AIR - Air NZ.

[blackcap]

(Disclaimer - short , evil I know!)

Hi Peat,

Can I please ask how you are short? Which instrument do you use? Would like to go and join you on the other side :)

[stoploss]

Hi Peat,

Can I please ask how you are short? Which instrument do you use? Would like to go and join you on the other side :)

I have done a CFD with CMC markets .

[blackcap]

I have done a CFD with CMC markets .

Thanks, will have to get my CMC account up and activated again... cheers :)

(did not know they had possible shorts on AIR, but good to know. Should really have a look at their trading possibilities)

[winner69]

AIR really need to pull their finger out and issue AIRCoins

http://www.smh.com.au/business/markets/eastman-kodak-unveils-cryptocurrency-stock-soars-20180109-p4yyd1.html

[Beagle]

They already have their own cryptocurrency mate, its called Airpoints...pretty useful things to have :p I have a few hundred, wish I had more.

[winner69]

They already have their own cryptocurrency mate, its called Airpoints...pretty useful things to have :p I have a few hundred, wish I had more.

Yes but nobody really that keen on those sort of things .... they want real crypto stuff


Wonder what the Airpoints 'business' is worth

[BlackPeter]

They already have their own cryptocurrency mate, its called Airpoints...pretty useful things to have :p I have a few hundred, wish I had more.

Agree - Airpoints are useful and more currency than probably all of the crypto's (you even can buy something of worth with them), but they are not crypto :); The information is stored in some boring old centralized databases controlled by AIR. No need for a wallet or funny crypto-keys to spend them either - and hey, they don't go up and down in worth like an out of control bungee, but they are nice and steady ...

[winner69]

Agree - Airpoints are useful and more currency than probably all of the crypto's (you even can buy something of worth with them), but they are not crypto :); The information is stored in some boring old centralized databases controlled by AIR. No need for a wallet or funny crypto-keys to spend them either - and hey, they don't go up and down in worth like an out of control bungee, but they are nice and steady ...

...and every now and again they take airpoints away from the punters

[Beagle]

Pretty reasonable expiry timeframe though. Use them or lose them after a few years. Speaking of expiry...last chance to sell with a $3 handle for quite some time ?
They reckon this is a scary landing ? https://www.msn.com/en-nz/news/national/video-shows-terrifying-wellington-landing-that-took-three-attempts/ar-BBIb6mx?li=AAaeXZz&ocid=spartandhp

[Zaphod]

AIR really need to pull their finger out and issue AIRCoins

http://www.smh.com.au/business/markets/eastman-kodak-unveils-cryptocurrency-stock-soars-20180109-p4yyd1.html

Capitalising on the current hype of cryptocurrency (although technically that terms is a misnomer), or blockchain would be the best strategic move AirNZ could make.

[Zaphod]

Agree - Airpoints are useful and more currency than probably all of the crypto's (you even can buy something of worth with them), but they are not crypto :); The information is stored in some boring old centralized databases controlled by AIR. No need for a wallet or funny crypto-keys to spend them either - and hey, they don't go up and down in worth like an out of control bungee, but they are nice and steady ...

AirNZ's databases are even a geographically distributed RDBMS, functioning much like a private blockchain! A blatant attempt to ramp up the SP.

On the serious side, there are some risks to the Airpoints scheme. For example, having a large APD balance is dangerous as Air NZ could devalue the programme at any given moment by adjusting the earn/burn ratio. Earn rates have eroded recently, especially on regional sectors, ostensibly to better reflect APD earn rates against actual spending with AirNZ.

[winner69]

Qantas far superior than AIR on punctuality
http://www.traveller.com.au/the-worlds-most-and-least-punctual-airlines-most-ontime-airlines-for-2017-h0ffdg

In mainline category Qantas 5th and AIR 17th

AIR fair way down list in Asia Pacific group

[value_investor]

Yikes! Looks like a sell off has begun then. It will be interesting to see where it settles. Down quiet solidly today and has been for a few months now.

Crude oil really trucking along in terms of price. Will eat into the annual result in the 2H FY, and still think there might be more to this dreamliner saga. What's the chances it just gets up being in the same place as last FY at 525m?

[Beagle]

Yikes! Looks like a sell off has begun then. It will be interesting to see where it settles. Down quiet solidly today and has been for a few months now.

