AIR - Air NZ.

[Beagle]

"Fare" enough mate :)

Interestingly Capex is very light in FY 20 as well and then tails off to almost nothing in FY21. From their conference call at the time of the annual result there is hardly anything in FY22, FY23 and FY24 either.
What will they do with ~ 80 cps in annual free cash flow in all those years ?

[Raz]

"Fare" enough mate :)

Interestingly Capex is very light in FY 20 as well and then tails off to almost nothing in FY21. From their conference call at the time of the annual result there is hardly anything in FY22, FY23 and FY24 either.
What will they do with ~ 80 cps in annual free cash flow in all those years ?

There will be capex and other initiatives just not planned at this stage....dividend may well increase however current management are good at spending money and always will be a good part of the pie...

[couta1]

"Fare" enough mate :)

Interestingly Capex is very light in FY 20 as well and then tails off to almost nothing in FY21. From their conference call at the time of the annual result there is hardly anything in FY22, FY23 and FY24 either.
What will they do with ~ 80 cps in annual free cash flow in all those years ? Arrows point toward plenty of scope for meaty sized special divvys to supplement ones normal diet methinks.

[Beagle]

Arrows point toward plenty of scope for meaty sized special divvys to supplement ones normal diet methinks.

Yeap, in FY19 the fleet replacement programme is complete and they'll have one of the youngest fleets of any airline in the world at only 6.2 years average age. You could say shareholders are well positioned :)

On another subject this looks like it might be on shaky ground in more ways than one.
http://www.sharechat.co.nz/article/4f6edab1/air-nz-seeks-to-be-heard-on-no-customers-no-business-case-wellington-runway-extension.html

[DonQ]

"On another subject this looks like it might be on shaky ground in more ways than one."

Yep, we shouldn't even have a city there , let alone talk about extending the airport :p

What is worrying though is what the quakes will cost in tourist numbers hence load factors.

Also , although their yields have dropped around 8% yoy, has anyone managed to understand their fuel hedging reports? I'd love to know what that says about their forward fuel costs.

[Beagle]

Welcome to the forum DonqQ
I'm avoiding any property company with significant Chch or Wellington high rise buildings.
I was down in Queenstown shortly after the recent earthquake and nobody seems worried about it. Sure it will have a massive impact on tourism to Kaikoura but beyond that I think the effect on AIR from a demand perspective will be nil, people will simply amend their travel plans within N.Z. to exclude heavily affected area's.

AIR use a system called collars where as the name suggests they basically try and control the cost of their fuel. Going off memory they've basically set themselves up to enjoy relatively inexpensive fuel for the rest of this financial year.

[Bobdn]

http://business.scoop.co.nz/2016/11/25/air-new-zealand-says-hello-to-adele-fans/

Air NZ is putting on an extra 80 flights for the Adele concert. What a busy airline!

[couta1]

http://business.scoop.co.nz/2016/11/25/air-new-zealand-says-hello-to-adele-fans/

Air NZ is putting on an extra 80 flights for the Adele concert. What a busy airline! Yep with the Adele concerts in March, the World Masters Games in April and the Lions tour in June/July sure is shaping up to be a cracker of a domestic year for Air in 2017, doubt very much you will be able to buy Air shares at $2.03 then.

[Jantar]

Yep with the Adele concerts in March, the World Masters Games in April and the Lions tour in June/July sure is shaping up to be a cracker of a domestic year for Air in 2017, doubt very much you will be able to buy Air shares at $2.03 then.
It even continues into 2018 with the Oceanic Masters in Dunedin in January.

[Bobdn]

I've even started thinking about the 2019 World Cup and 2020 Olympics in Japan. Our 787s to Osaka and Tokyo will be packed to the gunwales ('gunnels').

http://www.phrases.org.uk/meanings/full-to-the-gunwales.html

[winner69]

Blackest day in Air New Zealand's history this day 37 years ago

@NZHistory: Today in History 28 Nov 1979, 257 killed in Mt Erebus disaster https://t.co/R9p1jj6Hrr https://t.co/2iSwKGgVft

[Baddarcy]

Yeap, in FY19 the fleet replacement programme is complete and they'll have one of the youngest fleets of any airline in the world at only 6.2 years average age. You could say shareholders are well positioned :)

On another subject this looks like it might be on shaky ground in more ways than one.
http://www.sharechat.co.nz/article/4f6edab1/air-nz-seeks-to-be-heard-on-no-customers-no-business-case-wellington-runway-extension.html

What is everyone's thoughts on the 777-200s, by 2020 they will be about 14 years old, how long before we are looking at replacing these or are they going to become the next 767 and be kept going longer than Air Force 1?

[winner69]

AKL-LHR-AKL I always seem to get lumbered on those rickety 777's that rattle like nothing else to and from HKG or SNG

At least generally get on decent partner planes for leg to LHR

[Beagle]

What is everyone's thoughts on the 777-200s, by 2020 they will be about 14 years old, how long before we are looking at replacing these or are they going to become the next 767 and be kept going longer than Air Force 1?

They've all just recently been refurbished, (or are currently in the process thereof, sorry I forget which), so I would say they'll be looking to get somewhere around 20 years out of them taking their replacement out to mid-late next decade. To far out to try and guess what they might eventually replace them with. Average age as at 30/6/16 was 10.2 years.

[tony64peter]

AKL-LHR-AKL I always seem to get lumbered on those rickety 777's that rattle like nothing else to and from HKG or SNG

At least generally get on decent partner planes for leg to LHR


WOW 15000 posts in 15 years. That's nearly three posts a day.

[Beagle]

WOW 15000 posts in 15 years. That's nearly three posts a day.

Congrats on achieving that milestone Winner69.

Meanwhile on the anniversary of the blackest day in AIR's 76 year history AIR executives award themselves millions of free performance rights. I tried adding all the disclosures up but I got an extreme case of nausea part way through so will leave that "enjoyable" task to someone else...

P.S.Oh I see in a separate disclosure they've summed them up for us 5.961m free performance rights and 367K restricted share rights. Someone please hand me a large sick bag...

[couta1]

Congrats on achieving that milestone Winner69.

Meanwhile on the anniversary of the blackest day in AIR's 76 year history AIR executives award themselves millions of free performance rights. I tried adding all the disclosures up but I got an extreme case of nausea part way through so will leave that "enjoyable" task to someone else...

P.S.Oh I see in a separate disclosure they've summed them up for us 5.961m free performance rights and 367K restricted share rights. Someone please hand me a large sick bag... Greed in its purest form mate, I'd like to see these guys spend a few weeks working in a shearing gang to give them a bit of a reality check.

[Baa_Baa]

Might need to figure out how to monitor this. Those generous 5.96m performance rights vest over three years (+6 months if needed) "... subject to the Company’s share price outperforming a comparison index made up 50:50 between the NZX All Index and the Bloomberg World Airline Index over a three year measurement period from the date of issue"

Gotta keep those execs focused on shareholder value somehow!
:confused:

[Beagle]

Might need to figure out how to monitor this. Those generous 5.96m performance rights vest over three years (+6 months if needed) "... subject to the Company’s share price outperforming a comparison index made up 50:50 between the NZX All Index and the Bloomberg World Airline Index over a three year measurement period from the date of issue"

Gotta keep those execs focused on shareholder value somehow!
:confused:

Maybe we could ask Gordon Gekko to help ?

[ratkin]

AKL-LHR-AKL I always seem to get lumbered on those rickety 777's that rattle like nothing else to and from HKG or SNG

At least generally get on decent partner planes for leg to LHR

http://www.sharetrader.co.nz/images/icons/icon1.png


Cant beat the double deckers (a380s) There some decent seats in the upstairs section. They give Nzers old rickerty planes, its always the European leg where the modern planes come in. Ones where the videos actually work.

[Beagle]

http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/news/Air-New-Zealand-NZ-voted-top-carrier-23460601/

Haven't seen Hoop post for a while but for TA people (even unadjusted for the 25 cps special divvy) its interesting to note the SP now has a break above the 100 day moving average which looks like $2.04.

Fundamentally based on average analyst forecast for FY18, (when all known extra competition will have a full years effect), AIR still trades on a PE of just under 7, compared to a ten year average of about 10.5. I guess those who still hold a negative view, (although being strangely quiet lately), would still be thinking profitability works in multi year trends and profit is headed lower in FY19.

I think that's anyone's guess and its impossible to try and predict profitability in FY19 at this stage. Anyway for what its worth I garner a bit of comfort from the technical's lining up with the fundamental's so added a few more today.

[tony64peter]

http://www.sharetrader.co.nz/images/icons/icon1.png


Cant beat the double deckers (a380s) There some decent seats in the upstairs section. They give Nzers old rickerty planes, its always the European leg where the modern planes come in. Ones where the videos actually work.


NO airline has ever made money flying the A380. If they had then Airbus would still be building them.As an investor in AIR I'm very glad they never bought them.

[vin]

Liking the way the SP is heading... Tempted to get onboard again. Last time was at $2.70, still holding since then

[Zaphod]

NO airline has ever made money flying the A380. If they had then Airbus would still be building them. As an investor in AIR I'm very glad they never bought them.

The A380 might not have been profitable for Airbus thus far, but it has however been profitable for airlines where the aircraft have been strategically deployed to routes with very high PAX levels and/or capacity constrained airports. Examples of highly successful A380 routes include DBX-LHR, DBX-BKK, SIN-LHR, and there are many others.

AIR's decision not to purchase an A380 is based purely on their own economics for a relatively small regional airline and is not reflective on the aircraft itself.

[Joshuatree]

You answered your question with your next post. The compelling value will eventually shine through but who can predict when... I guess people have to decide for themselves if the turbulence is too much or whether they trust management to stay on board for the long haul. I'm a long haul bloke on this one. Over 30 years of investing has taught me its a very rare thing to find companies this well managed and on these compelling metrics. By any rational comparison with other airlines AIR looks incredibly good value.

That was on the 28th of Feb. A mate has asked me why the s/p has dropped since. My answer is because AIR increased capacity about the same time as competition increased intensely and fares dropped. AIR forecast less profits but still healthy ones(can't find this fig).They also gave one off special div. Also a vey cyclical stock (where are we in the cycle?). Money is being pulled out of NZ back to USA etc.Ive also suggested one more big earthquake and the tourism boom will be over.What else have i missed?.cheers JT

[BlackPeter]

That was on the 28th of Feb. A mate has asked me why the s/p has dropped since. My answer is because AIR increased capacity about the same time as competition increased intensely and fares dropped. AIR forecast less profits but still healthy ones(can't find this fig).They also gave one off special div. Also a vey cyclical stock (where are we in the cycle?). Money is being pulled out of NZ back to USA etc.Ive also suggested one more big earthquake and the tourism boom will be over.What else have i missed?.cheers JT

You mentioned the cyclical nature of the share - and given that analysts assume earnings to drop next year and the year after does it make sense for the SP to keep dropping;

Some (too many) of their management are using their share options as ATM machine and sell their shares as fast as they get their hands on them. If they don't believe in the stock - why should the market?

[Beagle]

I think everyone was surprised this year by the extent of the new competition coming to N.Z. That said I think that's been fully factored into analysts forecasts for FY17 and FY18.
Looking at FY18 as mentioned earlier we're at a PE of 7 vs a long run average of 10.5, (could make a case for using 11-12 based on ultra low interest rates).
a)Those with a negative bias would probably say that we're still headed lower in cyclical earnings for Fy19 hence the PE discount to long run average.
b)Those with a positive bias would make the case that if they can hit those Fy18 projections with the full force of all the new competition that could be the new cyclical low.
c) And then there's those investors who'd probably say they have no clue one way or the other on Fy19 earnings and they could be either higher or lower than Fy18 with a 50 / 50 probability so on the balance of probabilities AIR is cheap at present due to the fact that it trades at such a meaningful discount to its long run average PE

[Bobdn]

BP, I think it's sensible for employees to sell their shares as soon as they get them. It means that they are less exposed to the fortunes of the company. They get their salary from the company after all, no point having all their eggs in one basket.

Some poor Pumkin Patch employees probably thought they were doing the right thing by joining the PP share scheme. Honestly, I'd never advise anyone to join a company share plan and if you happen to get some "free" shares from your company, sell them.

[BlackPeter]

BP, I think it's sensible for employees to sell their shares as soon as they get them. It means that they are less exposed to the fortunes of the company. They get their salary from the company after all, no point having all their eggs in one basket.

Some poor Pumkin Patch employees probably thought they were doing the right thing by joining the PP share scheme. Honestly, I'd never advise anyone to join a company share plan and if you happen to get some "free" shares from your company, sell them.

Hmm - brave. Not even I would dare to compare AIR on this thread with PPL :p, but yes - I hear what you are saying - and from a "selfish management perspective" do I understand this point of view.

On the other hand - the shareholders of this company don't give their executives additional shares to increase the level of their "overpaid-ness", but to better align management interests with shareholders interests.

If management are however selling their shares as soon as they get them (and are allowed to do so), than they obviously work against the interests of the remaining shareholders, which makes me wonder why a board allows these sort of lolly scrambles for their executives. Maybe the SP tanks because people start realizing that the company is run by a weak, incompetent or selfish board?

A board with any sense would immediately stop this lolly scramble and either cut the freebees for their execs or otherwise arrange for (a adequate) mandatory time for them to hold the shares when they get them. The current schema is just a waste of shareholder funds and contributing to the downtrend.

[Beagle]

Is that the downtrend that you predicted would have us to 82 cents by now BP :p

Incentive schemes have to be viewed in the context of international norms in this industry. Mr Luxon's base salary for 2016 was $1.47m, short term incentive $1.617m, (I presume a cash bonus), performance rights valued at $808.5K, restricted share rights valued at $700K and superannuation benefits of $120.4K, source page 62 2016 annual financial results.

He's delivering the results, unlike Virgin. May I suggest you do some research on the package that the CEO gets for Virgin and Qantas before making any more disparaging remarks about the board or management. You are talking about a board who's chairman has received some of the highest accolades to be bestowed on any business leader in N.Z.

Further to my comments in response to JT's post yesterday its worth noting that AIR has paid 45 cents per share in fully imputed dividends this year.
The SP performance this year in my view is as much a function of fear over greed as anything else. The market dislikes uncertainty and its the uncertainty created by significant amounts of new competition on AIR routes and the impact on yield that's caused the SP to drop in my view.

I recommend people read note 19 to the financial statements in full to enhance their understanding of the incentive scheme. Extract,
during the year ended 30 June 2016 the group funded the purchase on-market of 13,181,727 shares. The shares were used to settle obligations under employee share-based compensation plans. Their is not the heavy dilution some are suggesting.
You either pay them a LOT more in cash or you try and tie key executives in with incentive scheme's to help ensure their continuity of employment, AKA "golden handcuffs". Looks like the board's incentive policies are based on pragmatic commercial factors to me. I still dislike them because a part of me thinks they're excessive but at the end of the day they have to attract and retain key talented staff...we wouldn't want our best people going to Qantas or Virgin would we !

