AIR - Air NZ.

[skid]

They've got deep pockets over there in Dubai

[QOH]

They've got deep pockets over there in Dubai
They sure have, Emirates ordered 50 new A380 airbuses the other day.

[winner69]

They've got deep pockets over there in Dubai


100 billion of orders to Boeing this week

Emirates 150 odd 777s whatever they are

http://america.aljazeera.com/articles/2013/11/17/boeing-signs-dealsworth100binordersatdubaiairshow.html

[Zaphod]

I travel on 777-200ERs to and from HK mostly and they are very tired IMO. A few years ago, they were spanking new and fabulous; now I often find seats and controllers in economy are broken & just looking worn. The business class cubicles have not fared well, with what looks like polyfilla in worn areas for some time now. Can't remember being in an AirNZ 767 so no comment about those.
Having said that, I suspect the US routes are more up-to-date; I get the feeling that's their focus and perhaps where the $ is.


Yes, some of the 777-200ER's are looking quite tired but they are all scheduled to be refurbished beginning in early 2014. IMO this should be done immediately, but I guess AirNZ may have deferred this upgrade for cashflow or logistical reasons.

I do wonder whether the new white coloured BP seats in the 777-300ER's will weather well, compared to the brown coloured seats which tend to hide scuff-marks/damage much better. This might lower the lifespan of the product and hence raise costs. Time will tell.



Business AKL to LHR return last month - ~NZD11k on NZ (would have been 777s all the way I think & similar price whichever route) vs ~NZD8k on SG (mix of 777 and A380 via Singapore). There appeared to be plenty of spare seats on AirNZ very close to departure (as a shareholder at the time, I was very interested so I kept and eye on it).

That's a very good price via Singapore, more comparable to the BP specials on AirNZ. Well done! :) The Oneup upgrades usually take a few empty seats from BP as do recognition upgrades, but I do get the feeling that the revenue team purposefully hold back some Oneup upgrades that otherwise would have made it, just to ensure that the system isn't being gamed.

[TimmyTP]

That's a very good price via Singapore, more comparable to the BP specials on AirNZ. Well done! :)
Thanks, but it was no great achievement. You could get the same fare of NZD8,522.58 next week if you like, vs AirNZ for NZD10,997.48. Incidentally, Emirates will get you there for NZD9,904 - will stop with the fares right there as I'm not WebJet :)

I'll also take this opportunity to stop going on about this - my observations are not the whole picture and I have no desire to attack our national airline (privatised or not). I had my concerns, exited happy and genuinely wish the best for remaining holders - just wanted to add something towards the 'other side' of the debate.

[peat]

I find Jetstar web site easier to use, and Jetstar deals are better than AIR's.
Would not buy Qantas shares however.
Jetstar let you down in my experience. They have no qualms about cancelling a flight.
However I am also of the opinion that anecdotes don't provide a valid analysis for evaluating a company as an investment :p

[noodles]

AIR sell down completed at 1.65.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11159607

IMO, This is quite bullish. Most sell-downs have a discount.

[blackcap]

I cannot fathom that at all. How do the govt manage to do that. They got top price for MRP, near top for MELCA and now top price for AIR. Why would anyone want to buy at 1.65 in this placement when they were readily available on market at 1.65. Supply has now increased significantly and I cannot see them go up in the near future. Puzzling.

[noodles]

I cannot fathom that at all. How do the govt manage to do that. They got top price for MRP, near top for MELCA and now top price for AIR. Why would anyone want to buy at 1.65 in this placement when they were readily available on market at 1.65. Supply has now increased significantly and I cannot see them go up in the near future. Puzzling.

For many institutions AIR would have been unattractive prior to the sell down because:
1. Liquidity was poor
2. They knew a sell down was coming and just needed to wait. They probably thought they could get the shares at a discount.

These 2 factors are gone now. Also, the free float has nearly doubled. This means AIR will move up the indexes. Expect institutions to be buying in for this reason as well.

Most brokers think AIR is cheap at these levels. Consider this, AIR is trading at less than half the PE ratio of the power companies. At least AIR has potential for growth. Thus I don't think the government have got top price.

Come election time, I reckon AIR will be the only SOE float in the black.

[janner]

So when are you going to sell up Belg :-))

[Zaphod]

Thanks, but it was no great achievement. You could get the same fare of NZD8,522.58 next week if you like, vs AirNZ for NZD10,997.48. Incidentally, Emirates will get you there for NZD9,904 - will stop with the fares right there as I'm not WebJet :)

I'll also take this opportunity to stop going on about this - my observations are not the whole picture and I have no desire to attack our national airline (privatised or not). I had my concerns, exited happy and genuinely wish the best for remaining holders - just wanted to add something towards the 'other side' of the debate.

FYI Just looked up the load factors on those SQ flights and there is plenty of availability on the ones returning $8.5K, while NZ are showing moderate to low availability for the same period. NZ do price their product higher but perhaps that is in the belief that theirs is superior? Anyway yes, anxious that this doesn't turn into a beat up too. Whatever NZ are doing is obviously working overall as things are looking good.

[Zaphod]

If you want a big stake 5% or more, try buying that on-market when there's less than 10% being traded over the entire year.

Yes, that's too true.

Will be interesting to see where the price heads tomorrow!

[Xerof]

Yes, that's too true.

Will be interesting to see where the price heads tomorrow!

well, if it goes higher, that muppet (beaker, if I recall) and the guy in the seaweed suit who lead the opposition will probably drag out the 'firesale' comment again. I haven't heard if pumpkinhead Cosgrove has had anything to say - probably told to shut up by the muppet.

[Jaa]

Why did the government only sell down to 53% and not to 51%?

Is a capital raising on the horizon?

1.65 is a great price, the overhang has been holding AIR back for a couple of years so good to see it gone at a high price. Expect to see the share price fly higher this week.

[kyanar]

Why did the government only sell down to 53% and not to 51%?

Is a capital raising on the horizon?

1.65 is a great price, the overhang has been holding AIR back for a couple of years so good to see it gone at a high price. Expect to see the share price fly higher this week.


Holding 2% in reserve for employee purchase schemes. I think it was mentioned in one of the NZX announcements.

[modandm]

Holding 2% in reserve for employee purchase schemes. I think it was mentioned in one of the NZX announcements.

Sorry but that is incorrect - the Airline is buying shares for that purpose, but that has nothing to do with the Govt.

I wonder if Air NZ may announce that it will purchase 3 or 4% of its stock back from the govt (as I have been calling for), bringing the govt stake down to 51%. This would explain the lack of buy-back so far. There is no chance in hell of a capital raising. They have too much cash already!

Re the comments about SQ etc - the truth is Air doesn't want to fly you to Europe - its not profitable for them. Look at the financial performance of SQ... It's a tool for promoting Singapore.. Same for EK and Dubai.

No idea what the share price will do in the short term from here - but very happy this uncertainty has been removed. And very optimistic about how the company is going.

[Harvey Specter]

Holding 2% in reserve for employee purchase schemes. I think it was mentioned in one of the NZX announcements.


Sorry but that is incorrect - the Airline is buying shares for that purpose, but that has nothing to do with the Govt.I read that too so while it may not be correct, that is the story they used.

[Balance]

Oops - heard from a broker that some retail investors bid aggressively, going for 2 or 3 times what they wanted, expecting to be scaled back.

Instead, they received 95% of what they bid for.

Watch the institutions help these investors off their overbid shares at 5c to 8c discount from the $1.65.

[Joshuatree]

My broker was ringing me again this morn trying to flog some; nada.

[Balance]

My broker was ringing me again this morn trying to flog some; nada.

Good chance to pick up some soon.

:D

[FarmerHamilton]

NTA value of $1.60 looking good again. once again, the gubernment knows when to sell!


mmm , I took 5000 shares off Bill & John ... and i got charged brokerage by my stockbroker to be on the buy side of a placement. Can anyone else confirm they got charged as well as I would be pretty miffed if it was just For Barr !!

[Hoop]

Oops - heard from a broker that some retail investors bid aggressively, going for 2 or 3 times what they wanted, expecting to be scaled back.

Instead, they received 95% of what they bid for.

Watch the institutions help these investors off their overbid shares at 5c to 8c discount from the $1.65.

My broker was ringing me again this morn trying to flog some; nada.

Share glut on the market, methinks.................. now at 159.5 ...down 5.5c
Could take a while to clear...

[Balance]

Share glut on the market, methinks.................. now at 159.5 ...down 5.5c
Could take a while to clear...

Brokers left with stock and not allowed to hold?

Be some decent crossings towards end of day.

[NOCASH]

Brokers left with stock and not allowed to hold?

Be some decent crossings towards end of day.

Is it time to panic? i got sucked in by a broker to buy at 1.65 now its at 159.50 looking to go to $1.50 very soon.

Why on earth would the institutional investors buy at $1.65. I thought the share price will propel to $1.68 - 1.70.

[Harvey Specter]

Is it time to panic? i got sucked in by a broker to buy at 1.65 now its at 159.50 looking to go to $1.50 very soon.

Why on earth would the institutional investors buy at $1.65. I thought the share price will propel to $1.68 - 1.70.its the traders thinking that it would go to 1.70 that are now getting out. The insto's who needed a large holding for a long term hold wont be concerned with the decline as if they had to buy a few mil, they would have pushed the price up heaps anyway.

[Balance]

Is it time to panic? i got sucked in by a broker to buy at 1.65 now its at 159.50 looking to go to $1.50 very soon.

Why on earth would the institutional investors buy at $1.65. I thought the share price will propel to $1.68 - 1.70.

Too many got sucked in thinking the same way.

Best to let the flippers and stressed get out and then, watch the real buying interest move in.

Then time to ride the upside.

Stock is 2nd cheapest on NZX apparently, with a healthy 7.8% gross dividend yield.

[noodles]

Is it time to panic? i got sucked in by a broker to buy at 1.65 now its at 159.50 looking to go to $1.50 very soon.

Why on earth would the institutional investors buy at $1.65. I thought the share price will propel to $1.68 - 1.70.

I don't think you can sell. The settlement date is next week?

[NOCASH]

I guess i have to hold the stock until better days.

[TimmyTP]

I don't think you can sell. The settlement date is next week?
You don't have to settle before you can sell - you just can't sell something you haven't yet bought (unless you have stock lending in place).

[Harvey Specter]

No need to panic at all. good sell down at a premium for a good company in good times. fast money is moving out after quick buck didn't materialise. traded up to$1.69 before this. holding will pay off :)And its index weighting will double which is why, in part, the insto's bid it up. They will probably have to top up a bit more too.

[gv1]

This one was manipulated for govt to get the maximum. SP might recover next yr, in the mean time riding lower.
For the newbies, IMO stay clearer until SP settles.

[Balance]

And its index weighting will double which is why, in part, the insto's bid it up. They will probably have to top up a bit more too.

Overseas instos will buy in when the dust has settled, and when the indexing kicks in.

Meanwhile, a lesson for those who bid aggressively thinking it is easy money!

[Balance]

"Demand is likely to be boosted toward January, when index weightings on the NZX are next reviewed. Air New Zealand's weighting will increase to between 1.4 percent and 1.5 percent from 0.8 percent currently, he said."

A month of anxious waiting ahead?

[Major von Tempsky]

Mugs, mugs.
Buffetology (the authoritative book on Warren Buffett) gives a table of industry sectors NOT to invest in. Airlines features prominently. No barriers to entry, heaps of competition, at the mercy of petroleum rises, sudden unexpected passenger fall-offs, government intervention. And look at Air NZs history. I used to own some before I read Buffetology and I'm very pleased I got rid of them then.
Besides, would you buy ANYTHING from an NZ Govt? They've all been poisoned chalices so far, Telecom, Chorus, Mighty River, Meridian...
And in the unlikely event that Air NZ was quite successful then ComCom would step in and hit it for six!
Those institutions and private investors who have bought Air NZ are NUTS! Quite NUTS!

[FarmerHamilton]

Mugs, mugs.
Buffetology (the authoritative book on Warren Buffett) gives a table of industry sectors NOT to invest in. Airlines features prominently. No barriers to entry, heaps of competition, at the mercy of petroleum rises, sudden unexpected passenger fall-offs, government intervention. And look at Air NZs history. I used to own some before I read Buffetology and I'm very pleased I got rid of them then.
Besides, would you buy ANYTHING from an NZ Govt? They've all been poisoned chalices so far, Telecom, Chorus, Mighty River, Meridian...
And in the unlikely event that Air NZ was quite successful then ComCom would step in and hit it for six!
Those institutions and private investors who have bought Air NZ are NUTS! Quite NUTS!

I must be a bag of cashews ... just averaged down at 156.5 ....

[psychic]

Good one FH - well in... :)

[Balance]

I must be a bag of cashews ... just averaged down at 156.5 ....

More like the prince of nuts, macadamia!

[peat]

Air NZ sale a 'bloody debacle' (http://www.stuff.co.nz/business/industries/9418799/Air-NZ-shares-fall-post-selldown)

A fall in Air New Zealand's share price has provoked anger and dismay among some market players as another government sale left investors nursing short-term losses

However, not everyone shared the concern. Matt Goodson, of Salt Funds Management, who acquired some stock in the offer, said he did not see a problem.
"If you bid $1.65 for some shares, and you got them, what's your problem?"



It has always struck me with these Govt sales that you are dealing (trading) with someone (Key) who was very successful at this game. High chance of being shafted - exactly as would appear to have occurred with this sale. Well done selling 200 million at the high for the day (so far) on behalf of NZ taxpayers John.

5046

[Harvey Specter]

Air NZ sale a 'bloody debacle' (http://www.stuff.co.nz/business/industries/9418799/Air-NZ-shares-fall-post-selldown)
The Smiling Assassin strikes again. In 5 years time, Skycity will be complaining about the raw deal they got given and Labour will bail them out to save jobs.

[Harvey Specter]

Air NZ sale a 'bloody debacle' (http://www.stuff.co.nz/business/industries/9418799/Air-NZ-shares-fall-post-selldown)Given every pool got scaled heavily (apparently), where are all the buyers? Or where they just expecting a gift from the government.

Long term holders will be ok (apart for the fact it is an airline). SHort term, not so much.

[Under Surveillance]

However, not everyone shared the concern. Matt Goodson, of Salt Funds Management, who acquired some stock in the offer, said he did not see a problem.
"If you bid $1.65 for some shares, and you got them, what's your problem?"
Love it. This man is no muppet.

[Beagle]

The winning Trifecta for taxpayers has come in. Yeap, investors have been duped three times in a row !!

Anyone up for a fourth belting next year with Genisis ?

When you look at the PE Ratio's the power companies were flaoted on in a no growth industry I struggle to understand how experienced investors could allow themselves to be so silly :mellow:

I posted my negative opinion many times in each respective power company thread. But this Air N.Z. one surprised me, I thought it would be onward and upward from $1.65. Fortunatly I have a policy of not investing in Airlines.

[blackcap]

Like I wrote earlier.. the govt on behalf of the tax payer have done very well. Well done JK and Bill. Anyone paying 1.65 for Air NZ should be happy enough because that is what they obviously wanted. No need to complain after the event. Everyone was well informed same goes with the power companies. Had some Meridian but sold out day 2 or 3.

[NZSilver]

http://www.stuff.co.nz/business/industries/9418799/Air-NZ-shares-fall-post-selldown

Seriously, welcome to shares, sometimes you feel sick, other times you feel great, surely brokers know as well as others this is reality of open markets! You shouldnt buy for the short term, maybe it will teach them a lesson! NO point letting your day turn to crap and being angry for a few % here and there. Anyway why buy into such a high cost, competative industry anyway when there is shares like SUM. Muppets.

[777]

Have a look across the board today. Mostly down following last night offshore markets. Why should AIR be exempt from that.

[BIRMANBOY]

Muppets indeed....this is the highest SP its been in five years...why would anyone with half a brain buy at the top of the top of the market. Good on the Govt for maximizing the return for the shares however. Should be some soul searching going on in brokerage and instos that bought in. Its not a highly liquid stock in the first place and what were they thinking would happen when 20% gets dumped on the market.
http://www.stuff.co.nz/business/industries/9418799/Air-NZ-shares-fall-post-selldown

Seriously, welcome to shares, sometimes you feel sick, other times you feel great, surely brokers know as well as others this is reality of open markets! You shouldnt buy for the short term, maybe it will teach them a lesson! NO point letting your day turn to crap and being angry for a few % here and there. Anyway why buy into such a high cost, competative industry anyway when there is shares like SUM. Muppets.