Crude oil really trucking along in terms of price. Will eat into the annual result in the 2H FY, and still think there might be more to this dreamliner saga. What's the chances it just gets up being in the same place as last FY at 525m?

At the annual meeting they were upbeat about profit growth this year but this was based on an oil price quite considerably lower than today. They do have about 75% forward cover for FY18 but the market is a forward looking beast and like me its wondering how they get on in FY19 ?
In short I think you can "look forward" to softer outlook commentary from management with their half year result announcement late next month.
Apart from the well discussed engine drama what's bothering me quite a lot is their yield this year which is only up about 2% on last year.
Why am I bothered by a yield increase ?
1. The PCP was a period in which 10 new operators started new or additional services to N.Z. many of which were making sustained opening special offer's on airfares which were at unsustainable level's and AIR had to discount very heavily to retain market share. Since then we've seen quite some rationalization of these new routes by other airlines and yet yields have only recovered ~ 2%
2. This very modest yield recovery is in spite of the fact that spot oil prices are dramatically higher this year compared to last and many other airlines don't have forward cover on their fuel costs.
Other concerns
3. Load factors are down a bit.
4. I think customers have got used too very low airfares (customer adaption) and any attempt to raise airfares to recover the extra fuel costs in FY19 when AIR are presently predominantly unhedged could see customer demand affected.

A gradual pullback to $2.50 as the year unfolds what not surprise me in the slightest. The question is where's the bottom for this stock and I'd have to say its too early to make that call at present.

[Marilyn Munroe]

There is an article in the Sydney Morning Herald about the possibility of paying out the small shareholders and taking Virgin(Under Arm Bowlers Division) private.

It then discusses the muddle of foreign airlines who own stakes in the company. The article suggests this arrangement is unlikely to last and Lee Kuan Yew Airlines will push aside sand state airline Etihad and the two Chinese airlines to gain control.

http://www.smh.com.au/business/aviation/five-elephants-in-the-room-virgin-australia-dances-ownership-tango-20180110-p4yydg.html

Boop boop de do
Marilyn

[winner69]

Closed the week below $3 and low of the day as well. Punters obviously wanting to see at weeks end

Bad sign

Does $2.50 beckon

[Jantar]

.....

Does $2.50 beckon
I hope so. Then I shall buy back in and regain the shares I sold at above $3.10 :)

[Joshuatree]

Me too when i sold above $3.15. Found it harder to sell; a little emotional guru ego monkey on my shoulder was saying dont sell, HOLD but the charting and some good posts helped rationality back on and the monkey off.;)

[Beagle]

Must admit it was quite an emotional wrench for me to exit this one. Did adjust down my holding at $3.46, more a portfolio rebalancing exercise after a stellar run in 2017 but most went in the mid 320's. Now its done, its done and I am pleased and it feels like a cathartic experience. You can date this stock and don't have to be married to it. I still think they're a good well managed company and when risk abates and headwinds reduce and when the SP more correctly reflects the situation and outlook I'll be pleased to buy in again....but please don't ask me when or at what price, far too early to say. Little birdie told me today they are slowly working their way through their engine issues and resulting damage to one or two aircraft...part of the way through this but there's still quite a bit of this journey to travel. Hope they don't get any more failed engines in the meantime. One might speculate that seeing as two have failed their inspection program of the remaining in service engines is very intense !

[sb9]

Coming back from recent overseas trip, had the pleasure of taking Air Nz plane from Singapore to Auckland.

Flight was at full capacity, nice service, meals and smooth flying....no worries, all hunky dory.

[Beagle]

Good that you escaped without another engine failure and more damage to another wing.
Speaking of coming back from trips, one wonders (seeing as there's been no changes on 4traders regarding profit forecasts), how analysts coming back from holiday's will react to events in recent weeks with AIR. Been some pretty significant developments since most departed for their holiday break. Probably too much to ask them to actully be proactive and make adjustments to their forecast of their own volition. I suspect they'll wait until the company itself gives guidance lower with the half year result in late February and then simply follow along with company guidance. Can't expect them to re-crunch their numbers over the holiday break and restate what "blind freddy" can see already and what's now starting to be reflected in the SP can we ?