Virgin's annual report including extensive remuneration report on how incentives are measured for those that want to drill down into a comparative analysis of incentive scheme's
http://www.asx.com.au/asxpdf/20160922/pdf/43bc8sf5fn1rfs.pdf
Short story - The CEO Borghetti in a company that's turning over $5b, (similar amount to AIR) but made the remarkable "achievement" of losing $A224m in a year when conditions were the most favorable for the airline industry for decades, and despite only achieving a 17.5% success rate on his key performance indicators still earned remuneration totalling nearly A$2.9m and that despite the company needing urgent help from its shareholders to recapitalise and stay afloat. Puts Mr Luxon's package in a company making a record ever operating profit of over $800m before tax into perspective in my opinion.

[skid]

Hmm - brave. Not even I would dare to compare AIR on this thread with PPL :p, but yes - I hear what you are saying - and from a "selfish management perspective" do I understand this point of view.

On the other hand - the shareholders of this company don't give their executives additional shares to increase the level of their "overpaid-ness", but to better align management interests with shareholders interests.

If management are however selling their shares as soon as they get them (and are allowed to do so), than they obviously work against the interests of the remaining shareholders, which makes me wonder why a board allows these sort of lolly scrambles for their executives. Maybe the SP tanks because people start realizing that the company is run by a weak, incompetent or selfish board?

A board with any sense would immediately stop this lolly scramble and either cut the freebees for their execs or otherwise arrange for (a adequate) mandatory time for them to hold the shares when they get them. The current schema is just a waste of shareholder funds and contributing to the downtrend.

Or just give them a bonus--why do their lolllies have to be at the shareholders expense?-One buys shares(become a part of a company)just to find you part has been diluted with more shares and your ''part'' suffers as a consequence.

I cant comment on the companies performance,but i can say there are some real bargains out there,as Im sure all have seen.
With less income(ticket price) they are going to have to fill those planes.
For this years Southeast Asia trip ,I was able to get on my favorite airline (Thai Air) for alot less than my second choice last year (even with an extra leg thrown in!)

[BlackPeter]

Is that the downtrend that you predicted would have us to 82 cents by now BP :p

Incentive schemes have to be viewed in the context of international norms in this industry. Mr Luxon's base salary for 2016 was $1.47m, short term incentive $1.617m, (I presume a cash bonus), performance rights valued at $808.5K, restricted share rights valued at $700K and superannuation benefits of $120.4K, source page 62 2016 annual financial results.

He's delivering the results, unlike Virgin. May I suggest you do some research on the package that the CEO gets for Virgin and Qantas before making any more disparaging remarks about the board or management. You are talking about a board who's chairman has received some of the highest accolades to be bestowed on any business leader in N.Z.

Further to my comments in response to JT's post yesterday its worth noting that AIR has paid 45 cents per share in fully imputed dividends this year.
The SP performance this year in my view is as much a function of fear over greed as anything else. The market dislikes uncertainty and its the uncertainty created by significant amounts of new competition on AIR routes and the impact on yield that's caused the SP to drop in my view.

Look Roger, I notice that we seem to have different views about the mid term outlook for AIR ... and I guess this is o.k. If everybody would predict the same results for any stock, than we hardly would have a market.

Just to have a look at the bigger picture:

8489
chart courtesy to yahoo.

Not sure about you, but I would call this a so far unbroken downtrend (and yes, I've heard all the arguments about the special dividend). And sure - most downtrends end at some stage with a trend change (unless they don't, but I don't see at this stage the latter risk for AIR) - and hey, this might be now. On the other hand - if I just look at the dropping (I know, but still nice) EPS predictions and the increasing competition and market volatility would I say that at this stage it is more likely the trend continous to stay for some time below the MA200.

Anyway - time will tell.

Related to the executive salaries - I personally think they are outrageous bordering on indecent, but I know that there are other companies paying still more to their execs. I know as well that there is normally no correlation between the pay rate and the performance of a CEO ... while some might be worth the money they are paid, many are just lucky (until they are not) and I am sure that we both don't need to think too hard to come up with lots of examples for highly paid and unqualified executives.

Remember - Buffett said once something like "better to own a company with an average manager in a good industry than a company with a good manager in an average industry". Sort of puts the reason for high wage packages into perspective - doesn't it? ... and I am not even sure, whether aviation would qualify for Buffett as a good industry.

Anyway - back to AIR: not sure in which category I would put AIR board and management, but the use of their bonus share system points at least to some weaknesses in its current board and management team.

[bull....]

I think there announcement of incentive scheme very positive for share price, clear boundaries to perform

[Raz]

Hmm - brave. Not even I would dare to compare AIR on this thread with PPL :p, but yes - I hear what you are saying - and from a "selfish management perspective" do I understand this point of view.

On the other hand - the shareholders of this company don't give their executives additional shares to increase the level of their "overpaid-ness", but to better align management interests with shareholders interests.

If management are however selling their shares as soon as they get them (and are allowed to do so), than they obviously work against the interests of the remaining shareholders, which makes me wonder why a board allows these sort of lolly scrambles for their executives. Maybe the SP tanks because people start realizing that the company is run by a weak, incompetent or selfish board?

A board with any sense would immediately stop this lolly scramble and either cut the freebees for their execs or otherwise arrange for (a adequate) mandatory time for them to hold the shares when they get them. The current schema is just a waste of shareholder funds and contributing to the downtrend.

Weak, self severing governance..world class companies do not allow you to vest so easily...AIRs approach is far from the norm.

[Beagle]

My view is with the enormous size of the final dividend 35 cps including the special of 25 cps which is unprecedented in the airline's 76 year history, to do anything other than adding back in such a huge special into the chart gives a disingenuous view of historical SP performance, (i.e. the chart is technically incorrect). While I acknowledge that some will have differing views on this the basis behind my approach is that effectively the 25 cps special was a return of capital. As noted many months ago, 25 cents per AIR share represents the entire value of the sale of VAH which was all sold for over 30 cents per VAH share...just check the current SP of VAH at 22 cps to see if you think this was a good idea or not :)

BP - If you add back in the 25 cent special into your own chart there's a very clear break above the 200 day MA so your viewpoint and mine in terms of interpreting your own chart differs based purely on the interpretation of treatment of the special divvy.

AIr could have used this money in a number of ways including like QAN to buy back their own shares. QAN's buy-back, given its size could logically be interpreted to influence the share price again skewing their chart and giving a misleading interpretation of historical SP performance.

My view is a chart and interpretation of same (Technical analysis) is only as good as the information that goes into it. Removing substantial anomalous factors gives a far more technically correct picture in my opinion and substantially improves the validity of any technical analysis based on same.

Each to their own, I prefer to interpret pure data rather than data corrupted by hugely anomalous factors. To reiterate, AIR has clearly broken through the 200 day MA on a special dividend adjusted basis. Those that want to wait for their chart to break through on an unadjusted basis will need to wait a bit longer :)

Raz. CL's base salary $1.46m is very modest for a company turning over $5b plus with ~ 11,000 employees. VAH's Borghetti's base salary by comparison is $A1.95m, over 40% more, (currency adjusted) and just look at the relative performance of the two companies ! My opinion, if the bar was set higher to achieve vesting of shares his base salary would need to be adjusted up significantly.
Swings and roundabouts, you pay one way or the other.

[modandm]

Hi folks. Thought I would add my 2c before disappearing again for awhile. Still haven't sold a share.

Been a tough year obviously. I think most of us underestimated the impact to yields that the lower oil price/competition would bring. It's a global phenomenon. Certainly my FY17 earnings estimates have fallen from 40-45c down to 30-35c. That said the share price move down has been dramatic, leaving the company (imho) significantly undervalued, as has been the case for about the last 5 years (has it been that long...).

I certainly knew that FY16 was peak, and perhaps naively thought the dividend / cash-flow story would support the stock. Clearly the negative momentum and uncertainty on yields has mean't a tough devaluation, and risk being priced into the stock.

Where to from here then?

For the ST investor: Yield comparisons get easier in January, so should the operating stats firm up I would expect a re-rating towards 2.50, which values the stock on a reasonable 8x PE.

For the LT investor: Personally i'm not too concerned whether AIR make 28 or 32c in FY17 EPS. The question is sustainability and ideally growth in profit from there. If sustained (along with cash flow) there is a bonanza in FY19-20. I did a few figures and have spoken to the CFO, basically over the next 4 years (if things stay stable), AIR could pay $1.80 in dividends. That's based on a 50c special in FY19, and a 60c special in 2020 plus recurring twenty something ordinary. Over 5 years, you basically get your entire capital back, so if the stock is still at $2, you double your money (15% p.a). Any growth is cream on top.

I wouldn't be so tough on management either. Yes I agree they are too conservative, but with a government shareholder that's natural. As for the pay they are delivering so what's the problem? I would say we are lucky to have them. The new IR is good too.

Best, millimod :cool:

[couta1]

Nice to hear from you Mod, agree with your sentiments, great long term hold.

[Nasi Goreng]

two good posts here by Roger and Millimod.

But while we could debate that extra 25c divi and how it affects TA, why not just look at the chart like it is?Now I don't know how to post the picture of a chart in here but looking at the chart, the current share price is well above the 50 day SMA and has just broken through the 100 day SMA in the last week. 200 day SMA is currently at $2.28 so still a bit of a way to go but it definitely looks like the stock has bottomed and is currently recovering.

I've drawn a downtrend line from the peak in early 2016 to the peak in April and that trendline is currently at about $2.50 which is in line with a few valuations and may act as a bit of resistance if the share price gets there in the next few months.

If we are trying to guess what is going on with TA traders right now, it definitely looks to me like there is a tailwind, $2 will be the new resistance and I could see the share price increasing over the next month or so to approach the 200 day SMA. If we can get into the $2.20s by end of year, early January, it will set up nice for earnings and then there is the probable return of $0.10 divi which may act as further resistance as the share price absorbs the dividend payment. Earnings at the high end of guidance may add further support but we will all have to wait and see.

That's enough tea leaf reading for one day. Please do your own research.

[Beagle]

Hi folks. Thought I would add my 2c before disappearing again for awhile. Still haven't sold a share.

Been a tough year obviously. I think most of us underestimated the impact to yields that the lower oil price/competition would bring. It's a global phenomenon. Certainly my FY17 earnings estimates have fallen from 40-45c down to 30-35c. That said the share price move down has been dramatic, leaving the company (imho) significantly undervalued, as has been the case for about the last 5 years (has it been that long...).

I certainly knew that FY16 was peak, and perhaps naively thought the dividend / cash-flow story would support the stock. Clearly the negative momentum and uncertainty on yields has mean't a tough devaluation, and risk being priced into the stock.

Where to from here then?

For the ST investor: Yield comparisons get easier in January, so should the operating stats firm up I would expect a re-rating towards 2.50, which values the stock on a reasonable 8x PE.

For the LT investor: Personally i'm not too concerned whether AIR make 28 or 32c in FY17 EPS. The question is sustainability and ideally growth in profit from there. If sustained (along with cash flow) there is a bonanza in FY19-20. I did a few figures and have spoken to the CFO, basically over the next 4 years (if things stay stable), AIR could pay $1.80 in dividends. That's based on a 50c special in FY19, and a 60c special in 2020 plus recurring twenty something ordinary. Over 5 years, you basically get your entire capital back, so if the stock is still at $2, you double your money (15% p.a). Any growth is cream on top.

I wouldn't be so tough on management either. Yes I agree they are too conservative, but with a government shareholder that's natural. As for the pay they are delivering so what's the problem? I would say we are lucky to have them. The new IR is good too.

Best, millimod :cool:

A very warm welcome back modandm. I know a lot of people have tremendous respect for your input and really value it so PLEASE stick around and post more often. It would be much appreciated by many including myself.

[winner69]

Poor Gary - should know better than to get grumpy with Air NZ Zealand

http://www.stuff.co.nz/entertainment/tv-radio/86985193/morefms-gary-mccormick-banned-from-air-nz-for-two-years

[QOH]

Poor Gary - should know better than to get grumpy with Air NZ Zealand

http://www.stuff.co.nz/entertainment/tv-radio/86985193/morefms-gary-mccormick-banned-from-air-nz-for-two-years
I'm on AIRs side here, why should he expect to march into Koru lounge when he hasn't been a member for years, hope he lives somewhere that Jetstar flies from.

[Marilyn Munroe]

Poor Gary - should know better than to get grumpy with Air NZ Zealand


There are some things you should never do;

Invade Russia

Light a match to test for a gas leak

Tangle with the Merivale Matrons who run the Christchurch Koru Club.

Boop boop de do
Marilyn

[Beagle]

There are some things you should never do;

Invade Russia

Light a match to test for a gas leak

Tangle with the Merivale Matrons who run the Christchurch Koru Club.

Boop boop de do
Marilyn

http://www.stuff.co.nz/entertainment/tv-radio/86985193/morefms-gary-mccormick-banned-from-air-nz-for-two-years

Interesting comments now below the article. Judging from the consensus plus's and minus's to the various comments it seems there is very little sympathy for Gary. I can't imagine they would have banned him without there being a serious fracas.

[Raz]

http://www.stuff.co.nz/entertainment/tv-radio/86985193/morefms-gary-mccormick-banned-from-air-nz-for-two-years

Interesting comments now below the article. Judging from the consensus plus's and minus's to the various comments it seems there is very little sympathy for Gary. I can't imagine they would have banned him without there being a serious fracas.

The Koru staff in Christchurch are very flexible where able...be surprised if they were part of the problem.

Raz. CL's base salary $1.46m is very modest for a company turning over $5b plus with ~ 11,000 employees. VAH's Borghetti's base salary by comparison is $A1.95m, over 40% more, (currency adjusted) and just look at the relative performance of the two companies ! My opinion, if the bar was set higher to achieve vesting of shares his base salary would need to be adjusted up significantly.
Swings and roundabouts, you pay one way or the other.

Rodger i agree the base is way to low and should be increased, it not much more than a typically medical specialist working the hospital and private practice. The signal of executives continuing to cash up shares as a substitute is a bad signal and just not the norm. My first executive role was a AIM listed company in the UK and my last was as a VP for Fortune 500 based in NYC , every position expected you would not cash up shares unless you left...that is just standard..they pay you a great base and perks in the job and the shares are the cream for you long term future.

[Raz]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11756983

And on it goes..that Auckland hub thing may be a problem...

[winner69]

Gary in NZ Herald re AIR

"Apparently they have this anonymous committee who hand out edicts - just like the cultural revolution in China. I've no idea who they are, I've never met them, they have never asked me about what went on. I didn't think this sort of thing happened in New Zealand."