[Zaphod]

Should be some soul searching going on in brokerage and instos that bought in. Its not a highly liquid stock in the first place and what were they thinking would happen when 20% gets dumped on the market.

No need for soul searching at brokerages. They were probably thinking about the profits they were assured to make regardless of whether the shares go up or down!

[macduffy]

Very true, Zaphod.

Anyone going for the AIR placement would/should be well aware of the risks around the stock. Not too many new mums and dads - detestable term! - in this one!

[Balance]

Muppets indeed....this is the highest SP its been in five years...why would anyone with half a brain buy at the top of the top of the market. Good on the Govt for maximizing the return for the shares however. Should be some soul searching going on in brokerage and instos that bought in. Its not a highly liquid stock in the first place and what were they thinking would happen when 20% gets dumped on the market.

Now now, BB - you win some, you lose a few and that's the name of the game.

If anyone went into this as a sure thing, they were not taking heed of what happened with MRP and now, Genesis.

[baller18]

http://www.stuff.co.nz/business/industries/9418799/Air-NZ-shares-fall-post-selldown

Seriously, welcome to shares, sometimes you feel sick, other times you feel great, surely brokers know as well as others this is reality of open markets! You shouldnt buy for the short term, maybe it will teach them a lesson! NO point letting your day turn to crap and being angry for a few % here and there. Anyway why buy into such a high cost, competative industry anyway when there is shares like SUM. Muppets.
Yup such a competitive industry, in which really no airline company which has a competitive edge over the other company, which is why Mr. Buffett never invests in airline companies!! There ain't no moat!!

[FarmerHamilton]

Yup such a competitive industry, in which really no airline company which has a competitive edge over the other company, which is why Mr. Buffett never invests in airline companies!! There ain't no moat!!

Warren Buffett did invest in USAir many years ago via some preferred stock or convertible bond ... I think he got out at roughly breakeven thans to a big coupon on the debt ... So "NEVER" is not strictly true.

Disc: Hold 8,500 AIR NZ

[troyvdh]

giday to continue ballers thread ...and call me old fashioned...but I heard yonks ago that every airline (other than those govt owned i.e. emirates,singapore,areoflot et al) go broke.

[golden city]

push up and sell..., good strategy the govt haha

[777]

push up and sell..., good strategy the govt haha

And how did they do that?

[baller18]

Warren Buffett did invest in USAir many years ago via some preferred stock or convertible bond ... I think he got out at roughly breakeven thans to a big coupon on the debt ... So "NEVER" is not strictly true.

Disc: Hold 8,500 AIR NZ
He prob did, and he prob quoted he would never again maybe? lol

[robbo24]

Well it certainly is doom and gloom in here.... I bought a reasonible parcel in the placement at what I thought was a fair price ...so I am very happy. What was a good investment yeaterday at 1.65 is not a bad investment today at a cheaper price. seems to be alot of haha I told you so type comments - but lets see how things pan out in a years time.

Earlier this year when SKT did a placement (infact, the majority holder completely sold out if I recall correctly) the price dropped below the placement price and recovered a few days later.

Lets see what happens...

[Jay]

Makes perfect sense to me STC

Thank you for posting

[Harvey Specter]

Thanks Sparky - Not that I have followed the Freelancer IPO but I noticed that they appeared to select the institutions that would get shares and gave the other institutions nothing. Not necessarily a 'fair' way to do it but the Govt/Treasury should have had an indication from the previous 2 floats which instos were supporting the floats and which were just stagging it.

It does seem that they were focused on just getting the highest price, wheras they probably could have been a bit more tricky and still got the same result.

[Harvey Specter]

Thanks Sparky - Not that I have followed the Freelancer IPO but I noticed that they appeared to select the institutions that would get shares and gave the other institutions nothing. Not necessarily a 'fair' way to do it but the Govt/Treasury should have had an indication from the previous 2 floats which instos were supporting the floats and which were just stagging it.

It does seem that they were focused on just getting the highest price, wheras they probably could have been a bit more tricky and still got the same result.

[Balance]

In the words of Gaynor, Treasury weren't particularly interested in hearing advice from others.

Good to hear from you, STC.

Reaffirms everything about Treasury which I have had experience with and heard about.

Really, Treasury are a bunch of pimpled faced kids let loose with the country's economic destiny and applying an efficient free market 'tried and failed' philosophy on everything.

I still remember one of the top NZ companies locating one of its plants (employing over 200 people) in Australia after Treasury advised the government that NZ government should not match the miserable $15m R&D funding promised by the Queensland government. Instead the idiots in there were busy recommending cutting back on government services and we saw one of the consequences with the Pike River tragedy.

One of the overseas bankers I met some years ago said she was horrified to meet the sort of staff at Treasury who are 'wet behind the ears' making policy decisions.

Arrogant and ignorant - that's how she summed them up.

Dangerous combination!

[gv1]

Same goes for auckland council mate...law into themselves.

[BIRMANBOY]

Balance is there anyone, anywhere, at any point in time in the last 300 years who, in your opinion, isn't an idiot?:p
Good to hear from you, STC.

Reaffirms everything about Treasury which I have had experience with and heard about.

Really, Treasury are a bunch of pimpled faced kids let loose with the country's economic destiny and applying an efficient free market 'tried and failed' philosophy on everything.

I still remember one of the top NZ companies locating one of its plants (employing over 200 people) in Australia after Treasury advised the government that NZ government should not match the miserable $15m R&D funding promised by the Queensland government. Instead the idiots in there were busy recommending cutting back on government services and we saw one of the consequences with the Pike River tragedy.

One of the overseas bankers I met some years ago said she was horrified to meet the sort of staff at Treasury who are 'wet behind the ears' making policy decisions.

Arrogant and ignorant - that's how she summed them up.

Dangerous combination!

[J R Ewing]

I have heard the opposite criticism of the power company floats. We allocate to overseas instos at the expense of NZ instos. Then the overseas instos stag to the NZ instos. But in the Air NZ case, how could the government possibly deliver on the "keep the shares in local hands", if they placed a lot with overseas instos?

What amazes me is that they could unload that many shares so close to the prevailing market price - especially given the track record of the other 2 sales. You have to say it's Gummit 3 Investors 0 so far! If JK has been looking after his mates - they aren't us lot!

[Balance]

I have heard the opposite criticism of the power company floats. We allocate to overseas instos at the expense of NZ instos. Then the overseas instos stag to the NZ instos. But in the Air NZ case, how could the government possibly deliver on the "keep the shares in local hands", if they placed a lot with overseas instos?

What amazes me is that they could unload that many shares so close to the prevailing market price - especially given the track record of the other 2 sales. You have to say it's Gummit 3 Investors 0 so far! If JK has been looking after his mates - they aren't us lot!

Point that STC and Gaynor are making is that they should give the 30m odd shares allocated to overseas investors to just one or two, like Capital Group. Then it's worth their while to build up their stake to say, 5%. Otherwise, they just sell out the 1 or 2m shares allocated to them as Treasury spread the shares too wide.

[Harvey Specter]

I have heard the opposite criticism of the power company floats. We allocate to overseas instos at the expense of NZ instos. Then the overseas instos stag to the NZ instos. But in the Air NZ case, how could the government possibly deliver on the "keep the shares in local hands", if they placed a lot with overseas instos?You give those that stagged the first two nothing and you give those that didn't, most of what they want (assuming the same instos applied for all three). ie. reward your loyal purchasers and punish the others. The amount of shares allocated need not change.

[Balance]

That guy from Forsyth Barr has made a right charlie of himself.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11161521

To suggest that Buffett was wrong about airlines when AirNZ had to be bailed out 10 years by the state to the tune of $900m, and was barely profitable throughout the GFC, is a nonsense.

Buffett is on record as saying his investment holding period is ideally forever. It is a nonsense for The ForBarr Man to suggest Buffett would have cyclically traded an airline stock prior to bailout, in again after the bailout and out again before the GFC with the accuracy inferred by The Forbarr Man.

I would look forward to seeing a comparison of Buffett's investment record with that of the results of The ForBarr man's clients. Presumably they weren't holding any BRK-A or BRK-B.

Agree, STC - no perspective whatsoever of what a dog of an investment Air NZ was for Brierley, SIA and the minority shareholders who lost billions. Pick a time period and most investments can be made to look really good or really bad.

As for comparing Forsyth Barr's investment recommendation track record, three words - Feltex, Credit Sails.

[777]

AIR only lost such a huge amount in 2001/2002 year because of Brierley's decision to have AIR invest in Ansett. To say AIR was a dog of an investment for Brierley's when they were in control is total rubbish from you.

[Balance]

AIR only lost such a huge amount in 2001/2002 year because of Brierley's decision to have AIR invest in Ansett. To say AIR was a dog of an investment for Brierley's when they were in control is total rubbish from you.

You are right there that BIL supported Air NZ in buying Ansett and Air NZ made a dog's breakfast out of Ansett.

But it was still a dog of an investment for them.

If it looks like a dog, bark like a dog and walk like a dog (irrespective of what you feed it), it is a dog!

[777]

Brierley did not support AIR in buying Ansett, Brierley's were controlling AIR at the time and had they alone did not do "due diligence" and bought a dog.

[Balance]

Brierley did not support AIR in buying Ansett, Brierley's were controlling AIR at the time and had they alone did not do "due diligence" and bought a dog.

Your logic is beyond my comprehension today.

BIL did not support Air NZ.

BIL was controlling Air NZ.

They (who?) alone did not do due diligence.

Is it me, the champagne I have just drunk or logic so profound I am lost!

[Marilyn Munroe]

History may repeat for Cullen Airlines expeditions into the Australian market.

The domestic air-fare war between Virgin and Queer and Nasty and friends is far from settled.

Best outcome for John Key and us taxpayers, flog the lot to Etihad.

Boop boop de do
Marilyn

[Snow Leopard]

from a Rod Oram piece (http://www.stuff.co.nz/business/opinion-analysis/9430919/Buy-into-SOEs-the-smart-way) on Stuff

But all is not lost. You can make a far better investment in Air NZ than its shares. If you were smart enough to buy its 2016 bonds when they were issued, you're enjoying a 6.90 per cent coupon. Even if you bought them this week, they still return 5 per cent and your capital is secure

Not exactly 100% true is it?

Best Wishes
Paper Tiger

[biker]

from a Rod Oram piece (http://www.stuff.co.nz/business/opinion-analysis/9430919/Buy-into-SOEs-the-smart-way) on Stuff


Not exactly 100% true is it?.

Best Wishes
Paper Tiger

No, it's an outrageous thing to say. Your capital is 'secure' ??? Ask Babcock and Brown bond holders and many others who have lost all their capital or a huge percentage of it.

And he says this!

"Should Air NZ hit the skids again as it did in 2001 when the government was forced to bail it out, - heaven forbid, but that's a real risk in airlines - bond-holders would likely get all or at least a large chunk of their capital back.
And should the airline go bust, as a shareholder you will rank far behind bondholders in the division of the meagre value left in the company"


Which is just crap! In AIR NZ hits the skids as in 2001 or "goes bust" the bond holders will lose their money just like the shareholders. You can rank anywhere you like, but if there is nothing left, where you rank is meaningless.
Some times Rod Oram needs to stop talking from his back side.
A commentator in his position should know better.

[BIRMANBOY]

I don't know that I'd agree with your pessimism there. The Govt still own 51%. this should give you some measure of comfort I would think. I own the bonds and at 6.9% not the best yield but was better than the shares were paying at the time. Risk everwhere as we all know..I think these bonds are very low risk but that's just me.
No, it's an outrageous thing to say. Your capital is 'secure' ??? Ask Babcock and Brown bond holders and many others who have lost all their capital or a huge percentage of it.

And he says this!

"Should Air NZ hit the skids again as it did in 2001 when the government was forced to bail it out, - heaven forbid, but that's a real risk in airlines - bond-holders would likely get all or at least a large chunk of their capital back.
And should the airline go bust, as a shareholder you will rank far behind bondholders in the division of the meagre value left in the company"


Which is just crap! In AIR NZ hits the skids as in 2001 or "goes bust" the bond holders will lose their money just like the shareholders. You can rank anywhere you like, but if there is nothing left, where you rank is meaningless.
Some times Rod Oram needs to stop talking from his back side.
A commentator in his position should know better.

[winner69]

Some of those numbers show how 'risk' doesn't seem to be an issue these days

Gvt Bonds 2027/2019 quoted at around 4% - lets call that the country risk premium

The Air NZ bonds at 5% implies investors putting a 1% company risk premium on Air NZ

Take it a bit further and dividend yield is 5% - implies a equity risk premium of 0% - so are shareholders saying no added risk in holding shares at 160? Punters no doubt playing the capital gain trick

Seems like most think Air NZ pretty risk free anyway

The only thing of value in Orams little piece is that he reckons AIR has destroyed heaps of value ....Air NZ is no exception. From 2003 to 2012, its profits exceeded its cost of capital in only four of the 10 years, according to data it supplied for this column. The last time was 2005. Its total cumulative destruction of shareholder value was $179m.

If that the case AIR isn't worth any more than its book price of 164 anyway ... so improved performance built into the price (ie consistently making more than its cost of capital)

[modandm]

A lot of garbage in the herald and by posters here - almost entirely backward looking. Past performance is no way to judge an investment. Since 2001 the oil price has gone from 30 USD to over 100 USD a barrel. A more than 300% increase. In 10 years time oil prices will not be 400USD per barrel (if it is we are all screwed).

The fact that Air NZ has been profitable throughout this is testament to its strong competitive position and thoughtful conservative management. As far as airlines go Air NZ is nearly as good as the best of them - which have been very successful investments. These are Copa, Ryanair, Easyjet, and a few others. In some ways I see Air NZ as facing less competitive pressure than Ryanair and Easyjet, which means it should deliver more stable returns.

Buffets comments apply to US airlines - a huge market, highly competitive, and one with low barriers to entry. NZ is a small market where AIR has significant incumbent advantages. We have seen the departure of Virgin NZ and Jetstar struggling - it is unlikely there will be any new competitor. Internationally NZ will continue to face competition - but only from Asia. Air NZ has a significant cost advantage over US and Canadian airlines, as well as small pacific airlines.
In asia NZ will compete with efficient aircraft, and do okay bringing tourists to the country (which will likely fly domestically as well). They will increase their focus on outbound destinations such as Bali where they have a competitive advantage - NZers will pay more to fly NZ, Chinese ones may not.

The current outlook for Air NZ is very good, the company is on track to grow earnings 20-25% pa over the next 4 years, and dividends at an even faster pace. Whatever metric you use the stock is cheap and not reflecting the quality of the business (its strong competitive position), the growth, or the value of its virgin stake.

And fyi AIR has significantly lagged US airlines this year. They are the best performing stocks in the market - a lot have doubled. As a long term investor I would rather own Air NZ which I think can do consistently well, rather than US airlines which have bounced hard from rock-bottom valuations, but remain structurally challenged.

[modandm]

Some of those numbers show how 'risk' doesn't seem to be an issue these days

Gvt Bonds 2027/2019 quoted at around 4% - lets call that the country risk premium

The Air NZ bonds at 5% implies investors putting a 1% company risk premium on Air NZ

Take it a bit further and dividend yield is 5% - implies a equity risk premium of 0% - so are shareholders saying no added risk in holding shares at 160? Punters no doubt playing the capital gain trick


This is bizarre analysis and it is totally incorrect to apply a dividend yield vs bond yield comparison as a measure of equity risk premium. What would you say about the many stocks with low or no dividend yield.

Not sure what came over you to post such thinking - based on your next point you seem an intelligent guy.




If that the case AIR isn't worth any more than its book price of 164 anyway ... so improved performance built into the price (ie consistently making more than its cost of capital)

Makes some sense - but book value is rising quickly, and I would argue the company can sustainably generate returns above cost of capital - P/B of Copa Ryanair and Easyjet is over 2x! Air NZ currently 0.8-0.9x.

[winner69]

Modandm - isn't one of the key inputs into ERP an expected returns number. Lots of academia using bond and dividend yields to assess implied ERP. I admit such studies are generally at a market level but the rationale does apply at a company level

Just says old fashioned thinking in that investing in the government (govt bonds) is the least risky investment. Investing in company (bond) is more risky and the yield be higher. Investing in a company by having shares is even more riskier and so the dividend yield should be even higher. (Suppose the logic does assume that the most of free cash flow is paid out in dividends)

In AIR case I should have used a dividend yield of 6.944% (nxz gross figure quoted) . So country risk is 4%, company risk 1% and implied equity risk is 2% (not the 0% I said earlier)

Current situation but that is state of play these days in a world of inflated asset prices .....risk premiums are pretty low on a historical basis. Accepting this AIR is probably well priced at the moment.

