AIR - Air NZ.

[Marilyn Munroe]

Jetstar confirms no plans to expand routes...

Propstars Q300 aircraft are surplus Queer and Nasty Airlines planes from the Land of Underarm Bowlers which they tried to sell but couldn't.

They must be approaching the end of their economic life. It will be an interesting question whether Propstar generates enough cash to justify Queer and Nasty Airlines upgrading their subsidiaries fleet.

Boop boop de do
Marilyn

[Joshuatree]

Great that airlines are safer than ever

The intent of the technology is to make flying safer – and it has. In the past decade, the number of commercial flights worldwide has surged by almost a quarter to about 40.5 million last year. Despite the surge in flying, fatalities in accidents involving planes carrying more than 14 passengers have fallen from 773 in 2007 to 258 last year, according to the Aviation Safety Netwo

NOT AIR but a very scary event with a psycho computer overriding the pilot


(http://www.stuff.co.nz/travel/travel-troubles/92556121/The-terrifying-untold-story-of-QF72-What-happens-when-psycho-automation-leaves-pilots-powerless?cid=app-iPad)http://www.stuff.co.nz/travel/travel-troubles/92556121/The-terrifying-untold-story-of-QF72-What-happens-when-psycho-automation-leaves-pilots-powerless?cid=app-iPad

[Beagle]

Thanks Joshuatree. What an enthralling read. Not surprised crew and passengers have PTSD, what a shocker !!!!

[dobby41]

Thanks Joshuatree. What an enthralling read. Not surprised crew and passengers have PTSD, what a shocker !!!!

Yes scary indeed.
I like the comment that the automation is produced by people to reduce the mistakes made by people.

[winner69]

That QAN.AX shareprice has significantly outperformed AIR.NZ over most time periods .....especially the last 3 and 6 months

I see QAN got a credit ratings upgrade the other day

[allfromacell]

That QAN.AX shareprice has significantly outperformed AIR.NZ over most time periods .....especially the last 3 and 6 months

I see QAN got a credit ratings upgrade the other day

AIRs dished out a lot of big imputed dividends which QAN hasn't so I'm sure the total return is somewhat closer.

[winner69]

AIRs dished out a lot of big imputed dividends which QAN hasn't so I'm sure the total return is somewhat closer.

But QAN have bought back $366m of shares - all part of the TSR calculation

[Beagle]

QAN running higher leverage and an older less fuel efficient fleet and have been enjoying the benefits of wage freezes negotiated for several years after their blockbuster $2.8 billion dollar loss a few years ago. This works fine while oil and interest rates stay low and those freezes remain in place but for how much longer ?

[Subway]

Air China scales back....AIR N.Z. expands...Jetstar confirms no plans to expand routes...last week Qatar threatened to throw their toys out of the cot if laptop's were banned.
Looks like management were bang on the money when they recently said we're passed the high tide of competition intensity and its impact on yield
https://www.nbr.co.nz/article/carry-china-airlines-scales-back-auckland-chch-more-americas-ng-202856?utm_source=newsletter&utm_medium=email&utm_campaign=NBR%252520Last%252520Call%25253A%2525 20Weekend%252520Review%252520edition
If they can make over half a billion, (second highest ever) in the year in which intensity is at its most severe...

AirNZ will be impacted if the laptop ban from europe goes ahead...

[iceman]

AirNZ will be impacted if the laptop ban from europe goes ahead...

As will most other airlines !!

[weasel]

AirNZ will be impacted if the laptop ban from europe goes ahead...

Why? They don't fly Europe to US, do they?

[iceman]

Why? They don't fly Europe to US, do they?

Los Angeles - Heathrow

[dobby41]

AirNZ will be impacted if the laptop ban from europe goes ahead...

They will be affected the same as any other airline so shouldn't change how customers decide who to fly with.

[weasel]

Los Angeles - Heathrow

ah, sorry... stupid.

[weasel]

They will be affected the same as any other airline so shouldn't change how customers decide who to fly with.

US carriers are exempt though......

[dobby41]

US carriers are exempt though......

Really?
I thought that the issue was the airports and their checks.
So US carriers are safer because they are US - amazing times we live in.

[Zaphod]

Really?
I thought that the issue was the airports and their checks.
So US carriers are safer because they are US - amazing times we live in.

Airports with certified US pre-check clearance are affected (e.g. Abu Dhabi), so it's not clear exactly what criteria are being applied.


UPDATE: It would appear that the proverbial cat is out of the bag. Trump has told the Russian ambassador the classified details regarding how laptops were to be used as bombs. Perhaps we will not have to wait much longer to understand the rationale for this ban.

[BeeBop]

Really?
I thought that the issue was the airports and their checks.
So US carriers are safer because they are US - amazing times we live in.

Heavens! Now what were the airlines that were flown into the Twin Towers....hmmmm surely US airlines are not exempt...will make them sitting targets....

[sb9]

Looks like we might topple that 2.80 mark today, some strong and large bids coming in pre-close session.

[Raz]

Looks like we might topple that 2.80 mark today, some strong and large bids coming in pre-close session.

More reason for the price to go up...

http://www.stuff.co.nz/business/92644365/singapore-airlines-trimming-several-flights-from-capital-express-service

[Beagle]

So...lets compile a list. In the last few weeks we've had:-
Qatar threaten to abandon its new routes entirely in the laptop ban comes in, (which surely it will)
American Airlines cancel its flights to America for a few months while they rejig capacity, to be restarted very late 2017
China Southern pull back on Chch routes
Signapore Airlines trimming Wellington flights
Jetstar confirming no expansion of flights within N.Z.
and in the meantime AIR announcing expanded frequency to South America and Houston using all new Dreamliners with more business and premium economy seats to meet strong demand for premium services...have I missed anything else ?

[iceman]

So...lets compile a list. In the last few weeks we've had:-
Qatar threaten to abandon its new routes entirely in the laptop ban comes in, (which surely it will)
American Airlines cancel its flights to America for a few months while they rejig capacity, to be restarted very late 2017
China Southern pull back on Chch routes
Signapore Airlines trimming Wellington flights
Jetstar confirming no expansion of flights within N.Z.
and in the meantime AIR announcing expanded frequency to South America and Houston using all new Dreamliners with more business and premium economy seats to meet strong demand for premium services...have I missed anything else ?

Yes you did ! China Airlines dropping Sydney flights to both Wellington and Auckland, 3x and 4x per week respectively

[sb9]

So...lets compile a list. In the last few weeks we've had:-
Qatar threaten to abandon its new routes entirely in the laptop ban comes in, (which surely it will)
American Airlines cancel its flights to America for a few months while they rejig capacity, to be restarted very late 2017
China Southern pull back on Chch routes
Signapore Airlines trimming Wellington flights
Jetstar confirming no expansion of flights within N.Z.
and in the meantime AIR announcing expanded frequency to South America and Houston using all new Dreamliners with more business and premium economy seats to meet strong demand for premium services...have I missed anything else ?

Throw into the mix I heard somewhere about new flight services to Osaka, Japan.

[Beagle]

Yes you did ! China Airlines dropping Sydney flights to both Wellington and Auckland, 3x and 4x per week respectively


Throw into the mix I heard somewhere about new flight services to Osaka, Japan.

Crickey...its hard to keep up with how AIR's competitors are shrinking their capacity and how AIR are expanding theirs !

[sb9]

Crickey...its hard to keep up with how AIR's competitors are shrinking their capacity and how AIR are expanding theirs !

Hence Mr Market appears to be rerating this stock at the moment...

[BlackPeter]

QAN running higher leverage and an older less fuel efficient fleet and have been enjoying the benefits of wage freezes negotiated for several years after their blockbuster $2.8 billion dollar loss a few years ago. This works fine while oil and interest rates stay low and those freezes remain in place but for how much longer ?

Roger,

I obviously realise that this is the Qantas trash thread. However - are you sure that their fleet is that inefficient? Just came back from a trip to Singapore flying Qantas (to my excuse - had to use up some Frequent flyer points) and was flying with A330-200 and Boeing 737-800. Both have a fuel consumption of roughly 2.3l per 100 passenger km. Not too bad.

Just some other observations: While I rated Qantas previously lower in terms of service and comfort than e.g. Singapore Airlines, Air New Zealand and Emirates (and I used to fly a lot - i.e. I can compare), my recent experience (after something like 3 years abstinence on Qantas) seems to point to Qantas moving back into this top group. It feels like the partnership with Emirates is influencing them quite positively.

I like the 30kg luggage allowance which they adapted from Emirates (i.e. no need to worry about the luggage - on my last trip with AIR I still had to worry about the (I think) 23 kg limit with AIR.

Their seats have been new (and not too bad for economy), the crew was in 3 out of the four legs exceptionally helpful and friendly, food is as good (or bad) as on the other "better" carriers.

Don't want to annoy anybody on this thread, but it might be even for AIR investors useful information that AIR might not be the only good airline.

I put Qantas after this last experience back into the group of my preferred carriers (i.e. might accrue some more frequent flyer points with them ;)).

[Kelvin]

Not quite correct

China Airlines dropping their Sydney - Auckland and Christchurch flights, but increasing Brisbane - Auckland to daily
Singapore Airlines only cutting 3 return services over 3 months, I wouldn't consider it a significant cut

[couta1]

Not quite correct

China Airlines dropping their Sydney - Auckland and Christchurch flights, but increasing Brisbane - Auckland to daily
Singapore Airlines only cutting 3 return services over 3 months, I wouldn't consider it a significant cut True, and if demand was there Singapore Airlines wouldn't be cutting their service, nothing in it for Air considering they are a code share partner.

[Beagle]

I stand by my comment BP. Its not a thrash thread for QAN I am simply stating the facts. Their fleet average age is a lot older, less efficient, they are running more leverage and they are presently enjoying the tail end of a number of wage freezes negotiated after their horrific $2.8b loss a few years ago. Their business model works very well when oil and interest rates are very low but as we saw with their shocker loss when things go against them they really struggle. I believe AIR's business model is more robust and they would be profitable with $100 oil.

[winner69]

Over the last 5 weeks flown with AIR, Cathy Pacific, Icelandair, Logan Air/Yoube and Easyjet

I'll forgive Icelandair for being late on one leg because of a big storm ......the only other flight that was late departing was an AIR flight from AKL to WLG because of (believe it not) " crewing requirements" ....and the Jetstar flight leaving at the same time was on time. Was not impressed waiting an hour for AIR to sort that out.

[BC_Doc]

I never quite understood individuals using their own experience as anecdotal evidence for how a company is performing in general. Sure every airline will have some issues at some point. People unlucky enough to be affected by those issues will understandably have a negative view based on their experience.

I think how the company responds in the long run to most of these issues is a more pertinent measuring stick of performance as well as how often these incidents occur compared to competitors.

Just my 2 cents worth...which is exactly how much AIR has gained today. Peace.

[winner69]

$3 beckons for AIR (maybe by month end) - get there about the same time as QAN gets to $5 in Australia

[couta1]

$3 beckons for AIR (maybe by month end) - get there about the same time as QAN gets to $5 in Australia Are you holding Air winner? you seem mighty keen on that $3 mark. PS-Your welcome to have as many as you like at that price, well actually even at todays finishing price.PPS-I reckon there will be a lot of very relieved people to see the stock get back to the $2.80 mark again and will be taking the nearest exit door with much gratitude not to have lost their skin.

[Baa_Baa]

Are you holding Air winner? you seem mighty keen on that $3 mark. PS-Your welcome to have as many as you like at that price, well actually even at todays finishing price.PPS-I reckon there will be a lot of very relieved people to see the stock get back to the $2.80 mark again and will be taking the nearest exit door with much gratitude not to have lost their skin.

I think you're right about that, your PPS that is, which is why some people won't sell into strength until the up-trend abates, which it hasn't so far. This stock has many and varied perspectives because it suits multiple investment and trading strategies, at any given point in time.