Best guess another 50 cents to come off... over time...but perhaps best to not wait until the analysts tell you that lol.

[macduffy]

Air NZ ranks well for fuel efficiency on trans-Pacific flights.

http://www.abc.net.au/news/2018-01-17/qantas-fuel-efficiency-worst-for-trans-pacific-flights-study/9333616?section=business

[777]

Air NZ ranks well for fuel efficiency on trans-Pacific flights.

http://www.abc.net.au/news/2018-01-17/qantas-fuel-efficiency-worst-for-trans-pacific-flights-study/9333616?section=business

Cram some more seats in then they could be the leader.

[Beagle]

Closed the week below $3 and low of the day as well. Punters obviously wanting to see at weeks end

Bad sign

Does $2.50 beckon

Starting to look like we're headed down there again mate.

[Marilyn Munroe]

Cram some more seats in then they could be the leader.

Heh! Cullen Airlines could lead the table for incidence of deep vein thrombosis per passenger/klm.

Boop boop de do
Marilyn

[value_investor]

Closed the week below $3 and low of the day as well. Punters obviously wanting to see at weeks end

Bad sign

Does $2.50 beckon

Hopefully it gets oversold so I can buy in some more, thought the uptick to 3.60 was a bit overcooked. The HY result won't show the full picture imo because of the hedge and the crude prices started to rise over the range in December.

[Beagle]

Heh! Cullen Airlines could lead the table for incidence of deep vein thrombosis per passenger/klm.

Boop boop de do
Marilyn

Almost all of then are doing it now, cramming in more and more passengers into smaller and smaller tighter spaces. Customers are possibly their own worst enemies here as they're the ones driving the demand for more efficiencies. As an example earlier this week through Flight Centre AIR are desperate enough to be advertising return flights to Europe for as low as $1,399 for travel later this year. I got to thinking that its always traditionally cost about $2,000 - $2,500 to fly to Europe over the last 30 or 40 years economy class. Prices have therefore in inflation adjusted terms never ever been cheaper, so perhaps its airlines who are their own worst enemy as they pass on all of the savings of more efficient aircraft and more compressed seating configurations.

I am sure we all long for the good old days when there was heaps of legroom and flying was a romantic experience with truly great inflight service.
Interestingly I went on too the Reserve Bank's inflation calculator to compare a $2,500 economy class flight in 1978 forty years ago with what we should in theory be paying if the real cost hadn't changed and the figure is ~ $16,500. Emirates will fly you return business class to London for less than half that. My thoughts are that the good old days remain its just that you have to pay a proper price to enjoy them. Maybe people who value their health and want far less chance of DVT need to ante-up with their travel budget a bit ? AIR's business class is a lot more than Emirates to London, go figure on that one ?

[Onion]

Interestingly I went on too the Reserve Bank's inflation calculator to compare a $2,500 economy class flight in 1978 forty years ago with what we should in theory be paying if the real cost hadn't changed and the figure is ~ $16,500. Emirates will fly you return business class to London for less than half that. My thoughts are that the good old days remain its just that you have to pay a proper price to enjoy them.

A one-way flight to London with a stop-over in Hong Kong cost me $1200 in 1986 (and I didn't have much money back then so there wouldn't have been any cheaper options).

[winner69]

Business / first class has a greater carbon foot print per passenger

Do away with this segregation and cram a few more passengers into that space wouldmake them more fuel efficient and lower carbon emissions (per passenger)

dont think likes of Raz would agree

[Beagle]

Business / first class has a greater carbon foot print per passenger

Do away with this segregation and cram a few more passengers into that space wouldmake them more fuel efficient and lower carbon emissions (per passenger)

dont think likes of Raz would agree

Same applies to so called premium economy doesn't it mate. I say so called because some airlines premium economy is no better than standard economy of a few years ago before all this "sardine can type space" philosophy took over the airline world.

[peat]

My short take profit was hit at 2.90 - 35c taken on that. As a trader (at this point) I'm happy enough with that.

[Raz]

Business / first class has a greater carbon foot print per passenger

Do away with this segregation and cram a few more passengers into that space wouldmake them more fuel efficient and lower carbon emissions (per passenger)

dont think likes of Raz would agree

Interesting, no one here would speak for others here would they:-) Yes naturally mathematically it would help with carbon emission, also the higher incidents of DTV would also assist with population control. What a grand plan.