[Snow Leopard]

...For the LT investor: Personally i'm not too concerned whether AIR make 28 or 32c in FY17 EPS. The question is sustainability and ideally growth in profit from there. If sustained (along with cash flow) there is a bonanza in FY19-20. I did a few figures and have spoken to the CFO, basically over the next 4 years (if things stay stable), AIR could pay $1.80 in dividends. That's based on a 50c special in FY19, and a 60c special in 2020 plus recurring twenty something ordinary...

Now if you had said 50c in FY20 and 60c in FY21 I would give this some credence.

Best Wishes
Paper Tiger

[Balance]

http://www.theaustralian.com.au/business/aviation/qantas-american-airlines-ditch-alliance-plan/news-story/d36e74b0e673e6ed0028fe5ae5676452

A positive for Air NZ.

[modandm]

Now if you had said 50c in FY20 and 60c in FY21 I would give this some credence.

Best Wishes
Paper Tiger

Thank you for noticing.

That would have been my initial conclusion, but I was reminded that fleet arrivals are usually in July-September (Q1), and that management would look to recommend specials pre-emptivly.

For anyone not following, I am suggesting the 2nd special (60c), would be paid in September 2020 (itself part of FY21) having been announced at FY20. This is a year earlier than one might presume looking at capex forecasts.

[workingdad]

Gary in NZ Herald re AIR

"Apparently they have this anonymous committee who hand out edicts - just like the cultural revolution in China. I've no idea who they are, I've never met them, they have never asked me about what went on. I didn't think this sort of thing happened in New Zealand."

All very vague from Gary with "trying to go somewhere and Air New Zealand... well the plane didn't leave and so forth. They said they would switch [me] to another flight and they didn't. I said, 'This was unacceptable'."The 65-year-old said he couldn't recall exactly when the disagreement happened. "I fly a lot. It wasn't last week. I can't even remember,"
Story updated with a release from AIR supporting the decision to ban him under standard procedures "In cases where there are behavioural issues over a long period of time and/or are serious enough for the Police to be involved, there comes a point where Air New Zealand is no longer willing to accept some customers for carriage on our services."

Not sure where he gets the comment he stopped being a member of Koru when they changed things and he couldn't take his family in. I just took my wife and 3 children in to Koru both Auckland and Brisbane on my membership without issue.

Me thinks Gary not going to fair well on this one and good on AIR for taking a stand against someone full of self importance not becoming to their stature.

I am pleased to see the SP hit 2.10 and showing some strength and a happy holder looking ahead, missed out on buying more at the 1.70s range thinking weakness was going to hang around for a while. Should have flipped the coin again and gone best out of three......

[Robomo]

http://www.theaustralian.com.au/business/aviation/qantas-american-airlines-ditch-alliance-plan/news-story/d36e74b0e673e6ed0028fe5ae5676452

A positive for Air NZ.

Pity it's protected by a paywall. Can you give us some idea what the article is about?

[winner69]

Pity it's protected by a paywall. Can you give us some idea what the article is about?

No Qantas / American Airlines alliance

[Balance]

Pity it's protected by a paywall. Can you give us some idea what the article is about?

Strange - no paywall when I read the article.

http://www.wsj.com/articles/american-airlines-qantas-drop-bid-for-deeper-partnership-amid-dot-pushback-1480371091

Yes, as W69 wrote, US DOT rejected Qantas and AA proposal to have a deeper and closer alliance filed in July last year and Qantas has decided to drop the proposal altogether instead of appealing.

I recall Air NZ sp dropping on the news last year so this is positive for Air NZ.

[Robomo]

Strange - no paywall when I read the article.

http://www.wsj.com/articles/american-airlines-qantas-drop-bid-for-deeper-partnership-amid-dot-pushback-1480371091

Yes, as W69 wrote, US DOT rejected Qantas and AA proposal to have a deeper and closer alliance filed in July last year and Qantas has decided to drop the proposal altogether instead of appealing.

I recall Air NZ sp dropping on the news last year so this is positive for Air NZ.

Paywalls on both journals (wsj and Australian). Maybe you subscribed to both whilst having a glass of red and forgot about it?

Anyway, it's all in the Daily Telegraph

http://www.dailytelegraph.com.au/travel/travel-news/us-spoils-qantasamerican-airlines-party/news-story/4c7993ae671f1eb36370823d55d3effe

[stoploss]

All very vague from Gary with "trying to go somewhere and Air New Zealand... well the plane didn't leave and so forth. They said they would switch [me] to another flight and they didn't. I said, 'This was unacceptable'."The 65-year-old said he couldn't recall exactly when the disagreement happened. "I fly a lot. It wasn't last week. I can't even remember,"
Story updated with a release from AIR supporting the decision to ban him under standard procedures "In cases where there are behavioural issues over a long period of time and/or are serious enough for the Police to be involved, there comes a point where Air New Zealand is no longer willing to accept some customers for carriage on our services."

Not sure where he gets the comment he stopped being a member of Koru when they changed things and he couldn't take his family in. I just took my wife and 3 children in to Koru both Auckland and Brisbane on my membership without issue.

Me thinks Gary not going to fair well on this one and good on AIR for taking a stand against someone full of self importance not becoming to their stature.

I am pleased to see the SP hit 2.10 and showing some strength and a happy holder looking ahead, missed out on buying more at the 1.70s range thinking weakness was going to hang around for a while. Should have flipped the coin again and gone best out of three......

Maybe he used to take his wife and kids in for free food and a drink before he caught a flight . They now require you to be actually flying with Air NZ to use the lounge , he also mentions holding meetings there as if it was a second office .

[Balance]

Paywalls on both journals (wsj and Australian). Maybe you subscribed to both whilst having a glass of red and forgot about it?

Anyway, it's all in the Daily Telegraph

http://www.dailytelegraph.com.au/travel/travel-news/us-spoils-qantasamerican-airlines-party/news-story/4c7993ae671f1eb36370823d55d3effe

Haha - I hope not!

But seriously, it was not paywall while it is now. Wonders of cyber space.

[tony64peter]

The A380 might not have been profitable for Airbus thus far, but it has however been profitable for airlines where the aircraft have been strategically deployed to routes with very high PAX levels and/or capacity constrained airports. Examples of highly successful A380 routes include DBX-LHR, DBX-BKK, SIN-LHR, and there are many others.

AIR's decision not to purchase an A380 is based purely on their own economics for a relatively small regional airline and is not reflective on the aircraft itself.

How do you know those routes are profitable? It may just be having committed to a capital investment it has to be utilised. If the A380 was a profitable aircraft then there would have been further orders for them. New orders and Airbus would still be manufacturing them. It was quite the contrary orders were cancelled. Filling an A380 to capacity does not mean it's making a profit. It all depends on the yield. There are numerous operating constraints ($$$$) it incurs related to its size.

[Beagle]

Paywalls on both journals (wsj and Australian). Maybe you subscribed to both whilst having a glass of red and forgot about it?

Anyway, it's all in the Daily Telegraph

http://www.dailytelegraph.com.au/travel/travel-news/us-spoils-qantasamerican-airlines-party/news-story/4c7993ae671f1eb36370823d55d3effe

Thanks for sharing mate. Quite an interesting development, what do you make of it ?

Implications for their existing code share arrangements ?

[winner69]

Those Koru lounges more of a den of iniquity than the poker machine floor at Sky Casino

[sb9]

Strange - no paywall when I read the article.

http://www.wsj.com/articles/american-airlines-qantas-drop-bid-for-deeper-partnership-amid-dot-pushback-1480371091

Yes, as W69 wrote, US DOT rejected Qantas and AA proposal to have a deeper and closer alliance filed in July last year and Qantas has decided to drop the proposal altogether instead of appealing.

I recall Air NZ sp dropping on the news last year so this is positive for Air NZ.

Thanks for that Balance.

Possible explanation for recent rise in sp...

[mikeybycrikey]

Strange - no paywall when I read the article.

http://www.wsj.com/articles/american-airlines-qantas-drop-bid-for-deeper-partnership-amid-dot-pushback-1480371091

Yes, as W69 wrote, US DOT rejected Qantas and AA proposal to have a deeper and closer alliance filed in July last year and Qantas has decided to drop the proposal altogether instead of appealing.

I recall Air NZ sp dropping on the news last year so this is positive for Air NZ.

WSJ lets you through the paywall if you arrive from a Google search. For reading the occasional WSJ article, you can pop the headline into a Google search, click the link that Google gives you and then read the article.

[Balance]

Thanks for that Balance.

Possible explanation for recent rise in sp...

News only in last 24 hours.

Broker tells me should be worth between 10c to 15c on sp.

We will see.

[Bobdn]

Yay, let's hope so. I bought a lot (by my humble standards) at 2.19 before it went xd. If it goes to 2.19 I'm literally (not figuratively) going to wet my pants.

[Raz]

Yay, let's hope so. I bought a lot (by my humble standards) at 2.19 before it went xd. If it goes to 2.19 I'm literally (not figuratively) going to wet my pants.

Unrelated however interesting, only via email currently..

AIR Flexitime Flyer annual membership for just $279. Will allow you to change flight on day domestically with membership.

[sb9]

News only in last 24 hours.

Broker tells me should be worth between 10c to 15c on sp.

We will see.

True, although officially 24 hours unofficially the pundits would've clues long before...

[Beagle]

News only in last 24 hours.

Broker tells me should be worth between 10c to 15c on sp.

We will see.

The 149 people in business class, (so too speak), >100K shares would be very pleased if that happened. Meanwhile those who have recently moved up to premium economy won't be displeased either :)

[winner69]

Now $2 barrier well and truly broken its going to be steady ride up to $2.50 and then FY profit comes in >$600m back to $3 again

Plenty of good news and things going right for AIR - even lack of Gary's patronage won't do any harm

[sb9]

Now $2 barrier well and truly broken its going to be steady ride up to $2.50 and then FY profit comes in >$600m back to $3 again

Plenty of good news and things going right for AIR - even lack of Gary's patronage won't do any harm

Here comes big buyers at 212, let the action begin...

[see weed]

Had to sell some AIR 2 weeks ago to get some more HLG div=$11,300 paid in 2 days time. bought back 17000 AIR in last 2 days which brings av price up from 1.76 to $1.834:). Now in the green $23,000 and rising:t_up:. The TA people might start buying now. How are those charts looking now?

[Bobdn]

Couta1, every cent increase must be like a small 2nd division lotto win to you. How exciting!

[Beagle]

Those Koru lounges more of a den of iniquity than the poker machine floor at Sky Casino

That sounds a little licentious, what are you suggesting goes on in there mate ?

Bobdn - that cuts both ways though. I think Couta1 did exceptionally well to hold his nerve when the SP was taking in the low 170's a while back.
I must follow him up on which brand of calming herbal tea he drinks.

[Bobdn]

Haha yes, too true.

[workingdad]

That sounds a little licentious, what are you suggesting goes on in there mate ?

Bobdn - that cuts both ways though. I think Couta1 did exceptionally well to hold his nerve when the SP was taking in the low 170's a while back.
I must follow him up on which brand of calming herbal tea he drinks.

Is bourbon herbal? Close enough :drool:

[Snow Leopard]

Day 3 in the green on a dividend adjusted basis and now poking it's head above the downtrend line if you are a pure capital value based line drawer.

Also perilously close to consensus broker values if you think 4-traders.com is the definitive source.
But still a little height before it hits the Tiger Valuation Target ($2.32) though.

Must be time to unbuckle the seat belts and start serving drinks with accompanying nuts.

Best Wishes
Paper Tiger

[workingdad]

OPEC agree to cut oil production and accept Iran's increase in production.

Two points to consider, when oil prices rise a bit shale production will ramp up and maybe all those oil rigs cod stacked throughout the world will start coming back on line. I cant see prices reaching past highs anytime soon.

https://www.bloomberg.com/news/articles/2016-11-30/opec-said-to-agree-oil-production-cuts-as-saudis-soften-on-iran

[ratkin]

Also perilously close to consensus broker values if you think 4-traders.com is the definitive source.
But still a little height before it hits the Tiger Valuation Target ($2.32) though.

Best Wishes
Paper Tiger

What a great website, the financials graphs are terrific. How did I miss this one.

[Beagle]

OPEC agree to cut oil production and accept Iran's increase in production.

Two points to consider, when oil prices rise a bit shale production will ramp up and maybe all those oil rigs cod stacked throughout the world will start coming back on line. I cant see prices reaching past highs anytime soon.

https://www.bloomberg.com/news/articles/2016-11-30/opec-said-to-agree-oil-production-cuts-as-saudis-soften-on-iran

Agreed. Here's how CNBC are reporting it.
http://www.cnbc.com/2016/11/30/the-opec-deal-is-done-heres-what-to-expect-from-oil-markets-next.html

[sb9]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11758195

Another nice touch from AIR's marketing team....

[skid]

if all the shale rigs come on line it will kind of defeat the purpose of an OPEC cutback and may just PO them enough to ditch the effort.
Also its winter in the states and cold as, in the Bakken area.(alot easier to carry on than to restart) And so far we are not seeing much growth to use all that oil--there are countries that desperately need to sell more oil that arent in OPEC.
So far its been an easy ride for the new admin in the US--Lets see how they do with their first real test economically--(whatever that may be)

[Robomo]

Thanks for sharing mate. Quite an interesting development, what do you make of it ?

Implications for their existing code share arrangements ?

Code shares, interline agreements, revenue or non-revenue sharing arrangements and other cooperative agreements inside or outside alliances make it all very confusing for the travelling public. The rates of earning airpoints, airmiles etc may or may not change when changing from one airline to another. Even that can change depending on what airline is actually flying that particular route. Baggage may or may not be routed through to the final destination depending on the particular agreement. So for the travelling public it is an increasing nightmare when flights have to be booked on two or more airlines to your final destination. Check the bewildering number of posts on flyertalk.com to see the variety of opinions - even though you might think the posters there have a reasonable knowledge of airlines.

For the airlines it's all about 'protecting your patch' and 'spreading the risk' to minimise the chances of a competitor suddenly eating into your market share. The ANZ / United deal from AKL to LAX is a case in point. Bookable on ANZ with usual airpoints earnings and revenue sharing. So ANZ lose some marketshare but retain some revenue so 'frees up' a plane to send somewhere else, hopefully retaining profit margin. United fly everywhere in USA and due to the alliance, bookings can be made straight through and the airlines take responsibility for getting you and your baggage to your final destination.

The ending of the QF/AA code share reduces the convenience factor and brings in the uncertainty of 'co-operation' so for the travelling public it's increased the risk factor and introduced some inconvenience to get somewhere in the USA that Qantas does not fly direct to. I suspect that is why ANZ introduced the 'Dave the Goose' campaign to entice travellers to destinations that QF does not go directly to (Vancouver, San Francisco [at present] and Houston) and with the surety of seamless code share with United.