For momentum traders with capital sensitive strategies it's 'Ride the wave', AIR is already a massive winner for those who bought the recent reversal upwards and still hold. This cyclical stock is performing as expected, cyclically, and until it turns over, the patient and observant will hold. They'll be out at the first sign of reversion to the down-trend.

Until then the uneasy balance between divi strippers, long termers, divi holders, and momentum traders (and no doubt others) will continue to keep us informed, entertained and sometime amused.

;)

[Xerof]

$3 beckons for AIR (maybe by month end) - get there about the same time as QAN gets to $5 in Australia

$3++ I said on May 1 winner, stop being conservative. :D

I don't really do charts anymore, just eyeball the patterns and post the odd comment about what I am seeing, but the inverse H&S looks to have plenty of AIR between breakout and final measured target. Some young turk might do a chart for us.

still long here and nothing saying sell yet

ooh, having said I don't post charts, I think I highlighted SUM gap on a chart around 4.93, that I used to accumulate sum more SUM. I thought it might have been useful to sum people by showing the power of the chicken bones (sumtimes)

anyway, the gap got filled and was a nice reversal point, so far

[couta1]

Nothing saying sell, but equally important nothing saying buy either, unless your certain it's not nearing it's cyclical peak, which I am certainly not certain about.:eek2:

[Beagle]

Interesting to see Virgin languishing at an all time low of just 17 cents. People heavily criticized Chris Luxon for "spitting the dummy" about the incumbent under-preforming CEO" with rumor's of either he goes or I go. The VAH board aren't looking too clever now are they ! AIR did well to extricate themselves from that pup last year with the shares now languishing at close to half what AIR sold their stake for. Often a bit of fire in one's belly and righteous indignation is a very useful character tool to possess in business, this a classic case in point.

[winner69]

Jeez - at this rate might be 3 bucks next week

No worries

[couta1]

Jeez - at this rate might be 3 bucks next week

No worries But are you holding?

[winner69]

Jeez - at this rate might be 3 bucks next week

No worries


...as long as the other execs dont joing Stephen and offload heaps of shares

Those AIR execs prett canny sharetraders - they invariably pick the tops to off load their free shares (sorry the pay packet ones)

[couta1]

...as long as the other execs dont joing Stephen and offload heaps of shares

Those AIR execs prett canny sharetraders - they invariably pick the tops to off load their free shares (sorry the pay packet ones) At these sort of prices, I'd be off loading faster than a straight ski run from the top of Treble Cone ski field.

[winner69]

But are you holding?

At this point in time I remain loyal .....even though recent travels did remind me that airline business is just a commodity item and there ain't much difference between airlines anyway. Air seem to be one of the more efficient ones (operationally) so probably has the best prospects

Hate this modus operandi on long haul - give them dinner and then turn the lights off and hope most passengers sleep so they don't have to do too much for them. After 5 or 6 hours in the dark how the heck can you even tell what airline you are flying with anywhere

[stoploss]

At these sort of prices, I'd be off loading faster than a straight ski run from the top of Treble Cone ski field.

Pity you off loaded sub $ 2.50 .....your judgement wasn't right on the timing then what makes you think it's any better now ? Seems you have repeated this overvalued s/p call every 10 cents since you sold.

[winner69]

At these sort of prices, I'd be off loading faster than a straight ski run from the top of Treble Cone ski field.

Many were saying that at 230 odd just after the divie

Who knows when she'll stop flying high - hopefully over 3 bucks eh

[winner69]

At these sort of prices, I'd be off loading faster than a straight ski run from the top of Treble Cone ski field.

Thought of you the other day when I was watching that film about Eddie the Eagle - cool movie

[couta1]

Many were saying that at 230 odd just after the divie

Who knows when she'll stop flying high - hopefully over 3 bucks eh No mate, I just know myself, even if I hadn't have sold before the divvy, they would have been gone soon after anyways. PS-Very cool movie.

[bung5]

Still pretty low PE ratio couta...even without any earnings upgrade

[couta1]

Still pretty low PE ratio couta...even without any earnings upgrade Yes but that's normal for Airline stocks, doesn't mean it's good buying in comparison to non cyclicals.In fact when PE ratios are very low in a stock like Air, it's a signal of the end of a prosperous interlude.

[bung5]

Yes but that's normal for Airline stocks, doesn't mean it's good buying in comparison to non cyclicals.

Yes but industry PE ratio average is probably about 50%+ above where airnz is . correct?

[couta1]

Yes but industry PE ratio average is probably about 50%+ above where airnz is . correct? Around PE of 11 is average I think. Air currently 8.5.

[bung5]

Around PE of 11 is average I think. Air currently 8.5.

kk I'll settle with you with that the industry average is 30% more than airnz PE. So certainly doesn't seem to be overvalued

[Beagle]

At $2.87 AIR trades on a 2017 PE of 9 based on my forecast of 32 cps. Their ten year average PE is 11. I defy anyone to accurately state what part of the airline cycle we are currently at. It seems to me competition is starting to become somewhat ameliorated from the peak intensity of late 2017. AIR management seemed very confident of improving yields going forward at their most recent conference call and are undoubtedly in the best position to know. I won't say what I think they're worth after getting egg on my face last year...all I will say is that those in this for the fully imputed dividends are very well positioned as we're only 2 years away from the completion of a very thorough fleet upgrade bringing the average age down to a very young 6.2 years. This hounds long range nose can smell those XXXXXXL special dividends coming after that major capex program completion along with regular six monthly ~ 10 cent fully imputed feeds in the meantime to keep him well fed and watered. Investing in an airline for long term dividend income might seem like a contradiction to common sense conventional investment theory but it makes perfect sense to me. Whether the stock is $2, $3, or even $4 makes no difference to me.

On a relative basis AIR seems at least as good value as QAN in my opinion.

Market seems to think there's an imminent profit upgrade coming. Could be some grounds to think that as I've thought for some time now their official forecast for FY17 of circa $500m was is very conservative. Certainly the first half performance set them up for the year very well.

[Xerof]

yep, on their average PE, the price is easily $3++, but I'd settle for $3.10/15, and leave a bit for someone else:p (and make it snappy - I have a good use for the funds in the next little while)

At the time I did think $500m could have been realistic, given their comments about tailwinds turning to headwinds, but they seem to be basking under a big H at the moment, getting on with business. So now I think we can say they were just shaggy dog stories

[couta1]

Your all heart Xerof, don't you feel sorry for all those poor buggers buying in at those prices, the bit left on the table won't be any consolation when the whole table is ripped from under them.:eek2:

[Beagle]

I topped up a few more at $2.76 this week so unsurprisingly I hold a different view. My thinking is that their business model has evolved a fair bit under Chris Luxon's leadership with a lot of code / revenue sharing and a more modern simplified fleet. I also think they have a laser focus on more prudent expansion in the future and will only expand routes where there's proven demand. Fact is we are looking at the second highest profit in FY17 when they've been subjected to very intense international competition so I think their business model is actually now very resilient. I expect they'll continue to perform very well for the foreseeable future, (acknowledge that comes with a caveat that we don't experience a GFC MK2), and as stated above shareholders can look forward to some very special dividends once their comprehensive fleet upgrade program is completed in FY19.

[BlackPeter]

Interesting SP development ... but it feels to me more and more like an approaching peak.

Analysts are as well much more careful when assessing this stock (12 month consensus in 4 traders is $2.23 (with a quite close range from $2.10 to $2.31) together with a "hold" recommendation.

RSI is around (and currently slightly above 70) - in overbought territory (and this already for some time).

I do see the still juicy forward PE of 8.8 which is somewhat inconsistent with the 12 month consensus (though - maybe there is a reason?) - but I think that analysts are as well starting to wonder when the current boom period ends.

Admittedly - oil might stay in the current region for a long time to come, given the oversupply and the ease to increase the supply if the price goes just slightly further up (though I don't know anybody who in the past predicted the oil price with any sort of accuracy), but this is obviously good for the competition as well.

The US might put funny restrictions on Muslim carriers, but in the long term I don't see this sticking. If there is a real threat, than any restriction will latest after the first laptop explosion on an US carrier apply to all.

And not sure I see tourism growth as a one way street. At some stage we will have another terror attack, another GFC, another volcanic eruption - or just the start of either the "post trump" or the "trump still hanging around" hangover and any of this will hurt an airline share in the top quartile more than one purchased in the bottom quartile.

I feel that midterm the SP is more likely to go down than up - and just looking at the current movement I think that Buffet's "be fearful when others are greedy" might be the appropriate saying for this situation.

Anyway - don't want to spoil the party: Enjoy the dance but stay close to the exit in case the music stops, though I agree that AIR is one of the better airlines. They are unlikely to bite the dust anytime soon, but they might be in a year or two cheaper to buy then they are now.

[Beagle]

With all due respect BP you've been saying ostensibly the same thing since they were ~ $1.73 around 7-8 months ago and they've paid a 10 cent fully imputed dividend during that timeframe. $1.24 increase later ($2.87-$1.73 + 0.10 divvy) a whopping 74% in total shareholder return...you're singing the same tune.
The analysts have a very poor record of predicting future SP movements with this stock...far better off tuning into the conference calls after interim and final results and listening to Chris Luxon and reading what else they have to say, the most recent of which is here https://www.nzx.com/files/attachments/257547.pdf

[forest]

What ST members think of John Key on the board.
I must confess I bought a few when I saw the announcement of JK joining the board.
But I also must confess that I find it impossible to quantify to what extend his contribution would contribute
to future growth if any.

[Beagle]

As former minister of Tourism and PM he will have some valuable international contacts which will be useful to the company and his pragmatic style of leadership will also be useful, in my opinion. Worth noting that the SP has shown considerable northward movement since the announcement of his appointment, both on the day of the announcement itself and since then, coincidence or not ?, you folks be the judge. John Key also had some highly complimentary things to say about the company at the time of the announcement of his appointment, perhaps international institutional investors who hold the vast bulk of the shares not owned by the N.Z. Govt see what he had to say or his appointment itself as a genuine endorsement of the company ? Someone's been driving up the SP and it won't be the lowly 4% of shares held by retail N.Z. investors doing it that's for sure and it certainly won't be anyone listening to N.Z. analysts views of fair value either !

Overseas institutions buying even more shares because they have confidence in John Key's leadership ? How long before he's the Chairman of the Board ?
When you get your head around the fact that retail and N.Z. Institutional investors only own just on 100million of the 1,123million shares of the company I think this gives an interesting insight into what impact JK's appointment has on the minds of the overseas institutions who own the vast bulk of the free float shares of AIR (excl Govt majority stake).

[Elles]

With all due respect BP you've been saying ostensibly the same thing since they were ~ $1.73 around 7-8 months ago and they've paid a 10 cent fully imputed dividend during that timeframe. $1.24 increase later ($2.87-$1.73 + 0.10 divvy) a whopping 74% in total shareholder return...you're singing the same tune.

All the more reason to think they're overpriced at the moment then?

[couta1]

Definately Overseas Insto's driving the SP Roger, however that's not always a good long term gauge of true value. I remember last year when the same sort of buying drove the Ryman SP to $9.86, and yet look where it is sitting now. Air is a great company to hold if you can buy the shares at a value price, I see that as under $2.50, buying at current prices or higher is risky and doesn't give one any breathing space so to speak. I'm not keen on allowing the market to wipe my plate clean these days, I'd rather take a safe snack and forsake a risky large meal.

[Beagle]

All the more reason to think they're overpriced at the moment then?

Most of the well run airline stocks have staged a nice recovery from lows experienced in late 2016. QAN is up more than AIR in percentage terms in the last six months for example. Delta, American Airlines and many others have also been doing very well. It seems to me many airline stocks hit a low point in 2016 on fears of a real slowdown in worldwide economic growth, geopolitical factors and oil rising off the back of admittedly a very low cyclical point. You could just as easily make the case that AIR was stupidly underpriced at $1.73, (which is something I quite correctly called unlike some of the serial bears on here). We are now at a forward PE of 9, I repeat, the ten year average PE is 11. I think those with a bearish view hoping to buy this stock a lot cheaper and tap into some juicy special dividends in the years ahead are probably going to be disappointed but like all things about predicting the future, time will tell !