You mention low dividend companies ......one needs to ask why low dividend. What is being done with any free cash flow? In these companies one could use the FCF and assume it paid as a dividend to apply the sums above. Reminds me of what an old timer told me a while ago in that maybe the generation that follows the baby boomers will be demanding of companies and make them pay out surpluses every year instead if hoarding them. A generational thing eh

[modandm]

Modandm - isn't one of the key inputs into ERP an expected returns number. Lots of academia using bond and dividend yields to assess implied ERP. I admit such studies are generally at a market level but the rationale does apply at a company level


Yeah can be used at the market level, but it must be used along with the markets expected earnings growth to imply a cost of equity. Its not very good at the stock level - but if you try you need to plug in a growth rate - that is the difference between fixed interest and dividends - dividends grow over time.

The formula is Value of stock = Dividends next year / (Cost of equity - growth rate)

For Air NZ say 1.60 = 0.12 / (x - 5%)

solve for x = around 13%

So 13% would be your return per year forever if Air NZ grows its dividend from 12c next year by 5% pa to infinity.

In the case of Air NZ dividend growth is likely to be faster than that - but then growth will slow. You can use a multi period formula and plug in your own dividends for the next few years then use a terminal growth rate.

I don't accept you argument that Air NZ is fairly priced at all - or that the worlds stocks are... There are some assets that are expensive - but its not widespread. Of course stocks feel expensive because they have been very cheap for the last 4 years...

[Marilyn Munroe]

Meanwhile in the land of the underarm bowler Federal Treasurer Joe Hockey has hinted that the Aussie Taxpayer may put money into Queer and Nasty Airlines.

Maurice Williamson had better dash down the corridor to the Minister of Transports office and tell him to unplug the fax machine right now. We wouldn't want the Aussie Government to queer the pitch in favour of their nationalised national airline like last time

Boop boop de do
Marilyn

[modandm]

Meanwhile in the land of the underarm bowler Federal Treasurer Joe Hockey has hinted that the Aussie Taxpayer may put money into Queer and Nasty Airlines.

Maurice Williamson had better dash down the corridor to the Minister of Transports office and tell him to unplug the fax machine right now. We wouldn't want the Aussie Government to queer the pitch in favour of their nationalised national airline like last time

Boop boop de do
Marilyn

Its a good point MM. I don't think the Aussies can do much to 'queer the pitch' as you say for Air NZ, but a stronger Qantas would be a negative for VAH.

I don't think its in VAH's best interest to keep the pressure on Qantas as it has been doing for too much longer. Maybe another 6 months - putting Qantas under pressure means Qantas can't invest as aggressively as VAH in new a/c and improving the customer experience - which all plays to VAH's strategy of taking market share.

If they carry on too long and put Qantas under too much pressure political action may result - so its a fine balance.

In the medium term, once the bloodbath is over both carriers are likely to start hiking prices, and reducing capcity growth in unison. This bodes well for improving profitability for both. I think both carriers will be making tidy profits in 3-5 years time.

[Marilyn Munroe]

Uh ooh! The fasten seat belts sign has just come on in the Cullen Airlines shareholders flight.

Standard and Poors has just downgraded Queer and Nasty Airlines to junk status.

Boop boop de do
Marilyn

[Marilyn Munroe]

Moodys has followed Standard and Poor's downgrading Queer and Nasty Airlines debt to junk status.

Will this create wake turbulence for Cullen Airlines?

Boop boop de do
Marilyn

[kyanar]

I'm seeing 5 mill shares on the sell side from 4 sellers today - volume seems a little excessive?

[Marilyn Munroe]

The response by Virgin(Underarm Bowlers Division) to an ASX price movement query makes for stimulating reading.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01489284

I hope the Virgin ground proximity warning radar device in the Cullen Airlines boardroom is active: "WHOOP WHOOP, Pull Up, WHOOP WHOOP, Terrain, WHOOP WHOOP, Pull UP WHOOP......"

Of course I could be worrying for no good reason, after all a kiwi Airline loosing its shirt in Aussie has happened before so I'm sure the Cullen Airlines board are watching carefully.

Memo to John Key and long suffering Kiwi taxpayers; sell the lot to Etihad.

Boop boop de do
Marilyn

[Marilyn Munroe]

The airflow providing lift for Cullen Airlines ambitions in Aussie could become a lot more turbulent

Federal treasurer for the underarm bowlers Joe Hockey is talking about Aussie taxpayers guaranteeing Queer and Nasty Airlines debt.

http://www.smh.com.au/federal-politics/joe-hockey-ready-to-throw-qantas-a-lifeline-20140213-32jxc.html

Could this mean Cullen and Queer and Nasty airlines will become entangled in a dog fight over the Tasman Sea with the ammunition paid for by the taxpayers of either country?

Memo to John Key; sell the lot to Etihad.

Boop boop de do
Marilyn

[modandm]

so AIR reports half year today. Should be little surprise as they gave guidance of 20% increase in PBT in December.

What will be interesting is the dividend. I am hoping a special will be announced. They are in a very strong position and have saved up some imputation credits that could easily be utilised.

They should be on track to deliver just over 20c eps this year, with a 60% payout ratio that means 12c in divs or about 7% yield. To get there they need to hike the first half div to 5c I think.

Continue to hold tightly, I see the stock trading on about 2.35 in a years time, which is 9x my FY15 eps estimate of 25c. Should get some healthy dividends too so c.40% return potentially.

Lots of new aircraft and capacity increases in FY15 to get excited about.

Cheers

[slimwin]

29% increase in earnings. 4.5% div.

[Schrodinger]

Great result. Can they maintain the good performance? If you look at history this industry tends to boom bust regularly. What is interesting is that will the new fuel efficient planes change the boom bust cycle?

I tend to follow other more knowledgable people in this sector (Buffett) who says airlines make a poor investment. However his observation in generally based on the hard and fast rules of the industry that people, planes and fuel are the major expenses and travel is a luxury good. If fuel efficient planes take out a major cost can legacy industry dynamics change and make this a consistent earner?

I tend to look at this from a long term perspective. I am sitting on the "wait and see" before passing judgement.

[freddagg]

Great result. Can they maintain the good performance? If you look at history this industry tends to boom bust regularly. What is interesting is that will the new fuel efficient planes change the boom bust cycle?

I tend to follow other more knowledgable people in this sector (Buffett) who says airlines make a poor investment. However his observation in generally based on the hard and fast rules of the industry that people, planes and fuel are the major expenses and travel is a luxury good. If fuel efficient planes take out a major cost can legacy industry dynamics change and make this a consistent earner?

I tend to look at this from a long term perspective. I am sitting on the "wait and see" before passing judgement.

When it comes to AIR Modandm is the most knowledgeable person I know. He is heavily invested in AIR and does quality research.

[Marilyn Munroe]

Has the good profit result announced by Cullen Airlines given Marilyn a pie in the face? A vol-au-vent maybe.

Cullen Airlines has been lucky. Their biggest competitor Queer and Nasty Airlines is run by a bunch of clueless idiots, and there has been no customer push-back from their roll out of the thrombosis class cabin layout.

Their are continuing concerns. The use of Airbus A380's by competitors on North American routes would see customers deserting Cullen Airlines. Jetstars Asia strategy is stuttering leaving them with a fleet of seriously underutilised A320's. These aircraft could be redeployed in Aoteroa domestically or criss crossing the ditch. Whether Boeing 787's are the right aircraft is still unknown, and of most concern Cullen Airlines are bankrolling the ruinous capacity war between Virgin(Under Arm Bowlers Division) and Queer and Nasty Airlines across the ditch

Queer and Nasty Airlines are due to to announce their profit result later today. It is widely expected to be a shocker. If it forces change on this airline it may not be to Cullen Airlines advantage.

Memo to John Key, sell the lot to Etihad, after today the taxpayers will get a better price.

Boop boop de do
Marilyn

[modandm]

:) thanks, to answer your question I would say yes things are going to get even better. I expect strong earnings growth to continue as the company expands. Airlines have high operational leverage, therefore when economies improve and revenue growth is strong, profitability rises at a rapid rate. In AIR's case by about 25%pa over the next few years. Combining that with the company's very low valuation vs peers, relatively strong competitive position, and high yield you can see why I like the stock so much.

Here are some more quick thoughts post conf call:

Very much as expected, maybe a touch better in some areas. A very credible result considering low revenue growth this year and the significant one off labour costs (redundancies, and retraining). Otherwise very little new or of surprise,

Key positives for me are:

- comments that domestic yield environment is improving
- outlining 8% FY15 capacity growth (previously they have used 7-8%),
- FX hedging for next year is building up nicely at 82c+ NZD/USD

A touch disappointed on the dividend, but looks like they want to do 4.5+7.5 = 12, to make it 50% even increase for the year. Maybe a special occurs at full year - but don't count on it. Unfortunately there is a bit of management conservatism in this regard.

FY 15 is going to be super! I can pick a FX and jet fuel cost, the difficulty is what will the 8% capacity growth translate to revenue? If you assume constant load factor and yield the answer is 8%, which would deliver c.30c EPS! If you say load factor and yield detract about 2% then using 6% revenue growth you get then about 25c EPS.

I then value the company at 9x forward PE or $2.35. I would say this is conservative. You could use a higher multiple or higher earnings number and get $3.00 easily.
Also this valuation ascribes zero value to VAH - worth c.25c NZD per share (unlikely to see a return on that in the next few years though...)

Happy holder.

[Schrodinger]

http://www.watoday.com.au/business/aviation/qantas-chief-alan-joyce-cuts-5000-jobs-20140227-33j48.html

Lol QQ Australia...

[Marilyn Munroe]

I'll sumarise the loss announcement of Queer and Nasty Airlines CEO Allan Joyce so you don't have to.

We are in more poo than an outback dunny, other than treating those who work for the airline as annoying blowflies I don't know what to do.

But I deserve to keep my job.

Boop boop de do
Marilyn

[Marilyn Munroe]

Cullen Airlines Aussie step child, Virgin(Underarm Bowlers Division), has just announced it has flushed $A83.7 million down the dunny.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01496443

Boop boop de do
Marilyn

[silverblizzard888]

In such a forward looking market, why is the stock price not higher right now?

[Snow Leopard]

In such a forward looking market, why is the stock price not higher right now?

Because it is a forward looking market !

Best Wishes
Paper Tiger

[silverblizzard888]

Because it is a forward looking market !

Best Wishes
Paper Tiger


Surely the prospect of 300 million profits for the year would cause the price to be much higher than it is now. The P/E is quite low right now, for such a forward looking market, would that possibility not be accounted for. At $1.80 that is still a very cheap price when comparing the P/E to other stocks.

[Snow Leopard]

Surely the prospect of 300 million profits for the year would cause the price to be much higher than it is now. The P/E is quite low right now, for such a forward looking market, would that possibility not be accounted for. At $1.80 that is still a very cheap price when comparing the P/E to other stocks.

Well that normalised $300M+ before tax will be $210M+ after tax so it is already on a P/E of 9.42 or better.
Take the SP to $2.10 and the P/E is 11.0

Then where does it go?
Airline profits tend to be all over the place and the further forward you try and predict the greater the possible variations, but you start factoring in a major downturn.

So they trade on nice low multiples to counter the higher risk (than more boring stocks).

Best Wishes
Paper Tiger

[silverblizzard888]

Not to spike any false excitement but generally the second half has been at least 80% of the 1st half (as shown on previous two years), so if we take that the 1st half of 140 million profit, we get 112 million for the 2nd half, which would give a nice estimate of 252 million full year profit.

Based on a P/E of 10 we'd get $2.27 or $2.497 on a P/E of 11.

[modandm]

100% correct silverblizzard. The stock is a bargain, with a great yield and lot of growth ahead.

As PT points out airlines are volatile therefore PE's tend to stay low. Of course many of the same investors who suggest airlines are risky are happy to buy 'hot' tech stocks... but hey.

Personally I'm happy to own cheap stocks, it reduces the downside. Plus even if the stock stays cheap on PE, with earnings rising 25% pa and a 7% yield on top its a tasty investment. Any re-rating would be icing.

[silverblizzard888]

Selling price seems to be going up slowly and selling depth reducing by quite a bit.

I agree Modandm, as long as the fundamentals are doing great then there should be no worry at all!

[couta1]

I'm looking at picking up a parcel of these,dividend yield looks pretty average at 4.3% price down a bit today so might be a good opportunity ?

[Arbroath]

I'd say the forward yield is more like 5.9-6.4% based on a 11-12cps payout this year. Interim was up from 3c to 4.5c. Last years final was 5c and my guess they'll pay 6.5-7.5c this year. Airlines can always be tricky and although I'm long AIR I'm married to them. They might string another couple of good years together which could see the PE expand and the shares head towards $2.5-$3 but up there I'd argue they become pretty risky.


I'm looking at picking up a parcel of these,dividend yield looks pretty average at 4.3% price down a bit today so might be a good opportunity ?

[couta1]

I'd say the forward yield is more like 5.9-6.4% based on a 11-12cps payout this year. Interim was up from 3c to 4.5c. Last years final was 5c and my guess they'll pay 6.5-7.5c this year. Airlines can always be tricky and although I'm long AIR I'm married to them. They might string another couple of good years together which could see the PE expand and the shares head towards $2.5-$3 but up there I'd argue they become pretty risky.
Thanks Arbroath,with them going ex divvy on the 12 th,price may go back up tommorow so think I'll grab me 10k shares just for the fun of it

[Jaa]

Just reviewing my AIR holding after the recent share price increase and have come up with a lot of positives to support the increase. Their fleet and route network is looking very good with plenty of capacity increases coming. NZ economic growth will also drive air travel.

The alliance with Singapore Airlines should be very profitable but not at the expense of consumers. Thus I hope it gets approved and I give it a 70% chance of being so. Qantas is making noise as is their way but JetStar's competing service was losing a lot of money and going to close anyway.

Almost like Singapore Airlines have agreed to share some of the routes capacity and profit with Air NZ??? But why give it away? Singapore Inc pulling some strings to direct more traffic through its hub and away from Dubai, Hong Kong and others? Part of a grand plan by Singapore to hurt Emirates, Qantas and the Dubai hub? Or have have Air NZ used their leverage with Virgin Australia to a deal with Singapore relating to Virgin's future at Eithad's expense?

Only negative I could come up with is a lack of an A320 NEO (or less likely a 737 MAX) order. They longer they leave it the more they will pay and the longer they will have to wait for delivery slots. This might be a result of a change in focus under new numbers man Mr Luxon compared to his predecessors. The order may not stack up completely on paper but without it they leave themselves open to new more cost competitive trans-tasman and domestic competition.

[Snow Leopard]

With the government holding the majority and then the SuperAnn Funds doing their trading we end up with SSH announcements like this one (http://SSH announcements like this one):

"Betty is selling"

We are amused
Paper Tiger (by royal disappointment)

[modandm]

PT - yes I found funny too.

Jaa - Wouldn't worry about the a320 neo, they will be leased anyway as is the current SH a320 fleet. I understand they should be coming to a decision soon on a replacement - could be new CEO versions which would have commonality with domestic.

Re the SQ alliance - SQ has been getting hurt by Emirates (badly), not the other way around. By forming a partnership with NZ SQ should be able to reclaim some market share, but more importantly get access to NZ's frequent flyer base, which is higher yielding. It's pretty win-win.

Happy with the increased shareprice obviously. Also NZD is stronger and Fuel lower. Management are talking about 8% ASK growth in FY15. I have them earning 30c next year on my base case of 6% revenue growth, FX at 83c and Jet Fuel at $128. Once again this is well above what the broking analysts expect (they are anchoring, and don't seem to calculate fuel as accurately as I have over the last 2 years...) On 9x that gives you 2.70 to 3.30, so a good 50-70% upside including dividends.

Yes I'm still in love with the stock - and in deeper then ever! :D

[slimwin]

Apparently Boeing have put a very good offer in for the Max but Luxon likes fleet commonality...

Won't affect the share price whichever way it goes. Both will be very good aeroplanes.

[airedale]

I don't follow Air NZ but my daughter has some. Her latest statement from the share registry shows that her holding was reduced by 10% on 8/4/14 under the heading "scheme of arrangement". She has not sold any shares. Does anyone have info on this "scheme of arrangement"?

[Snow Leopard]

I don't follow Air NZ but my daughter has some. Her latest statement from the share registry shows that her holding was reduced by 10% on 8/4/14 under the heading "scheme of arrangement". She has not sold any shares. Does anyone have info on this "scheme of arrangement"?

