levels, $3 then $2.95.

Similar has been said before - and, no doubt, will be again.

[Hoop]

Back over $3, wow. Major rollercoaster of emotions with this company. Hopefully stays above this mark for a good period of time.. at least.

Vin...The only emotions is whats been posted on Sharetrader forum..

AIR has for the last 5 months been stuck in an near untradeable (10% swing) boring trading pattern (range 2.70 to 2.96)..The only excitement for the TA people was the hope of a sustained breakout but that breakout only lasted a couple of weeks in late January..it failed and got knocked back by the Secular resistance pressure after setting a nice bull trap just above the secular resistance (3.17 to 3.22)..no doubt burning many, especially the low PE ratio brigade.

Comparison:..5 months ago Air was around $2.90 the NZX50 was 6050 ..today AIR is trying to achieve a closing day breakout at 3.01 up 3.5% while the NZX50 is 6750 up 12%..

If Air can sustain its breakout this time it could play catch up with the NZX...but it will need the global markets help which is presently pausing after a surprising lengthy rally and especially the Global airline index which has also paused after a sudden rally starting 6 weeks ago...

TA wise AIR is looking healthy..even though it has been in a lengthy boring trading range the primary up trend has kicked up a trend notch and is in a long term moderate up trend...this is a bullish scenario but that Secular resistance is still the big bogey...

Disc: Got bored and Sold out of AIR late in March at 2.84 (slight capital loss + DIV)..looked for bigger fish to fry and used AIR money to buy CAV (at 55c)..

Best of luck to the AIR holders :)

[Beagle]

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

[Poet]

http://www.nbr.co.nz/article/singapore-airlines-lifts-stake-virgin-australia-cs-p-187214

Seems that SIAL has purchased extra VAH shares. In part, the article states...

The Singapore-based airline announced to the Singapore Stock Exchange yesterday evening that it now owned 23.11% of Virgin, up from 22.91% previously.
Singapore Airlines also said it had chosen to physically settle a series of equity swaps it had entered into with a counter-party, at a cost of $A3.18 million, or 46.72Ac a share. This represents a significant premium to Virgin's closing price of 33.5Ac on Wednesday.

[couta1]

I know what you mean about getting bored Hoop, I guess that's what separates the traders from the investors. PS-Roger that be $3.26 Mate but what's 2c between friends.

[Beagle]

I know what you mean about getting bored Hoop, I guess that's what separates the traders from the investors. PS-Roger that be $3.26 Mate but what's 2c between friends.

Thanks mate. I'd better get some new glasses with part of my forthcoming special divvy :)

Plenty of speculation in the paywall protected NBR article about Singapore buying in and AIR doing a buy-back of its own shares with the proceeds but I reckon the Govt will want a special divvy as well.

[winner69]

Government loves these special dividends - keeps them in surplus to the next election

Maybe $300m from Kiwibank and $200m from AIR would be enough (35 cents soec div)

[winner69]

Back over $3, wow. Major rollercoaster of emotions with this company. Hopefully stays above this mark for a good period of time.. at least.

We'll be fine this time around

Brokers back from lunch so a bit more action

[Beagle]

Government loves these special dividends - keeps them in surplus to the next election

Maybe $300m from Kiwibank and $200m from AIR would be enough (35 cents soec div)

Yeah and that monster special divvy paid say in tandem with the final divvy in September 2016 would come into account in their books for the year ended 30 June 2017 and make their finances look all rosy for them for the election, cunning eh !!

[Hoop]

I know what you mean about getting bored Hoop, I guess that's what separates the traders from the investors. PS-Roger that be $3.26 Mate but what's 2c between friends...
Yep,, very true Coulta..that what separates the traders (Overall I average out as a medium term investor/trader) from the long term investors...

Investors have to stick to their goals especially those like me that treat it as a business and earn a wage from it..we work harder and do longer hours at our investments..often a wake to 2 am and then up again at 7.30am.. I treat the longer hours as a payable wage for me ..As my portfolio is a taxable job for me...I need to keep earning +20 - +30% % per year average..(average overall bull market bear market combined). To do that I have to have working stocks...AIR was not a working stock..it went up 5% in the last year during a bull market which I should earning +40%pa.. I need this %age level in the bull years so to buffer against low %age returns or loses during the bear market times..That kind of result from AIR is a drag on my portfolio as now I have to find a stock to outperform above 40% just to keep my goal average up...I gave AIR a couple of goes..but it's too high up the cycle ..

.Have to prune the poor stock performers to maintain an efficient portfolio, so at that time AIR was one to go...

[Raz]

..
Yep,, very true Coulta..that what separates the traders (Overall I average out as a medium term investor/trader) from the long term investors...

Investors have to stick to their goals especially those like me that treat it as a business and earn a wage from it..we work harder and do longer hours at our investments..often a wake to 2 am and then up again at 7.30am.. I treat the longer hours as a payable wage for me ..As my portfolio is a taxable job for me...I need to keep earning +20 - +30% % per year average..(average overall bull market bear market combined). To do that I have to have working stocks...AIR was not a working stock..it went up 5% in the last year during a bull market which I should earning +40%pa.. I need this %age level in the bull years so to buffer against low %age returns or loses during the bear market times..That kind of result from AIR is a drag on my portfolio as now I have to find a stock to outperform above 40% just to keep my goal average up...I gave AIR a couple of goes..but it's too high up the cycle ..

.Have to prune the poor stock performers to maintain an efficient portfolio, so AIR was one to go...

Just made the equivalent of the special divi from buying in yesterday..important to have clear exit point and what return you are satisfied with. AIR is a total punt currently wrt this divestment...it could go either way.