[winner69]

Into the 290s ....... 3 bucks not far away

[sb9]

Into the 290s ....... 3 bucks not far away

Glad this thread is bit more normal and silent in the lead upto that $3 mark, unlike last time when there was too much exuberance and ramping up from punters...

[BlackPeter]

With all due respect BP you've been saying ostensibly the same thing since they were ~ $1.73 around 7-8 months ago and they've paid a 10 cent fully imputed dividend during that timeframe. $1.24 increase later ($2.87-$1.73 + 0.10 divvy) a whopping 74% in total shareholder return...you're singing the same tune.
The analysts have a very poor record of predicting future SP movements with this stock...far better off tuning into the conference calls after interim and final results and listening to Chris Luxon and reading what else they have to say, the most recent of which is here https://www.nzx.com/files/attachments/257547.pdf

Selective memory? I did ride some way up with this share starting actually from 176 (just checked). Sold however out when the SP temporarily dipped during the uptrend and, yes - while the fundamentals still look ok if nothing changes, for my feeling are the risks at this stage higher than the potential future rewards.

Nothing to fight about - just a different perception of risk and a higher discount I tend to request for shares of any company which make their money with floating or flying people around.

I am not saying that the SP will dip from here - nobody can predict that. I am just saying that the odds are in my view at this stage less likely to reward holders than to punish them ... but hey, life is full of uncertainty, lets embrace it ;).

[Beagle]

Sorry BP, probably just poor memory...Its called getting older :) Agree no point ramping or arguing, retail investors only own 4% and overseas insto's that own the bulk of the free float wouldn't care less what's written on here and certainly wouldn't read it. All good.

[Marilyn Munroe]

... but hey, life is full of uncertainty, lets embrace it ;).

The uncertainty surrounding Cullen Airlines decision to unfreind their cobbers at Virgin(Underarm Bowlers Division) is evaporating with every profit announcement.

http://www.asx.com.au/asxpdf/20170518/pdf/43jbss2wpp4rgt.pdf

Boop booop de do
Marilyn

[airedale]

Getting off topic for a moment: I get grumpy when I book with Air NZ then find that I am on a Virgin flight. It is definitely a down grade. Air NZ should get out of that arrangement.

[theace]

Hmmm ... normally when one books, you can see if it is a codeshare flight (on Virgin metal) ... option to choose another flight on preferred metal.

[BlackPeter]

Pitty that:

http://www.stuff.co.nz/business/92860129/hong-kongs-cathay-lays-off-600-as-it-faces-rising-pressure

I remember them as one of the top airlines (though didn't use them admittedly for some time ... their routes didn't suit my needs).

But just wondering - if Cathay feels the pressure - is there anything in store for the industry as a whole?

[winner69]

Pitty that:

http://www.stuff.co.nz/business/92860129/hong-kongs-cathay-lays-off-600-as-it-faces-rising-pressure

I remember them as one of the top airlines (though didn't use them admittedly for some time ... their routes didn't suit my needs).

But just wondering - if Cathay feels the pressure - is there anything in store for the industry as a whole?

Had 2 recent long haul flights with them

Liked this bit in report - frontline workers, including pilots and cabin crew, would not be affected, but "will also be asked to deliver greater efficiencies and productivity.''

Jeez - they were awfully efficient on my flights. Had the punters fed and the lights turned within 90 minutes of takeoff and then only turned the lights on and fed the punters about 2 hours out. Hopefully not too many punters were a nuisance in the 8 odd hours in between.

[Beagle]

Pitty that:

http://www.stuff.co.nz/business/92860129/hong-kongs-cathay-lays-off-600-as-it-faces-rising-pressure

I remember them as one of the top airlines (though didn't use them admittedly for some time ... their routes didn't suit my needs).

But just wondering - if Cathay feels the pressure - is there anything in store for the industry as a whole?


Cathay is making the cuts after it reported a US$74 million loss in 2016,


At a guess without having the time to delve into their situation its most interesting to note they made a loss in 2016, (a year of record ever profits in the aviation industry with record low oil prices).
The only other airline I know of that made a loss in 2016 was Virgin and they have major systemic issues including a seriously over leveraged balance sheet.
To make a loss in 2016 and to now be undertaking major restructuring just like Virgin is I would suggest their problems are not unlike Virgin's and particular to those two companies not a sign of systemic issues right across the industry...or to put this in more colloquial terms, only badly run dogs made losses in 2016 so it shouldn't be a surprise they're now applying lots of flea powder :) Others may attribute this to the rise of discount carriers in Asia...whatever theory floats your boat.

[winner69]

At a guess without having the time to delve into their situation its most interesting to note they made a loss in 2016, (a year of record ever profits in the aviation industry with record low oil prices).
The only other airline I know of that made a loss in 2016 was Virgin and they have major systemic issues including a seriously over leveraged balance sheet.
To make a loss in 2016 and to now be undertaking major restructuring just like Virgin is I would suggest their problems are not unlike Virgin's and particular to those two companies not a sign of systemic issues right across the industry...or to put this in more colloquial terms, only badly run dogs made losses in 2016 so it shouldn't be a surprise they're now applying lots of flea powder :) Others may attribute this to the rise of discount carriers in Asia...whatever theory floats your boat.

So AIR under Chris is sort of 'best in breed' and the future looks very bright

No wonder the share price is heading to over 3 bucks and new highs (at least for this century)

Instos love well oiled machines and industry leading performers

[couta1]

So AIR under Chris is sort of 'best in breed' and the future looks very bright

No wonder the share price is heading to over 3 bucks and new highs (at least for this century)

Instos love well oiled machines and industry leading performers Yet NZ instos aren't that interested in buying the stock, I know this from personal experience when I tried to sell my large holding a few months ago, they weren't even interested at $2.32, so would be a lot less interested now.

[winner69]

Yet NZ instos aren't that interested in buying the stock, I know this from personal experience when I tried to sell my large holding a few months ago, they weren't even interested at $2.32, so would be a lot less interested now.

NZ instos pretty useless - global ones more switched on

[macduffy]

Yet NZ instos aren't that interested in buying the stock, I know this from personal experience when I tried to sell my large holding a few months ago, they weren't even interested at $2.32, so would be a lot less interested now.

Perhaps they had their fill already?

[couta1]

Perhaps they had their fill already? No, they weren't interested, said all the buying was coming from overseas not NZ.

[bull....]

Back from the states flew on a refurbished 777=300 there service was 1st rate not to mention the fact they went beyond and gave empty premium seat rows to parents with young toddlers.

[winner69]

Really solid set of numbers

https://www.nzx.com/files/attachments/258773.pdf


Things getting better as financial year rolls on

Even if F17 profit is as they say around $500m based on these improving stats D18 is looking pretty good - possibly better than F17

And 3 bucks not far away - need another debate about resistance becoming support eh

[Beagle]

Very strong month, very pleasing. Group wide yields over the last three months year to date have come in from down 7.3% YTD, down 6.6% YTD to down 5.9% YTD in April. Yields in April must have been very strong indeed (as were load factors for that matter), to move the year to date needle that much. $500m before tax for the year looking extremely conservative now and outlook for FY18 looking very sound too.

I won't comment on what I think they are worth, (especially about the $3 hurdle), other than to say I just topped up even more at $2.85 after topping up last week at $2.76.

Fuel hedging position looks very sound to me. Collared-up 75% of 1H FY18 consumption based on Brent price of between $43 and $54 and 45% of third quarter FY18 consumption at similar levels. Good prudent risk management in my opinion.

[sb9]

I won't comment on what I think they are worth, (especially about the $3 hurdle), other than to say I just topped up even more at $2.85 after topping up last week at $2.76.


Zee Roger, at this rate you may have to file SSH notice soon...:p Good on ya..

[sb9]

Expecting a strong finish today, 2.90+...

[winner69]

Expecting a strong finish today, 2.90+...

....290+ ............300?

[babymonster]

if it gets to 3.00, i might have to off load some as it weights more than 20% of portfolio atm ready

[Snow Leopard]

Wow, even I am nearly impressed with these op stats !

Over-priced though :p.

Best Wishes
Paper Tiger

[Xerof]

if it gets to 3.00, i might have to off load some as it weights more than 20% of portfolio atm ready Why do you count unrealised gains in your worry wall of diversification. I always keep it as cost, for the simple reason that if a share is well into profit, it's trending up, and I would only liquidate if the tables turn

[couta1]

....290+ ............300? Winner, you little ramper, you. Can you start ramping SUM other share a bit more now, this one's flying high but nearly out of puff.

[arc]

Looking likely its lost its legs ?.

[Xerof]

In cruise mode at 28,700 feet. No turbulence, but if there is, they just go to 35,000 feet :D

[Hoop]

if it gets to 3.00, i might have to off load some as it weights more than 20% of portfolio atm ready

One golden rule (of many) to successful investing.......Cut your losses short and let your profits run

[peat]

In cruise mode at 28,700 feet. No turbulence, but if there is, they just go to 35,000 feet :D

I thought our ceiling was 29,500 feet.

[Raz]

Back from the states flew on a refurbished 777=300 there service was 1st rate not to mention the fact they went beyond and gave empty premium seat rows to parents with young toddlers.

If you paid for a premium economy seat and they did this near you I suspect many would not be impressed..interesting.

[dobby41]

If you paid for a premium economy seat and they did this near you I suspect many would not be impressed..interesting.

You would have purchased premium economy seat not a child free area seat.

[RTFQ]

If you paid for a premium economy seat and they did this near you I suspect many would not be impressed..interesting.

For the FSM to upgrade without an underlying cabin problem would be immediate suspension. I suggest there were other factors, not obvious, for this to have occurred.

[Baddarcy]

I thought our ceiling was 29,500 feet.

I was on a 777-200 coming back from Houston last year about 3 hours out from Auckland we went all the way up to 41,000 feet for about an hour.

[winner69]

For the FSM to upgrade without an underlying cabin problem would be immediate suspension. I suggest there were other factors, not obvious, for this to have occurred.

FSM being Flight Services Manager - yes?

[Beagle]

Oil down sharply overnight, (Opec agreement, buy the rumor sell the fact). Most of the American carriers up ~ 2% overnight. QAN finished at $5.01 yesterday.

[johnluangco]

Interesting to see that Singapore Airlines has posted a loss for the quarter ended March.

http://asia.nikkei.com/magazine/20170525/Business/Singapore-Airlines-and-Cathay-Pacific-set-a-new-course-for-survival

[Onion]

Interesting to see that Singapore Airlines has posted a loss for the quarter ended March.

http://asia.nikkei.com/magazine/20170525/Business/Singapore-Airlines-and-Cathay-Pacific-set-a-new-course-for-survival

I thought this observation was interesting. Effectively the low price of oil is neutral when competitors also buy the same cheap fuel:


The cheap price of oil, which should be a positive factor for airlines in terms of cost savings, has turned out to be a double-edged sword.
"The sharp drop in yield for the last two years can be partly attributed to the sharp drop in the oil price, which has given room [for airlines] to price more aggressively," Executive Vice President Mak Swee Wah said. With oil prices ticking higher recently, there are early signs of yields bottoming out, Mak said. Stiff competition, however, looks like it is here to stay.

[Beagle]

Yeap, oil prices and yields are inextricably linked, always have been and always will be. AIR would actually be in a better position from a competitive point of view with its modern fleet with $70 oil.

[dobby41]

AIR would actually be in a better position from a competitive point of view with its modern fleet with $70 oil.

And that is a key - cheap oil allows airlines with thirsty planes to compete easier.
If oil went back up many would stop flying some of the routes they do - competition would decrease.

[RTFQ]

FSM being Flight Services Manager - yes?