As an side benefit my wife and daughter would never fly anymore which would save me a great deal.

This week went to Sydney for the night to see Sam Smith at the Sydney Opera House, great stuff, ex Auckland via 787 out, business class they liked.. the AIR fight back was held up in Queenstown with mechanical issues last night and therefore they bumped most of the flight to one of those Hi-fly planes.. no comparison plane or staff. That nearly put them off flying for life.

[Raz]

Almost all of then are doing it now, cramming in more and more passengers into smaller and smaller tighter spaces. Customers are possibly their own worst enemies here as they're the ones driving the demand for more efficiencies. As an example earlier this week through Flight Centre AIR are desperate enough to be advertising return flights to Europe for as low as $1,399 for travel later this year. I got to thinking that its always traditionally cost about $2,000 - $2,500 to fly to Europe over the last 30 or 40 years economy class. Prices have therefore in inflation adjusted terms never ever been cheaper, so perhaps its airlines who are their own worst enemy as they pass on all of the savings of more efficient aircraft and more compressed seating configurations.

I am sure we all long for the good old days when there was heaps of legroom and flying was a romantic experience with truly great inflight service.
Interestingly I went on too the Reserve Bank's inflation calculator to compare a $2,500 economy class flight in 1978 forty years ago with what we should in theory be paying if the real cost hadn't changed and the figure is ~ $16,500. Emirates will fly you return business class to London for less than half that. My thoughts are that the good old days remain its just that you have to pay a proper price to enjoy them. Maybe people who value their health and want far less chance of DVT need to ante-up with their travel budget a bit ? AIR's business class is a lot more than Emirates to London, go figure on that one ?

Yes, my brother will always go for the cheapest on everything..super frugal..was booking one of the Chinese airlines for three trips to London this year..his cheapest fare was under $1000 return. My pick would be Singapore airlines on one of the older 777s, old style seating means more space and decent service in economy...closest you will get to old world economy, around $1,800 return in May to see a royal wedding...

[Beagle]

Yes, my brother will always go for the cheapest on everything..super frugal..was booking one of the Chinese airlines for three trips to London this year..his cheapest fare was under $1000 return. My pick would be Singapore airlines on one of the older 777s, old style seating means more space and decent service in economy...closest you will get to old world economy, around $1,800 return in May to see a royal wedding...

That's amazing..under a $1,000 to London return. Those Chinese owned carriers must be paying their crew a mere pittance to be able to do that at the current fuel prices.
I agree with your prognosis. Older style seating configuration on Singapore airlines with wider seats at 19 inches and more legroom than most premium economy seats these days. Trust a hound with fat buttocks to know these things :) Otherwise Emirates economy as we've discussed before on their A380's. They were doing $1,599 return to many European airports the other day shoulder season. Value for money is off the charts...wish nice European hotels would follow suit :eek2:

[Jantar]

I recall an add from Air New Zealand (or was it still called TEAL) in the mid 1960s where they advertised "Any destination for only 6d per mile". That made a one way trip to London £600 or $1200. So not any major change over ther years :mellow:

[madmat]

I recall an add from Air New Zealand (or was it still called TEAL) in the mid 1960s where they advertised "Any destination for only 6d per mile". That made a one way trip to London £600 or $1200. So not any major change over ther years :mellow:
If you totally ignore inflation ....

[bull....]

under 3 been saying it for a while , imagine it will be under 2 at some stage of the cycle again. im seeing 80 brent this yr as a guess

[Baa_Baa]

under 3 been saying it for a while , imagine it will be under 2 at some stage of the cycle again. im seeing 80 brent this yr as a guess

Ignore the TA, suffer the consequences. This has for some time been vulnerable, but re-enforced recently by the technical price breakdown. It's a waiting game, preferably on the sidelines.