I think you daughter owns Auckland Airport shares, see AIA thread.

Best Wishes
Paper Tiger

[airedale]

Thanks PT, they don't call you a tiger for nothing. I had just been booking a flight with Air NZ when the question came in, so I had Air NZ on the brain instead of Auckland Airport.

[Zaphod]

Update on the Air NZ - Singapore alliance. Looking very favourable!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11242161

[Marilyn Munroe]

Update on the Air NZ - Singapore alliance. Looking very favourable!


So if you can't get a seat on Singapore's A380 you will be relegated to thrombosis class on Cullen Airlines.

Boop boop de do
Marilyn

[Marilyn Munroe]

Readers of this thread will be aware I have previously suggested the Governments share of Cullen Airlines be sold to Etihad.

Now Cabinet Ministers used to the finer things in life and a love of international travel have a motive to do this. Ethhad has just launched a new cabin layout for its A380's and Dreamliners. A feature of this layout is new suites in the first class cabin featuring a lounge area, sleeping area and a private bathroom which includes a shower.

Cabinet Ministers would feel inhibited flying this airline because of public perception they should supprt the national airline. If it was sold this barrier to their pampering would no longer exist.

The only problem with this statergy is these enhanced services would only be available from Australian Airports. To join up with these flights Cabinet Ministers would still have to cross the ditch on Cullen Airlines flying thrombosis class.

http://www.stuff.co.nz/travel/news/10008954/Etihad-unveils-luxury-residence-suite


Boop boop de do
Marilyn

[Huskeez]

Anyone out there have a fair value for AIR or care to share their views? I have $2.40 on the conservative end and $2.90, based on the last 5 years earnings growth and assuming a P/E of 10-11.

DISC: Holding

[freddagg]

[QUOTE=Huskeez;478889]Anyone out there have a fair value for AIR or care to share their views? I have $2.40 on the conservative end and $2.90, based on the last 5 years earnings growth and assuming a P/E of 10-11.

Check out modandm's posts on AIR

[Huskeez]

Higher Highs each week. Slowly heading towards projected SP. New 52 Week high, pretty excited for the FY14 Results.

[couta1]

Higher Highs each week. Slowly heading towards projected SP. New 52 Week high, pretty excited for the FY14 Results.
Got this one right bought 10k shares at $1.86 not that long ago up 17%, only wish I'd bought that amount times three as my old self would have but trying to be a bit more conservative these days and keep that enthusiasm at bay,shame about that.

[Huskeez]

Got this one right bought 10k shares at $1.86 not that long ago up 17%, only wish I'd bought that amount times three as my old self would have but trying to be a bit more conservative these days and keep that enthusiasm at bay,shame about that.


Oh nice couta! Do you have a projected pirce? Seems to be off most of the Sharetrader members radar, but volume wise there seems to be some heavy Insto/Fund involvement.

[couta1]

Oh nice couta! Do you have a projected pirce? Seems to be off most of the Sharetrader members radar, but volume wise there seems to be some heavy Insto/Fund involvement.
I'm taking the conservative approach and thinking around the $2.40 mark based on possible volatility which can come from several areas in this type of business, my daughter worked for them as a hostess and their standards were very high and consistent.

[Beagle]

https://www.nzx.com/files/attachments/190114.pdf

Looks promising. Recent developments for the airline look positive. A320 with its winglets is very fuel efficient, launch customer for the stretched version of the Dreamliner (787-9), enabling exit of fuel heavy 747-400's next year which are difficult to achieve high load factors due to size, extra flights into Queenstown with Virgin, study giving approval for later flights in Queenstown should further expand the capability of this airport...lots of other positive factors...PE of only 10 is very reasonable.

I'm in. Besdies all that, I love planes :D and you're being paid to enjoy the ride with a reasonable fully imputed dividend yeild
http://www.reuters.com/finance/stocks/overview?symbol=AIR.NZ
Analyst's consensus view is very positive too :)

[Schrodinger]

Sold out at $1.65 a few months back after buying for $1.12. Still kicking myself...

[couta1]

Sold out at $1.65 a few months back after buying for $1.12. Still kicking myself...
That's still a good profit but I know how you feel having sold my Turners car auctions at $1.90, we will probably make the same mistake again on another stock in the future, ain't hindsight a great thing:cool:

[Robomo]

https://www.nzx.com/files/attachments/190114.pdf

launch customer for the stretched version of the Dreamliner (787-9), enabling exit of fuel heavy 747-400's next year which are difficult to achieve high load factors due to size,

Not quite right Roger. Air NZ have 2 777-300 planes on order (lease arrangement I believe) that will be delivered later this year and they will replace the 747's. I was in Seattle last week and saw one of the 777's ready for painting (rudder already painted with Koru) followed by a couple of months or so of preparation and testing for handover. Both 747's should be gone by the end of this year. The 787-9's will be used on Perth-Auckland and Asian routes initially and will replace the 767 planes that are getting a bit old and fuel hungry. As more 787's are delivered then new routes may be developed but I expect that will not be until 2016.

AKL-SFO and LAX-AKL flights both completely full so profitable for Air NZ. Talked to a couple of Americans on board and they were both impressed with the Kiwi service and cabin crew, much better than the United and Delta flights they had flown to Los Angeles.

The next two years look very bright for AIR with all the fuel efficient planes arriving. I like the management style too of Christopher Luxon. Once Virgin Australia get going and turning a profit that will be a big bonus for Air NZ with its 26% (I think that's right) ownership of Virgin.

[Marilyn Munroe]

AKL-SFO and LAX-AKL flights both completely full so profitable for Air NZ. Talked to a couple of Americans on board and they were both impressed with the Kiwi service and cabin crew, much better than the United and Delta flights they had flown to Los Angeles.


Robomo, I have argued on this thread Cullen Airlines is vulnerable to passenger defections if a competitor flies A380's on these routes. I would be interested in your take on this.

Boop boop de do
Marilyn

Edit: Imagine this scenario. There is a purge of the boardroom and senior management at Queer and Nasty Airlines caused by its dire financial situation. They install a managerment that actually has a clue and looks around for lucrative routes which will bring in cash fast. They decide to abandon Kangaroo route flights ex Malbourne to the Camel Jockeys and redirect the metal to MEL --> AKL --> LAX

[Robomo]

If someone does fly A380's AKL to USA and beyond then their seat/mile cost would be slightly better than the current 777. However the only profitable route would be AKL-LAX. The A380 is designed as a hub to hub carrier and works well in that scenario - look at Dubai. The 777 and 787, being smaller and only marginally more costly on a seat/mile cost are better on point to point routes.
Airbus bet on airlines going hub to hub, Boeing on point to point. A380 sales have stalled whilst Boeing 777 and 787 sales have soared, as have Airbus's A330 and A350 2 engine planes. With 2 engine planes now able to fly just as far as the 4 engine planes there is no need to invest in the 4 engine A380 for long-distance trans-ocean flights.
Air NZ's philosophy is point to point. Thus to USA we have AKL to LAX, SFO and Vancouver. When more 787's arrive there is the possibility of direct flights to Dallas and Seattle and CHC-LAX, routes that would never support an A380 (AirNZ tried 747's on CHC-LAX a few years ago but could not fill the planes profitably).
Passengers prefer point to point rather than spending time in an enormous hub just to fly another hour or two to a smaller destination (as well as the greater possibility of delays and lost baggage).
Emirates and Singapore are the only realistic possibilities to fly A380 AKL-LAX (Qantas are in real trouble according to today's paper) but it would be risky, being away from their hubs. There would be considerable added costs in flight crews spending time away from their home town and to make it profitable they would have to offer just about daily flights. A huge investment and given the current popularity of AIRNZ with the travelling public I can't see it happening.
AirNZ have the right philosophy IMO. From a passenger's point of view I'm just as comfortable in a 777 as a 380 and they fly at the same speed anyway.

[biker]

Robomo, I have argued on this thread Cullen Airlines is vulnerable to passenger defections if a competitor flies A380's on these routes.


Edit:
They install a managerment that actually has a clue and looks around for lucrative routes which will bring in cash fast. They decide to abandon Kangaroo route flights ex Malbourne to the Camel Jockeys and redirect the metal to MEL --> AKL --> LAX

The AKL-LAX route is lucrative for AIR but by simply putting metal on it doesn't mean QAN will make it likewise. It would be costly initially and at the moment they are in no financial position to take even short term increased losses.
QAN need a management change that will ditch the current idea that a 65% market share must be maintained at ALL costs.
VAH now have some shareholder muscle behind them and with Christopher Luxon going onto the board in the next few months I would expect some positive AIR influence and airline acumen playing a part in the improvement of the VAH product as VAH continue the relentless pursuit of the QAN market. Eventually there has to be substantial domestic profit for both carriers but it will need a change of strategy at QAN bought about firstly by axing Alan Joyce. The slash and burn cost cutting will only take their profitability so far. A much more comprehensive business plan is needed and a pig headed determination to maintain market share regardless is not it.

I realise I'm a bit off track on the AIR thread, but with VAH now a big part of AIR's business model the workout going on in the Aust market is very important to them.

[Beagle]

If someone does fly A380's AKL to USA and beyond then their seat/mile cost would be slightly better than the current 777. However the only profitable route would be AKL-LAX. The A380 is designed as a hub to hub carrier and works well in that scenario - look at Dubai. The 777 and 787, being smaller and only marginally more costly on a seat/mile cost are better on point to point routes.
Airbus bet on airlines going hub to hub, Boeing on point to point. A380 sales have stalled whilst Boeing 777 and 787 sales have soared, as have Airbus's A330 and A350 2 engine planes. With 2 engine planes now able to fly just as far as the 4 engine planes there is no need to invest in the 4 engine A380 for long-distance trans-ocean flights.
Air NZ's philosophy is point to point. Thus to USA we have AKL to LAX, SFO and Vancouver. When more 787's arrive there is the possibility of direct flights to Dallas and Seattle and CHC-LAX, routes that would never support an A380 (AirNZ tried 747's on CHC-LAX a few years ago but could not fill the planes profitably).
Passengers prefer point to point rather than spending time in an enormous hub just to fly another hour or two to a smaller destination (as well as the greater possibility of delays and lost baggage).
Emirates and Singapore are the only realistic possibilities to fly A380 AKL-LAX (Qantas are in real trouble according to today's paper) but it would be risky, being away from their hubs. There would be considerable added costs in flight crews spending time away from their home town and to make it profitable they would have to offer just about daily flights. A huge investment and given the current popularity of AIRNZ with the travelling public I can't see it happening.
AirNZ have the right philosophy IMO. From a passenger's point of view I'm just as comfortable in a 777 as a 380 and they fly at the same speed anyway.

I agree that twin engine aircraft are where its at for AIR as a small regional player. The 777-300's are still a very efficient aircraft as you've noted and a favourite with airline accountants all over the world. The more comfortable cabin pressure of an A380 makes it an attractive proposition for long haul travel but I'm not sure how many people realise that the new Dreamliners have a similar comfortable cabin pressure, (equilivent to 6,000 ft altitude not 8,000 ft like a regular aircraft) so with appropriate marketing they'll be a real draw-card for AIR in this part of the world. I like how AIR were also the launch customer for the retro-fitted winglets on the A320 aircraft, saving 4% fuel on this already very efficient aircraft and adding 500 kg's to the payload. Exiting of the fuel hungry remaining 737's shortly is also a good thing. Domestically it would appear that AIR will be hitting it out of the park with good growth in the local economy so the outlook looks very promising. I'll be doing some more reasearch on how a current year PE of only 10 compares to other airlines around the world shortly. Whilst I would be the first to acknowledge that this is a cylical industry, a PE of only 10 seems cheap for this part of the cycle.

[ace5715]

Up until 2 or so years ago Qantas did fly MEL-AKL-LAX, we use to use it for work flights to LAX because we were aligned with Qantas. I believe it was ditched due to it not being profitable enough. From a passenger stand point it was a terrible flight to be on, I only did the AKL-LAX leg of it but it seemed Qantas used their oldest planes able to fly the distance, it was never on time leaving Melbourne and the staff always seemed like being put on this flight was punishment for past sins.

I'm glad Qantas ditched it so we could start using Air New Zealand where AKL-LAX is one of their flagship routes.

[modandm]

There is no way Qantas will enter AKL-LAX/SFO. As noted by others NZ has a strong position and lower costs here. There is a risk a US carrier enters, but I think its relativly low.

The stock price has seen recent strength on broker upgrades, but I still see alot to go for. Recent NZD strength is positive and incrediby timely given the huge USD capex occurring in the next 2 years.

Per my current base case EPS of 30c for FY15, growing to 35c in FY16. Choose your PE multiple, and remember this give 0 value to VAH stake (worth 30c per share)

Assumptions are:
Jet $128 USD
NZD 0.83 USD
Revenue growth of 1.5% this year, 6% FY15, 4% FY16

The interesting things will be:

- VAH recovery?
- Rising free cash flow generation - leverage rises with new fleet short term, then falls fast given super-strong operating cash flow generation
- What will management do in FY16-FY17-FY18 with the fast growing cash pile, special dividends please!!

My approach here is to enjoy the ride until I see turbulence ahead.

[modandm]

Oh and as an aside, its been an incredibly rewarding investment for me over the last 2-3 years, I hope others have enjoyed the gains.

Watch the business, not the stock price.

[psychic]

Oh and as an aside, its been an incredibly rewarding investment for me over the last 2-3 years, I hope others have enjoyed the gains.

Watch the business, not the stock price.

Very much so and largely because of your analysis Modandm. Thank you for sharing.
Topped up again today, a great ride. :)

[Robomo]

Oh and as an aside, its been an incredibly rewarding investment for me over the last 2-3 years, I hope others have enjoyed the gains.

Watch the business, not the stock price.

I've stuck with AirNZ having believed in the direction the airline was taking under Rob Fife and then Chris Luxton. Reinvested in shares when this was available and purchased a few when they were cheap and now have a sizeable holding.

Modandm is quite right - watch the business, not the stock price.

All the ducks are lined up for AirNZ - US self-sufficient in oil so this will dampen any trends to increase fuel price, new fuel efficient planes (bought at very good prices as the GFC hit airline orders in 2008), more travellers as airfares drop, near-monopoly domestically, good exposure to Australian market (Virgin are looking reasonably good to becoming more profitable in the medium term as Qantas continues to bleed), good staff morale and vigorous and agile management.

Even though airlines are traditionally a risky investment it's hard to see any dark clouds on the horizon for Air NZ.

I won't be selling and I expect that dividends will reflect the increasing share price.

[Beagle]

Some great points noted above. Yeap, the development of the massive shale reserves in Amercia and Canada have gone ahead at considerable pace and there's plenty there. I've heard that shale reserves are more easily refined into diesel and jet fuel, rahter than regular petrol, can anyone confirm that ? Another good point about plane orders during the GFC, I'd imagine if those same planes were ordered today the price would be materially more expensive.
Budget predicting 4% economic growth...rock star economy...lets hope the Reserve bank takes a more reserved approach towards any further application of the brakes...just let the economy grow for goodness sake.

Anyway here's a few comparitive PE's from airlines I chose at random this morning, no doubt others will have a view on what's the best comparitive airline but here's a bit of research to hopefully spark some discussion on what PE is apprpriate and fair for AIR at this stage of the economic cycle because too me it seems AIR is very cheap
What's the right PE Ratio for AIR ?

Here's some comparisons but please feel absolutly free to add to the list

Cathay Pacific
Consensus view of 22 analysts for Dec 14 earnings HK$ 1.13 per share, current SP
$15.26 current year PE = 13.5
http://www.reuters.com/finance/stocks/analyst?symbol=0293.HK

Delta Airlines
Consensus View Dec 14 EPS of $U.S2.98, current SP 38.13 = PE of 12.8
http://www.reuters.com/finance/stocks/analyst?symbol=DAL.N

Singapore Airlines
Consensus view Mar 15 EPS of 51.57 cents current SP$10.25 = PE of 19.9
http://www.reuters.com/finance/stocks/analyst?symbol=SIAL.SI

Even if we use a conservative forward PE of 10 for AIR given its a relativly small regional player and assume a forecast earnings of $350m for 2015 which would appear to be quite plausible for EPS pf circa 32cps that gives a $3.20 SP this time next year all going well, a 50% gain on this mornings price of $2.13.
What am I missing here ????, this stock seems far too cheap.

[biker]

Although this is about QAN and VAH it relates to AIR also indirectly.