Affirmative......

[BlackPeter]

https://www.ft.com/content/36f5f2dc-43af-11e7-8d27-59b4dd6296b8

This is not an AIR problem, but the recent interruptions for BA are a welcome reminder how easy it is in the airline industry to lose hundreds of millions literally over night through an "out of the blue" event. And its not even necessary for a plane to crash - sounds like BA didn't plan for sufficient backup power supplies for their IT systems (or they didn't work).

While we don't know the cost of the tab yet for BA, a much shorter and similar interruption for Delta (only 8 hours) accrued to a loss of $100m.

Maybe a high risk premium is appropriate for such an industry - just imagine the wrong power supply for an AIR computer browning out ....

[arc]

https://www.ft.com/content/36f5f2dc-43af-11e7-8d27-59b4dd6296b8

This is not an AIR problem, but the recent interruptions for BA are a welcome reminder how easy it is in the airline industry to lose hundreds of millions literally over night through an "out of the blue" event. And its not even necessary for a plane to crash - sounds like BA didn't plan for sufficient backup power supplies for their IT systems (or they didn't work).

While we don't know the cost of the tab yet for BA, a much shorter and similar interruption for Delta (only 8 hours) accrued to a loss of $150m in profits.

Maybe a high risk premium is appropriate for such an industry - just imagine the wrong power supply for an AIR computer browning out ....

A few years ago I had a tour of the AIR computing center and spent some time in interviews with various staff there, I was impressed with their thoughtful approach to mediating certain types of events, multiple cable entry/exit systems for the building, additional capacity wiring etc. I seem to remember backup diesel generators being a "standard" fixture for them.

[mondograss]

Been there, done that:
http://www.stuff.co.nz/business/industries/2955289/Air-New-Zealand-boss-criticises-IBM-over-outage

I'm sure they learned from the experience (I'm equally sure that IBM learned as I'm pretty sure they lost the contract).

[Snow Leopard]

The questions for any business are
where is your backup data center and/or where is disaster recovery data center?
When did you last actually try to use it?

An IT power supply issue should not bring any company to it's knees!

Even I now have backup servers [in different countries] running my critical software.

Best Wishes
Paper Tiger

[dobby41]

Even I now have backup servers [in different countries] running my critical software.

Best Wishes
Paper Tiger

Hopefully you also have backup access to those backup servers.
This is all only as strong as the weakest link.

[Snow Leopard]

Hopefully you also have backup access to those backup servers.
This is all only as strong as the weakest link.

There is only one Paper Tiger.

Best Wishes
The Weakest Link

[dobby41]

There is only one Paper Tiger.

Best Wishes
The Weakest Link

True that.
May point, in case it is missed, is that I have seen a lot of people do all sorts of things about data security and then find their company on its' knees because a cable was cut and they have lost Internet access.
They then complain loudly but the fact remains that they didn't plan properly - they didn't understand what ran their business.

[arc]

True that.
May point, in case it is missed, is that I have seen a lot of people do all sorts of things about data security and then find their company on its' knees because a cable was cut and they have lost Internet access.
They then complain loudly but the fact remains that they didn't plan properly - they didn't understand what ran their business.

Very true.
And also when your supplier fails... as happened to Xero and many others, your up a creek...

[Marilyn Munroe]

I knew a dude who was working in IT at Cullen Airlines at the time Ansett went under.

He used to regale us with tales of horror about the rush moving all the IT backend from Melbourne to Auckland overnight.

Boop boop de do
Marilyn

[Beagle]

Institutional Investor day on Thursday 1 June. Cat about to be let out of the bag regarding implied or explicit guidance upgrade ?

[sb9]

Institutional Investor day on Thursday 1 June. Cat about to be let out of the bag regarding implied or explicit guidance upgrade ?

2.90 beckoning and with that investor day scheduled in a day or so, we could be well close or over that 3 mark soon...

[winner69]

2.90 beckoning and with that investor day scheduled in a day or so, we could be well close or over that 3 mark soon...

Was an Investor Day last year that really moved the share price.

[couta1]

2.90 beckoning and with that investor day scheduled in a day or so, we could be well close or over that 3 mark soon... Overseas investors don't seem to mind paying top dollar for stocks like Air and Spark currently with no divvies in sight for a few months. Some of us kiwis would rather buy stocks offering nice juicy divvies over the next month.

[Beagle]

Was an Investor Day last year that really moved the share price.

And on that occasion management were selling left right and center. This time so far there's just the one recidivist offender. I expect they'll confirm what "blind freddy" can see from the monthly operating stat's that yields are improving and overall things are better than expected. Probably an implied upgrade rather than an explicit one.

[Raz]

And on that occasion management were selling left right and center. This time so far there's just the one recidivist offender. I expect they'll confirm what "blind freddy" can see from the monthly operating stat's that yields are improving and overall things are better than expected. Probably an implied upgrade rather than an explicit one.

Hear another executive is about to build his new mansion down in central so expect the respective share selling to commence shortly :-)

[bull....]

looks a bit toppy

[arc]

looks a bit toppy


Totally agree. Most of the market looks that way at the moment. I've noticed profit taking across most of the stocks im monitoring, 100k here 125k there just enough to not panic the market, but its a repeating pattern...

Whats that saying.. feeding the chickens, fattening them up for...

[Beagle]

Nothing of the sort. Investor day tomorrow will shed some light.

[johnluangco]

Emirates has decided to cut it's daily Airbus A380 flights between Auckland and Sydney, in turn Qantas will upgrade some of it's Boeing 737 flights to Airbus A330.

Whilst this is not good news for consumers, it's probably good for Air NZ...?

https://www.ausbt.com.au/emirates-axes-sydney-auckland-airbus-a380-flights

[iceman]

Intensity of competition continues to ease http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11866931

[BlackPeter]

Emirates has decided to cut it's daily Airbus A380 flights between Auckland and Sydney, in turn Qantas will upgrade some of it's Boeing 737 flights to Airbus A330.

Whilst this is not good news for consumers, it's probably good for Air NZ...?

https://www.ausbt.com.au/emirates-axes-sydney-auckland-airbus-a380-flights

Still remember the 10 hours I had to wait some years ago in Sydney for my Emirates flight (which had been delayed in Dubai) to hop back over the ditch. I'd say that doing this last mile with Qantas must be a win-win for everybody and given my recent experience with Qantas - they significantly managed to improve their standards. I think this is good for everybody and if demand increases I am sure that Qantas can easily throw in another plane ...

[Arbroath]

Profit upgrade as expected in the investor day presentation...the question is do they deliver $530m or $550m+

Maybe can push past $3 next month or two

[Learning slowly]

It is out already - >$525 million is the revised forecast.


Profit upgrade as expected in the investor day presentation...the question is do they deliver $530m or $550m+

Maybe can push past $3 next month or two

[winner69]

That previous guidance was always a load of codswallop. Roger and myself saw through that when they came out with it. No way was H2 going to be as bad as they implied.

The market per se saw through it as well - that's why the share price is close to $3

Now AIR have actually come clean certainty prevails and yes $3 plus soon

I'm still sticking to my forecast $550m to $600m (including Virginngain)anything

[winner69]

Will be 2nd best year in their long history

[winner69]

Who would want to be an analyst / investor - must be really hard work to sit and fully concentrate for 3 hours listening to Chris and his team rave on. Even the pretty slides wouldn't keep me awake. Chris will love it though - gets to use all the buzzwords

They probably get a decent lunch at the end of it to make it worth while - and it's a good excuse to get out and meet their peers.

Get an invite Roger?

[babymonster]

Anything else could push the sp apart from the upgrade?

[Learning slowly]

Anything else could push the sp apart from the upgrade?

There are a few goodies.

1-2 new destinations being worked on
Delay in A320/321
Cost management on track

[couta1]

525+ Million, but until the final figure is known, there's an awful lot baked into the current SP IMO.

[winner69]

Look at Slide 13

https://www.nzx.com/files/attachments/259318.pdf

That's why they love their outrageous bonuses being based on relative performance to certain indices

Cool eh

[Beagle]

* Very pleased with how they're running the company
* Very pleased they're targeting consistent dividends across the cycle, (perfect dividend hounds stock)
* Good that FY18 capex is down ~ $150m, plenty of opportunity to shrink their gearing back to the middle of targeted range 45-55%
* Very pleased with their highly disciplined approach towards future growth
* Targeting improved CASK
* Growth in loyalty programs
* Upgraded guidance as expected but still looks extremely conservative @ $$525m, I'm expecting $550 - $600m
* We appear to have passed the high tide mark for intensity of new competition and as recent entrants look to either confirm the profitability of their new route or quit
* I see a gradual ongoing improvement in the yield environment
* The recent lift in SP has solid foundations behind it in my opinion.
* Still expecting very significant special dividends in FY20 - FY22
* Expecting stable 10 cps final this year - Gross dividend yield from ordinary dividends is ~ 10% with current SP, (happy with that).
* I won't comment whether I think its worth more than $3 but have been topping up recently as high as $2.85 (speaks for itself).

[bull....]

be interesting to see how much the market had priced in the better performance.

[winner69]

* Very pleased with how they're running the company
* Very pleased they're targeting consistent dividends across the cycle, (perfect dividend hounds stock)
* Good that FY18 capex is down ~ $150m, plenty of opportunity to shrink their gearing back to the middle of targeted range 45-55%
* Very pleased with their highly disciplined approach towards future growth
* Targeting improved CASK
* Growth in loyalty programs
* Upgraded guidance as expected but still looks extremely conservative @ $$525m, I'm expecting $550 - $600m
* Shareholders are extremely well positioned going forward. We appear to have passed the high tide mark for intensity of new competition and as recent entrants look to either confirm the profitability of their new route or extricate themselves from same I see a gradual ongoing improvement in the yield environment
* The recent lift in SP has solid foundations behind it in my opinion.
* Still expecting very significant special dividends in FY20 - FY22
* Expecting stable 10 cps final this year - Gross dividend yield from ordinary dividends is ~ 10% with current SP, (happy with that).
* I won't comment whether I think its worth more than $3 but have been topping up recently as high as $2.85 (speaks for itself).

Surely you were worthy of an invite to the do - investor and company advocate

[Beagle]

Surely you were worthy of an invite to the do - investor and company advocate

I would agree and be pleased to attend but it is limited to institutional investors and analysts. Already tried to make the case for large retail holders to attend with Tony Cater in my discussion with him last year. It is what it is and to be fair at least this time retail shareholders can watch it here live http://edge.media-server.com/m/p/kuo3uxit/r/1 and website will be updated with recording later. Hopefully some of the N.Z. analysts can read the tea leaves now they've been handed them on a silver platter.

[sb9]

My pick is they're likely to hit $550m target at least...

[sb9]

That's one heck of presentation, so much to take in....need a good hour or so to go through in detail. Just flicked through highlights for now...

[stoploss]

525+ Million, but until the final figure is known, there's an awful lot baked into the current SP IMO.

Coming across as sour grapes now Couta let it go ......$ 2.94 and counting , that's a lot of opportunity cost you left on the table. An uptrending stock in a hot industry ......

[Beagle]

That's one heck of presentation, so much to take in....need a good hour or so to go through in detail. Just flicked through highlights for now...

I agree 100%. Already my #1 investment position but I will be studying that presentation in great detail today and updating my thinking for FY18 and FY19 forecasts.
My preliminary thinking is we're headed close to $600m this year and I can't see any obvious reason that won't be replicated in FY18. That would give after tax EPS of circa 38 cps. Average ten year PE is 11. I think the market is already modelling in the specials as a given hence the most compelling medium term investment case from the divvy yield perspective. I am modelling a five year average gross dividend yield of 15% inclusive of special's.

[couta1]

Coming across as sour grapes now Couta let it go ......$ 2.94 and counting , that's a lot of opportunity cost you left on the table. An uptrending stock in a hot industry ...... I'll buy it again at the right price, at its current price it's not a stand out from a few other high divvy payers on the NZX. Looking ahead a couple of years toward a potential for more specials, then it stands out again. PS-Opportunity lost is money that was never yours as opposed to profit in the hand.