[Beagle]

I recall an add from Air New Zealand (or was it still called TEAL) in the mid 1960s where they advertised "Any destination for only 6d per mile". That made a one way trip to London £600 or $1200. So not any major change over ther years :mellow:
Couldn't help myself and looked up the RBNZ calculator. There must have been some really serious inflation at some stage because $1 in early 1965 in inflation adjusted terms is now $39.32 so that $1,200 fare back then would be the same as paying $47,000 return to London now :eek2:
I recall visiting Te Papa a year or two ago when AIR had their excellent exhibition to celebrate their 75th anniversary of commencement of operations as Teal. It took nine hours for those first flying boats to fly to Sydney and cost half a years wages of the average worker at the time for a return flight, now just two days wages. Graphically sheeted home to me how the real cost of flying has so dramatically reduced over the years.

[ratkin]

Can travel to Barcelona from Auckland return in May for 1100 dollars, that is including all taxes. Air China Takes 46 hours to get there but it is a pretty hot price, and Spain is great in May.

[Beagle]

Flying on planes with dodgy engines and now rubbing salt into the wound by treating people like ****.... "Nice" work.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11980210

At the very least you would think they would allow passengers to stay on board and feed them...surely that's not too much to ask !

[winner69]

Flying on planes with dodgy engines and now rubbing salt into the wound by treating people like ****.... "Nice" work.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11980210

This once great airline going to the pot?

Chris has been very very low profile lately ....always used to get regular press and media and all that stuff ...does he still work for them?

[johnluangco]

At the very least they should have learnt their lessons from previous incident and communicate with their passengers. Have to say their response has been quite disappointing.

[IAK]

Chris must be on holiday in Hawaii with John.

[dobby41]

At the very least you would think they would allow passengers to stay on board and feed them...surely that's not too much to ask !

They were onboard for 7 hours and were fed.

Still really bad though!

[Beagle]

They were onboard for 7 hours and were fed.

Still really bad though!
Yes granted but if I am reading this right... then kicking them off the plane and then the terminal kicking young families with their kids / babies out without food / hotel / proper communication into the cold winter's snow in the depth's of the night...what an absolute shocker ! Didn't they learn anything from the Hawaii fiasco a while back ?

Okay I did re-read the article...conflicting stories from various passengers...messy, not a good look.

[couta1]

All the fuss seems to be helping the SP.

[percy]

All the fuss seems to be helping the SP.

I noted that too.!

[peat]

I do hope it goes back to $3.10

[Beagle]

I do hope it goes back to $3.10

"Nothing sweeter than a repeater"..wouldn't mind betting a bob you're getting ready for another short.

[Baa_Baa]

"Nothing sweeter than a repeater"..wouldn't mind betting a bob you're getting ready for another short.

The day after the 50EMA/200MA death cross (down), what happens? It bounces nicely. Go figure. That $2.89 horizontal support seems to have worked bouncing the price back up to the magical $3.00 where it stalled, unless it's a bull trap setup (note light volume), but even that scenario seems a bit conspiracy theory. Another daily up tomorrow (through and close above $3) and I reckon it'll have a go at the MA's crossover, albeit still that's below the descending resistance trend line.

[Zaphod]

Happy to be completely out now at 3.20.

Trump began the trade war with China today. It'll be interesting to see what happens with the markets over the coming months.

[Oliver Mander]

It might be interesting times indeed Zaphod...but on fundamentals Air NZ is now trading on a forward P/E of around 8.4.

Oil price rising or not (and it hasn't risen THAT much), that seems inordinately cheap to me. Operating stats are not supporting a massive slide in patronage...so Mr Market is assuming something about margin I guess. Yet there's been no negative views from the company on this front. Share price could rise 10% overnight and still be on a solid P/E.

[sb9]

It might be interesting times indeed Zaphod...but on fundamentals Air NZ is now trading on a forward P/E of around 8.4.

Oil price rising or not (and it hasn't risen THAT much), that seems inordinately cheap to me. Operating stats are not supporting a massive slide in patronage...so Mr Market is assuming something about margin I guess. Yet there's been no negative views from the company on this front. Share price could rise 10% overnight and still be on a solid P/E.

And strengthening NZD (currently @ .7359 USD) also eases the pressure of rising crude oil costs.

[cymonger]

It might be interesting times indeed Zaphod...but on fundamentals Air NZ is now trading on a forward P/E of around 8.4.

Oil price rising or not (and it hasn't risen THAT much), that seems inordinately cheap to me. Operating stats are not supporting a massive slide in patronage...so Mr Market is assuming something about margin I guess. Yet there's been no negative views from the company on this front. Share price could rise 10% overnight and still be on a solid P/E.