Qantas has finally blinked in a vicious capacity battle with Virgin Australia that could result in the larger carrier reporting a record loss approaching $1 billion.
Qantas will freeze domestic capacity in the first three months of the financial year because of weak consumer confidence and a slowdown in the mining sector that have hit at a time when capacity has outstripped demand.
It marks the formal abandonment of a strategy of maintaining a line in the sand at 65 per cent domestic market share, which was meant to maximise profitability.

Alan Joyce: happy with 63 per cent.
In January, Qantas chief financial officer Gareth Evans said ''stepping back from the 65 per cent would effectively be waving the white flag''.
Qantas chief executive Alan Joyce had led a campaign seeking a debt guarantee from the federal government to level the playing field against foreign-backed Virgin, in a move that might have prolonged the capacity battle.
But Prime Minister Tony Abbott in February turned down the request, offering instead to push for foreign ownership restrictions on Qantas to be lifted, in a move that has yet to be approved by the Senate.
In a presentation to investors at the Macquarie conference in Sydney this month, Mr Joyce indicated the carrier's market share stance was softening.
He said the airline was comfortable with its current position of about 63 per cent and was more focused on maintaining frequency and network advantages that help attract and retain customers.
The airline on Wednesday told investors total domestic capacity growth, including Qantas, QantasLink and Jetstar, would be ''zero in each of the first three months of financial year 2015 compared with the prior corresponding period''.
But the statement left room for Qantas to cut capacity in the mainline division while adding it in Jetstar, if it chooses, in line with long-running trends.
Qantas provided the update to the market alongside weak April traffic statistics, with the timing linked to it pulling some flights and placing smaller aircraft on others for the July-to-September period.


Read more: http://www.smh.com.au/business/qantas-blinks-first-in-virgin-battle-with-domestic-capacity-freeze-20140521-38p18.html#ixzz32OJfh23c

[Beagle]

http://www.stuff.co.nz/travel/news/10099923/Air-NZ-s-new-787-9-completes-first-test-flight

Finally !! Take-off for the first of our beautiful new super efficient Dreamliners, doesn't she look impressive !!

[macduffy]

http://www.stuff.co.nz/travel/news/10099923/Air-NZ-s-new-787-9-completes-first-test-flight

Finally !! Take-off for the first of our beautiful new super efficient Dreamliners, doesn't she look impressive !!

Yes, looks great! I wonder how it travels back in "coach" class?

[modandm]

Nothing that moves the needle short term, but a decision has been made with regard to replacing current A320 international aircraft (currently on lease).

Points of interest:
- decision taken to wait for the A320neo, rather than take ceo's earlier and have full commonality with domestic fleet
- ordering a minimum of 3 A321's with options to convert A320's
- rapid arrival schedule (13 in 2 years!!)

My thoughts:
- although the leases are ready to exit in the near term, the economics of the NEO, especially on the longer sectors NZ operates (3 hours is the shortest), have been too significant to ignore
- A321 clearly offers growth potential, and lower CASM
- reflecting the fact NZ would prefer them sooner, they have gone for an accelerated delivery rate

This does mean the current A320's will probably be strung out till replacement. They are generally in okay shape so I wouldn't expect a refit. Expect complaints in 2016 and 2017 as they look old though :)

Looking forward to 30 August

mod

[Schrodinger]

Great timing with the plane announcement. This will drive further efficiencies through to profits (hopefully). If the NEO is already in production this is a great move. The 787 delay has cost the company 2 years of progress.

Should be a solid future for Air NZ.

[Beagle]

I like the look of the new A321's and with the new engines they should be the perfect aircraft for Air's short haul pacific work.
I suspect they'll opt for more than the 3 out of 13 being the new A321.

[Robomo]

I suspect the A321's will be fitted out with a few business class seats and used mainly for AKL-SYD and AKL-MEL where there is sufficient business traffic to justify business class. Three planes would just about do it on current scheduling but I guess AirNZ will monitor the possibility of including Brisbane as well before commiting to more than 3 A321's.

AirNZ already use the larger twin-aisle planes (777 and 767 and probably 787 in the future) for some MEL and SYD and BNE flights so A321 with business class would ensure class commonality regardless of aircraft. Qantas and Emirates and Virgin all have some business class in all their trans-tasman flights so AirNZ would like to compete for that traffic on all flights.

On the above basis I'm picking that Air NZ will eventually settle for 4 A321's, all with a few business class seats.

[Beagle]

http://www.nbr.co.nz/article/satellite-navigation-plan-will-save-2-billion-aviation-industry-157804

Anyone else noticed how much quicker these new "smart" approaches to N.Z. airports are ?

I presume they're talking about installing new differential GPS systems, (http://en.wikipedia.org/wiki/Differential_GPS), which are state of the art and will allow far more accurate aircraft movements than the really antiquated radar systems presently in use that my brother used to maintain.

In other news Air increases its holding in Virgin to the maximum allowable 25.99% today.

Lots of good incremental improvements for this stock and trading on a really cheap forecast PE of only 8.3 times June 2014 earnings.
( Forecast $300m / 1,111m shares = 27 cents eps, $2.25 / 0.27 = 8.33)

[Lost in space]

http://www.nbr.co.nz/article/satellite-navigation-plan-will-save-2-billion-aviation-industry-157804

Anyone else noticed how much quicker these new "smart" approaches to N.Z. airports are ?

I presume they're talking about installing new differential GPS systems, (http://en.wikipedia.org/wiki/Differential_GPS), which are state of the art and will allow far more accurate aircraft movements than the really antiquated radar systems presently in use that my brother used to maintain.

In other news Air increases its holding in Virgin to the maximum allowable 25.99% today.

Lots of good incremental improvements for this stock and trading on a really cheap forecast PE of only 8.3 times June 2014 earnings.
( Forecast $300m / 1,111m shares = 27 cents eps, $2.25 / 0.27 = 8.33)

Thanks for that Roger. I'm contemplating buying in. Could I kindly piggy back on your undoubted research on this stock and comment on what the average industry PE is - particularly those few airlines that are providing adequate returns on equity? Thanks in advance.

[modandm]

http://www.nbr.co.nz/article/satellite-navigation-plan-will-save-2-billion-aviation-industry-157804

Anyone else noticed how much quicker these new "smart" approaches to N.Z. airports are ?

I presume they're talking about installing new differential GPS systems, (http://en.wikipedia.org/wiki/Differential_GPS), which are state of the art and will allow far more accurate aircraft movements than the really antiquated radar systems presently in use that my brother used to maintain.

In other news Air increases its holding in Virgin to the maximum allowable 25.99% today.

Lots of good incremental improvements for this stock and trading on a really cheap forecast PE of only 8.3 times June 2014 earnings.
( Forecast $300m / 1,111m shares = 27 cents eps, $2.25 / 0.27 = 8.33)

Not sure where you have got this number from - it looks too high and wrong to me. Its also well above consensus. Given we are so close to the end of the year I very much doubt the market is so wrong. The 2015 number on the otherhand - well it all depends on the assumptions you make...

Regarding your looking at PE ratios of competitors I would be cautious. Different tax treatments towards depreciation, stages of the cycle, leverage, and underlying exposures mean such comparisons are not useful imho.

Anyway I agree the stock is attractive.

[Arbroath]

Not sure where you have got this number from - it looks too high and wrong to me. Its also well above consensus. Given we are so close to the end of the year I very much doubt the market is so wrong. The 2015 number on the otherhand - well it all depends on the assumptions you make...

Regarding your looking at PE ratios of competitors I would be cautious. Different tax treatments towards depreciation, stages of the cycle, leverage, and underlying exposures mean such comparisons are not useful imho.

Anyway I agree the stock is attractive.

They said at the half year "normalised earnings pre-tax to exceed $300m" which is different to NPAT. I'd guess NPAT will come in around $240m which puts them on a PE of about 10.5 for this year.

It is very difficult to get too precise with 2014 earnings, let alone next year, as there are so many moving parts in the airline business. Although they've been doing really well and are in a somewhat virtuous cycle of being able to invest in more fuel efficient planes to increase margins and/or keep their foot on QAN's throat on the Tasman routes at the end of the day this is still an airline = notoriously hard industry.

I bought in around the Govt sell down level but feel anything around $2.50 they are getting expensive - forward PE of 9 when all the stars are aligned could be just the time to lighten the load and look for better value elsewhere.

[Beagle]

Thanks for that Roger. I'm contemplating buying in. Could I kindly piggy back on your undoubted research on this stock and comment on what the average industry PE is - particularly those few airlines that are providing adequate returns on equity? Thanks in advance.


Chairman Tony Carter says that with stable fuel prices and a traditional
seasonal earnings pattern of a stronger first half, Air New Zealand expects
to deliver a full year result of normalised earnings before taxation in
excess of $300 million. Extract from half year profit announcement.

Sorry gents I got it wrong on the after tax PE front, as you were gentlemen. Working on say $250m aftter tax, (say $320m x .78), 22% was actual tax rate for first half, EPS = 22.5 cents = PE of 10. Looking at other airline PE's my gut says its not unrealistic to expect some PE exapansion as AIR continues to build credibility with its fresh and efficient fleet and excellent service level's.

I know airlines are a notoriously cylical industry but when you look at the average PE on the N.Z. market overall and the PE of other airline stocks I referenced earlier in the thread its incredibly hard to find value elsewhere and provided there's not a sustained oil price increase off the back of world-wide geo-political events I'm looking for a rally towards $3.00 this time next year :D

Its hard to get reliable directly comparable data, (no point looking to Qantas for PE comparitives).

[forest]

provided there's not a sustained oil price increase off the back of world-wide geo-political events I'm looking for a rally towards $3.00 this time next year :D

Its hard to get reliable directly comparable data, (no point looking to Qantas for PE comparitives).

Roger, I think that even in the case of sustained oil price increases AIR might do just fine. An increase in oil prices will be felt more by airlines with inefficient planes. AIR very efficient planes might become even more competitive when oil rises in price.

[Beagle]

Roger, I think that even in the case of sustained oil price increases AIR might do just fine. An increase in oil prices will be felt more by airlines with inefficient planes. AIR very efficient planes might become even more competitive when oil rises in price.
They certainly are well positioned mate.. I think everyone has been caught by surprise by these radical ISUS extremists in Iraq, (hopefully the tide will be turned with some well placed Tomahawk cruise missles and a few dozen repositioned military drones as well as the Iraq military actually showing a back-bone).
I guess the risk is if these extremists can impeed the flow of the 3.5 million barrells per day coming out of southern Iraq we'll see a sustanied imbalance in the demand supply equilibirum for oil.

Air N.Z. have some useful fuel hedges and collars in place but out into the second half of 2015 not so much.
How the public would react too fuel surcharges again, if necessary, I'm not sure to be honest ?
I think by and large people accept fuel surcharges as long as they're perceived to be necessary and reasonable, what do you think ?

[Marilyn Munroe]

There are an awful lot of idle underutilised A320's in the Near Abroad.

Be a shame if they were to used to undercut Cullen Airlines profitable cross-ditch routes because cut throat pricing would cash flow better than paying penalities for returning them to the leasing company.

Boop boop de do
Marilyn

[noodles]

The investor presentation has the following comment with regard to virgin
"Board seat to be taken up, equity accounting to follow"

Does this mean that virgin's losses will now be part of AIR's P&L? Brokers are forecasting a $82 mill loss for FY15.

[Beagle]

Investor day briefing

https://www.nzx.com/files/attachments/195586.pdf

[Beagle]

I see the flying Kangaroo has its nail's clipped and is withdrawing capacity on the Tasman, see N.Z. Herald article today...I'll post a link later if I get time.

Really... the unions over there seem determined to destroy almost all industry. When baggage handlers are earning well north of $A100,000 with all the union allowances what hope has Qantas got ? Plays into AIR's ongoing growth in my opinion.

Guys, have a good read of that investor briefing I posted above. This company could be making close to half a billion dollars in a few years time, heaps and heaps of blue sky left for this puppy to keep gaining altitude.

[Marilyn Munroe]

Rogers link;

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11277625

As I posted previously there are a large number of underutilised A320's in the Near Abroad. Governments on both sides of the Ditch have a near open skies policy.

In the global scene having the luxury of manipulating flights for revenue maximisation like that enjoyed by the (Cullen Airlines - Virgin{underarm bowlers division}) and Queer And NasTy AirlineS duopoly is very rare. As we all know competition hates a vacum, sooner or later someone is going to have a go.

Roger: Baggage handlers @ Sydney, While a concern in my opinion the biggest problem Queer and Nasty Airlines faces is inept management.

Boop boop de do
Marilyn

[Beagle]

While a concern in my opinion the biggest problem Queer and Nasty Airlines faces is inept management.

Without a doubt but the Unions are a major impediment to Qantas and always will be. On the other hand Air's management look like they've got their team working well together and streamlining aircraft types and looking for further efficiencies...ready too hit the after-burner on profits :)

[Beagle]

http://ir.delta.com/files/doc_presentations/2014/Delta%20-%20DB%20Industrials%20Conference%2004Jun14_v001_r4 m6e6.pdf

According to a leading analyst on CNBC speaking this morning his top pick in the Airline sector was Delta so I thought I'd dig out some info on them, see presentation. Forward PE is 10.9 for 2015.

[bryndlefly]

AIR's shareprice has taken a beating in the last few days, is it just profit taking? I hadn't seen any negative news. Buyers are pretty thin on the ground today, it could slide a bit further too. Edit: actually on second thoughts 15c drop is probably not 'a beating' but still...

[Beagle]

AIR's shareprice has taken a beating in the last few days, is it just profit taking? I hadn't seen any negative news. Buyers are pretty thin on the ground today, it could slide a bit further too. Edit: actually on second thoughts 15c drop is probably not 'a beating' but still...

Hard too understand. May 2014 operating figures are out and it all looks very positive. End of financial year, (30 June), selling by Australians is my best guess for this correction.

[noodles]

Hard too understand. May 2014 operating figures are out and it all looks very positive. End of financial year, (30 June), selling by Australians is my best guess for this correction.
I think Forbar have downgraded them. Also, AIR have annouced they will equity account Virgin. This has the effect of lowering profits. Other than that, I've no idea. Profit taking? It has had a great run.

[slimwin]

Susceptable to long term changes in fuel prices too. Perhaps that market expects there to be on going trouble in Iraq. More than normal that is.

[noodles]

Susceptable to long term changes in fuel prices too. Perhaps that market expects there to be on going trouble in Iraq. More than normal that is.
Yes, probably more relevant than my thoughts.

[modandm]

Hi all,

Yes I think a bit of profit taking, and a very late reaction to the Iraq issues. US airlines had been down much earlier and I was surprised AIR had held up in the high 220's so easily.

The operating statistics came out this week and I was very pleased with them. At the start of the year I was forecasting 2% pax revenue growth, and a few brokers were forecasting 0%. About 3 months ago it looked like only 1.5% would be achieved, but since then there has been stronger RPK and yield growth which I think gets us to 2.1% for the full year. This is good momentum to take into FY15, where I am assuming 6% growth. I think this is conservative given the CFO told me they expect 8% RPK growth. I think it will be less in the first half and pick up to 8% in the second. I am assuming pretty flat yields, but it possible 1-2% growth here too.

On a base case I think around 29-31cps is realistic, with 35c a bull case.

I will do more analysis on how the accounting for VAH is likely to impact in the next few months, but I feel the market will probably continue to ignore VAH and its P&L impact. Honestly hard to understand why the market is valuing AIR so lowly given growth and VAH stake - I don't believe there is any value of VAH currently implied in the AIR share price. It's almost like the market just values AIR on its dividend yield! (thankfully dividend growth has been 50% this year and is likely to be 50% again next year! 12c-18c based on 60% payout. I continue to call for higher dividends or a special dividend, who know we could get a 7.87c special dividend at FY? :) that would be good!

[Beagle]

^ Like you I've been keeping a close eye on the monthly operating stat's and am pleased with load factors and RPK growth.
Air is very well positioned from a strtegic perspective with a very strong financial position and a good forward order book of new aircraft. The Dreamliner appears to be over its intial teething problems and as these stretched versions are first in the world and I assume state of the art in terms of fuel cost and were ordered during the GFC I'd expect that AIR would have obtained a sizeable discount and can look forward to meaningful operating efficiencies. Further these deliveries are occurring when our currency is very strong lowering their cost in N.Z. dollars. The stock is very cheap in my opinion. There will always be risks with any business and i think the corrction in light of the tick up in oil price, (a significant percentage of which has now corrected back towards a more normalised range) is over-done.