[sb9]

I agree 100%. Already my #1 investment position but I will be studying that presentation in great detail today and updating my thinking for FY18 and FY19 forecasts.
My preliminary thinking is we're headed close to $600m this year and I can't see any obvious reason that won't be replicated in FY18. That would give after tax EPS of circa 38 cps. Average ten year PE is 11. I think the market is already modelling in the specials as a given hence the most compelling medium term investment case from the divvy yield perspective. I am modelling a five year average gross dividend yield of 15% inclusive of special's.

Thanks for that input Roger, now that big question, what's your take on final divvy for the year then...15c or 10c + a special of 10c?

[Beagle]

Thanks for that input Roger, now that big question, what's your take on final divvy for the year then...15c or 10c + a special of 10c?

See post #11141 mate. No special this year, (close to top of gearing range). Expecting very strong specials in FY20- FY22 after capex program finished.

[Kelvin]

Both China Airlines and Emirates have withdrawn from Sydney-Auckland recently. I did a rough calculation and that's a drop in capacity of over 5000 seats each week :eek2:

[777]

Both China Airlines and Emirates have withdrawn from Sydney-Auckland recently. I did a rough calculation and that's a drop in capacity of over 5000 seats each week :eek2:

Emirates replaced with 2 Qantas A330 flights.

[Kelvin]

Emirates replaced with 2 Qantas A330 flights.

Qantas just replacing 2 existing 737 flights with A330. Only makes up for half the capacity lost from the A380

[777]

See post #11141 mate. No special this year, (close to top of gearing range). Expecting very strong specials in FY20- FY22 after capex program finished.

Capex program will never finish. Expansion requires more aircraft. 777-200 fleet replacement will need to be considered FY21-FY24.

[Beagle]

From listening into the presentation :-
Over 280 internal parts now 3D printed at a quarter the cost of OEM parts
Reduced inventory, reduced obsolescent inventory, speeds up delivery, average 3D part print time 8 minutes.
CASK improvement forecast a bit flat in FY 18 due to delay in A321 neo
CASK improvement regaining down track in FY19
Fleet simplification driving CASK savings very well
777-200 refurbishment complete
777-300's getting a refresh now
Customer lounge upgrades very well received, half way through now
Dreamliner efficiency 20-25% better than 767's on a ASK basis
787-9 Code 1 - 9 Dreamliners configuration ideally suited to Asian / Tasman markets
787-9 Code 2 4 Dreamliners remaining on order will be spec as 54% more premium seats to U.S.
A321 Neo coming - 27% more seats at only a fraction more to operate than standard A320. To be deployed on larger leisure markets, leverage utilization as much as possible
Rob Mcdonald - CFO
Profitable growth is the focus
Only now understand critical international financial strengths that are durable and playing to that
Gearing is a guideline only 45-55%, comfortable with being at top of range at moment as capex program comes to a conclusion
Emergence of strong free cash flow looking ahead
Cost of debt continues to reduce, lower margins for new debt coming on board, no covenants on debt, debt is attractive to investors due to strong credit rating
Delay in A321 due to engine issues, delay was pushed out further at AIR's request to take advantage of new configuration with more seats, leases on some current aircraft easy to cope with delay's to neo A320 and neo A321
New seats on hand now, (seats often a reason for aircraft delay'(s)
$170m capex lower in FY18 due to aircraft delay's, (a good thing according to Rob Mcdonald.
Hedging gives us time to adjust our business model.
Looking at fleet replacement program for 777-200 starting from FY22...looking at request for information from manufacturers later this year.
Hedging gives us time to adjust our business model
Excellent liquidity still at top of range despite big special last year, may buy some aircraft outright to being this down to normal level's. (no talk of special divvies to hand out liquidity to shareholders).
Goal of maximizing ROIC over 15%
Consistency of dividend across the cycle their #1 aspiration - medium term focus
Truck loads of imputation credits on hand
Chris Luxon:-
We're constuctivly dissatisfied and there's a lot more to do in the business.
We have a very strong core domestic business
We have a very strong loyalty proposition
Pacific rim focus of network.
Well positioned, all markets profitable
De-risked our business by partnering with other outstanding airlines
Relentless daily focus about cost reduction
Very strong investment grade balance sheet.
Competitors now behaving more rationally.
Improving revenue environment.
We are done with acquisitions !! ( My read, special divvies are a given FY20-FY22 all things being equal if the market remains normal)
Low staff churn. Pilot poaching is not a big issue for AIR. We're proud of our pilots, they have a clear flight path ahead for progression within AIR.
5 year focus in thinking regarding profitable growth.

[stoploss]

I'll buy it again at the right price, at its current price it's not a stand out from a few other high divvy payers on the NZX. Looking ahead a couple of years toward a potential for more specials, then it stands out again. PS-Opportunity lost is money that was never yours as opposed to profit in the hand.

So what other stock on the NZX has put as much profit in the hand I make it 10 weeks $ 2.29 > 2.985

[couta1]

So what other stock on the NZX has put as much profit in the hand I make it 10 weeks $ 2.29 > 2.985 I'm speaking from a dividend yield perspective, removing specials. In answer to your question though, I'd say ATM would fit the bill. Regardless of all that, I simply wouldn't have held from $2.29 to $2.985, so it isn't really relevant to myself. I sold my holding early in order to even out income years somewhat, as the Air divvy was paid in March and I didn't want any more divvies in that financial year.

[stoploss]

I'm speaking from a dividend yield perspective, removing specials. In answer to your question though, I'd say ATM would fit the bill. Regardless of all that, I simply wouldn't have held from $2.29 to $2.985, so it isn't really relevant to myself. I sold my holding early in order to even out income years somewhat, as the Air divvy was paid in March and I didn't want any more divvies in that financial year.

You are a rare beast on a financial forum " even out income" paying tax means you are making money .....ATM not bad looks like $ 2.95 ish to 3.37 same timeframe .

[JeremyALD]

Amazing how things can change so quickly.

Still I agree with Couta. The SP was around $3 when AIR was at record profits. How much further can it go? Probably another 10% but there's a bit of risk at the current SP too.

[couta1]

You are a rare beast on a financial forum " even out income" paying tax means you are making money .....ATM not bad looks like $ 2.95 ish to 3.37 same timeframe . Excess imputation credits must be carried forward. PS-ATM more like $2.60ish to $3.85 over same period.

[bull....]

So what other stock on the NZX has put as much profit in the hand I make it 10 weeks $ 2.29 > 2.985

brought in about yr ago at 2.30 got the special divs + div , brought at 1.75 lots + more divs just sold the remainer of my shares reckon gains + divs = just over 100% gain in a yr so I thinks its difenetly one if not the best performing stock on the nzx wether it continues who knows but im departing the flight thx air nz for the great ride.

[Beagle]

Amazing how things can change so quickly.

Still I agree with Couta. The SP was around $3 when AIR was at record profits. How much further can it go? Probably another 10% but there's a bit of risk at the current SP too.
Extract from post #11148
That would give after tax EPS of circa 38 cps. Average ten year PE is 11.

[couta1]

brought in about yr ago at 2.30 got the special divs + div , brought at 1.75 lots + more divs just sold the remainer of my shares reckon gains + divs = just over 100% gain in a yr so I thinks its difenetly one if not the best performing stock on the nzx wether it continues who knows but im departing the flight thx air nz for the great ride. Very well done, your trigger fingers are well controlled.

[bull....]

Very well done, your trigger fingers are well controlled.

Its only ever in hindsight one truly no's if they made the right decisions - win some lose some :)

anyway air reminds me of NZR enjoy it why the conditions are more than favourable

[Beagle]

A superb presentation, clearly articulating their strategy going forward. Very impressively managed company.

[Onion]

I'll buy it again at the right price, at its current price it's not a stand out from a few other high divvy payers on the NZX. Looking ahead a couple of years toward a potential for more specials, then it stands out again. PS-Opportunity lost is money that was never yours as opposed to profit in the hand.

I guess that is you are called "Cautious Couta"! :p

[couta1]

Amazing how things can change so quickly.

Still I agree with Couta. The SP was around $3 when AIR was at record profits. How much further can it go? Probably another 10% but there's a bit of risk at the current SP too. Yep, a lot of toppy stocks on the NZX currently, however there is still SUM value to be found out there, for those happy to pay top dollar, that's their choice ,but I've been stung many times and had to sell for significant losses in the past, either that or wait years for the price to come back to your buy in average or not.

[couta1]

I guess that is you are called "Cautious Couta"! :p Yeah, I can hardly believe it myself.:cool:

[Marilyn Munroe]

Emirates are withdrawing A380's from the AKL --> SYD run. They are being replaced by Queer and Nasty Airlines A330's instead.

http://australianaviation.com.au/2017/05/qantas-to-add-widebody-sydney-auckland-flights-as-emirates-drops-route/

Cabinet ministers travelling to Europe on vital government business will not be pleased.

Is the Blitzkrieg launched by sand state airlines faltering? Is the Tasman Emirates Stalingrad?

Boop boop de do
Marilyn

[Zaphod]

IMO there's far too much capacity on TT routes. Some reduction is both warranted and inevitable.

[RTFQ]

The lunch talk/questions off the record, will probably determine the close price.

[winner69]

The lunch talk/questions off the record, will probably determine the close price.

So true - that carefully disguised nudge nudge wink wink not really disclosing anything chatter

If only Roger was there!!!!!

[Joshuatree]

brought in about yr ago at 2.30 got the special divs + div , brought at 1.75 lots + more divs just sold the remainer of my shares reckon gains + divs = just over 100% gain in a yr so I thinks its difenetly one if not the best performing stock on the nzx wether it continues who knows but im departing the flight thx air nz for the great ride.

Its been great cycle ride In at AIR for sure Bull and can understand you taking profits atp. Im still enjoying the results atm and hope she runs a while longer. Fab Day all-round here.:)

[arc]

Looks like the finger of death pattern has developed...

[Beagle]

QAN up 6 cents to over $5 today (and that's without upgraded profit guidance), and has also been extremely strong in recent months. Gives a useful insight into how investors on the other side of the Tasman also believe the competitive environment is now more benign.

[Xerof]

Looks like the finger of death pattern has developed...

Yep, I've probably been given the fingers by all the downrampers, but exactly which pattern are you on about?

[arc]

Yep, I've probably been given the fingers by all the downrampers, but exactly which pattern are you on about?

That sharp price spike on my/your screen, 285 close 295 launch today , typically followed by a negative period that may or may not recover. But then again if it is overseas investors driving the trend then "the sky may be the limit"... no pun intended. perhaps they think it should be more like our auuwwwssttraleeen bros

[Beagle]

That sharp price spike on my/your screen, 285 close 295 launch today , typically followed by a negative period that may or may not recover. But then again if it is overseas investors driving the trend then "the sky may be the limit"... no pun intended. perhaps they think it should be more like our auuwwwssttraleeen bros

They just had a profit upgrade mate and the airline index is up overnight on cheaper oil prices. Today's share price improvement is quite a logical and perfectly understandable movement in my opinion. Tomorrow and the next day we'll see analysts come out with revised estimates for FY17 and FY18. I'm sorry but I think your logic of a SP fall tomorrow is predicated on nothing more than pure speculation.

[Xerof]

arc, I would call that a shooting star, but for that to be a valid formation, it needs to close today just below the opening price. Doesn't seem likely at the moment. (probably already seen the back-fill)

As roger says, this mornings rise is based on the earnings upgrade

[arc]

They just had a profit upgrade mate and the airline index is up overnight on cheaper oil prices. Today's share price improvement is quite a logical and perfectly understandable movement in my opinion. Tomorrow and the next day we'll see analysts come out with revised estimates for FY17 and FY18. I'm sorry but I think your logic of a SP fall tomorrow is predicated on nothing more than pure speculation.