It actually is still a solid buy. It just falls out of favour with people so quickly from a "sentiment" perspective. That engine stuff gave some people pause, but in end it's gonna be another really good year. I think it's likely this stock will be both $2.50 and $3.50 at some point this year. I guess a savvy trader could make money in both directions.

[BlackPeter]

It might be interesting times indeed Zaphod...but on fundamentals Air NZ is now trading on a forward P/E of around 8.4.

Oil price rising or not (and it hasn't risen THAT much), that seems inordinately cheap to me. Operating stats are not supporting a massive slide in patronage...so Mr Market is assuming something about margin I guess. Yet there's been no negative views from the company on this front. Share price could rise 10% overnight and still be on a solid P/E.

Actually - long term (7 year) PE is just 13.9. The forward PE of 8.3 sort of highlights that the market expects this stock to drop from its cyclical highs ...

And yes, there are some risks - for some reason my Inbox seems to attract more and more offers for really cheap flights (too much competition? I do my best, but I can't really fly that much) - and than, there is still AIR's nightmare-liner issue ...

But sure - it always can go higher - but it can keep dropping as well, and given that the stock is in a confirmed down trend (XoD and all these things), am I not sure I would take the chances.

discl: don't;

[blackcap]

And yes, there are some risks - for some reason my Inbox seems to attract more and more offers for really cheap flights (too much competition? I do my best, but I can't really fly that much) - and than, there is still AIR's nightmare-liner issue ...


discl: don't;

Yeah, just looked at flights to Paris return in July/August and getting quoted $1680 return... crazy cheap and for that time of year too.....

[Oliver Mander]

Actually - long term (7 year) PE is just 13.9. The forward PE of 8.3 sort of highlights that the market expects this stock to drop from its cyclical highs ...

And yes, there are some risks - for some reason my Inbox seems to attract more and more offers for really cheap flights (too much competition? I do my best, but I can't really fly that much) - and than, there is still AIR's nightmare-liner issue ...

But sure - it always can go higher - but it can keep dropping as well, and given that the stock is in a confirmed down trend (XoD and all these things), am I not sure I would take the chances.

discl: don't;

Don't necessarily disagree on the competitiveness elements...am convinced that is indeed a 'drag'.
But where do you get your 7 year income figure from to get a P/E of 13.9? Net income is forecast to rise again from 2020 I thought...

Anyhoo, I tend to take airline forecasts with some salt, positive or negative...if anyone knows the oil price in 7 years time, can they please let me know? Would love an early retirement...:-)!
??

[BlackPeter]

...
But where do you get your 7 year income figure from to get a P/E of 13.9?
...


From my (typically well maintained) company database. If you want to check - just read the last 7 annual reports and do the numbers :p;

[Beagle]

Seems cheap enough at about 8.5 times this years earnings but the market is a forward looking beast and once their forward cover on oil runs out mid year what are they going to be paying for fuel in FY19 and will they be able to recover any of that (extra $200m ?) with yield improvements ? Long term their average PE is about 11 so maybe the current price is about right considering worries about fuel price next financial year ? That said they're not anywhere near out of the woods with their engineering issues with those dodgy engines yet... I'm still expecting a very cautious tone to their half year results presentation next month. Far more likely to see $2.50 in the near term than $3.50 in my opinion. Disc: Interested at $2.50 not at $3.00.

[value_investor]

Seems cheap enough at about 8.5 times this years earnings but the market is a forward looking beast and once their forward cover on oil runs out mid year what are they going to be paying for fuel in FY19 and will they be able to recover any of that (extra $200m ?) with yield improvements ? Long term their average PE is about 11 so maybe the current price is about right considering worries about fuel price next financial year ? That said they're not anywhere near out of the woods with their engineering issues with those dodgy engines yet... I'm still expecting a very cautious tone to their half year results presentation next month. Far more likely to see $2.50 in the near term than $3.50 in my opinion. Disc: Interested at $2.50 not at $3.00.


I'm with you on this one, I'll get into this one at closer to $2.50 with the current market environment. I'm a bit worried now in the interim that the dodgy engine issues and the fuel prices will eat into yields. The company is already so highly geared, it needs a few more good years at the current financial level to get that gearing to where I would like it to be. If not it could be a rocky time for one or two FY's.