The usual scaremongers and investment houses with their own agenda's are out there claiming were going back to $150 a barrell oil again...I'll believe it when I see it. There's vast quantities of shale oil now in production in North America and plenty more coming into development, shale oil is ideal for processing into heavy fuel such as diesel and jet fuel.

My thinking is that once the American's send the necessary military drones into Iraq we'll see a stabilisation in the influence of the new extremists who've caused this disruption.

I see really good value in AIR at the current price with the prospect of excellent profit and fully imputed dividend growth in the years ahead. Forbar's ability to pick stocks has never impressed me, (I was a client of theirs for many years). Yes AIR has had a good run but I think there's plenty more to come :)

[biker]

I sold the last of mine last week in the 2.20's . Have had a great run from 87c and happy to take profits. Good luck to holders. Should be more up side yet.
Now looking for Virgin to perform, with the added help of 3 new and experienced directors on the board.
This will help drive the AIR sp but the risk/reward ratio with VAH appeals to me more, at the point where it's share price is still pretty beaten up but with plenty of upside if they get it right.

[Zaphod]

I sold the last of mine last week in the 2.20's . Have had a great run from 87c and happy to take profits. Good luck to holders. Should be more up side yet.
Now looking for Virgin to perform, with the added help of 3 new and experienced directors on the board.
This will help drive the AIR sp but the risk/reward ratio with VAH appeals to me more, at the point where it's share price is still pretty beaten up but with plenty of upside if they get it right.


I completely agree. VAH now also have significant capital available to them via the consortium of airline investors, and an exceptional opportunity before them to grow the Australian market while Qantas is down for the count and bleeding. Keep a close eye on their Op Stats.

[Beagle]

I sold the last of mine last week in the 2.20's . Have had a great run from 87c and happy to take profits. Good luck to holders. Should be more up side yet.
Now looking for Virgin to perform, with the added help of 3 new and experienced directors on the board.
This will help drive the AIR sp but the risk/reward ratio with VAH appeals to me more, at the point where it's share price is still pretty beaten up but with plenty of upside if they get it right.

Asset backing in the late 20 cents per share range, (trading at 45 cents) with significant losses and no dividends ? I struggle too see the attraction but good luck too you and as you suggest if they do perform that'll help AIR along.
From Air's perspective i do see the attraction as they're able to offer a seamless and extensive product offer into Australia, e.g. Airpoints members we're offerred flights on the all new Dreamliner into Perth from 15 October for $429 each way and part of the marketing was a range of additonal destinations in Western Australia available as add-on's for modest additional cost.

I'm hoping for a final divvy of 7 cps, (up from 5 cps last year) for a total of 11.5 cps this year, (fully imputed), and this places AIR on a gross dividend yield of 7.5% for the 2014 year with excellent prospects for future dividend growth with strong cash flows and the balance sheet in excellent shape with record low gearing. I think dividends will be very strong in the years ahead as the Govt loves cash even more than shareholders do to help makes its books look strong :)

[Beagle]

I completely agree. VAH now also have significant capital available to them via the consortium of airline investors, and an exceptional opportunity before them to grow the Australian market while Qantas is down for the count and bleeding. Keep a close eye on their Op Stats.
I can't see the heavily wounded Kangaroo rolling over and playing dead like an old Labrador.

[biker]

I can't see the heavily wounded Kangaroo rolling over and playing dead like an old Labrador.

No, likewise, but stats out today don't indicate a Kangaroo acting like a young huntaway either.

Summary of Traffic and Capacity Statistics
Month of May 2014
Qantas Group passenger numbers for May 2014 were in line with the previous year. Group capacity
(Available Seat Kilometres) increased by 3.0 per cent and Group demand (Revenue Passenger Kilometres)
increased by 1.5 per cent, resulting in a revenue seat factor of 73.4 per cent which was 1.1 percentage
points lower than the previous year.
Demand at Qantas Domestic in the month was negatively impacted by weak consumer confidence and
business sentiment. On 21 May 2014, Qantas announced that in response to changing conditions in the
domestic market, total domestic capacity growth (comprising Qantas Domestic, QantasLink and Jetstar
Domestic) will be zero in each of the first three months of financial year 2015 compared to the prior
corresponding period.
Financial Year 2014
Qantas Group passenger numbers for the financial year to date (31 May 2014) increased by 1.1 per cent
from the previous year. Group capacity increased by 1.1 per cent and demand decreased by 1.2 per cent,
resulting in a revenue seat factor of 77.4 per cent which was 1.9 percentage points lower than the previous
year.
For the financial year to date, Qantas Group yields were lower than the prior corresponding period. Total
Domestic (comprising Qantas Domestic, QantasLink and Jetstar Domestic) yields were lower than the prior
corresponding period as a result of market capacity growth and weak demand. Total International yields
were lower than the prior corresponding period due to persistently high levels of competitor capacity growth
into Australia

[Beagle]

No, likewise, but stats out today don't indicate a Kangaroo acting like a young huntaway either.
Agreed but I can't see the over-capacity issue in Australia being solved through economic growth anytime soon so I suspect turning Virgin around will be easier siad than done notwithstanding board and shareholder changes. Time will tell, we both want the same thing mate :)

[RTM]

What puts me off AIR Anything is that one pilot error, heaven forbid, could have a major effect on the share price.

[Zaphod]

I can't see the heavily wounded Kangaroo rolling over and playing dead like an old Labrador.

They're not dead, but they are down and hurting. The cutbacks Qantas have made to routes (int & dom), frequencies, aircraft and staff provide a significant opportunity for VAH. Qantas have also replaced older aircraft with superior hard products with newer aircraft with inferior hard products, in order to reduce fuel costs.

I do wonder whether Qantas will reconsider selling/float all or part of it's frequent flyer programme, in order to generate some additional capital.

[Jaa]

These are dreadful operating stats. A load factor of 73.4%?!?! Achieved with lower yields in both domestic and international!!

They really had no choice but to stop adding additional capacity... If Qantas were acting rationally they would be cutting it.


No, likewise, but stats out today don't indicate a Kangaroo acting like a young huntaway either.

Summary of Traffic and Capacity Statistics
Month of May 2014
Qantas Group passenger numbers for May 2014 were in line with the previous year. Group capacity
(Available Seat Kilometres) increased by 3.0 per cent and Group demand (Revenue Passenger Kilometres)
increased by 1.5 per cent, resulting in a revenue seat factor of 73.4 per cent which was 1.1 percentage
points lower than the previous year.
Demand at Qantas Domestic in the month was negatively impacted by weak consumer confidence and
business sentiment. On 21 May 2014, Qantas announced that in response to changing conditions in the
domestic market, total domestic capacity growth (comprising Qantas Domestic, QantasLink and Jetstar
Domestic) will be zero in each of the first three months of financial year 2015 compared to the prior
corresponding period.
Financial Year 2014
Qantas Group passenger numbers for the financial year to date (31 May 2014) increased by 1.1 per cent
from the previous year. Group capacity increased by 1.1 per cent and demand decreased by 1.2 per cent,
resulting in a revenue seat factor of 77.4 per cent which was 1.9 percentage points lower than the previous
year.
For the financial year to date, Qantas Group yields were lower than the prior corresponding period. Total
Domestic (comprising Qantas Domestic, QantasLink and Jetstar Domestic) yields were lower than the prior
corresponding period as a result of market capacity growth and weak demand. Total International yields
were lower than the prior corresponding period due to persistently high levels of competitor capacity growth
into Australia

[Hoop]

I was technically late to get in at 1.70 but was technically chucked out at 2.14 when buyers could be found during the steep daily fall through the supports..
Geeez ..another one of my favourite stocks gone out of my portiofolio...40% cash now..

http://i458.photobucket.com/albums/qq306/Hoop_1/Air30062014.png (http://s458.photobucket.com/user/Hoop_1/media/Air30062014.png.html)

[Beagle]

You must be running some really tight stops Hoop as even using a 10% correction from the top price recorded lately of $2.28 wouldn't have triggered an exit till $2.05. That said the very rapid 9% correction in SP looks over-done too me, especially given that the majority oif the recent oil price increase has corrected again. With a good dividend just around the corner in a couple of months maybe you could buy back in at $2.10 and be ahead:)

Qantas got thumped really hard yesterday...I remain of the view that some of the recent selling was too do with the end of the financial year in Australia 30 June. Company looks in great form and this has to be the cheapest of the large cap stocks on the NZX by miles...I'm getting ready to back the truck up once its confirmed this correction is done and dusted.

[Hoop]

You must be running some really tight stops Hoop as even using a 10% correction from the top price recorded lately of $2.28 wouldn't have triggered an exit till $2.05. That said the very rapid 9% correction in SP looks over-done too me, especially given that the majority oif the recent oil price increase has corrected again. With a good dividend just around the corner in a couple of months maybe you could buy back in at $2.10 and be ahead:)

Qantas got thumped really hard yesterday...I remain of the view that some of the recent selling was too do with the end of the financial year in Australia 30 June. Company looks in great form and this has to be the cheapest of the large cap stocks on the NZX by miles...I'm getting ready to back the truck up once its confirmed this correction is done and dusted.

Yes my sell was very tight...My personal Investment Strategy discipline required me to sell...see my post on the NZx50 Good news thread (http://www.sharetrader.co.nz/showthread.php?6952-NZSX50-Good-News!/page113).
However the AIR break (pun:p) was very significant it didn't just trigger one or two signals..it was a mass signal break across many TA areas..these mass breaks should not be ignored by any TAist..Nothing wrong in selling and waiting for re-entry...Its always possible it could quickly reverse and climbs back through the new resistances to the joy of the Buy and Hold FAists. If that happened then I simply buy back in again (probably at a price higher than I sold out for) and treat the loss in not keeping hold as an insurance policy cost....The other scenario of course is to buy back in after the market correction is over for many cents cheaper than I sold for thereby compounding my overall capital gain associated with AIR over time..Remember when a share goes down and breaks, the risk of it to go down further is more likely... sudden reversing upwards from now and creating a bear trap, leaving a stopped out seller high and dry, that risk is less likely.

We can't predict the future..so we wait and see how the theoretical odds play out..

[Beagle]

Hoop, mate I totally respect TA and when there's nothing else to go on, e.g. PEB I swear by it but I almost always use a combination of FA and TA whereever possible. In terms of TA personally I use simple 100 day moving averages which at present are at $2.00 for AIR and I would be concerned if it breeched below that level. That said from a FA point of view this stock is extremly good buying.
As suggested above, I'm looking for the stock to stabilise, (show far less turbulence:p) and confirm the correction is over and will back the truck up on the basis that there's so few other opportunities on our market that offer such a compelling valaution story.

[modandm]

These are dreadful operating stats. A load factor of 73.4%?!?! Achieved with lower yields in both domestic and international!!

They really had no choice but to stop adding additional capacity... If Qantas were acting rationally they would be cutting it.

few airlines operate with the high load factors NZ does. Partly because QF is higher yielding traffic. 75-80% is usually the sweet spot for premium carriers believe it or not.

[modandm]

Your mad hoop. While we can't predict the future we can make educated guesses, and forecasts. Doing this based on fundamental analysis is far more likely to be successful than predicting the future based on short term price movements or patterns you see on charts. Your likely to get whipsawed and incur higher trading costs as well.

Roger, keep loading :) - my truck is so full! As for turbulence AIR is remarkably stable - in fact on on our risk reports it has a beta of under 0.6. While a c.9% fall seems alot, its a remarkably steady stock! Usually just goes up!

[Jaa]

few airlines operate with the high load factors NZ does. Partly because QF is higher yielding traffic. 75-80% is usually the sweet spot for premium carriers believe it or not.

The rule of thumb used to be 78% was profitable and 77% was not. It is higher for a LCC.

Jetstar international at 68.8% for May and 74.2% for the financial year must be losing a huge amount of money. The Qantaslink numbers are also terrible with only a 62% load factor for the financial year. They are obviously reacting to slowly to the end of the mining boom.

I had a look at VAH operating stats for May and they seem to have improved nicely so Qantas must be heading for a tailspin (talk in the Aussie media is a loss for the full year of $1b-1.5b).

My guess is QAN are forced to do an equity raising which is underwritten by another airline (ala FPA). The other airline then cleans out the top management and starts making rational decisions which leads to a stabilisation and slow improvement. But first you need a good old fashioned crisis.

Positive short/medium term for AIR/VAH but the good times can't last forever.

[Marilyn Munroe]

My guess is QAN are forced to do an equity raising which is underwritten by another airline (ala FPA). The other airline then cleans out the top management and starts making rational decisions which leads to a stabilisation and slow improvement. But first you need a good old fashioned crisis.


The most logical underwriter would be a sand state airline flush with petrodollars. Up until now Queer and Nasty's cobbers from Dubai have avoided foreign equity entanglements, so may not be the suitor some were expecting.

On the other hand Etihad have been splashing the cash around buying up stakes in all sorts of airlines. They could be the white knight.

Memo to John Key, sell Cullen Airlines to Etihad now for a good price. Dont be left standing at the altar while Etihad uses its petrodollars to chase Queer and Nasty Airlines.

Boop boop de do
Marilyn

[Beagle]

Qantas is a sad old tired and injured Roo fed a constant toxic diet of Australian union extremism so will never be a young huntaway and fundamentally looks to remain an unloved pet.
You can't make a silk purse out of a sow's ear no matter how many petro dollars you throw at it :)

John Key on behalf of all Kiwi's and just like other direct shareholders, is on to a winner :)

[Hoop]

Your mad hoop. While we can't predict the future we can make educated guesses, and forecasts. Doing this based on fundamental analysis is far more likely to be successful than predicting the future based on short term price movements or patterns you see on charts. Your likely to get whipsawed and incur higher trading costs as well.

Roger, keep loading :) - my truck is so full! As for turbulence AIR is remarkably stable - in fact on on our risk reports it has a beta of under 0.6. While a c.9% fall seems alot, its a remarkably steady stock! Usually just goes up!

Mad?..I must admit I felt like it when I sold..I do like AIR this year...but my TA Strategy discipline said sell so I sold....No discipline is foolproof so there is always a chance of being Whipsawed Modandm. It has happened before and will happen again but my investment discipline has shown that overall the positives have far overweighed the negatives (whipsaw)

Unfortunately...My selling is becoming a habit this year AIA CNU PEB SUM STU etc.. As of today they all still below what I sold them for.... so probably due for a failure..eh?

My TA strategy discipline has kept me safe from some really bad moments in the past..Thats what it's all about... risk management!!

Great day on Wall St up 0.7% AOrds across the ditch up 1.1% ...The technically weak (broken) NZX has so far risen only 0.1% that's what happens with those types of markets on a good day..they have a tendency to disappoint investors...

Buying a technically weak share within a technically weak market. the disappointment is still there?......AIR 2.12 up 1 (+0.5%) as I type.

[Beagle]

Mad?..I must admit I felt like it when I sold..I do like AIR this year...but my TA Strategy discipline said sell so I sold....No discipline is foolproof so there is always a chance of being Whipsawed Modandm. It has happened before and will happen again but my investment discipline has shown that overall the positives have far overweighed the negatives (whipsaw)

Unfortunately...My selling is becoming a habit this year AIA CNU PEB SUM STU etc.. As of today they all still below what I sold them for.... so probably due for a failure..eh?

My TA strategy discipline has kept me safe from some really bad moments in the past..Thats what it's all about... risk management!!

Great day on Wall St up 0.7% AOrds across the ditch up 1.1% ...The technically weak (broken) NZX has so far risen only 0.1% that's what happens with those types of markets on a good day..they have a tendency to disappoint investors...

Buying a technically weak share within a technically weak market. the disappointment is still there?......AIR 2.12 up 1 (+0.5%) as I type.

I must admit from a TA perspetive you make a compelling argument. On the other hand I'd concur that you are due for a failure and many of the stocks you sold had very stretched valuations, No PE or very high PE
I think the market as a whole is fully priced and is trading on a two decade high on a forward PE of 17 times so is likely to continue treading water at best in the next quarter or two, just like it did last quarter. In this sort of environment I look for stocks that are exceptional value from a FA point of view where you're being paid to wait, (i.e. with dividend yields well above the cash rate to compensate for the ongoing market exposure. I estimate AIR to have a gross dividend yield of 9% for the 2015 year based on a fully imputed dividend of 14 cps. Further, there's a decent final 2014 year dividend due in the next couple of months, (I reckon 7 cps).
Holding a few high quality cheap PE stocks and shorting the market as a whole through futures is another good way to mitigate risk in my opinion.