However, the numbers of travellers swapping to ANZ/United from Australia are likely to be small so I would not think it is going to have much impact on ANZ profitability. It will be worthwhile as even a percentage point in load factor is good for the bottom line.

I was surprised to read another post on this thread that the ending of QF/AA code share would increase ANZ SP by up to 10c. It did go up 6c yesterday but most of that has been lost today. It will be an interesting question to ask at the next AGM, exactly what effect the ending of QF/AA had and if the load factors of Aussies transferring through Auckland to North America did increase as a result.

In the end, slightly good news for Air New Zealand I thought. Dave the Goose was well positioned to take advantage of that!

[Beagle]

Thanks Robomo, appreciate your detailed reply. Remember the old Spot the Telecom dog campaign ? That campaign was extremely successful for them. It seems customers react very well to animals they can identify with so perhaps AIR's marketing campaign with Dave the Goose might be more value accretive to AIR than expected :)

In terms of the oil price jump today, I recall AIR's FY17 profit estimate range of $400m - $600m was predicated upon $55 Oil so we've been well below that all year and remain so.

[winner69]

In terms of the oil price jump today, I recall AIR's FY17 profit estimate range of $400m - $600m was predicated upon $55 Oil so we've been well below that all year and remain so.

That along with how reenues are tracking as per monthly stats all points to FY17 profit being greater than $600m

Share price $3 on the cards

[Beagle]

That along with how reenues are tracking as per monthly stats all points to FY17 profit being greater than $600m

Share price $3 on the cards

From the conference call at the time of the annual result I think yield has been pretty much as expected so based on info in that regard to date based on maximum visibility I can see, it appears we're on track for the mid point of the forecast range. In regard to fuel and other matters, currency has been pretty much as expected and fuel appears to be materially undershooting the expected cost. Add in the recognition of the realised profit, (as compared the written down value of VAH shares at balance date), on the sale of their remaining VAH shares and factoring in everything we could well be looking at reported statutory profit before tax towards the upper end of the forecast range. The hound is staying on board for the dividends so is pretty much content to let others pontificate about where fair value lies...as long as I get my regular half yearly 10 cps fully imputed feeds and the occasional special I am happy :)

[bonmaklad]

This is good on good news. Long haul is a loss (imho) and short is where the money is at
Year on Year Cumulative Revenue Comparisons:

Short Haul:
Jul: 99.36%
Aug: 99.26%
Sep: 99.18%
Oct: 99.65%

Long Haul:
Jul: 99.99%
Aug: 98.62%
Sep: 98.07%
Oct: 97.13%

Year on Year October Month Revenue Comparison (Estimate)
Short: 101.06%
Long: 94.30%

Best Wishes
Paper Tiger

[brend]

However, the numbers of travellers swapping to ANZ/United from Australia are likely to be small so I would not think it is going to have much impact on ANZ profitability. It will be worthwhile as even a percentage point in load factor is good for the bottom line.

They do get alot of australians travelling with AirNZ to South America.

Spoke with someone that works with Qantas...he mentioned to me that their A380 fleet has never made them money!!

[Robomo]

They do get alot of australians travelling with AirNZ to South America.

Spoke with someone that works with Qantas...he mentioned to me that their A380 fleet has never made them money!!

Which is why Qantas won't be taking up the rest of their A380 options (8 I believe). The point to point philosophy of Boeing (vs hub to hub of Airbus) and the better fuel economy and maintenance costs of 2 vs 4 engines is working well in favour of the Boeing 777-300 and Airbus A350 for large long haul. Air New Zealand's decision to go with the 787-9 was the right one.

Interesting though that Emirates, with their massive A380 fleet (up to about 80 now) are making big profits and have repeatedly called on Airbus to do a stretched version of the A380. Presumably Emirates would not have put on an A380 CHC-SYD if they were not going to make a profit.

[tony64peter]

Which is why Qantas won't be taking up the rest of their A380 options (8 I believe). The point to point philosophy of Boeing (vs hub to hub of Airbus) and the better fuel economy and maintenance costs of 2 vs 4 engines is working well in favour of the Boeing 777-300 and Airbus A350 for large long haul. Air New Zealand's decision to go with the 787-9 was the right one.

Interesting though that Emirates, with their massive A380 fleet (up to about 80 now) are making big profits and have repeatedly called on Airbus to do a stretched version of the A380. Presumably Emirates would not have put on an A380 CHC-SYD if they were not going to make a profit.

Emirates also have the biggest fleet of 777 aircraft in the world. Also to park an aircraft for 6 hours in SYD is costly. That's why it's more effective to operate it trans Tasman at a loss than pay the parking fees in Australia. AIR has been complaining about this fare dumping for years.

[winner69]

From the conference call at the time of the annual result I think yield has been pretty much as expected so based on info in that regard to date based on maximum visibility I can see, it appears we're on track for the mid point of the forecast range. In regard to fuel and other matters, currency has been pretty much as expected and fuel appears to be materially undershooting the expected cost. Add in the recognition of the realised profit, (as compared the written down value of VAH shares at balance date), on the sale of their remaining VAH shares and factoring in everything we could well be looking at reported statutory profit before tax towards the upper end of the forecast range. The hound is staying on board for the dividends so is pretty much content to let others pontificate about where fair value lies...as long as I get my regular half yearly 10 cps fully imputed feeds and the occasional special I am happy :)

QAN in their trading updates give a est full year fuel cost.

AIR doesn't give this info unless its hidden away in their hedging updates

Do you have any idea what AIRs fuel bill will be FY17?

More or less than last years $846m

[Raz]

Which is why Qantas won't be taking up the rest of their A380 options (8 I believe). The point to point philosophy of Boeing (vs hub to hub of Airbus) and the better fuel economy and maintenance costs of 2 vs 4 engines is working well in favour of the Boeing 777-300 and Airbus A350 for large long haul. Air New Zealand's decision to go with the 787-9 was the right one.

Interesting though that Emirates, with their massive A380 fleet (up to about 80 now) are making big profits and have repeatedly called on Airbus to do a stretched version of the A380. Presumably Emirates would not have put on an A380 CHC-SYD if they were not going to make a profit.

Emirates save on the landing charges and then they offer frequent flyers complimentary business class across to aussie to tie you into travelling with them through the east to Europe.

Qantas A380s losing heaps does not surprise me, I always pass a number of them parked up at LAX in the maintenance area..I understand they have had real problems with them.

[Robomo]

Emirates also have the biggest fleet of 777 aircraft in the world. Also to park an aircraft for 6 hours in SYD is costly. That's why it's more effective to operate it trans Tasman at a loss than pay the parking fees in Australia. AIR has been complaining about this fare dumping for years.

A bit rich of AIR to complain about fare dumping as they did the same to destroy Origin Pacific's bid to make a go of Nelson-Palmerston North a few years ago.

[winner69]

What I trying to achieve is how this chart might look like for FY17 amd what AIRs unique capabilities will have achieved

[Balance]

Emirates save on the landing charges and then they offer frequent flyers complimentary business class across to aussie to tie you into travelling with them through the east to Europe.

Qantas A380s losing heaps does not surprise me, I always pass a number of them parked up at LAX in the maintenance area..I understand they have had real problems with them.

Transit through Kuala Lumpur airport recently and noticed several MAS A380s parked on the tarmac, side by side.

A quick google search reveals MAS had been trying to sell them and with zero success since 2015, decided to defer selling or leasing them until '2018' when airliners more suited to their needs become available.

SIA also decided not to renew the lease on its first A380 this year which speaks volume.

Seems there's a glut of them on the market?

[Robomo]

Transit through Kuala Lumpur airport recently and noticed several MAS A380s parked on the tarmac, side by side.

A quick google search reveals MAS had been trying to sell them and with zero success since 2015, decided to defer selling or leasing them until '2018' when airliners more suited to their needs become available.

SIA also decided not to renew the lease on its first A380 this year which speaks volume.

Seems there's a glut of them on the market?

Malaysian have not been able to sell their A380's so have decided to keep them but change them to high density and use them for the Hajj pilgrimage (just announced a few days ago).

[Balance]

Malaysian have not been able to sell their A380's so have decided to keep them but change them to high density and use them for the Hajj pilgrimage (just announced a few days ago).

Which is a once in a year event? No wonder MAS is a basket case!

[Robomo]

Which is a once in a year event? No wonder MAS is a basket case!

The Hajj is certainly just once a year, so only about a month's use for that. However, general pilgrimages to Mecca do go on for the rest of the year as well and I think this is what MAS are counting on.

[777]

Which is a once in a year event? No wonder MAS is a basket case!

If no one wants to buy them then what should they do? Aircraft deteriorate with not being used, especially in a humid climate. To operate the Haj would normally mean taking aircraft out of service so why not use the 380's which are surplus. What they should do is park them in the Nevada desert to at least preserve them in hope of finding a customer. Google "Victorville" and select "map" and count the aircraft there.

[Beagle]

QAN in their trading updates give a est full year fuel cost.

AIR doesn't give this info unless its hidden away in their hedging updates

Do you have any idea what AIRs fuel bill will be FY17?

More or less than last years $846m

First half of last year fuel was fairly expensive, (by today's standards), average price was $60 IIRC and average exchange rate was 65 cents U.S.
Benefits of cheaper fuel didn't really start flowing until 2H FY16 and even then some of the hedges they'd previously made meant they didn't fully realise the very low spot prices, circa $30 prevailing in the early part of this year.
This year the currency is stronger and they executed some very good hedging earlier this year which would have had a very strong effect in Q1 FY17, basically they went to maximum allowable hedge within their hedge framework earlier this year.

No they don't appear to disclose like QAN do. Consumption will be up a little bit due to the annualisation of route expansion started part way through FY16 but not nearly as much consumption growth as FY16, RPK growth is much lower and arrival of extra fuel efficient dreamliners and pending retirement of 767's will help with efficiency.

I haven't really modelled it up because fuel costs are inextricably related to yield, (witness some of the extremely cheap airfares a few months back when oil was really cheap) but my instinct is fuel is probably going to be about $100-125m cheaper than last year.

More importantly as mentioned yesterday, yields seem to be tracking where management expected them to be but their profit forecast was predicated upon an average price of $55 barrel. Its been well under that YTD, (especially when AIR was using super cheap forward cover they bought earlier this year in the low $30 range in Q1 FY17 and forward cover for the rest of the year is also well under $55. I think the actual fuel cost has the potential to be some $50 -75m less than what management expected when they made their profit forecast of $400 - $600m just over three months ago.

[Xerof]

Is the much quoted $55/bbl price based on Brent (or similar) or Platts jet fuel? Av Gas trades about $10 higher than crudes. It's a significant difference, and should be clarified in any commentary.

Anywhoo, they DID do well to hedge aggressively near the lows - good on you Paul K

[winner69]

Is the much quoted $55/bbl price based on Brent (or similar) or Platts jet fuel? Av Gas trades about $10 higher than crudes. It's a significant difference, and should be clarified in any commentary.

Anywhoo, they DID do well to hedge aggressively near the lows - good on you Paul K

Twice (I have seen) they have said: Assumes jet fuel at US$55 per barrel for the remainder of the year

So I presume that it means jet fuel?

[Snow Leopard]

When the May fuel hedging announcement came out I had a go at modelling the whole fuel cost thing.

My estimate for FY2016 came out about NZ$30M higher than in the subsequent FY accounts.

At that time, using AIR volume estimates, assuming $44 a barrel (of Brent) and an US$ to NZ$ exchange rate of 0.7 my FY2017 estimate was approx NZ$30M less than my FY2016 attempt.

So on the assumption that the model reads a little high that would be a corrected value of $816M. I currently have no idea to what extent AIR currency hedging should be included in the model so it still needs a little latitude.

Much can happen between now and FY years end but in six months time I may try the exercise again and see how close I get to reality.

Best Wishes
Paper Tiger

[Xerof]

Ok thanks W69, I should have bothered to look myself lol. So they buy jet fuel but hedge Brent, presumably relying on the strong correlation on differentials.

Here's a chart (second one) that shows the differentials/correlation
http://www.iata.org/publications/economics/fuel-monitor/Pages/price-development.aspx

looks to me that $55 for jet fuel will be tough to achieve going forward, especially given the forward curve is in contango, but it's not the end of the world at this stage.

discl: still long from low 2's cum divs, and added more at 1.80 ex divs

[Beagle]

** Based on a fuel price of US$55 per barrel for the remainder of the year. Extract from annual result announcement.

Ahhh, yes, my bad. Current spot price for Brent Oil this morning was $54. They have good hedges in place so overall for the year taking into account very low Q1 fuel costs I am comfortable with their assumption of an average of $55 for jet fuel. As you were gentlemen, back to the middle of the forecast range then ($500m before tax), until we hear something different :sleep:

[Joshuatree]

Surprised there is no Qantas thread. if one has $A looking for home and yield this is a worthy option."they've been buying back their shares; they don't have enough franking credits good for us until they do which will attract more aussie investors"

[Raz]

Looks all good from here this evening from a high floor at the Novotel overlooking Auckland Airport...out tomorrow on one of the AIR birds although those A380s are always tempting...

[Snow Leopard]

Surprised there is no Qantas thread. if one has $A looking for home and yield this is a worthy option."they've been buying back their shares; they don't have enough franking credits good for us until they do which will attract more aussie investors"

There is one and it is >here (http://www.sharetrader.co.nz/showthread.php?7284-QAN-Qantas-Airways)< but strangely if you search for 'qantas' it never appears in the results!

Best Wishes
Paper Tiger

[Beagle]

AIR's main rival in this part of the world does seem to be doing quite well. http://www.asx.com.au/asxpdf/20161031/pdf/43cgwx313twbyv.pdf
In this market update which I don't think ? has been discussed in this thread before they're looking at $800-$850m underlying operating profit before tax on the reduced number of shares due to the buy-back of 1,874b. Looks like about $580m after tax or A31 cents per share in earnings for the first half.

On the other hand AIR are forecasting at their mid-point $500m before tax for the full year which gives about $360m after tax and on 1,123m shares = N.Z.32 cps.

Keep in mind these two companies did about the same EPS for the full year last year so we are now seeing quite a significant divergence in their earnings. It would appear that QAN's current strategy of cost control, running older tech planes in a low oil price environment and carrying more leverage in a ultra low interest rate environment as well as doing a significant share buy-back is really starting to work in terms of earnings per share. With QAN's relative outperformance (they're slowly becoming a more formidable competitor) and their business model is working extremely well given the heightened competition all carriers face.

Based on 4 traders average estimates AIR trade on a 2018 forward PE of 6.73 times whereas QAN trade on only 6.02 times.
2018 PE's for Delta are 8.2, United 9.8 and American Airlines 9.3.