I'm sure we'll get more commentary at the HY announcement.

[workingdad]

I had always thought higher fuel prices would be somewhat helpful in a way as competition will decrease. They still have the domestic market stitched up but I agree there would be a cautious tone to the outlook which they generally take even when tailwinds are in play.

No market updates since last guidance so my guess is they are doing ok. Suspect negotiations in play with regard to compensation over engines and impact on flights but other than the planned work on the fox being brought forward I don’t see significant impact going forward. Keen to jump back in on the rollover coaster when price comes back down

[winner69]

Singapore canned WLG - Canberra flights and going to do WLG-MEL instead (with council subsidies believe it our not)

AIR and QAN struggle on this route so will no doubt cut a flight or two a week out.

Singapore got an offer out WLG-MEL $312 RETURN.Apparently $185 of that is taxes / charges etc leaving $65 on each leg for Singapore

It’s all stupid eh ...but might go for Melbourne for a few days to catch up with a few mates.

[Beagle]

Cheap as chips mate. Go for it.

[Mush]

Singapore canned WLG - Canberra flights and going to do WLG-MEL instead (with council subsidies believe it our not)

AIR and QAN struggle on this route so will no doubt cut a flight or two a week out.


What makes you think AIR and QAN are struggling on WLGMEL?

[winner69]

What makes you think AIR and QAN are struggling on WLGMEL?

Probably struggling not the right word but not one of their busiest and at times not always full.

Probably quite lucrative capacity wise if they ‘manage’ the number of flights between them.

[winner69]

Whoops

https://www.stuff.co.nz/business/100934864/air-nz-cancels-flights-sold-too-cheaply

Thank goodness they been cancelled for shareholders sake

[stoploss]

Whoops

https://www.stuff.co.nz/business/100934864/air-nz-cancels-flights-sold-too-cheaply

Thank goodness they been cancelled for shareholders sake
Why not just honour it and put it down to marketing ....Is the bad press really worth it ?

[winner69]

Why not just honour it and put it down to marketing ....Is the bad press really worth it ?

Shouldn’t happen these days with all these high powered computers

If I was in charge i’d ask for the system to send out alarm bells if any price was below a certain percentage of normal ......just to check

Most of those customers are unhappy but betcha that person who still has an internal US flight are more than unhappy

[Raz]

Why not just honour it and put it down to marketing ....Is the bad press really worth it ?

classic....see a lot of negative press on this in the US current on social media...

Winner are you aware the level of subsidy you are paying as a rate payer to Singapore airlines for ten years, the have a competitive advantage now on the new route :-)

[Baa_Baa]

AIR punters sure don't like that $3.00 mark, 3 days attempting and failing, then the fourth day through on trades and big pullback to $2.91. $3.00 is only the midpoint of the Bollingers, looks like a back test of $2.90-$2.86 is next, which is the floor of the descending wedge providing current support.

[winner69]

classic....see a lot of negative press on this in the US current on social media...

Winner are you aware the level of subsidy you are paying as a rate payer to Singapore airlines for ten years, the have a competitive advantage now on the new route :-)

Yep, its a disgrace and probably hasn't been fully disclosed yet.

The Wellington City Council (and its Mayor) is as dodgy as with so many 'secret' deals with developers and the like.

And being part owner of Wellington Airport they should be ashamed of themselves about being so keen on the runway extension. (Disclosure - on a stop the runway extension action group)

[Mush]

Probably struggling not the right word but not one of their busiest and at times not always full.

Probably quite lucrative capacity wise if they ‘manage’ the number of flights between them.

I think it's been one of the better performing sectors since JQ exited a few years back. Load factors do not necessarily indicate performance, given higher yielding traffic (due to less market capacity) more than compensates.

[iceman]

Why not just honour it and put it down to marketing ....Is the bad press really worth it ?

Agree stoploss. This is extremely poor customer relations from AIR. Makes me wonder what the Customer Service department is thinking, or rather, why aren't they thinking. Silly stuff and they will do themselves significant unnecessary reputational damage from this.