Could well be...

[Meextr]

Cracked the 300

[stoploss]

Cracked the 300

Aussie fund managers back from lunch suitably lubricated ......

[Beagle]

Cracked the 300

I will make this comment and this is not a ramp, it bothers me not one way or the other whether people think that, only 4% of holdings is retail so nothing to be gained by ramping IMO.
I remain of the view that nobody can reliably tell you which point of the airline cycle we're currently at.
What the company has done this year is show their business model in the face of arguably one of the fiercest periods of competition is extremely robust.
Their brand is strong, their management team are focused and their business model is underpinned by compelling tourism growth, a strong drive for cost reduction and a modern very fuel efficient fleet.
Looking forward, all things being equal I see competitor pressure further easing as we head into 1H Fy18 as we lap the year when new entrants launched with red hot opening specials and new entrants last year look to ensure their new routes are profitable or reduce capacity or extricate themselves from the route.
My preliminary thinking is I see nothing in today's announcement, (with further growth in depth on routes established last year for which the expensive development launch costs have already been expended) and further growth leveraging off the existing fixed cost base leading to further CASK efficiencies) which would make me think that ~ $550 before tax or $400m after tax isn't achievable all things being equal in Fy18 and FY19 with possible upside from there. $400m after tax gives 35.6 cps, this year I think we're slightly higher than that.
The average PE across the cycle is 11. John Key coming on board will add further depth to an already highly talented intellectual pool and very useful international contacts.
People who think $3 is the ceiling could be in for a big surprise in the years ahead.

[sb9]

I will make this comment and this is not a ramp, it bothers me not one way or the other whether people think that, only 4% of holdings is retail so nothing to be gained by ramping IMO.
I remain of the view that nobody can reliably tell you which point of the airline cycle we're currently at.
What the company has done this year is show their business model in the face of arguably one of the fiercest periods of competition is extremely robust.
Their brand is strong, their management team are focused and their business model is underpinned by compelling tourism growth, a strong drive for cost reduction and a modern very fuel efficient fleet.
Looking forward, all things being equal I see competitor pressure further easing as we head into 1H Fy18 as we lap the year when new entrants launched with red hot opening specials and new entrants last year look to ensure their new routes are profitable or reduce capacity or extricate themselves from the route.
My preliminary thinking is I see nothing in today's announcement, (with further growth in depth on routes established last year for which the expensive development launch costs have already been expended) and further growth leveraging off the existing fixed cost base leading to further CASK efficiencies) which would make me think that ~ $550 before tax or $400m after tax isn't achievable all things being equal in Fy18 and FY19 with possible upside from there. $400m after tax gives 35.6 cps, this year I think we're slightly higher than that.
The average PE across the cycle is 11. John Key coming on board will add further depth to an already highly talented intellectual pool and very useful international contacts.
People who think $3 is the ceiling could be in for a big surprise in the years ahead.

Well said mate, that $3 might be a bargain price in a months time...

[sb9]

Finished at day's high point 3.02, well done :t_up:

[winner69]

Finished at day's high point 3.02, well done :t_up:

No surprises here

Wonder if $3.00 will now become strong support seeing it has broken through a mark that showed strong resistance

If as Roger says the big boys will mull over their models over night ....and start buying in earnest tomorrow and next week I reckon

Nothing to upset the apple cart until the full year announcement time - when is that

[sb9]

No surprises here

Wonder if $3.00 will now become strong support seeing it has broken through a mark that showed strong resistance

If as Roger says the big boys will mull over their models over night ....and start buying in earnest tomorrow and next week I reckon

Nothing to upset the apple cart until the full year announcement time - when is that

Not until last week of Aug, the FY results to be announced..

[Beagle]

No surprises here

Wonder if $3.00 will now become strong support seeing it has broken through a mark that showed strong resistance

If as Roger says the big boys will mull over their models over night ....and start buying in earnest tomorrow and next week I reckon

Nothing to upset the apple cart until the full year announcement time - when is that

Kudos to you for calling it as being worth over $3, (I was too gun shy after last year's downdraft) but was topping up as recently as last Friday at $2.85 which speaks for itself. Couldn't believe the market didn't react late last week in a more positive way to the excellent April operating stat's, (my read is investors left a free lunch on the table late last week after those robust stat's). Institutional holders and analysts got a free lunch after today's presentation but I reckon my free lunch was more rewarding :D
Market could gain even more altitude when they announce close to $600m in late August. $525m figure looks extremely conservative.

[Meextr]

Do you think we are looking at a special dividend?

[JeremyALD]

Apparently this is the highest level in 16 years? I'm sure that's incorrect https://www.nbr.co.nz/article/market-close-nz-shares-rise-air-nz-16-year-high-and-restaurant-brands-hits-record-after

[Jantar]

Apparently this is the highest level in 16 years? I'm sure that's incorrect https://www.nbr.co.nz/article/market-close-nz-shares-rise-air-nz-16-year-high-and-restaurant-brands-hits-record-after Maybe thaey are deducting the 25c special off the $3.21 high in Jan 2016

[winner69]

Apparently this is the highest level in 16 years? I'm sure that's incorrect https://www.nbr.co.nz/article/market-close-nz-shares-rise-air-nz-16-year-high-and-restaurant-brands-hits-record-after

It was about $16 last century ....maybe it'll get back there one day

[Snow Leopard]

Apparently this is the highest level in 16 years? I'm sure that's incorrect https://www.nbr.co.nz/article/market-close-nz-shares-rise-air-nz-16-year-high-and-restaurant-brands-hits-record-after

Yes on a dividend-adjusted and consolidation-adjusted basis this is truly the most-valued it has been for some quite considerable time. [since $3.037 on 19th Feb 2001]

Best Wishes
Paper Tiger

[winner69]

That $1.70 / $1.80 level seems so far away ...but it wasn't that long ago

[tim23]

I recall them being $3.26 about 12 months ago?

[Xerof]

I recall them being $3.26 about 12 months ago?

Yes, so do I, Jan 2016 actually

[Raz]

Yes, so do I, Jan 2016 actually

Its been a good day :-)

[Beagle]

Do you think we are looking at a special dividend?
See post #11151
In further excerpts from today's investor briefing management confirmed they were half way through providing new cuistomer lounges and that feedback to date from customers had been extremely positive.
Melbourne lounge for example looks great. http://australianaviation.com.au/2017/05/air-new-zealand-unveils-new-melbourne-lounge/

[mayday]

a chance to touch $3 in 12 months I'd say (Donald Trump has won the US election, nothing seems impossible nowadays, it is all rational at the end of day) :)

yeah here we go

[Subway]

See post #11151
In further excerpts from today's investor briefing management confirmed they were half way through providing new cuistomer lounges and that feedback to date from customers had been extremely positive.
Melbourne lounge for example looks great. http://australianaviation.com.au/2017/05/air-new-zealand-unveils-new-melbourne-lounge/


Not the feedback i've heard from visitors to the Melbourne lounge, have complained that its smaller and more cramped....

[winner69]

Today could be a big day for the AIR share price

Air New Zealand from a flyers perspective might just be another airline and nothing special but it is operational efficient and makes heaps of money in its home market from having an almost monopolistic position .......but from a punters perspective it has heaps going for it at the moment and market and current market sentiment will take it to new highs

[couta1]

Today could be a big day for the AIR share price

Air New Zealand from a flyers perspective might just be another airline and nothing special but it is operational efficient and makes heaps of money in its home market from having an almost monopolistic position .......but from a punters perspective it has heaps going for it at the moment and market and current market sentiment will take it to new highsGee winner, your starting to sound like a Journalist.

[BlackPeter]

Today could be a big day for the AIR share price

Air New Zealand from a flyers perspective might just be another airline and nothing special but it is operational efficient and makes heaps of money in its home market from having an almost monopolistic position .......but from a punters perspective it has heaps going for it at the moment and market and current market sentiment will take it to new highs

Are you selling ;)?

[Baddarcy]

Not the feedback I've heard from visitors to the Melbourne lounge, have complained that its smaller and more cramped....

I disagree, I've been to the new one a couple of times, including a Friday afternoon/evening rush hour and it was very nice, heaps of room. If you want to see crowed try Wellington domestic any weekday evening.

The food area is an exact carbon copy of the Auckland one which is a little disconcerting, almost makes you forget where you are after a long day at work !

Top tip, the ottomans in the shower/toilets have wheels on the bottom, if you pull it out from under the sink too hard they can fly across the floor. I gave some poor bugger in the next room one heck of a fright (judging by his loud 4 letter expletive) when my one slammed into the wall with an almighty bang.

[Raz]

I disagree, I've been to the new one a couple of times, including a Friday afternoon/evening rush hour and it was very nice, heaps of room. If you want to see crowed try Wellington domestic any weekday evening.

The food area is an exact carbon copy of the Auckland one which is a little disconcerting, almost makes you forget where you are after a long day at work !

Top tip, the ottomans in the shower/toilets have wheels on the bottom, if you pull it out from under the sink too hard they can fly across the floor. I gave some poor bugger in the next room one heck of a fright (judging by his loud 4 letter expletive) when my one slammed into the wall with an almighty bang.

I beg to differ, they are all over crowded at peak times...you just got lucky...time they have an auction off koru memberships. increase the price and reduce membership and access...they are like disneyland..stuffed beyond capacity. 3.20 today ah Winner...

[bull....]

credit suiss issued a underperform on air today after the presentation

[Beagle]

Interestingly just a short while back when QAN announced their 3rd quarter result and underlying forecast before tax of $1.35 - $1.4b = ~ 53 cps after tax AIR and QAN were trading on exactly the same PE ratio of ~ 8 as I observed based on AIR's forecast of $500m before tax.

A short time later we have seen QAN's SP rally strongly and now trading on a FY17 PE of 9.67 as at a few minutes ago when their SP had added another 8 cps to trade at $5.15.
Using an input of $575m for AIR less full corporate tax of 28% on 1123m shares gives 36.9 cps and based on a SP of $2.97 still gives a forward PE of almost exactly 8, 8.04 (to be exact).
After yesterday's very positive presentation I am wondering which PE is more appropriate and I'm leaning towards the QAN one seeming quite reasonable.
Applying that 9.67 PE, (remember the 10 year average is ~ 11), to my assumption of profit before tax of $575m giving 36.9 cps gives $3.57.
Just an interesting observation, not suggesting its worth that or it will go to that figure anytime soon. Disc: Happily holding long term for exceptional dividend yield including specials over the next five years.

[winner69]

Roger - Aussie companies generally trade at higher multiples than NZ companies (in same sector)

I know you don't believe it but the ASX is a much bigger and more vibrant exchange with greater number of participants etc etc. with greater liquidity ........and though AIR is also listed on the ASX its a sad fact that QAN has the 'home advantage' eh

[Beagle]

Wonderful "efficient" market we have eh Winner, both flying in similar skies...

[couta1]

Bit of Air coming out of the balloon today, people paying $3 plus are either very balsy or suffering from Amnesia.:cool:

[bull....]

Bit of Air coming out of the balloon today, people paying $3 plus are either very balsy or suffering from Amnesia.:cool:

usually the pros need a day to digest the info - so the true reaction today? credit suess downgrade?

[RupertBear]

Bit of Air coming out of the balloon today, people paying $3 plus are either very balsy or suffering from Amnesia.:cool:

At $3 I would be take the money and run! :D

[BeeBop]

I took the money and ran yesterday. Maybe worth more, but it cycles and I have a better home for the money (going conservative for the time being)....maybe will buy and hold at another time.

[couta1]

At $3 I would be take the money and run! :D Come on RB, buy a parcel NOW for a trade at $3, you know you want to.

[RupertBear]

Come on RB, buy a parcel NOW for a trade at $3, you know you want to.