On a forward dividend yield basis AIR has the comparison shot to bits. No reason that I can see why they can't pay 20 cps fully imputed for the foreseeable future. 20 / 0.72 = 27.78 cps gross which on today's closing price of $1.98 = gross yield of 14%.

The American carriers have had quite a rally in the last few months and both QAN and AIR have underperformed by comparison. How each would perform if there's some sort of market reality check, (which I think is fairly likely) is anyone's guess. Quote 17 November 2016

From a divvy yield perspective QAN's record is shabby and FY16's final was pretty pathetic but fundamentally they're doing very well IMO.
Older fleet with less efficient planes and they use a LOT of leverage so they do well when the tailwinds are blowing but I don't think their business model is as robust as AIR's, (AIR made money throughout the GFC, no multi billion dollar losses for them, unlike a certain other carrier). AIR well positioned if fuel goes up with a very young and efficient fleet and quite moderate gearing. Lack of ability to claim back franking credits, (when available) a disincentive for Kiwi investors too.
According to 4 traders average expectations for the next 3 years put QAN on about 5.2% yield whereas AIR are on 9.5% plus imputation credits = 9.5 / 0.72 = 13.2% gross.

And speaking of Ripley's believe it or not, someone has really put the dream into the term Dreamliner
http://www.stuff.co.nz/travel/themes/luxury/85203004/Take-a-tour-of-the-BBJ-787-The-Dreamliner-that-has-been-converted-into-private-jet?cid=starter:taboola

[Zaphod]

How do you know those routes are profitable? It may just be having committed to a capital investment it has to be utilised. If the A380 was a profitable aircraft then there would have been further orders for them. New orders and Airbus would still be manufacturing them. It was quite the contrary orders were cancelled. Filling an A380 to capacity does not mean it's making a profit. It all depends on the yield. There are numerous operating constraints ($$$$) it incurs related to its size.

Airlines such as Emirates have proclaimed the fact that the A380 is profitable in industry magazines. Airbus, who are obviously anxious to quash rumours of their unprofitable nature, have also used these airlines as examples of how the aircraft should be utilised. There have however been a number of airlines (SQ springs to mind) that deployed A380's onto routes that were not optimal for that aircraft and suffered accordingly.

There are simply far too many variables at play to claim that the A380s are unprofitable based solely on the fact that orders were cancelled.

[reacher]

Airlines such as Emirates have proclaimed the fact that the A380 is profitable in industry magazines. Airbus, who are obviously anxious to quash rumours of their unprofitable nature, have also used these airlines as examples of how the aircraft should be utilised. There have however been a number of airlines (SQ springs to mind) that deployed A380's onto routes that were not optimal for that aircraft and suffered accordingly.

There are simply far too many variables at play to claim that the A380s are unprofitable based solely on the fact that orders were cancelled.

Speaking to a pilot friend who recently left his job flying with Emirates, the A380's struggle to make a profit because although they can sell the extra seats, they lose revenue on cargo. The baggage and cargo hold isn't as large per passenger as the 777 or similar, and it is not uncommon for Emirate to charter a cargo plane following an A380 just to take passenger luggage!

This, and the double maintenance expense of 4 engines are the reason why airlines are cancelling orders. Its also a pig of a plane to fly, so I am told...

[winner69]

Speaking to a pilot friend who recently left his job flying with Emirates, the A380's struggle to make a profit because although they can sell the extra seats, they lose revenue on cargo. The baggage and cargo hold isn't as large per passenger as the 777 or similar, and it is not uncommon for Emirate to charter a cargo plane following an A380 just to take passenger luggage!

This, and the double maintenance expense of 4 engines are the reason why airlines are cancelling orders. Its also a pig of a plane to fly, so I am told...

A cargo plane following alng behind with luggage .........sounds like one of those taxi shuttles with a trailer for the bags

[Subway]

Speaking to a pilot friend who recently left his job flying with Emirates, the A380's struggle to make a profit because although they can sell the extra seats, they lose revenue on cargo. The baggage and cargo hold isn't as large per passenger as the 777 or similar, and it is not uncommon for Emirate to charter a cargo plane following an A380 just to take passenger luggage!

This, and the double maintenance expense of 4 engines are the reason why airlines are cancelling orders. Its also a pig of a plane to fly, so I am told...

Charter a cargo plane to take the luggage? that doesn't make any sense, theres plenty of room for baggage, if anything, they would be chartering a cargo plane for, well, you know, cargo.

[Snow Leopard]

...and it is not uncommon for Emirate to charter a cargo plane following an A380 just to take passenger luggage!...

I presume you were also told that the planes are able to fly such long distances as Auckland - Dubai because they do inflight refuelling?

AIR have no A380s.

Best Wishes
Paper Tiger

[winner69]

I presume you were also told that the planes are able to fly such long distances as Auckland - Dubai because they do inflight refuelling?

AIR have no A380s.

Best Wishes
Paper Tiger

Probably go the fly-through in the cloud and pick up the KFC for dinner as well

[Onion]

A cargo plane following along behind with luggage .........sounds like one of those taxi shuttles with a trailer for the bags

You are on to a winner Winner! They could tow a glider!

https://en.wikipedia.org/wiki/Military_glider

[Zaphod]

Speaking to a pilot friend who recently left his job flying with Emirates, the A380's struggle to make a profit because although they can sell the extra seats, they lose revenue on cargo. The baggage and cargo hold isn't as large per passenger as the 777 or similar, and it is not uncommon for Emirate to charter a cargo plane following an A380 just to take passenger luggage!

This, and the double maintenance expense of 4 engines are the reason why airlines are cancelling orders. Its also a pig of a plane to fly, so I am told...

Cargo capacity on the A380 depends upon the interior configuration chosen by the purchaser. Lower crew rest areas significantly affect the amount of cargo that can be handled, but overall the passenger version of the A380 was not designed to be a major cargo carrier. Add into the mix falling cargo yields, and you can see why EK made the decision to focus on passenger yields for the A380. Horses for courses.

As for the charter flights tailing the A380, he's taking the proverbial.

The bottom line is that the A380 doesn't suite AirNZ's market, but it does other airlines. Some have purchased the aircraft and have applied it to sectors that it is not suited, for others it is working very well.

[reacher]

I presume you were also told that the planes are able to fly such long distances as Auckland - Dubai because they do inflight refuelling?

AIR have no A380s.

Best Wishes
Paper Tiger

Funny you should say that. Every 30 minutes in an A380 an alarm sounds in the cockpit reminding the pilot to go through fuel management procedure. This involves balancing the tanks in the body, of which there are multiple, and topping up the tanks in the wings, where the engines draw fuel from.

There was an article in the herald recently about pilots asleep in the air. Personally I am much more comfortable with them resting in a Boeing and managing only a couple of fuel pump switches, than flustered pilots trying to manage the pitch of an aircraft due to fuel weight distribution every 30 minute.

... sorry to go so off topic :)

[Marilyn Munroe]

Regarding A380's V 777's and Emirates

I understand high air temperatures at takeoff can adversely effect takeoff weight. An aircraft taking of from Dubai where air temperatures of 50c are not uncommon are punished by this less if they have four engines instead of two. This may explain Emirates greater enthusiasm for the A380 than other airlines.

Boop boop de do
Marilyn

[Snow Leopard]

https://www.youtube.com/watch?v=sr6lr_VRsEo

SP $2.17 at time of posting less 20 minutes delay which I am sure that Air New Zealand never do because they always leave on time.

Emirates have a younger fleet than Air New Zealand

Best Wishes
Paper Tiger

[RTFQ]

Regarding A380's V 777's and Emirates

I understand high air temperatures at takeoff can adversely effect takeoff weight. An aircraft taking of from Dubai where air temperatures of 50c are not uncommon are punished by this less if they have four engines instead of two. This may explain Emirates greater enthusiasm for the A380 than other airlines.

Boop boop de do
Marilyn

Not really a factor in choice of four engines as opposed to two. They have longer runways for the temps bearing in mind that lift from the wings is also reduced with reduce air density/temps. Their choice of A380's was more about max capacity of seats per govt reciprocated operating approvals.

[Bobdn]

I wonder what the perfect price of a barrel of jet fuel is for Air NZ. Not so low as to encourage every Tom Dick and Harry to fly here but not so high to really blow out operating costs.

No need for an answer. Onto to my third pint of ale and just thinking out loud.

[Xerof]

I wonder what the perfect price of a barrel of jet fuel is for Air NZ. Not so low as to encourage every Tom Dick and Harry to fly here but not so high to really blow out operating costs.

No need for an answer. Onto to my third pint of ale and just thinking out loud.

I ran it through HAL, and of course the answer was 42

:cool:

[Bobdn]

Haha, why not $42. Ive sobered up now.

[peat]

I ran it through HAL, and of course the answer was 42

:cool:
I dont trust that dude

[Beagle]

We now have a very clear break above the 100 day moving average even for those who didn't want to adjust for the effect of the special 25 cent dividend. All are still most welcome to climb on board but please note that the captain has left the seat belt sign on and you should be prepared for the possibility of turbulence at any stage of your flight :)

[Bobdn]

2.19! That monster dividend was free to me :) just enjoying the moment

[Raz]

2.19! That monster dividend was free to me :) just enjoying the moment

Good for you

Yes the negative sliders have gone quiet..happy sold post dividend on the slide and purchased again in 170s it been a stunning result..yet not a pip from you know who :-)

[Bobdn]

Sadly, I think I may have jinxed it, back down a bit.

[workingdad]

Sadly, I think I may have jinxed it, back down a bit.

Been a bit of resistance around this level for a week now... not surprising - tempting profits to be had for those that got in circa 1.80 and cant blame them. No shortage of buyers lining up at this level though so I am sitting tight and sticking to my view it will be a good year for AIR and more to come.

[Beagle]

2.19! That monster dividend was free to me :) just enjoying the moment

And what a nice fleeting moment it was...like a little glimpse into the near future :)

[winner69]

Sadly, I think I may have jinxed it, back down a bit.

Don't fret mate

Be back to $3 next year sometime

Reckon F17 profit will surprise - $600m plus

[Raz]

Don't fret mate

Be back to $3 next year sometime

Reckon F17 profit will surprise - $600m plus

I think they are doing very well and their latest marketing to me personally... customised with options has been impressive..I was keen to share what they come up with for me however I think they deserve to gain as much from the innovation as possible and will not let the wider market know what they are doing for regular customers....true it will get out in time however they deserve to gain what they can out of it. Using bid data and rewarding loyalty on a scale with benefits I have not seen before by any airline....

[Snow Leopard]

You guys read the latest stuff from Boeing & IATA?

Best Wishes
Paper Tiger

[Beagle]

You guys read the latest stuff from Boeing & IATA?

Best Wishes
Paper Tiger

Would you please be so kind as to share some relevant links. Thanking you in anticipation of your helpful assistance.

[Snow Leopard]

http://www.iata.org/publications/economics/Pages/industry-performance.aspx


http://www.boeing.com/commercial/market/long-term-market/downloads/


http://www.airbus.com/company/market/global-market-forecast-2016-2035/

Best Wishes
Paper Tiger

Disc: I am so good to you

[Beagle]

http://www.iata.org/publications/economics/Pages/industry-performance.aspx


http://www.boeing.com/commercial/market/long-term-market/downloads/


http://www.airbus.com/company/market/global-market-forecast-2016-2035/

Best Wishes
Paper Tiger

Disc: I am so good to you

Thanks PT :)

[Leftfield]

Qantas predicts 'game changer.' Perth to London direct in 17hrs.

https://www.bloomberg.com/news/articles/2016-12-11/qantas-to-fly-direct-perth-london-in-17-hours-with-dreamliner

[Robomo]

Qantas predicts 'game changer.' Perth to London direct in 17hrs.

https://www.bloomberg.com/news/articles/2016-12-11/qantas-to-fly-direct-perth-london-in-17-hours-with-dreamliner

Any flight to London that avoids Los Angeles will be a winner.

[BlackPeter]

Any flight to London that avoids Los Angeles will be a winner.

Well, yes, LA is bad. However just imagine how much better any flight to Europe would be if they manage to avoid Heathrow as well ... :sleep:

[Beagle]

Qantas are late to the party with their Dreamliners. Existing ones are used by Jetstar and IIRC have been configured in a truly horrendous way with an incredibly dense seating configuration (377 seats from memory). Feedback from pax on www.seatguru.com has been overwhelmingly negative.

Perth is a lovely city in its own right but as a stopover destination it doesn't really cut the mustard and break the journey up much being less than 7 hours flight time. It will be a gamechanger alright, for anyone living in Western Australia.

[winner69]

Qantas negiotiated that that Perth / london flight can leavevfrom domestic terminal to save transfers for inter-state punters. Never been there but obviously a bit of a didtance between terminals?

[Jantar]

It appears that rising fuel costs are hitting AIR's asian competitors hard. http://www.stuff.co.nz/travel/news/87454678/free-wine-endangered-on-asian-airlines-after-rising-fuel-costs

[brend]

Qantas negiotiated that that Perth / london flight can leavevfrom domestic terminal to save transfers for inter-state punters. Never been there but obviously a bit of a didtance between terminals?

apparently so:

"There are two separate terminal precincts at Perth Airport that are separated by a short, 15 minute drive: the T1/T2 precinct and the T3/T4 precinct." - 5 minute drive is short, not 15minutes lol???

have a look at this link. You will see the terminals qantas uses for it services.

T1 - all international

T3/T4 - Qantas domestic services

https://www.perthairport.com.au/at-the-airport/which-terminal


There are so many ways to get to the UK anyway - Shanghai has become an common port to use as well these days.

[777]

Qantas are late to the party with their Dreamliners. Existing ones are used by Jetstar and IIRC have been configured in a truly horrendous way with an incredibly dense seating configuration (377 seats from memory). Feedback from pax on www.seatguru.com has been overwhelmingly negative.

Perth is a lovely city in its own right but as a stopover destination it doesn't really cut the mustard and break the journey up much being less than 7 hours flight time. It will be a gamechanger alright, for anyone living in Western Australia.

Jetstar's international long haul services are serviced by a fleet of Boeing 787 Dreamliner aircraft. Jetstar’s 787-8s are configured with 21 seats in Business and 314 seats in Economy.

[arc]

Qantas negiotiated that that Perth / london flight can leavevfrom domestic terminal to save transfers for inter-state punters. Never been there but obviously a bit of a didtance between terminals?

The terminals are on opposite sides of the complex, literally divided down the middle with the runways between, I took their free bus service from Domestic to International. (Magically my bags also made the trip safely)

[Beagle]

Jetstar's international long haul services are serviced by a fleet of Boeing 787 Dreamliner aircraft. Jetstar’s 787-8s are configured with 21 seats in Business and 314 seats in Economy.