[Zaphod]

John Key on behalf of all Kiwi's and just like other direct shareholders, is on to a winner :)

Couldn't agree more. Although I was in favour of the asset sales, the majority stake in AirNZ still held by the Government should remain purely for reason of profit. Politically, a sell down would be frowned upon anyway I suspect!

[Beagle]

Hi all,

Yes I think a bit of profit taking, and a very late reaction to the Iraq issues. US airlines had been down much earlier and I was surprised AIR had held up in the high 220's so easily.

The operating statistics came out this week and I was very pleased with them. At the start of the year I was forecasting 2% pax revenue growth, and a few brokers were forecasting 0%. About 3 months ago it looked like only 1.5% would be achieved, but since then there has been stronger RPK and yield growth which I think gets us to 2.1% for the full year. This is good momentum to take into FY15, where I am assuming 6% growth. I think this is conservative given the CFO told me they expect 8% RPK growth. I think it will be less in the first half and pick up to 8% in the second. I am assuming pretty flat yields, but it possible 1-2% growth here too.

On a base case I think around 29-31cps is realistic, with 35c a bull case.

I will do more analysis on how the accounting for VAH is likely to impact in the next few months, but I feel the market will probably continue to ignore VAH and its P&L impact. Honestly hard to understand why the market is valuing AIR so lowly given growth and VAH stake - I don't believe there is any value of VAH currently implied in the AIR share price. It's almost like the market just values AIR on its dividend yield! (thankfully dividend growth has been 50% this year and is likely to be 50% again next year! 12c-18c based on 60% payout. I continue to call for higher dividends or a special dividend, who know we could get a 7.87c special dividend at FY? :) that would be good!

Australian Aviation magazine, (July 2014 edition) has an excellent write-up on AIR and explains the culture that the management are endeavouring to infuse into the airline and comments they're executing with considerable success. Top line growth of 5-7% per annum is managements expectation over the next 5 years with expenses expected to reduce by 3%.
Also noted elsewhere in that magazine the FAA have approved 330 minute ETOPS operations for the Dreamliner aircraft which is a great operational boost to AIR with its Pacific rim focus and will enable deployment of this extremely efficient aircraft on North American routes and / or give the airline considerably more operational flexibility with its fleet deployment. As many will know AIR have first mover advantage being the launch customer of the stretched Dreamliner.
http://airchive.com/blog/2014/05/28/faa-approves-330-minute-etops-rating-for-boeing-787/

[biker]

330 min ETOPS wont make any operational difference. The 777s have 240 mins and don't use it ( or very rarely) so 330 is superfluous for AIR and provides no operational boost whatsoever.

[Beagle]

330 min ETOPS wont make any operational difference. The 777s have 240 mins and don't use it ( or very rarely) so 330 is superfluous for AIR and provides no operational boost whatsoever.

http://boeing.mediaroom.com/index.php?s=20295&item=2070

[biker]

http://boeing.mediaroom.com/index.php?s=20295&item=2070

yes, 330mins meaningless to AIR

[Beagle]

[
B]Boeing to Offer up to 330-Minute ETOPS on 777[/B]
Allows more direct flights, burns less fuel, emits less carbon dioxide into atmosphere


EVERETT, Wash., Dec. 12, 2011 /PRNewswire/ -- Boeing (NYSE: BA) announced today it has received type-design approval from the U.S. Federal Aviation Administration (FAA) for up to 330-minute extended operations (ETOPS) for its 777 fleet.

The authorization allows 777 customers who purchase or already operate 777-300ER (extended range), 777-200LR (longer range), 777 Freighter and 777-200ER models equipped with General Electric engines to fly up to 330 minutes from an alternate airport. FAA approval for the 777-200ER equipped with Rolls-Royce and Pratt & Whitney engines is expected to follow over the next few months.

"Boeing twin-engine jets have flown more than 7 million ETOPS flights since 1985, and more than 120 Boeing operators fly more than 50,000 ETOPS flights each month," said Larry Loftis, vice president and general manager 777 program. "This is the logical continuation of the Boeing philosophy of point-to-point service. Passengers want to minimize their overall travel time. This is one more step in that direction."

The first airline to purchase the new longer ETOPS option is Air New Zealand. Air New Zealand completed the first 240 ETOPS flight earlier this month from Los Angeles to Auckland, N.Z.

"What this means is that the airplane is able to fly a straighter route between the city pairs and that's good for the environment," said Capt. David Morgan, chief pilot for Air New Zealand. "Less fuel is burned and less carbon dioxide is emitted into the atmosphere. It's also good for customers because flights are potentially shorter and passengers could arrive sooner at their destinations."

With respect I disagree. Whilst clearly I don't have the pilot or operational expertise you claim to have the chief pilot obviously thinks its worthwhile and what i'm talking about is an extension of the Dreamliners ETOPS capability from 180 mins to330 mins. This will open up new more direct routes for that aircraft type regardless of whether AIR's flights to North America with the 777 are 240 or 330 ETOPS. I know a pilot who flies to Vancouver a lot direct in the 777, I'll ask him the question and update the thread on this matter when I have some more feedback direct from the coal-face.

[biker]

Boeing to Offer up to 330-Minute ETOPS on 777
Allows more direct flights, burns less fuel, emits less carbon dioxide into atmosphere


EVERETT, Wash., Dec. 12, 2011 /PRNewswire/ -- Boeing (NYSE: BA) announced today it has received type-design approval from the U.S. Federal Aviation Administration (FAA) for up to 330-minute extended operations (ETOPS) for its 777 fleet.

The authorization allows 777 customers who purchase or already operate 777-300ER (extended range), 777-200LR (longer range), 777 Freighter and 777-200ER models equipped with General Electric engines to fly up to 330 minutes from an alternate airport. FAA approval for the 777-200ER equipped with Rolls-Royce and Pratt & Whitney engines is expected to follow over the next few months.

"Boeing twin-engine jets have flown more than 7 million ETOPS flights since 1985, and more than 120 Boeing operators fly more than 50,000 ETOPS flights each month," said Larry Loftis, vice president and general manager 777 program. "This is the logical continuation of the Boeing philosophy of point-to-point service. Passengers want to minimize their overall travel time. This is one more step in that direction."

The first airline to purchase the new longer ETOPS option is Air New Zealand. Air New Zealand completed the first 240 ETOPS flight earlier this month from Los Angeles to Auckland, N.Z.

"What this means is that the airplane is able to fly a straighter route between the city pairs and that's good for the environment," said Capt. David Morgan, chief pilot for Air New Zealand. "Less fuel is burned and less carbon dioxide is emitted into the atmosphere. It's also good for customers because flights are potentially shorter and passengers could arrive sooner at their destinations."

Yep, 240 does all that for AIR. 330 mins meaningless.

[Beagle]

Yep, 240 does all that for AIR. 330 mins meaningless.

So the chief pilot is full telling porkies ? What about flights beyond LAX ? (According to Boeing the Dreamliner is designed with longer range and ETOPS 330 from the outset so FAA granting this is clearly of some advantage compared to 180 ETOPS or can't we even get agreement on that for goodness sake).
Regarding your other point, I've talked to a number of Air New Zealand pilots over the years and most have never experienced an engine out in their entire career. Quite apart from that these aircraft are designed to be able to be flown on one engine in an emergency situation. I presume you've driven in central Auckland city rush hour traffic lately...you want scary, I reckon many people get their licence from some counterfeit overseas supplier. :scared: Remind me again, how many people die on the roads in N.Z. every single year !! I have no issue flying long range on a twin engine aircraft, less stuff to go wrong).

[biker]

[

With respect I disagree. Whilst clearly I don't have the pilot or operational expertise you claim to have the chief pilot obviously thinks its worthwhile and what i'm talking about is an extension of the Dreamliners ETOPS capability from 180 mins to330 mins. This will open up new more direct routes for that aircraft type regardless of whether AIR's flights to North America with the 777 are 240 or 330 ETOPS. I know a pilot who flies to Vancouver a lot direct in the 777, I'll ask him the question and update the thread on this matter when I have some more feedback direct from the coal-face.

You may find AIR hasn't been hanging out for 330 min ETOPS to open new routes. South America is the only region that it MAY be useful for and there has been no indication from AIR they are heading there any time soon and new routes generally lose money for quite some time from start up. Any announcement of a new route may be good news for crew but not necessarily for shareholders.

[biker]

So the chief pilot is full telling porkies ? What about flights beyond LAX ? (According to Boeing the Dreamliner is designed with longer range and ETOPS 330 from the outset so FAA granting this is clearly of some advantage compared to 180 ETOPS or can't we even get agreement on that for goodness sake).
Regarding your other point, I've talked to a number of Air New Zealand pilots over the years and most have never experienced an engine out in their entire career. Quite apart from that these aircraft are designed to be able to be flown on one engine in an emergency situation. I presume you've driven in central Auckland city rush hour traffic lately...you want scary, I reckon many people get their licence from some counterfeit overseas supplier. :scared: Remind me again, how many people die on the roads in N.Z. every single year !! I have no issue flying long range on a twin engine aircraft, less stuff to go wrong).

The chief pilot only refers to 240 mins. note that is all AIR has purchased. No mention by him or AIR of 330 Mins
Boeing offers UP TO 330 mins. Take (and pay) for what you need. AIR sometimes needs 240min. As of now it has no use for 330 min ETOPS (or EDTO for the purists) so, as in a post from way back, it has ( certainly in the short to medium term), no operational significance.

[Beagle]

If extension of ETOPS on Dreamliner aircraft from 180 to 330 minutes doesn't give more operational flexibility with this efficient aircraft type I'll eat my hat mate.
More to the point of the main thrust, (excuse pun) of my earlier comment, how many people on here knew that AIR is planning on 5-7% annual top line growth for the next 5 years ?
$2.15.5 and going up as I type :t_up:

[biker]

If extension of ETOPS on Dreamliner aircraft from 180 to 330 minutes doesn't give more operational flexibility with this efficient aircraft type I'll eat my hat mate.
More to the point of the main thrust, (excuse pun) of my earlier comment, how many people on here knew that AIR is planning on 5-7% annual top line growth for the next 5 years ?
$2.15.5 and going up as I type :t_up:

180 to 240? maybe. 330? hope its a small hat.

[Beagle]

I'll be able to buy some tomato sauce with my profits to make it more palatable :)

[biker]

I'll be able to buy some tomato sauce with my profits to make it more palatable :) Just accept it mate, you were overdue for a failure with your TA, getting it right six out of seven isn't so bad:D

If this is meant to refer to me, I think you have the wrong poster ( apart from the sauce)
Maybe you are refering to Hoop

[Beagle]

If this is meant to refer to me, I think you have the wrong poster ( apart from the sauce)
Opps, yeah, that was meant to be directed elsewhere. You've done well and but left plenty of meat on the bone for latecomers such as myself. Good luck with your VAH.

[Robomo]

Announcement from Boeing published in Air Transport News today.

"Boeing has confirmed delivery of the first 787-9 to Air New Zealand, the launch customer for the larger version of the Dreamliner that received FAA and European Aviation Safety Agency (EASA) certification last month.

“Boeing is proud to have contractually delivered the first 787-9 Dreamliner to Air New Zealand,” a Boeing spokesman said. “We look forward to celebrating the milestone with our customer soon.”

Air New Zealand has 10 787-9s on order for delivery through 2017. The -9 is 20 feet longer than the 787-8 currently in operation. The Auckland-based airline is configuring the 787-9 with 18 business class seats, 21 premium economy seats and 263 economy seats."

So AirNZ now own the 787, really look forward to it arriving here very soon.

[biker]

Opps, yeah, that was meant to be directed elsewhere. You've done well and but left plenty of meat on the bone for latecomers such as myself. Good luck with your VAH.

Cheers, and you with AIR. I do think it still has a way to go. ( driven by VAH I hope :-) )

[Beagle]

Announcement from Boeing published in Air Transport News today.

"Boeing has confirmed delivery of the first 787-9 to Air New Zealand, the launch customer for the larger version of the Dreamliner that received FAA and European Aviation Safety Agency (EASA) certification last month.

“Boeing is proud to have contractually delivered the first 787-9 Dreamliner to Air New Zealand,” a Boeing spokesman said. “We look forward to celebrating the milestone with our customer soon.”

Air New Zealand has 10 787-9s on order for delivery through 2017. The -9 is 20 feet longer than the 787-8 currently in operation. The Auckland-based airline is configuring the 787-9 with 18 business class seats, 21 premium economy seats and 263 economy seats."

So AirNZ now own the 787, really look forward to it arriving here very soon.
Thanks`. I understand the first commercial flight is to Perth on 15 October. Can you shed any light on why it takes just over 3 months to begin commercial operations ?

[Robomo]

Thanks`. I understand the first commercial flight is to Perth on 15 October. Can you shed any light on why it takes just over 3 months to begin commercial operations ?

I understand that the plane will be used for ad hoc trans-tasman flights (crew training purposes - easier on short flights, lots of landings and takeoffs) as well as static training and engineering training. So the old A320 you thought you booked on next time you fly to Sydney could well suddenly turn out to be a brand-new 787-9 - you might get a nice upgrade as well whilst the crew practice handing out drinks in business class!

[Hoop]

I'll be able to buy some tomato sauce with my profits to make it more palatable :)
Roger you edited your post at 4.30pm ;)
It was this ..
.................................................. .................................................. .................................................. .................................................. ..........,.....
http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by Roger http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=490082#post490082)
I'll be able to buy some tomato sauce with my profits to make it more palatable :) Just accept it mate, you were overdue for a failure with your TA, getting it right six out of seven isn't so bad:D..
.................................................. .................................................. .................................................. .................................................. .................
Second thoughts ..huh??
No problems from me...All good Roger:).I love debates (constructive) and the odd banter..we can learn and add experience from them.

Air did fall back (215.5) this morning (after trading hours last night) to test it's one buy signal area the EMA50 break point (215)...Thats good news...more good news is someone bought 1 million shares at 217 a moment ago..so this may create another buy signal in the money flow indicators...
My discipline shows not enough signals to re-enter..probably need to exceed 220 I'm guessing and also for the NZX index to rally.....As more buy signals appear it will lessen the risk of a dead cat bounce.

The NZX50 index is still disappointing..it seems the global rally is by-passing us (edit: I've now noticed NZX index has just enough buy signals for me to start buying NZ Shares http://www.sharetrader.co.nz/images/smilies/001_smile.gif)

[Beagle]

^^ I love a good healthy debate too mate. I admire you're discipline in sticking to your system, the main thing is too have a system in this sideways market, something I'm sure we can agree on and you've been very successful with picking close too the top to date :)
I've been thinking a lot overnight about what effect a 5-7% growth per annum in top line and a 3% reduction in expenses will do to the bottom line in the years ahead if the company meets its key targets.
As I 'm sure everyone knows airline companies traditionally have wafer thin profit margins. I'm trying to get my head around what impact this could have on their net profit, anyone like to share their thoughts ?

I think the reason the global rally will continue to bypass us boils down to three key factors.
1. Our market is already trading at a 22 year high on a forward PE basis 17 times is right out at the upper extreme based on history and history shows PE's always contract when they hit excessive level's.
2. The Reserve Bank have it wrong and are looking in the rear view mirror. Interest rates are already too high when its clear commodity prices have already seriously corrected. Another rise in the cash rate would be absolute madness in my opinion.
3. The wide plethora of new listings is sucking too much cash from the market, simple supply / demand imbalance.

Biker - You'll like this mate. http://www.sharechat.co.nz/article/f1791163/air-nz-boss-luxon-to-sit-on-virgin-board.html?utm_medium=email&utm_campaign=Air+NZ+boss+Luxon+to+sit+on+Virgin+bo ard&utm_content=Air+NZ+boss+Luxon+to+sit+on+Virgin+boa rd+CID_8a8989bceb1fbe4138043b1ba7f37c3c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlef1791163air-nz-boss-luxon-to-sit-on-virgin-boardhtml

[biker]

Biker - You'll like this mate. http://www.sharechat.co.nz/article/f1791163/air-nz-boss-luxon-to-sit-on-virgin-board.html?utm_medium=email&utm_campaign=Air+NZ+boss+Luxon+to+sit+on+Virgin+bo ard&utm_content=Air+NZ+boss+Luxon+to+sit+on+Virgin+boa rd+CID_8a8989bceb1fbe4138043b1ba7f37c3c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlef1791163air-nz-boss-luxon-to-sit-on-virgin-boardhtml

Yes, indeed Roger, and now looking for these percentages to transpose! :-)

"...........Shares in ASX-listed Virgin Australia last traded at 42.5 Australian cents and have gained 12 percent this year. On the NZX shares in Air New Zealand rose 0.5 percent to $2.18 and advanced 32 percent this year."