Wish I had a parcel to SELL now Couta but I timed it wrong and got out at $2.30:(

[winner69]

Guru analysts FNZC - winner of many awards - well respected - say AIR worth only $2.50

FIRST NZ AIR NZ TARGET PRICE 19%, LOWERS RATING TO 'UNDERPERFORM

Friday 2nd June 2017

Text too small?
First NZ Capital lifted its 12-month target price on Air New Zealand to $2.50 from $2.10 but lowered its rating to 'underperform' from 'neutral' based on its updated valuation and current share price.

The shares last traded down 2.3 percent at $2.95 but have gained 38 percent so far this year. On Thursday the company said it now expects its 2017 financial year earnings before taxation to exceed $525 million versus previous guidance of $475 million to $525 million.

First NZ Capital lifted its passenger booking total or PBT estimates by 10.5 percent in FY17, 31.4 percent in FY18 and 30 percent in FY19, reflecting the latest operating statistics, revised fuel cost assumptions, improved cargo revenue, modestly lower depreciation, the company's latest update and its operating leverage, said research analyst Andrew Steele in a note. He also said FNZC now assumes that Air New Zealand's pre-tax return on invested capital or ROIC reverts to 14.5 percent in the long term, versus its prior assumption of 14.0 percent.

However, despite the upgrades to its PBT forecasts "we estimate that the current share price of around NZ$3.00 implies a sustained through-cycle pre-tax ROIC of 16.5 percent," he said. Steele notes this is 200 basis points ahead of FNZC's revised long-run assumption and 150 bps about the company's targeted return.

Steele said the key risks to the target price include material changes in the competitivhttp://www.sharechat.co.nz/article/3fb4a17e/first-nz-air-nz-target-price-19-lowers-rating-to-underperform.htmle landscape, fuel costs as well as underlying demand.

http://www.sharechat.co.nz/article/3fb4a17e/first-nz-air-nz-target-price-19-lowers-rating-to-underperform.html

[Beagle]

Last N.Z. have consistently done their clients no favors with AIR. They have consistently had the lowest valuation on AIR for several years now.
Clients who believed their valuation model were told as recently as yesterday that a fair price for AIR in 12 months time was $2.10. Obviously that's a complete joke. The guesswork, (yes that is a deliberate choice of term), underpinning their valuation model is systemically flawed in my opinion.
N.Z. analysts generally have consistently been behind the curve with AIR...investors are far far better to listen to management and follow the monthly stat's and work their own numbers and that's what I'll continue to do. Some of their analysts are very good and have won awards, their analyst covering AIR is without any merit, in my opinion.

[couta1]

Wish I had a parcel to SELL now Couta but I timed it wrong and got out at $2.30:( Your not alone my friend.:eek2: Fancy these Guru Analysts stealing my target price which I've had for over a year, what a cheek.

[Snow Leopard]

...Using an input of $575m for AIR ...

Why $575M?

The pressy says "are likely to exceed $525 million"

likely = not guaranteed.

Much better that you take a conservative $526M, remove the $22M one-off Virgin bonus and end up with $0.323 eps.

As things are still going reasonably well for AIR, assume that they are not going to get any better going forward and definitely you do not want to paying anywhere near $3 a pop for this.

Mind you, neither do you want to be paying $5 for Qantas.

Best Wishes
Paper Tiger

[Xerof]

Jared Dillian (the 10th man) like airlines, and points out that Buffet does now too!!

gee...calls it 'the golden age of flying, here and now'

[Arbroath]

Last N.Z. have consistently done their clients no favors with AIR. They have consistently had the lowest valuation on AIR for several years now.
Clients who believed their valuation model were told as recently as yesterday that a fair price for AIR in 12 months time was $2.10. Obviously that's a complete joke. The guesswork, (yes that is a deliberate choice of term), underpinning their valuation model is systemically flawed in my opinion.
N.Z. analysts generally have consistently been behind the curve with AIR...investors are far far better to listen to management and follow the monthly stat's and work their own numbers and that's what I'll continue to do. Some of their analysts are very good and have won awards, their analyst covering AIR is without any merit, in my opinion.


I second that Roger. Why would anyone care what the local analysts think. UBS upgraded from 2.25 to 2.85 and left them as a neutral. What that means is most of their clients probably haven't owned AIR as its gone from $2 to $3 and paid a 10c dividend along the way. So FNZ & UBS dead wrong the past 12 months. Why put any weight in analyst views that are consistently wrong?

Morningstar have been the most bullish as far as I'm aware and have had them at $2.60 for quite a while. they are looking for c $575m NPBT.

[Joshuatree]

I care about what analysts think. Some of them are pretty damn good and i know they are good at what they have specialised in. Its great to get amateur sleuthing values and ideas off here too; throw them in the mix, gather as much info as poss; try all the tools out; i respect trained valuers who put their name to it; it all helps especially when they are looking ahead up to a year. Just had a look at my brokers valn, similar to others. And at an estimated 6.65% D/Y now not so attractive at this pricing .

[Beagle]

Why $575M?

The pressy says "are likely to exceed $525 million"

likely = not guaranteed.

Much better that you take a conservative $526M, remove the $22M one-off Virgin bonus and end up with $0.323 eps.

As things are still going reasonably well for AIR, assume that they are not going to get any better going forward and definitely you do not want to paying anywhere near $3 a pop for this.

Mind you, neither do you want to be paying $5 for Qantas.

Best Wishes
Paper Tiger

My preliminary estimate PT. I'll have another look next week. I am holding for dividend yield.
Even at 20 cps per annum fully imputed that's a gross yield of 9.6% at the current price of $2.90 and I believe that's sustainable across the cycle.
Factor in a couple of juicy specials in FY20 - FY22 when the capex program has a massive hole in it and the five year dividend outlook starts to look extremely attractive.
With the $170m revised capex reduction next year I am wondering if they might pay more than a final divvy of 10 cps this year...

[Baa_Baa]

The exhuberant calls put the hoo doo on the voodoo, like a beckoning call to the nimble profit takers, AIR SP above all analysts except those who reckon they have better insights here, and sure enough boom. Who knows where it's going from here but at the current parabolic rate it's fair to assume there's reason for tighter stops for the capital sensitive. But who uses stops anyway, almost never mentioned on ST, like naked trading, feels good until the cool breeze of a correction blows on ones nether regions.

[Beagle]

I second that Roger. Why would anyone care what the local analysts think. UBS upgraded from 2.25 to 2.85 and left them as a neutral. What that means is most of their clients probably haven't owned AIR as its gone from $2 to $3 and paid a 10c dividend along the way. So FNZ & UBS dead wrong the past 12 months. Why put any weight in analyst views that are consistently wrong?

Morningstar have been the most bullish as far as I'm aware and have had them at $2.60 for quite a while. they are looking for c $575m NPBT.
Well said mate. They've almost been as wrong as all those (who you can easily go back on this thread and see who they are), who thought AIR was a sell in late 2016 at ~ $1.80.

[Beagle]

The exhuberant calls put the hoo doo on the voodoo, like a beckoning call to the nimble profit takers, AIR SP above all analysts except those who reckon they have better insights here, and sure enough boom. Who knows where it's going from here but at the current parabolic rate it's fair to assume there's reason for tighter stops for the capital sensitive. But who uses stops anyway, almost never mentioned on ST, like naked trading, feels good until the cool breeze of a correction blows on ones nether regions.
Actually very few people called for $3 this time around and it was only very late afternoon trading when Asian and Chinese markets were open that pushed it over $3 yesterday.

[Baa_Baa]

Actually very few people called for $3 this time around and it was only very late afternoon trading when Asian and Chinese markets were open that pushed it over $3 yesterday.

Don't underestimate the influence of the vocal few on the passive masses, even the 4% can move the SP and there's 5x more lurkers here than members online. That said, I would wonder about why a yield and returns stalwart would engage in SP discussion as that's irrelevant to their strategy and objectives.

[Baa_Baa]

Actually very few people called for $3 this time around and it was only very late afternoon trading when Asian and Chinese markets were open that pushed it over $3 yesterday.

The push over $3 was late as you say but the ramp up was big time and in early trading, on the day. It might be a worthless exercise but interesting to correlate the rhetoric and timing here to SP moves on the market. I reckon ST has more influence from a very small vocal minority than that minority care to acknowledge. Jmho.

[hamish]

Just over 1 year ago.

Same thinking and outlook hold true. Personally, I kept averaging down during the drop / free fall when the sky was caving in due to all the increased competition (international flights to/from NZ) and perceived impact.

With the Chief Digital officer well now with > 1 year at AIR.... I'm anticipating some new and targeted digital offerings in the wings.... Who knows.. Bag tracking? More retail integration in-flight? Check in, weight calculation, x-ray all by walking through/across something with biometrics? etc

http://www.businessinsider.com/sc/farnborough-airshow-digital-aviation/?r=AU&IR=T
http://fantasy.co/legacy/fi-airlines/

Looking ahead, per many of Roger's insights, future earnings, PE, yield, reduced debt/leverage - returns look great to me over 5 year span.

Risk..... ? I have been wondering, at what stage does NZ population and domestic travel start to become big enough to sustain a 3rd operator .... the point being 'sustain' as we've seen lessons from the past. Population of 5m, 7m, 10m?

Ever wonder why NZ Profits so super-high?.. they are able to price-set really really well, particularly domestically. The pricing regime on their website is so tuned to making available each seat at highest price point possible - target highest use of day to limit low price sets, yet hook us in with low cost marketing for the few seats.... coupled with the loyalty airpoints which must be by now their greatest 'asset' (2.4m account holders driving 78% of their sales/service interactions).... which makes us all feel great to move up the tiers and we feel so rewarded... yet we're paying 2 times, 5 times, 10 times for it. Hats off to them for being so astute IMO.

[777]

The outlook for airlines - threatening skies

4:00 PM Friday Jun 2, 2017

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11867603

[winner69]

The outlook for airlines - threatening skies

4:00 PM Friday Jun 2, 2017

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11867603

At least our man Chris is going to that IATA meeting - he'll tell them that they worry too much and it's all honky dory in the industry ((at least in Australia and New Zealand

[Raz]

Just over 1 year ago.

Same thinking and outlook hold true. Personally, I kept averaging down during the drop / free fall when the sky was caving in due to all the increased competition (international flights to/from NZ) and perceived impact.

With the Chief Digital officer well now with > 1 year at AIR.... I'm anticipating some new and targeted digital offerings in the wings.... Who knows.. Bag tracking? More retail integration in-flight? Check in, weight calculation, x-ray all by walking through/across something with biometrics? etc

http://www.businessinsider.com/sc/farnborough-airshow-digital-aviation/?r=AU&IR=T
http://fantasy.co/legacy/fi-airlines/

Looking ahead, per many of Roger's insights, future earnings, PE, yield, reduced debt/leverage - returns look great to me over 5 year span.

Risk..... ? I have been wondering, at what stage does NZ population and domestic travel start to become big enough to sustain a 3rd operator .... the point being 'sustain' as we've seen lessons from the past. Population of 5m, 7m, 10m?

Ever wonder why NZ Profits so super-high?.. they are able to price-set really really well, particularly domestically. The pricing regime on their website is so tuned to making available each seat at highest price point possible - target highest use of day to limit low price sets, yet hook us in with low cost marketing for the few seats.... coupled with the loyalty airpoints which must be by now their greatest 'asset' (2.4m account holders driving 78% of their sales/service interactions).... which makes us all feel great to move up the tiers and we feel so rewarded... yet we're paying 2 times, 5 times, 10 times for it. Hats off to them for being so astute IMO.

Their data analysis needed psychological insights to tune customer analytics which now has occurred. It has improved from last year being below average for a world class company imho to above average..that is quite some improvement over twelve months. That in itself made it a buy for me. Competition has not found an answer to their distinct point of difference on network robustness and depth. I had several tricks over them to get a good deal in the past and now I'm just down to one that has worked. They are getting things tight.

Sold another substantial bundle this week for rich award and yet i will continue to hold as this company is starting to get clever... I expect more to come.