If you can call it business class. Note the economy has a seat pitch of only 30 inches for long haul flights ! https://www.seatguru.com/airlines/Jetstar/Jetstar_Boeing_787-8.php

Folks please scroll through some of the featured user comments on the right hand side of the page to see for yourself what customers think of how QAN have configured this plane for their Jokestar subsidiary.
Surely QAN wouldn't expect people to put up with a 30 inch seat pitch on a 17 hour flight :eek2:

[winner69]

Be a bugger if AIR allowed this

http://www.stuff.co.nz/travel/news/87464312/the-us-government-may-allow-inflight-phone-calls-and-people-are-not-happy

Just imagine those punters who assumes the caller is a long long away so has to yell into the phone to make sure thy are heard

[Crash Test Dummy]

If you can call it business class. Note the economy has a seat pitch of only 30 inches for long haul flights ! https://www.seatguru.com/airlines/Jetstar/Jetstar_Boeing_787-8.php

Folks please scroll through some of the featured user comments on the right hand side of the page to see for yourself what customers think of how QAN have configured this plane for their Jokestar subsidiary.
Surely QAN wouldn't expect people to put up with a 30 inch seat pitch on a 17 hour flight :eek2:

Tons of negative comments about Air 'Rip Off' New Zealand 787 seats too.

[Beagle]

Tons of negative comments about Air 'Rip Off' New Zealand 787 seats too.

Some people are like sheep, its in their nature to bleat. Fact, Jokestar's business class 787 seats have less width and pitch than AIR's premium economy 787 seats !.. Like I said earlier, Business class, if you can call them that, (really not even premium economy). AIR keep winning awards for their premium economy seats and recently got sixth in the world for their economy class seats. 30 inch pitch for long haul travel must surely rank right up there with AIR Asia X as amongst the very worst in the world. Possibly okay if you are of slim build and under 65 kg and also under five foot eight, otherwise :eek2:

[tony64peter]

North American bookings up 5% on last year. Talking to an AIR rep in IAH recently, she happened to say yields were higher than expected right across Nth America.

[couta1]

Dead right there mate, reading those bleating comments on the likes of Stuff are enough to do your head in, for every valuable comment there are 3 trolling ones from people who lives operate in a tiny box space.

[workingdad]

You get what you pay for....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765368

Not saying AIR doesn't have issues but I think they deal with it better than this.

Caught up with a mate today that paid for return airfares with AIR to Brisbane and back, the return flight was a surprise to him when he boarded a virgin plan - code sharing - he said you notice the difference in service from staff and economy seats in the virgin plane were noticeably smaller. Good news is he said he will double check in future and make sure he is on an AIR flight to avoid the same thing happening again.

[Grimy]

I've just been up to Japan on Air NZ (787). The past couple of years I've been lucky enough to fly Premium Economy, but this year it was Economy both ways (got a sky couch row, which while I couldn't use the service the seat pitch is a little better than the normal Economy seat).
The seat and roominess were fine. Sure PE is nice with a better selection of food and better service and more room, but from my experience I can't see the justification for spending so much more in PE (unless I'm not paying.....).
It's only 11 hours-a lot of us sit in a far more uncomfortable chair at a desk for 8+ hours a day for years on end.............

[Snow Leopard]

...Surely QAN wouldn't expect people to put up with a 30 inch seat pitch on a 17 hour flight :eek2:

Of course not.

They are going to fit 236 seats into their 787-9 for London/Perth, as opposed to the 302 that AIR have on their 787-9 fleet.

Best Wishes
Paper Tiger

[workingdad]

Of course not.

They are going to fit 236 seats into their 787-9 for London/Perth, as opposed to the 302 that AIR have on their 787-9 fleet.

Best Wishes
Paper Tiger

Like for Like as you say, I wonder how many of these seats are the same given the various classes comparing the size of respective business, premium economy and economy cabin areas?

[winner69]

How Air New Zealand have configured their Dreamliners was driven by their strategy of intrinsically streamlining business value

So 302 seats it was and soon in some cases only 275

[Beagle]

Of course not.

They are going to fit 236 seats into their 787-9 for London/Perth, as opposed to the 302 that AIR have on their 787-9 fleet.

Best Wishes
Paper Tiger

Fare enough then. Talking about different configurations I see AIR have specified their remaining three Dreamliner orders with only 275 seats. Apparently that gives them extra range to fly into heartland America.

[Robomo]

Fare enough then. Talking about different configurations I see AIR have specified their remaining three Dreamliner orders with only 275 seats. Apparently that gives them extra range to fly into heartland America.

Wonderful sleuthing Roger. Is the info on seating and heartland (Chicago maybe?) from anywhere official or did the hound drag it in from outside?

[brend]

Wonderful sleuthing Roger. Is the info on seating and heartland (Chicago maybe?) from anywhere official or did the hound drag it in from outside?

https://www.airnewzealand.com/press-release-2016-air-new-zealand-to-increase-its-premium-seating-offering

[Beagle]

Wonderful sleuthing Roger. Is the info on seating and heartland (Chicago maybe?) from anywhere official or did the hound drag it in from outside?

Thanks mate, I was pawing my way through the latest Australian Aviation magazine and sniffed it out in there.

[peat]

exercising options and selling ordinary's must be ok now because:
Chief Operational Integrity & Standards Officer

[sb9]

exercising options and selling ordinary's must be ok now because:
Chief Operational Integrity & Standards Officer

So true, anytime nowadays I see a notification of AIR's senior management relevant interest disclosure notices, I just yawn and move on....;)

[workingdad]

Like for Like as you say, I wonder how many of these seats are the same given the various classes comparing the size of respective business, premium economy and economy cabin areas?

Had a look and will answer it myself. QAN has more business class and premium economy, both AIR and QAN have similar pitched seats in economy which I believe was the comparisons made with comfort in economy seating.

QAN

42 business class seats (http://www.ausbt.com.au/first-photos-qantas-boeing-787-dreamliner-business-class-seats) in a 1-2-1 layout
28 premium economy seats (http://www.ausbt.com.au/qantas-boeing-787-9-premium-economy-seats-will-be-revolutionary) in four rows of 2-3-2
166 economy seats (http://www.ausbt.com.au/qantas-boeing-787-dreamliner-economy-class-seats) arranged 3-3-3, but with a comfy 32 inch seat pitch

AIR


Business Premier

Rows 1 to 6 (18 seats)

Fully lie-flat bed



Premium Economy

Rows 23 to 25 (21 seats)

41” (104cm)



Economy

Rows 34 to 65 (263 seats)

30 - 32” (78 - 81cm)



Economy Skycouch™

Rows 36 to 43 ABC and 36 to 41 HJK

33” (83cm)

[workingdad]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765940

My heart bleeds......:sleep:

They have to drive an hour to the Palm.north hub. Big deal, so instead of accepting a logical business decision write a bleeding heart article with a one sided personal view point in the herarld having a crack with an expectation AIR keep the whanganui flights at a loss due to national significance.

We lost a lot of flights from Hamilton and I find myself driving to Auckland an hour down the road but AIR is a business regardless of being 51% govt owned and I have no complaints about it - supply and demand, AIR has a responsibility to share holders and regardless of being national carrier it is a competitive market place and as such business decision's get made. I wonder how many Jetstar flights the writer has taken over the last few years.......

Keep it up AIR, business is business

[Raz]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765940

My heart bleeds......:sleep:

They have to drive an hour to the Palm.north hub. Big deal, so instead of accepting a logical business decision write a bleeding heart article with a one sided personal view point in the herarld having a crack with an expectation AIR keep the whanganui flights at a loss due to national significance.

We lost a lot of flights from Hamilton and I find myself driving to Auckland an hour down the road but AIR is a business regardless of being 51% govt owned and I have no complaints about it - supply and demand, AIR has a responsibility to share holders and regardless of being national carrier it is a competitive market place and as such business decision's get made. I wonder how many Jetstar flights the writer has taken over the last few years.......

Keep it up AIR, business is business

Came through Auckland on Monday and have never seen it this busy at international. There were not enough air bridges, not even a enough luggage carts, distressed people everywhere. They had deplaned so many onto the tarmac and using buses at this point... I saw no more logical spaces left.... Customs had a line twice as long as anything I have seen before and the line was way past the baggage claim making entering the line dysfunction. Following on from the commuting to and from the airport articles in the herald last week..one conclusion Auckland is full...where do we go from here...

[iceman]

Came through Auckland on Monday and have never seen it this busy at international. There were not enough air bridges, not even a enough luggage carts, distressed people everywhere. They had deplaned so many onto the tarmac and using buses at this point... I saw no more logical spaces left.... Customs had a line twice as long as anything I have seen before and the line was way past the baggage claim making entering the line dysfunction. Following on from the commuting to and from the airport articles in the herald last week..one conclusion Auckland is full...where do we go from here...

Ditto last Friday morning Raz. A complete joke and around 60 people from my AIR flight missed domestic and international connections as a direct result of poor service at the airport.This probably should be on the Auckland Airport thread but they are not keeping up with the large increase in tourism and it really starting to show in poor service at the airport. For tourism in NZ to flow and grow, we need serious alternative international airports such as Christchurch, Wellington and Queenstown. At present they are all a bit of a joke and not a pleasant travelers experience although Chch has been made better in the last few years. But they have a long way to go but probably can't until airlines commit to flights into it.

[iceman]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765940

My heart bleeds......:sleep:

They have to drive an hour to the Palm.north hub. Big deal, so instead of accepting a logical business decision write a bleeding heart article with a one sided personal view point in the herarld having a crack with an expectation AIR keep the whanganui flights at a loss due to national significance.

We lost a lot of flights from Hamilton and I find myself driving to Auckland an hour down the road but AIR is a business regardless of being 51% govt owned and I have no complaints about it - supply and demand, AIR has a responsibility to share holders and regardless of being national carrier it is a competitive market place and as such business decision's get made. I wonder how many Jetstar flights the writer has taken over the last few years.......

Keep it up AIR, business is business

Agree with most of this, certainly in the case of Hamilton or other cities/towns that are within a reasonably short driving distance from an alternative airport. But don't forget Michael Cullen gave AIR billions due to their national significance. It works both ways doesn't it ?

[Nasi Goreng]

But what about those poor people on the North Shore who have to travel over an hour to get to their local airport?

Disclaimer: I do not live on the North Shore, it is too far from the airport.

[winner69]

Auckland needs a second airport - Hamilton will do fine

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765940

My heart bleeds......:sleep:

They have to drive an hour to the Palm.north hub. Big deal, so instead of accepting a logical business decision write a bleeding heart article with a one sided personal view point in the herarld having a crack with an expectation AIR keep the whanganui flights at a loss due to national significance.

We lost a lot of flights from Hamilton and I find myself driving to Auckland an hour down the road but AIR is a business regardless of being 51% govt owned and I have no complaints about it - supply and demand, AIR has a responsibility to share holders and regardless of being national carrier it is a competitive market place and as such business decision's get made. I wonder how many Jetstar flights the writer has taken over the last few years.......

Keep it up AIR, business is business

My heart bleeds too. So the poor thing has to drive, (and its proper driving not the horrendous stop start driving in Auckland) for an hour to get to the airport. Big deal so do most Aucklanders. The writer chose to move to Wanganui to enjoy the quiet life and one has to expect that its not all peaches and cream. AIR is running a business not a social welfare service, welcome to the real world. Its funny how the writer is not complaining about all the super cheap flights to and from Palmerston North isn't it !

[Raz]

Agree with most of this, certainly in the case of Hamilton or other cities/towns that are within a reasonably short driving distance from an alternative airport. But don't forget Michael Cullen gave AIR billions due to their national significance. It works both ways doesn't it ?

Christchurch is under utilised...yes i agree with you on the national significance aspect...AIR should consider developing a second hub. The Auckland Hub will be interesting... it was way worse than the typical mess at the larger international airport overseas on a busy day on Monday ... still a while before its redevelopment comes on tap. This does effect AIR big time so happy to continue it here...

[winner69]

AIR in it to make money, ie profits for divies etc

If Wanganui not profitable don't there

And shouldn't they also be trying to squeeze a few more seats into those Dreamliners?

[brend]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765940

so many flaws in her argument..saying its like a road network...:ohmy:

Re Auckland Airport - all it takes is a couple planes to be late and it bottlenecks the airport. I've heard buses have been used to unload passengers on AIR 777 planes....The new airport is going to take a while to build, setup temporary facilities at Whenaupai?

[dobby41]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765940

We lost a lot of flights from Hamilton and I find myself driving to Auckland an hour down the road but AIR is a business regardless of being 51% govt owned and I have no complaints about it - supply and demand,

1hr from Hamilton to Auckland airport - quick trip!

Anyway - having the Govt drive the airline operations to fulfill some social or strategic policy is about the worst reason for the Govt to intervene. That's how Govt companies go broke!

[Beagle]

https://youtu.be/IEnlEVLyD1s

New safety video out today with some nice familiar faces. The last one was a lame duck, (goose?), so this was badly needed.

[Leftfield]

https://youtu.be/IEnlEVLyD1s

New safety video out today with some nice familiar faces. The last one was a lame duck, (goose?), so this was badly needed.

Nice video. I particularly like Hosking and Ferrari stuck in Auckland traffic. Best place for him IMHO.

[QOH]

Nice video. I particularly like Hosking and Ferrari stuck in Auckland traffic. Best place for him IMHO.

I'd enjoy it, if we weren't paying him mega bucks to do it. I'm sure he will be expensive, I remember the Sky City fiasco.

[Snow Leopard]

https://youtu.be/IEnlEVLyD1s

New safety video out today with some nice familiar faces. The last one was a lame duck, (goose?), so this was badly needed.

I reckon I recognised the tree - Te Matua Ngahere right?

Best Wishes
Paper Tiger

[winner69]

I'd enjoy it, if we weren't paying him mega bucks to do it. I'm sure he will be expensive, I remember the Sky City fiasco.

Prob got (demanded) the key to the special secret room, where Raz doesn't even venture into (yet)

[Beagle]

I reckon I recognised the tree - Te Matua Ngahere right?

Best Wishes
Paper Tiger

Yes a real beauty that one ! http://www.hickerphoto.com/picture/te-matua-ngahere-waipoua-forest-new-zealand-29881.htm

Question did anyone spot a flaw in that video, (apart from actors they didn't like) ? Hint, have another look at the part where the bag is stowed under the seat in front, what's wrong with that part of the video ? (Disc The hound has been busy today helping Mrs hound get the kennel ready for Christmas and has discovered he hates fly dirt with a vengeance).

[workingdad]

Yes a real beauty that one ! http://www.hickerphoto.com/picture/te-matua-ngahere-waipoua-forest-new-zealand-29881.htm

Question did anyone spot a flaw in that video, (apart from actors they didn't like) ? Hint, have another look at the part where the bag is stowed under the seat in front, what's wrong with that part of the video ? (Disc The hound has been busy today helping Mrs hound get the kennel ready for Christmas and has discovered he hates fly dirt with a vengeance).