[modandm]

I've been thinking a lot overnight about what effect a 5-7% growth per annum in top line and a 3% reduction in expenses will do to the bottom line in the years ahead if the company meets its key targets.
As I 'm sure everyone knows airline companies traditionally have wafer thin profit margins. I'm trying to get my head around what impact this could have on their net profit, anyone like to share their thoughts ?
[/url]

If you PM me your email I can send you my model. I don't use simple assumptions like expenses going down 3% - in fact I don't agree with that figure at all - expenses will rising by between 2% and 3% on average over the next few years. I flex assumptions like fuel price, NZD, and most importantly top line revenue growth. My individual line item (P&L forecast), is based on history, best guess, and conversations with senior management.

I'm pleased to say I have done a decent job forecasting so far, largely because I have picked top line and fuel cost reasonably well (and appreciated the value of NZD strength).

I don't forecast cash or balance sheet because cash is lumpy and the leverage ratio supplied and forecast by Air NZ is the only information I need. This is an earnings momentum story for the foreseeable future, with dividend ramping to reflect that. In a few years time cash generation will be incredible but I don't want to get excited about that yet.

[Beagle]

Thanks mate, PM sent.

Lots of great info on the all new 787-9 Dreamliner. Looks like a real game changer :)
http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=11285548

[Zaphod]

My individual line item (P&L forecast), is based on history, best guess, and conversations with senior management.

How approachable at a one-on-one level have you found senior management at AirNZ to be on these matters? I assume you're involved in the finance sector, so that might weight quite heavily on their enthusiasm to engage, but I'm just interested in your thoughts on accessibility, especially given AirNZ's culture.

With respect to the companies I hold shares in this has been a mixed bag; with some you can call the CEO directly (despite being relatively high market cap companies), while others are only really accessible during annual meetings.

[Beagle]

330 min ETOPS wont make any operational difference. The 777s have 240 mins and don't use it ( or very rarely) so 330 is superfluous for AIR and provides no operational boost whatsoever.

New routes planned to be opened-up including South America which will indeed make use of the ETOPS 330. Not trying to be argumentative mate, just providing evidence concluding this recent matter we debated.
http://www.nzherald.co.nz/travel/news/article.cfm?c_id=7&objectid=10795990

Extract from that article

The national carrier is getting the 787-9 version, able to carry between 250 and 290 passengers. Air New Zealand hopes that the 787's huge range and impressive fuel efficiency will allow it to open up new routes to South America and across most of Asia, including India.

[Snow Leopard]

New routes planned to be opened-up including South America which will indeed make use of the ETOPS 330. Not trying to be argumentative mate, just providing evidence concluding this recent matter we debated.
http://www.nzherald.co.nz/travel/news/article.cfm?c_id=7&objectid=10795990

Extract from that article

I note that the article, written by a journo on a jolly, is dated 3 Apr 2012.

So maybe plans are a little different now.

Mind you it would be great if someone did reasonable price airfares to South America.

Best Wishes
Paper Tiger

[Beagle]

Plans might be different for sure, but then again maybe not seeing as the Dreamliners are four years late. I'd love to know what compensation Air negotiated with Boeing for the delay. Who wouldn't want to be a fly on the wall when those negotiations were going on or better still being part of the team doing the haggling :)

[biker]

New routes planned to be opened-up including South America which will indeed make use of the ETOPS 330. Not trying to be argumentative mate, just providing evidence concluding this recent matter we debated.
http://www.nzherald.co.nz/travel/news/article.cfm?c_id=7&objectid=10795990

Extract from that article

This is from an opinion piece written by a Herald hack over two years ago!!
It is certainly not 'evidence' of anything currently and my comments as of now, still stand- that is, the ability to use 330 min EDTO, whether applied to the 777 or the 787 will not be adding anything to AIR's profitability in the short to medium term.

[iceman]

I note that the article, written by a journo on a jolly, is dated 3 Apr 2012.

So maybe plans are a little different now.

Mind you it would be great if someone did reasonable price airfares to South America.

Best Wishes
Paper Tiger

You're not wrong there PT. At present LAN has NO competition on direct routes between NZ and South America. I fly this route several times per year and the planes are full (or very nearly) every single time. One way prices are often similar to special offers return tickets NZ - Europe. There is definitely room for competition and increased traffic on this route.

[slimwin]

Stated intention is "no". There is no alliance to links over there to make it worthwhile. Point to point is very limited. Think Virgin. The advantage is just not the money it makes from them, (although hopefully it will) but the customers who will through book to destinations AIR does not service.

[QOH]

This is chilling in light of MH370.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11288373

[Beagle]

This is from an opinion piece written by a Herald hack over two years ago!!
It is certainly not 'evidence' of anything currently and my comments as of now, still stand- that is, the ability to use 330 min EDTO, whether applied to the 777 or the 787 will not be adding anything to AIR's profitability in the short to medium term.

Air's acquisition as launch customer for the stretched Dreamliner will indeed accrue benifets to the airline.
Next Gen plane with extra efficiency over the already extremly efficient standard version Dreamliner and has extra range.
Plane was designed from the ground up for extended range twin engine operations and FAA granting approval of same now that the Lithium-ion battery issue is behind the aircraft type will accrue benifets to AIR over time

They're only getting their first one this coming week...its hardly like they'll come out and announce flights to South America, India or any new routes any time soon is it !!

[Beagle]

http://www.nzherald.co.nz/business/news/video.cfm?c_id=1503079&gal_cid=1503079&gallery_id=125974

Good over-view of the new Dreamliner

[Hoop]

http://i458.photobucket.com/albums/qq306/Hoop_1/a-1.png (http://s458.photobucket.com/user/Hoop_1/media/a-1.png.html)

Back to 7 out of 7 :D.

AIR back down testing its 210 support again

[Beagle]

The first of ten brand new 787-9 Dreamliners arrive. Three more scheduled this year :)
http://www.nzherald.co.nz/travel/news/article.cfm?c_id=7&objectid=11291471

[arc]

Waiting to see if AIR breaks below $1.99...

[couta1]

Waiting to see if AIR breaks below $1.99...
Your answer came quickly.

[arc]

Couta
Your right... so much for market sentiment...

Sharks are in the water... They are building a ladder... DOWN
Its an interesting process to watch. The slow creep upwards from 196, testing the waters, but also bridging a psychological gap...
Im limited to a 20min delay here... some of you however, likely know the outcome already.

[bryndlefly]

the shareprice graph for the last 2 years suggests to me that the sp would have to dip below about $1.90 for the support trendline to be crossed. Is that about right? I think all these sellers are jumping the gun a bit. But, if they want to miss out on the september dividend thats their choice i suppose...

[Hoop]

Waiting to see if AIR breaks below $1.99...


Your answer came quickly.

This drop to 196 on very small volume looks like a Shakeout (http://www.incrediblecharts.com/trading/shakeout.php) to me..

200 is a support area and for a moment the highest buyer was at 1.96...This is the opportunity for this devious player to strike and try to create a technical breakdown by selling a small amount of shares in an attempt to buy a large volume of shares during the technical breakdown selling...........that effort has failed so far....

A shakeout can be seen as a bullish action...someone (usually a large player) wanting to buy into AIR.

http://i458.photobucket.com/albums/qq306/Hoop_1/00-1.png (http://s458.photobucket.com/user/Hoop_1/media/00-1.png.html)

[arc]

I might be foolish but I grabbed some at $2.00
Couldnt resist.

[forest]

I might be foolish but I grabbed some at $2.00
Couldnt resist.
Ongoing Disclosure Notice
Disclosure of Directors and Officers Relevant Interests
Section 19T(2), Securities Markets Act 1988
A Details of director or officer

Name of director or officer of public issuer:
Robert Jan Jager
Name of public issuer: Air New Zealand Limited
Name of related body corporate (if applicable):
Position held in public issuer: Director
B Securities in public issuer or related body corporate to which this disclosure relates

Number, class, and type of securities: 1
NUMBER OF SECURITIES HELD AFTER CHANGE
24,500 Ordinary Shares

C Nature of relevant interest and name of registered holder
Nature of relevant interest in those securities: 2 Beneficial Entitlement
Name of registered holder of those securities 3 Robert Jan Jager
D Details of acquisitions and disposals
If the relevant interest was acquired—
Date of acquisition: 4 11 July 2014
Consideration paid for acquisition: 5 NZ$49,884.21

[Beagle]

It's hard to figure why they're down 13% from $2.28 which so many positive things on the go for the company.
Record profit about to be announced next month, record final dividend shortly thereafter, first in the world with the new stretched super efficient Dreamliner 787-9 ordered a decade ago at what is thought to be a deeply discounted price and at an exchange rate that was dramatically less favourable that what it was actually settled at, (i.e. they're paying for these new planes at a very favourable current exchange rate) and nine more coming with options for another 8 if they want them, oil price now below where it was when the latest bunch of extremists, (ISUS), started their radical plans.

According to Reuters survey of seven analysts forecasts the average consensus is for 2015 after tax earnings of $262m or EPS of 23.61 cps. At $2.00 that puts the stock on a 2015 PE of 8.47. The company has plans and aspirations to grow the top line at 5-7% per year.
The SP seems amazing value to me, especiallly trading cum a circa 7 cps fully imputed final dividend.

I'm estimating 14 cps dividends for the 2015 year which when you take into account the value of the full imputation crredits attached this places AIR at $2.00 on a forecast gross yield of 9.7% with excellent prospects for growth in subsequent years.

[arc]

Couta, Bryndlefly, Hoop, Forest, Roger

I think that somewhere between all of your comments there is a background scenario playing out. Sudden fall.... for no "real" reason. Heavier traffic today... possibly close to someones "desired" limit, or still just above it.
I get the feeling someone wanted to break the 200c barrier purely for its psychological effect... it may still happen?

The Div is approaching and suddenly theres an "unstable nature" to the price..?

I find it interesting the way the 94 then 96, 96.5, 97, 97.5, 98, 98.5, 99, 99.5 happened. All those little .5 increases popped up in very quick succession.
I smell an algo and an HFT dark pool at play...

[bryndlefly]

Something i thought might be a factor - I wonder if all the selling at around $2 is because anyone who bought into AIR before about mid 2012 would have paid around a dollar a share. I bought mine back then, and its certainly pretty tempting to sell now that they've got that magical 100% number next to them in my portfolio... but then i'm greedy and am holding out for a 200% increase. Come on $3... ha ha

[arc]

Buy more!!! :d

Support the moosie retirement fund... laughing

Must admit, im dumping some disappointing ASX:-mining stuff, to take a bigger stake.

[arc]

After yesterdays flurry, today could be interesting.

Will wait to see market direction and either hold what I have, or load up again. That algo built ladder may provide entry for heavy loading.

[Leftfield]

mmm SP seems to be a tab seasonal....In past years July/August has seen AIR trading low cf 90 day MA?

[Hoop]

mmm SP seems to be a tab seasonal....In past years July/August has seen AIR trading low cf 90 day MA?

Hmmm..interesting observation Left field....

[arc]

In for the hammer :)

GO Moosie...
Did you manage to catch the wave before it was too tall.

Im hoping for a fall back this arvo to grab another load

[arc]

I'm working the other side of the ditch for you guys so I got in around VWAP ;)

Other side..(seller)?. I thought you didnt hold this one
Or do you mean your a Prof-Broker?

Sorry for the confusion.. Im a newbie to this game as you can tell
This has become a project that I'm writing/testing AI software for

[couta1]

Got the first parcel that went for $2.00 yesterday, my TA Gutometer told me to buy so I did:cool:

[goldfish]

Got the first parcel that went for $2.00 yesterday, my TA Gutometer told me to buy so I did:cool:
Nice, i was going to buy at 200 but the depth and amount that passed at ten put me off, when i checked next 200 had gone and it was to late.

[Beagle]

Got the first parcel that went for $2.00 yesterday, my TA Gutometer told me to buy so I did:cool:

Nice time to add more mate, well done.

[Beagle]

Looks like Robbos favourite time to me...

HAMMER TIME

Part of me was hoping it would correct even further...looking for that rare opportunity that comes along once every few years when you get absolutely extreme value...

Hammer time isn't also a reference to your drinking habits by any chance :D

[Leftfield]

Got the first parcel that went for $2.00 yesterday, my TA Gutometer told me to buy so I did:cool:

mmmm looks like good buying Couta (however it is early days.) While I appreciate you sharing your purchase, I'm slightly wary as based on your Xero experience your post could be the kiss of death for AIR !?;) (Bit like a certain brokers recommendation.)

Sincerely, I wish you well with this purchase, it looks like a good long term move.
(Disc: holding and accumulating when opportunities arise.)

[Beagle]

He's a nice bloke and well overdue for some good fortune :D

[couta1]

mmmm looks like good buying Couta (however it is early days.) While I appreciate you sharing your purchase, I'm slightly wary as based on your Xero experience your post could be the kiss of death for AIR !?;) (Bit like a certain brokers recommendation.)

Sincerely, I wish you well with this purchase, it looks like a good long term move.
(Disc: holding and accumulating when opportunities arise.) If only iI had that much influence on stock prices looks like Moosie has put the Kiss of Death on several stocks today:eek2:

[Zaphod]

There's been a lot of comments that the stock seems to be a bargain at the current SP, and modandm has previously mentioned lobbying for a special dividend, but perhaps an increase in the scope of the share buyback scheme is in the best interests at this point? The DRP was suspended a while back too, perhaps time to reconsider? Personally I've ended up using the dividend proceeds to top up with mostly AIR on the dips anyway.

[brend]

There's been a lot of comments that the stock seems to be a bargain at the current SP, and modandm has previously mentioned lobbying for a special dividend, but perhaps an increase in the scope of the share buyback scheme is in the best interests at this point? The DRP was suspended a while back too, perhaps time to reconsider? Personally I've ended up using the dividend proceeds to top up with mostly AIR on the dips anyway.


can you confirm re DRP plan?

The form is still available on their website

http://www.airnewzealand.co.nz/shareholder-forms

[arc]

I see the "shake-out" player as mentioned by Hoop ( http://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ&p=491661&viewfull=1#post49166 ) is still at work.

[Beagle]

There's been a lot of comments that the stock seems to be a bargain at the current SP, and modandm has previously mentioned lobbying for a special dividend, but perhaps an increase in the scope of the share buyback scheme is in the best interests at this point? The DRP was suspended a while back too, perhaps time to reconsider? Personally I've ended up using the dividend proceeds to top up with mostly AIR on the dips anyway.

The company has record low gearing and I expect well north of $1 billion of cash on hand as at 30 June 2014.
A special dividend to celebrate the 75th year of the airline seems appropriate to me. I think a special fully imputed divvy of 10 cps would be nice and would cost them a fairly modest $111m and hardly even make a dent on their massive cash stock-pile.
Lobby them at investor@airnz.co.nz

The more people that send them this suggestion the more likely they are to do it :D

[tzbang]

I see the "shake-out" player as mentioned by Hoop ( http://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ&p=491661&viewfull=1#post49166 ) is still at work.

How does this 'shakeout' work exactly?

[winner69]

Roger - what is most of that billion in cash?

I still recall years ago the CEO touting a billion in the bank ....no worries mate .....right up the day of the govt bailout

[Beagle]

Yes fair comment that most of it is tickets paid pending delivery of service but the record low gearing isn't debateable mate :)

Flight check Seattle to Auckland - Delivery flight of Dreamliner - Pity they didn't
invite some investors with large holdings along 1/3 rd full seems like a missed
opportunity to me.
http://www.nzherald.co.nz/travel/news/article.cfm?c_id=7&objectid=11293778

Dreamliner 787-9 struts its stuff at Farnborough air show
http://www.bing.com/videos/search?q=Boeing+787-
9+Dremaliner+display+at+Farnborough&docid=347597833072&mid=F3885085D52
B63061E03F3885085D52B63061E03&view=detail&FORM=VIRE4#view=detail&m
id=F3885085D52B63061E03F3885085D52B63061E03

[brend]

Yes fair comment that most of it is tickets paid pending delivery of service but the record low gearing isn't debateable mate :)

Flight check Seattle to Auckland - Delivery flight of Dreamliner - Pity they didn't
invite some investors with large holdings along 1/3 rd full seems like a missed
opportunity to me.
http://www.nzherald.co.nz/travel/news/article.cfm?c_id=7&objectid=11293778


what a stupid review for the flight. So many 'one-off' events due to it being the delivery flight, making it non-applicable to every day Joe that has to deal with other passengers and bad tempted flight attendants.