Though the sheep listening to the analysts most likely will have the short term say. Stop loss can be your friend.

[Meextr]

At what stage will the government make the decision to sell the remaining 50+% it owns. Will not be soon but the idea will eventually come up.

[winner69]

Good insights Raz re AIR digital/data/analytics performance and how it advantages them.

Maybe AIR needs to be valued as a tech stock ......that just happens to fly planes

Be more than 3 bucks if that was the case

[Eval]

Well said mate. They've almost been as wrong as all those (who you can easily go back on this thread and see who they are), who thought AIR was a sell in late 2016 at ~ $1.80.

Agreed with Roger. Those analysts always creates a panic in market and the poor retailers start selling. i have been reading this forum for while and see lots of negatives posts (when SP is gaining and some forum member exited with low SP). I am a long believer in AIR for many years. I have brought some of the shares when SP was over 3 last year (never paniced it when some of the lovely nz analysts downgraded after fy16). now i have lots volumes in AIR which i builded up over the last 10months (mostly brought when many mum and dad panic and start selling) and have a healthy profits of over $100K on my portfolio ATM and received some juicy dividends.

By the way i have all eggs in one basket which is AIR. I'm sill holding as i believe in AIR and its management.

[Zaphod]

At what stage will the government make the decision to sell the remaining 50+% it owns. Will not be soon but the idea will eventually come up.

Given public sentiment, that would spell political suicide for an incumbent Government. I can't see it happening for the foreseeable future, especially before an election.

[percy]

Don't underestimate the influence of the vocal few on the passive masses, even the 4% can move the SP and there's 5x more lurkers here than members online. That said, I would wonder about why a yield and returns stalwart would engage in SP discussion as that's irrelevant to their strategy and objectives.

Agree.
Maybe to the tune of between $6mil and $10mil,on this share alone. .

[Jantar]

i don't really care what the SP is. At my average cost per share the divi is giving me a gross return of close to 15%.

[Raz]

Don't underestimate the influence of the vocal few on the passive masses, even the 4% can move the SP and there's 5x more lurkers here than members online. That said, I would wonder about why a yield and returns stalwart would engage in SP discussion as that's irrelevant to their strategy and objectives.

Some people lead and other follow, it is what it is. In say that people are not stupid and follow only if the points are valid. Is it really on yield stewarts..because in the end we all will take a return what ever way it is generated. We are living in volatile times in everything which is open to competition. I work in the middle market with multinational entities...I could safely say I have no certainty many will be around in 2 years time given disruption risk of many kinds. Be it in the EU, UK, China & USA I see no difference if you are in the tradable sector of the economy and are not government advantaged...anywhere.

AIR I can say will be around in 2 years and provide the return with confidence...naturally it does have an advantaged position in its market place which has again shown through with the latest entrants. It has prevailed though by being a clever operator.

[GTI]

I joined the party late. I just bought at $2.90 yesterday. Not sure if it was a good move...

[winner69]

^XAL up 1% overnight

Pretty close to an all time high

The golden time for airline stocks continues

And we have one of the best airlines in the world on the NZX

Next week should see a recovery from yesterdays little blip ....and then, well you never know

[winner69]

Hey Roger - over the last 10 years QAN's PE has averaged 1.2 times AIR's NZ

On your numbers yesterday QAN pe IS 9.7 and AIR is 8.0 ---- QAN pe 1.2 times AIR --- about the long term average

Spooky eh

Aussie market premium / efficient market or whatever - its spooky --- even if it's unfair

Hope QAN keeps going up - AIR will follow

[GTI]

Agreed with Roger. Those analysts always creates a panic in market and the poor retailers start selling. i have been reading this forum for while and see lots of negatives posts (when SP is gaining and some forum member exited with low SP). I am a long believer in AIR for many years. I have brought some of the shares when SP was over 3 last year (never paniced it when some of the lovely nz analysts downgraded after fy16). now i have lots volumes in AIR which i builded up over the last 10months (mostly brought when many mum and dad panic and start selling) and have a healthy profits of over $100K on my portfolio ATM and received some juicy dividends.

By the way i have all eggs in one basket which is AIR. I'm sill holding as i believe in AIR and its management.

If I didn't hesitate when the PE was 5 and SP was $1.80 at Nov 2016, I am now gaining >50% already... :scared:

[Joshuatree]

Agreed with Roger. Those analysts always creates a panic in market and the poor retailers start selling. i have been reading this forum for while and see lots of negatives posts (when SP is gaining and some forum member exited with low SP). I am a long believer in AIR for many years. I have brought some of the shares when SP was over 3 last year (never paniced it when some of the lovely nz analysts downgraded after fy16). now i have lots volumes in AIR which i builded up over the last 10months (mostly brought when many mum and dad panic and start selling) and have a healthy profits of over $100K on my portfolio ATM and received some juicy dividends.

By the way i have all eggs in one basket which is AIR. I'm sill holding as i believe in AIR and its management.

Eval hope you're not serious here. Thats an incredible risk putting everything into one stock after initially buying it at the top when posters on here were saying back up the truck type pumps. You've had opportunity lost in that year by having funds tied up and other than the the pretty good div i don't know how much more AIR has to run. I include brokers ideas and mix it in with all the rest its another useful tool.I agree that its not wise to blindly follow brokers or anyone on here for that matter. IMO ; If you do only one thing diversify into some other stocks. Have you never lost money in shares atp? This must be a windup; i hope so.

[Eval]

Eval hope you're not serious here. Thats an incredible risk putting everything into one stock after initially buying it at the top when posters on here were saying back up the truck type pumps. You've had opportunity lost in that year by having funds tied up and other than the the pretty good div i don't know how much more AIR has to run. I include brokers ideas and mix it in with all the rest its another useful tool.I agree that its not wise to blindly follow brokers or anyone on here for that matter. IMO ; If you do only one thing diversify into some other stocks. Have you never lost money in shares atp? This must be a windup; i hope so.

My 100% portfolio is AIR at the moment. I'm investing in shares for last 8 to 9 years and never lost any money in the shares. I had big volumes in A2Milk which sold it when SP went to $3.70 last month and took a healthy profit over $80k. Im still buying more volumes in AIR. I brought more volumes @2.87 last week. Still quite bit juice left in the AIR. I do my own research. AIR management is also rock solid. Smart operator IMO.

[dreamcatcher]

Airline re-rate dated before Investor Day Presentation.

http://www.barrons.com/articles/goldman-sachs-lifts-target-prices-for-qantas-air-new-zealand-1495759422

[Eval]

Airline re-rate dated before Investor Day Presentation.

http://www.barrons.com/articles/goldman-sachs-lifts-target-prices-for-qantas-air-new-zealand-1495759422



Air New Zealand Price Target Raised 39% to NZ$3.09/Share by Macquarie
https://www.wsj.com/articles/DN-CO-20170601-011532

[Beagle]

Airline re-rate dated before Investor Day Presentation.

http://www.barrons.com/articles/goldman-sachs-lifts-target-prices-for-qantas-air-new-zealand-1495759422

Welcome to the forum and thank you for sharing. Add in the profit upgrade on 1 June and you're over $3.


Air New Zealand Price Target Raised 39% to NZ$3.09/Share by Macquarie
https://www.wsj.com/articles/DN-CO-20170601-011532
A very warm welcome to the forum and thank you for sharing.
Like you, I think this is a superbly managed company and there's many lessons to be learned from the way they develop and execute their strategy.

Some on here wonder why as a dividend hound I follow this company so closely. Baa Baa asked the question last week.
Three reasons.
1. I have a history of acting professionally for private aviation companies.
2. Much like people have a morbid fascination with train wreck companies to learn lessons of what not to do in business (Feltex, IQE, Dick Smith, Pumpkin patch e.t.c.) have all provided valuable business insights into what NOT to do, I see this company as the diametric opposite of that, there are many business lessons to be learned from the way this company is run of WHAT to do to be successful in business
3. I simply like aviation, I think its an exciting and interesting industry.

One further comment regarding First N.Z's analyst price target. One analyst at First N.Z. is a multi award winning bright chap, shame he's not the one covering AIR at that firm. "Last N.Z." as I referred to them as last week, have consistently been very downbeat on AIR. One thought...I suppose if one consistently holds an extremely negative view they're not going to get much one on one time at lunch after the presentation with top exec's. Perhaps he didn't get the special off the record comments and insights other analysts did during that lunch, or maybe he just strongly dislikes the risks inherent in the aviation sector like the occasional person on her loves to beat up on AIR.

It might have escaped some people's attention that they adamantly ruled out any further acquisitions so we can look forward to there being NO chance of an "Ansett Mk3" experience but what are they going to do with circa 80-90 cents per share in free cash flow in FY20, FY21 and FY22 and I wonder if the government will have any say in that ? Food for thought for dividends hounds positioning themselves early ?

I am comfortable with my estimate of $575m for FY17 and think the outlook for FY18 is very sound. Those 10 airlines that launched services here in 1H FY17 with red hot opening specials to build demand (which compromised the yield for AIR in that half), are unlikely to be running their red hot opening specials in 1H FY18. If the route isn't profitable after a year, some will reduce capacity as we've seen already with some airlines, and some will want out.

[winner69]

Upgrade last week because of lower than expected oil prices ........wow overnight oil falls below USD50

F18 looking better by the day as they start locking in fuel costs at these low prices

F18 could be 2nd best profitable year ever - relegating F17 to 3rd best

[Beagle]

More expansion for AIR https://www.nbr.co.nz/article/carry-air-nz-expands-samoa-polynesian-airlines-returns-ng-p-203687 and analyst upgrades as competition eases off https://www.nbr.co.nz/subscribe/203784

[couta1]

More expansion for AIR https://www.nbr.co.nz/article/carry-air-nz-expands-samoa-polynesian-airlines-returns-ng-p-203687 and analyst upgrades as competition eases off https://www.nbr.co.nz/subscribe/203784 Average price target now $2.62 with five hold and one underperform from the analysts. Seems pretty fair and realistic, unlike the former $2.10.

[winner69]

Average price target now $2.62 with five hold and one underperform from the analysts. Seems pretty fair and realistic, unlike the former $2.10.

But I keep hearing that analysts don't know what they are talking about when it comes to AIR





couldn't resist saying that

[Beagle]

Average price target now $2.62 with five hold and one underperform from the analysts. Seems pretty fair and realistic, unlike the former $2.10.
Check back in a couple of days mate. I'm not sure all the brokers revised projections have filtered through to 4 Traders database yet.

I'd be very happy to buy more at $2.62 and I suspect you'd be very happy to be back on board at that price too. Time will tell...you never know you might get lucky.
Interesting article on sub-standard Latin American infrastructure possibly impeding further growth there. http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/news/Air-New-Zealand-Latin-American-growth-hits-turbulence-24544288/

[couta1]

But I keep hearing that analysts don't know what they are talking about when it comes to AIR





couldn't resist saying that Yeah I keep hearing that too, they were talking nonsense at $2.10, but at least they are now cruising at a better altitude aye.

[winner69]

More expansion for AIR https://www.nbr.co.nz/article/carry-air-nz-expands-samoa-polynesian-airlines-returns-ng-p-203687 and analyst upgrades as competition eases off https://www.nbr.co.nz/subscribe/203784


Just shows you as Chris pointed out that they are holisticly monetizing low-risk high-yield growth strategies

[Beagle]

https://p-airnz.com/cms/assets/PDFs/air-nz-investor-day-transcript-1jun2017.pdf Transcript of investor day briefing on 1 June 2017 including Q & A session afterwards

[winner69]

https://p-airnz.com/cms/assets/PDFs/air-nz-investor-day-transcript-1jun2017.pdf Transcript of investor day briefing on 1 June 2017 including Q & A session afterwards

Pretty coy about what they going to do with that ever increasing huge pile of surplus cash in a few years time ....sort of mentioned reducing leverage but I think that was a diversionary tactic