You meaning the old scratched up seat frame? I thought it was more for the car they were in as opposed to an airline one but could be wrong on the interpretation....

[Beagle]

You meaning the old scratched up seat frame? I thought it was more for the car they were in as opposed to an airline one but could be wrong on the interpretation....

Oh yes... I see what you're getting at.

[tony64peter]

I'd enjoy it, if we weren't paying him mega bucks to do it. I'm sure he will be expensive, I remember the Sky City fiasco.

Send him one of your phasing signals.

[Raz]

Prob got (demanded) the key to the special secret room, where Raz doesn't even venture into (yet)

From experience real exclusivity Winner is over rated :-)

[Raz]

Nice video. I particularly like Hosking and Ferrari stuck in Auckland traffic. Best place for him IMHO.

Given I will see it 30 plus times before the next video..not so keen:-/ Still better than the last which is painful after multiples times...seems to have been going on forever...

[Beagle]

http://www.msn.com/en-nz/money/news/air-nz-axes-flight-to-norfolk-island/ar-AAlCkxo?li=AA4Zjm&ocid=spartandhp

Agree Raz, last safety video was extremly painful.

[BeeBop]

Can't say I am a fan....actors world famous in NZ.....too long...and yes, the aircraft seat looked quite dodgy when they were putting the bag under the seat in front (if interpreted in that way). That all said, I will only get to see it three or four times and at least they are trying hard to capture passengers attention.

[Grimy]

I'm pretty sure it's Tane Mahuta.
Te Matua Ngahere is the shorter, fatter one a bit further down the road.
Sadly both looking a lot sicker last time I visited them than they used to be.

[Snow Leopard]

I'm pretty sure it's Tane Mahuta.
Te Matua Ngahere is the shorter, fatter one a bit further down the road.
Sadly both looking a lot sicker last time I visited them than they used to be.

Looking at the DOC website and the video again confirms you are right.
Nearly 12 years since I last visited them.

I usually ignore the safety demonstrations/videos - but have a quick glance at the card.


Anyway, what is this about an old man grounding AIR ? (http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11768634)

Best Wishes
Paper Tiger

[BlackPeter]

Interesting - just looking at the pattern ...

http://www.sharetrader.co.nz/attachment.php?attachmentid=8536&stc=1

peak - steep downtrend - slow uptrend - lower peak - steep downtrend - slow uptrend - lower peak - steep downtrend - slow uptrend - lower peak (<--you are here);

Question - what comes next?

[winner69]

Interesting - just looking at the pattern ...

http://www.sharetrader.co.nz/attachment.php?attachmentid=8536&stc=1

peak - steep downtrend - slow uptrend - lower peak - steep downtrend - slow uptrend - lower peak - steep downtrend - slow uptrend - lower peak (<--you are here);

Question - what comes next?

A 10 year chart (which I am not allowed to post anymore because it has hand drawn lines on it and not very sophisticated) with similar cycles on it would suggest $1.50 is still on the cards next year

[Beagle]

Interesting - just looking at the pattern ...

http://www.sharetrader.co.nz/attachment.php?attachmentid=8536&stc=1

peak - steep downtrend - slow uptrend - lower peak - steep downtrend - slow uptrend - lower peak - steep downtrend - slow uptrend - lower peak (<--you are here);

Question - what comes next?

You are still not adjusting for the 25 cent special divvy so your thesis is flawed IMO.

[BlackPeter]

You are still not adjusting for the 25 cent special divvy so your thesis is flawed IMO.

No thesis, Roger - just an innocent observation and question :);

Not sure either, whether it would be in any way appropriate to adjust the SP trend for the special divvie (which in reality was a partial capital return minus the amount they lost in a bad investment). Obviously - it depends what you want to show with the graph. If you intend to show past returns, than by all means add dividends and capital returns. However - if you want to observe SP patterns - what good is it to add past dividends? The money is gone (distributed) and will do AIR no good anymore. Any SP movement will happen from the now lower base - and this is what the graph shows.

Anyway - it sort of feels you still seem to have your heart blood in this share. I remember how this feels, I lost this way a lot of money myself ;) (though not with AIR); I do hope you are right and AIR passed already rock bottom, but I am based on the 2017 analyst predictions, the cyclical nature of the aviation industry and the ongoing jitter in the share markets (anybody noticing that the NZX50 is very close to finishing a beautiful head and shoulders?) not convinced. Anyway - this makes things interesting ... would be terribly boring if we would always agree, wouldn't it?

[couta1]

A 10 year chart (which I am not allowed to post anymore because it has hand drawn lines on it and not very sophisticated) with similar cycles on it would suggest $1.50 is still on the cards next year But winner you were talking $3 a week or so ago, myself I remain firm on my $2.50ish price target for 2017, I'm very comfortable to continue to hold an XOS holding long term, can't really see any better options on the NZX to be overweight in.

[Baa_Baa]

A 10 year chart (which I am not allowed to post anymore because it has hand drawn lines on it and not very sophisticated) with similar cycles on it would suggest $1.50 is still on the cards next year

I feel awful about criticising your chart, sorry, so far it's been pretty close to forecasting the SP.

Here's my rarely published monthly chart (12 year view) showing the cycles, in as much as I see them. To-date this month the SP has broken out of the severe downtrend and looks like back testing it now. The less steep downtrend if it stays in force does happen to co-incide with the current cycle down at around $160.

8537

Not advice but interesting that if one took an ultra conservative approach and just bought and sold the 10EMA/20SMA monthly crossovers, they would've done pretty well, with dividends on top while holding.

As an aside, I don't think it's valid to suggest the dividends should be included in one chart when it suits and not in another chart when it doesn't suit. Dividend included charts are useful for portfolio views, but they are not a reflection of the market, being what people buy or sell for right now.

[Beagle]

No thesis, Roger - just an innocent observation and question :);

Not sure either, whether it would be in any way appropriate to adjust the SP trend for the special divvie (which in reality was a partial capital return minus the amount they lost in a bad investment).Record ever special so in my view it is. If I remember correctly Hoop was also of the same view


Obviously - it depends what you want to show with the graph. If you intend to show past returns, than by all means add dividends and capital returns. However - if you want to observe SP patterns - what good is it to add past dividends? The money is gone (distributed) and will do AIR no good anymore. Any SP movement will happen from the now lower base - and this is what the graph shows.Lets me advance that debate by giving an illustration.

If one were comparing the total shareholder return of two companies RYM and AIR over the last two years and brought up the SP graph's of both one would note RYM has fallen a little whereas AIR has fallen from $2.50 to $2.12, more in percentage terms. Adjusting for dividends paid however RYM is still probably down, (I haven't had the time to do the math's) but AIR is up due to 45 cents in fully imputed divvy's paid this year and about 20 cps last year. Dividend inclusive charts give a more accurate picture of total shareholder returns whereas dividend exclusive charts like those on ANZ securities give a more positive view towards low dividend yield shares

Anyway - it sort of feels you still seem to have your heart blood in this share. I like aviation and its an iconic N.Z. company with a long historyI remember how this feels, I lost this way a lot of money myself ;) (though not with AIR); I do hope you are right and AIR passed already rock bottom, but I am based on the 2017 analyst predictions, the cyclical nature of the aviation industry and the ongoing jitter in the share marketsbased on average analyst forecasts for FY18 when all the recent new competition will be fully bedded in for the full financial year the stock trades on a PE of 8, well below its 10 year average of about 11 (anybody noticing that the NZX50 is very close to finishing a beautiful head and shoulders?)now that's an interesting observation ! not convinced. Anyway - this makes things interesting ... would be terribly boring if we would always agree, wouldn't it?
Absolutely it would, what would we have left to enjoy debating ? I'm cautious on the market overall but am happy to take modest positions in very well managed companies with proven business model's paying highly attractive fully imputed dividends like AIR. Of course there is risk, risk abounds in all business's and people have to decide for themselves whether the returns justify the risks.

AIR meets my investment criteria based on valuation fundamentals but also I note after accounting for the effect of the 25 cent special it is in a decent uptrend. Even unadjusted like you seem to prefer it broke through to the upside of the 100 day MA a while back, (currently 100 day unadjusted MA appears to be about $2.04). My investment approach going forward is to only hold companies that meet the following criteria:-

1. Have a long and well established and profitable trading history
2. Have well respected management and directors
3. Have a well defined, proven and robust business model (AIR made money throughout the GFC)
4. Pay a sustainable dividend yield of at least 5% net to me i.e. fully imputed, preferably more than 7% net, (counting the money coming in makes any self respecting number cruncher happy)
5. Have a sensible level of gearing for the industry in which they operate
6. Fundamentally appear to be good value relative to their peer group and the market overall
7. This is lesson learned for 2016 - Only hold stocks that are trading north of their 100 day MA and sell when they break below that point absolutely regardless of the other 6 points above, (I will adjust for special divvies when calculating this 100 day MA trigger point but not normal divvies)
8. I won't invest in private equity floats in any circumstances whatsoever until at least 12 months financial results have been released so we see the real truth about their financial performance.
9. I won't buy any company not presently making a profit, (Bean counters have a very deep suspicion of any company presently losing money promising they will conquer the world in the next few years), this is probably an occupational hazard but I reckon its served me pretty well over the last 30 years of investing.
10. Don't invest in unethical companies (Gambling, war, tobacco, liquor or any other social harm like fringe money lenders who pillage poor people's scant resources, Geneva finance springs readily to mind).

AIR meets all my present investment criteria and presently accounts for approx 13% of my liquid investments. http://www.biblemoneymatters.com/what-does-the-bible-have-to-say-about-investing/
In here is great stuff including what the bible has to say about investing and diversification. I think my liquid investments asset allocation to AIR is very soundly based :)

Anyway for what its worth that's my 10 commandments of investing going forward. I shall print them out lest I forget at some stage in the future.

P.S. And happy flying http://www.traveller.com.au/how-to-have-a-relaxed-and-comfortable-longhaul-flight--even-in-economy-gle5hd

Best wishes to all for Christmas and the new year.

[kiwichick]

Just curious, why do you choose the 100-day moving average as your trigger point?

[Snow Leopard]

...
7. This is lesson learned for 2016 - Only hold stocks that are trading north of their 100 day MA and sell when they break below that point absolutely regardless of the other 6 points above, (I will adjust for special divvies when calculating this 100 day MA trigger point but not normal divvies)
...

Have you back tested that ?

Best Wishes
Paper Tiger

[Beagle]

Just curious, why do you choose the 100-day moving average as your trigger point?

Personal choice really. Use tighter trigger points like 50 day MA and you can get more wrong exit / entry signals, use looser TA trigger points like 200 day MA and you can lose too much waiting for what can often seem inevitable.

NO PT you know I haven't. I'm just running with what my gut tells me is right. 100 days is plenty of time for the market to tell me I'm wrong, (acknowledging nobody gets it right more than about 75% of the time), but long enough for short term aberrations and oscillations in the SP to iron themselves out. I reckon its a handy tool in the toolkit so I'm using it going forward.

[bonmaklad]

Still holding. I have a weighted av of $1.79 since a few months ago. I only look to make 30% a year.. so I am tempted to plan my out towards $2.2

Everyone still in for the long?

[kiwichick]

Still holding. I have a weighted av of $1.79 since a few months ago. I only look to make 30% a year.. so I am tempted to plan my out towards $2.2

Everyone still in for the long?

I just sold out yesterday. Learning about TA and not confident about the short/mid-term future for AIR. Bought bank shares instead.

(disc. total newbie.)

[Raz]

sold a third of my shareholding recently, from 170s buy in price, 35 cps ok for now to take off the table:-)

[Beagle]

Still holding. I have a weighted av of $1.79 since a few months ago. I only look to make 30% a year.. so I am tempted to plan my out towards $2.2

Everyone still in for the long?

More than happy to hold for the long haul. High quality companies that meet my ten key investment criteria are very thin on the ground and 1.5% on my call account does not make for a very rewarding alternative ! Still holding nicely above the 100 day MA, even for those who prefer to use unadjusted charts :)

Tourism growth continues at even higher level's http://www.sharechat.co.nz/article/e6d2bf95/nz-migration-tourism-set-new-records-in-november-extending-boom-year.html

[workingdad]

I am still holding, should have bought more when it was in the 1.70s but just wasn't expecting the recovery it has had due to the on going sell off, one good thing with a sell off, the buying back when it happens in is a decent old SP boost again :).

The end of this month will be the half year mark and once Nov operating stats are out I am of the opinion there is still enough profit there to be a rather good year and high side of the range given which makes the EPS very attractive.

Even when fuel kicks up again newer fleet give AIR the ability to compete on the routes they have and subsidise this competition with the national market they have pretty well stitched up.

Been tempted on occasion to sell and take some short term gain but I think the long term earnings and anticipated SP range mean theres more to make out of them yet.

[Bobdn]

Air NZ is Oscar Mike (on the move, heard someone say it on a TV show)

[Sideshow Bob]

Just gone Elite :) No further travel plans to be able to use it ;)

[warthog]

More than happy to hold for the long haul.

The hog sees what you did there…:)

[bonmaklad]

I flew every week from either kapiti to akl or wanganui to akl for over 3 years straight.... costing me up to 600 a week

I never even made Gold....

So I stopped flying airnz two months ago when I bought the shares instead haha

I am bull for long term growth as I used to work for them (finance department). I still value it at 2.4 currently but reckon it'll hits 3s again.

But I now have 100% in airnz.... and would like to sell out and take advantage of the silver plummet.

Just trying to figure out if it's going to jump to 2.4 in the next 2 months (may do once everyone realizes its going to do an amazing net profit)

[iceman]

I flew every week from either kapiti to akl or wanganui to akl for over 3 years straight.... costing me up to 600 a week

I never even made Gold....

So I stopped flying airnz two months ago when I bought the shares instead haha

I am bull for long term growth as I used to work for them (finance department). I still value it at 2.4 currently but reckon it'll hits 3s again.

But I now have 100% in airnz.... and would like to sell out and take advantage of the silver plummet.

Just trying to figure out if it's going to jump to 2.4 in the next 2 months (may do once everyone realizes its going to do an amazing net profit)

Good comments but I think AIR's Airpoints is one of the best airline loyalty programmes in the World. Are you saying you have 100% of your NZX investments invested in AIR ?

[bonmaklad]

100% Correct. Better returns then anything else, I had so bought more.

Almost sold back in 70s if it wasn't for this group lol but ended up doubling my positon

I don't doubt it's a good system. I just would have liked to get koru for free.... just one year

Consulting in wellington now, so no need to fly (unless I learn myself)

[King1212]

http://www.cnbc.com/2016/12/20/oil-prices-edge-up-on-expected-us-crude-inventory-draw.html

oil down again, another 10 days to half year....well half year result with oil below $55. Expecting record half year profit:t_up:

[winner69]

http://www.cnbc.com/2016/12/20/oil-prices-edge-up-on-expected-us-crude-inventory-draw.html

oil down again, another 10 days to half year....well half year result with oil below $55. Expecting record half year profit:t_up:

Don't forget the $55 AIR quote is probably jet fuel cost - think PT said about $10 more than crude.

Never mind - i still reckon they'll say FY17 profit be in excess of $600m

November stats will be good - maybe out today?

[winner69]

Year on Year Cumulative Revenue Comparisons:

Short Haul:
Jul: 99.36%
Aug: 99.26%
Sep: 99.18%
Oct: 99.65%

Long Haul:
Jul: 99.99%
Aug: 98.62%
Sep: 98.07%
Oct: 97.13%

Year on Year October Month Revenue Comparison (Estimate)
Short: 101.06%
Long: 94.30%

Best Wishes
Paper Tiger

PT's task to update .......but the %'s seem to be lower after November

More ASKs for less $

[boysy]

Competition clearly starting to bite and being reflected in the operating statistics

[winner69]

Does a 9% increase in ASKs imply that the cost of flying the planes goes up 9% less efficiency gains?

Or is that where CASKs (with MOPS a key driver) come into the equation (which we know Feb/March)

[couta1]

Competition clearly starting to bite and being reflected in the operating statistics Solid stats, what's more important is where they sit in their projected guidance range, I'm picking over 500 million coupled with a 20c fully imputed divvy for the year, sounds just fine to me. Your probably better concerning yourself with fleeting Rosehip sales than Air ticket sales.

[boysy]

back to discussions the op stats what portion of the release would you term solid ?

[Beagle]

back to discussions the op stats what portion of the release would you term solid ?

Group load factors at 83.3% are very solid and broadly consistent with the very high load factors AIR have enjoyed over the last five years.
Yields are lower but one has to consider the bigger picture. Oil prices are down on last year, they're getting far better efficiencies with more modern aircraft, (e.g. 9 dreamliners in the fleet now) and it is quite normal for new competitors to start off with a hiss and a roar to fill their planes. Initial launch specials don't last forever, (e.g. try booking a direct flight to LAX now and you'll see what I mean, it's NOT CHEAP !). I agree with Couta1's prognosis on profit and dividend outlook.

[couta1]

back to discussions the op stats what portion of the release would you term solid ? In the current operating environment, the whole lot is solid. Air is going to have an exceptional year on the domestic front in 2017 ,which is where their best return comes from, you might say we are well positioned indeed.

[King1212]

Solid stock to hold rather than other:t_up:..solid dividend n growth

[workingdad]

back to discussions the op stats what portion of the release would you term solid ?

Group wide year to date stats are well in line if not slightly better than expected given the competition. More flights, more passengers, load factors only 1.2% down and importantly the domestic market even with the earthquake is better in all comparisons on the year to date table. Yes some impact on competition but this has been priced in for quite some time now. The industry of immigration and tourism is not showing any signs of waning.

I don't have an expectation AIR will have another year like last year but the way this is shaping up it is certainly heading towards being a solid year of earnings.

[Beagle]

Group wide year to date stats are well in line if not slightly better than expected given the competition. More flights, more passengers, load factors only 1.2% down and importantly the domestic market even with the earthquake is better in all comparisons on the year to date table. Yes some impact on competition but this has been priced in for quite some time now. The industry of immigration and tourism is not showing any signs of waning.

I don't have an expectation AIR will have another year like last year but the way this is shaping up it is certainly heading towards being a solid year of earnings.

Nice post, sums the situation up very well in my opinion.

[winner69]

Whatever the result didn't Chris say F17 would still be the 2nd best result in 75 years of operation

Now that's a solid performance

[King1212]

Tourism is keep booming...

https://www.nbr.co.nz/article/nz-migration-tourism-set-new-records-november-extending-boom-year-b-198169

[winner69]

Doesn't the market like these latest operating stats

Hope it's not management selling

[Snow Leopard]

Year on Year Cumulative Revenue Comparisons:

Short Haul:
Jul: 99.36%
Aug: 99.26%
Sep: 99.18%
Oct: 99.65%
Nov: 99.30%

Long Haul:
Jul: 99.99%
Aug: 98.62%
Sep: 98.07%
Oct: 97.13%
Nov: 96.21%

Year on Year November Month Revenue Comparison (Estimate)
Short: 97.88%
Long: 92.52%

Best Wishes
Paper Tiger

[winner69]

Solid stats, what's more important is where they sit in their projected guidance range, I'm picking over 500 million coupled with a 20c fully imputed divvy for the year, sounds just fine to me. Your probably better concerning yourself with fleeting Rosehip sales than Air ticket sales.

Maybe an opportunity for Trilogy

Get AIR to hand out the special lotions on long haul flights so everybody arrives with glowing healthy skin.

Trilogy need all the help it can get

[Snow Leopard]

Solid stats, what's more important is where they sit in their projected guidance range, I'm picking over 500 million coupled with a 20c fully imputed divvy for the year, sounds just fine to me. Your probably better concerning yourself with fleeting Rosehip sales than Air ticket sales.

Anyhow there's things I see more clearly
Than those whose heads are searching in the clouds to make discoveries,
And maybe fail to see
What's on the ground beneath their feet, not hard to find

[http://www.metrolyrics.com/lucky-me-lyrics-tony-banks.html]


https://www.youtube.com/watch?v=oELafgEvmos

Best Wishes
Paper Tiger

[workingdad]

Year on Year Cumulative Revenue Comparisons:

Short Haul:
Jul: 99.36%
Aug: 99.26%
Sep: 99.18%
Oct: 99.65%
Nov: 99.30%

Long Haul:
Jul: 99.99%
Aug: 98.62%
Sep: 98.07%
Oct: 97.13%
Nov: 96.21%

Year on Year November Month Revenue Comparison (Estimate)
Short: 97.88%
Long: 92.52%

Best Wishes
Paper Tiger

Love the headings.....

Your 'estimate' for year on year is presumably projected to June 2017. Why would a combined average of 95% on the best year in history be such bad news? Maybe my head is in the clouds..... but 2.10 s/p with those returns - dream dream dream :)

[Snow Leopard]

Love the headings.....

Your 'estimate' for year on year is presumably projected to June 2017. Why would a combined average of 95% on the best year in history be such bad news? Maybe my head is in the clouds..... but 2.10 s/p with those returns - dream dream dream :)

1/ Thanks - you can press the little star thing in the bottom left corner of the post if you want :blush:.

2/ No the estimate is the revenue for, in this case, the month of November 2016 compared to the month of November 2015. I call it an estimate because I may not be totally accurate.

They are a worry:
Because long haul despite flying 9% more people 11% further they earned 7% less revenue and you can talk all the fuel-efficiency you like but that is going hurt the profit number.
Short haul is less bad.

Best Wishes
Paper Tiger

[workingdad]

1/ Thanks - you can press the little star thing in the bottom left corner of the post if you want :blush:.

2/ No the estimate is the revenue for, in this case, the month of November 2016 compared to the month of November 2015. I call it an estimate because I may not be totally accurate.

They are a worry:
Because long haul despite flying 9% more people 11% further they earned 7% less revenue and you can talk all the fuel-efficiency you like that is going hurt the profit number.
Short haul is less bad.

Best Wishes
Paper Tiger

but of course, star button pushed with suitably funny comment :)

be interesting to see the half year update that's for sure - your guess is as good as anyone's and maybe better than mine but I don't see FY2017 being horrible and despite competition plenty of room for those imputated divvies to keep flowing.

[winner69]

Love the headings.....

Your 'estimate' for year on year is presumably projected to June 2017. Why would a combined average of 95% on the best year in history be such bad news? Maybe my head is in the clouds..... but 2.10 s/p with those returns - dream dream dream :)

If revenues are 5% down thats $225m less than last year

So the $800m profit is already down below $600m before allowing for additional costs (flying further aren't they) and such things.

See why they say $400m to $600m eh

The only thing thats sure is that they'll still collect $50m plus in interest non the prepaid fares.

[Beagle]

Plenty of upgrading of aircraft going on, Dreamliners replacing 767's, 50 seat Q300's replacing 19 seat Beechcraft 1900's...not necessarily any more expensive to fly but make the stat's look a little worse.
Seats are on average sold 2 months forward, (source balance sheet, AIR traditionally carries about 2 months forward bookings at any one time). Sept was a tough month in the aviation industry, oil was cheap new competitors were hotly discounting. Try getting cheap seats now ! I wasn't thrilled with November stat's but as I've mentioned more than once before new competitors discount hard to fill new routes and that sort of initial market behavior doesn't gone on forever because its unsustainable. Just settle back , select a new movie and settle in for the long haul..the flight attendant will be around to fill your bowl with another large fully imputed dividend before too long :)

[winner69]

From numbers on those hedging reports fuel use looks like it will be 3% higher in F17 v F16

Be interested to see CASKs in 1/2 year report

[couta1]

Anyhow there's things I see more clearly
Than those whose heads are searching in the clouds to make discoveries,
And maybe fail to see
What's on the ground beneath their feet, not hard to find

[http://www.metrolyrics.com/lucky-me-lyrics-tony-banks.html]


https://www.youtube.com/watch?v=oELafgEvmos

Best Wishes
Paper Tiger The message I read whilst searching with my head in the clouds was that I will be receiving approximately(Give or take a Cats whisker or two) 70k of fully imputed divvys in my bank account in 2017, gotta love them clouds aye.

[Snow Leopard]

...Why would a combined average of 95% on the best year in history be such bad news? ...

I have run with that and the answer my friend is a NPBT of about $350M.

But, on the assumption that the current year to date percentages persist through to the end of the financial year then NPBT is about $475M.

The market got a little spooked today maybe it sees something between the two.

As the year unfolds we will see.

Best Wishes
Paper Tiger

Disc: Accurately predicting the future has a low success rate.

[Beagle]

From numbers on those hedging reports fuel use looks like it will be 3% higher in F17 v F16

Be interested to see CASKs in 1/2 year report

Cost per available seat kilometer probably down in line with the decline in yield in my opinion. If management saw profit outside of the $400 - $600m before tax range they would have updated guidance by now. They're in the best position to see the future with full knowledge of forward bookings and what yield those bookings are at.

[Baa_Baa]

It seems that with some doubt cast on NPAT vs guidance and the stalled SP, caution is warranted. That's if one cares about the SP, though some seem not to, given confidence in sustained dividends.

[couta1]

It seems that with some doubt cast on NPAT vs guidance and the stalled SP, caution is warranted. That's if one cares about the SP, though some seem not to, given confidence in sustained dividends. Interesting that my two largest holdings Air and SPK are both down 20c from my average buy in price, yet I have every confidence in both these companies to churn out long term, sustainable ,excellent divvies, market sentiment often doesn't equal actual reality.

[777]

Try and book a seat to Australia. It appears "seats to suit" has gone. Well that is my interpretation.

[pierre]

Try and book a seat to Australia. It appears "seats to suit" has gone. Well that is my interpretation.

I just booked a trip to Brisbane - all the various seat, seat+bag, etc options were available as usual. What makes you think they are not?

[777]

Just took another look and those choices have reappeared. Prices have also changed significantly so must have been a glitch.

As you were.

[winner69]

NZD falling below USD0.69

Does this impact AIR much or do they have so many natural hedges it doesn't matter

[Beagle]

It seems that with some doubt cast on NPAT vs guidance and the stalled SP, caution is warranted. That's if one cares about the SP, though some seem not to, given confidence in sustained dividends.

PT is the only one casting doubt on here. I think Tony Carter and the board are committed to the highest standards of integrity and if they thought that based on year to date data and known forward bookings that the profit before tax was going to fall outside the guidance range they would have updated the market to that effect already. We are almost half way through the FY17 year and the fact that they haven't updated guidance speaks for itself. SP is still holding about the 100 day MA and well above that for those like me that chose to use an special dividend adjusted calculation. Dividends look pretty safe to me.

W69 - Not a concern at this point, 3 expensive ~ (U.S.$150m each), Dreamliners just arrived. Currency not at too much of a variance from expectations at this stage and they have forward cover and natural hedges.

[Beagle]

Maybe an opportunity for Trilogy

Get AIR to hand out the special lotions on long haul flights so everybody arrives with glowing healthy skin.

Trilogy need all the help it can get

Trilogy yesterday's news. Sleepwear infused with sea kelp is now "all the rage" mate. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11771588

[winner69]

Trilogy yesterday's news. Sleepwear infused with sea kelp is now "all the rage" mate. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11771588

enough to make you fly 1st class

Hope raz gives us a report on how good these pjs are

[Joshuatree]

Wow! Never been in first class but thought you could be moisturised by an air hostess there:confused:;). There goes another fantasy dealt to by kelp!

[Beagle]

enough to make you fly 1st class

Hope raz gives us a report on how good these pjs are

I priced return first class flights for Mr and Mrs Hound to London next July on Emirates website. $30,065 :eek2:

[winner69]

I priced return first class flights for Mr and Mrs Hound to London next July on Emirates website. $30,065 :eek2:

Go on - your AIR divies will pay for it

[Robomo]

I priced return first class flights for Mr and Mrs Hound to London next July on Emirates website. $30,065 :eek2:

The Residence on Etihad from Brisbane - London - Brisbane is $48,719 plus whatever it takes to get from Auckland (say $50,000). Go on Roger, you deserve it.
Setup a 'give-a-little' page, I'm sure Boysy and others will kick in a dollar or two! Couta1 might even donate half his divvy!

[Nasi Goreng]

If you have to ask the price, you cant afford it :-) there's so much more holiday I could have on that extra $20k, or even add $10k more AIR shares at the cost of 48 hours of pain.

[Snow Leopard]

PT is the only one casting doubt on here. I think Tony Carter and the board are committed to the highest standards of integrity and if they thought that based on year to date data and known forward bookings that the profit before tax was going to fall outside the guidance range they would have updated the market to that effect already. We are almost half way through the FY17 year and the fact that they haven't updated guidance speaks for itself. SP is still holding about the 100 day MA and well above that for those like me that chose to use an special dividend adjusted calculation. Dividends look pretty safe to me.

W69 - Not a concern at this point, 3 expensive ~ (U.S.$150m each), Dreamliners just arrived. Currency not at too much of a variance from expectations at this stage and they have forward cover and natural hedges.

I am not casting doubt on anything.
I provided some solid numbers derived from AIR supplied data.
I was asked a question about same and I answered it and also provided what is a more likely scenario, which is inline with your dreams.

But I get accused of casting doubt.

I demand that you return my Christmas Card promptly.


BTW I have flown in first class, on AIR on a 747. It was a free upgrade from business.
The seat pitch was so great that you had to call the hostess to get and put stuff in your seat pocket for you.

Best Wishes & Happy Holidays If You Are Into That Sort Of Thing
Paper Tiger