[Beagle]

Agreed. Most established studies have shown that people with a bad experience will tell 20 other people about it, almost as though they're on a mission to make the company pay whereas with a good experience they'll tell perhaps one or two people. The problem is these studies were done before the advent of social media so people going out of their way to tell people about their bad experience will make a vastly bigger impact these days. You would think someone at AIR would have the intelligence to make the call to simply suck it up and honour the cheap tickets wouldn't you !

https://www.nbr.co.nz/article/market-close-nz-shares-fall-air-nz-and-trustpower-drop-while-metro-glass-gains-b-211982
Air also starting to now come under pressure from steadily rising crude prices. I've always thought AIR are in a better relative position than their competitors to compete with $70-80 oil with their modern fuel efficient fleet than with lower fuel costs. The irony that their special Dreamliner's are playing up right at the time when they need them isn't lost on me. I think this will be a great investment once the SP has corrected significantly more and Rolls Royce finally get their **** together.

[winner69]

One of those affected is Aaron ....he is a travel blogger with 10,400 followers on twitter ( so 10,400 could glance or pay attention to his tweets)

He seemed to be having trouble with his travel agent in getting a refund on the internal flight he don’t need because travel agent has to talk to AIR ....good luck

Interesting AIR response to Aaron initially was a curt ‘talk to your travel agent’

Doubt if Aaron will ever say nice things about Air NZ

And Beagle I reckon more than 20 of his mates know about this.

[emveha]

Whoops

https://www.stuff.co.nz/business/100934864/air-nz-cancels-flights-sold-too-cheaply

Thank goodness they been cancelled for shareholders sake

Now that "Flight Prices You're Not Allowed to See" ad finally makes sense.

[Beagle]

https://www.stuff.co.nz/business/100934864/air-nz-cancels-flights-sold-too-cheaply
Wide range of opinions on this one. See comments section.

[777]

One of those affected is Aaron ....he is a travel blogger with 10,400 followers on twitter ( so 10,400 could glance or pay attention to his tweets)

He seemed to be having trouble with his travel agent in getting a refund on the internal flight he don’t need because travel agent has to talk to AIR ....good luck

Interesting AIR response to Aaron initially was a curt ‘talk to your travel agent’

Doubt if Aaron will ever say nice things about Air NZ

And Beagle I reckon more than 20 of his mates know about this.

Book through an agent then deal through the agent. The correct reply by AIR. As to whether it was curt or not depends on the attitude of the person receiving the reply.

[iceman]

Book through an agent then deal through the agent. The correct reply by AIR. As to whether it was curt or not depends on the attitude of the person receiving the reply.

I totally disagree 777. It was AIR that made the mistake according to the news and they should accept it and honour the fares. This is very bad form from AIR and I'm surprised they get away with it. Many will read this and many will never book with AIR in the future. They're already having quite a backlash from customer about the Dreamliner fiasco and poorer service from Hi Fly. They certainly don't need more at the moment and should know this. They are playing with fire.

[777]

I totally disagree 777. It was AIR that made the mistake according to the news and they should accept it and honour the fares. This is very bad form from AIR and I'm surprised they get away with it. Many will read this and many will never book with AIR in the future. They're already having quite a backlash from customer about the Dreamliner fiasco and poorer service from Hi Fly. They certainly don't need more at the moment and should know this. They are playing with fire.

He was using an agent. Therefore that is who should be dealing with. They take his money. They booked the fare. They should be handling the situation other wise why use an agent.

[iceman]

He was using an agent. Therefore that is who should be dealing with. They take his money. They booked the fare. They should be handling the situation other wise why use an agent.

They should just get the fare they booked

[winner69]

They should just get the fare they booked

From his tweets even the agent was having difficulty in dealing with AIR

Maybe the ‘offer’ was so succesful (like more than odd one or two taking it up) that they felt compelled to cancel the tickets

One cheap flights watcher tweeted the offer to 700,000 of his followers.

Hope not too many come to NZ anyway ....far too many already

[winner69]

These safety ads must cost a small fortune to produce ....seems a waste of money

https://www.stuff.co.nz/travel/news/100953459/family-of-erebus-crash-upset-antarctica-will-be-setting-for-next-air-nz-safety-video

[Beagle]

These safety ads must cost a small fortune to produce ....seems a waste of money

https://www.stuff.co.nz/travel/news/100953459/family-of-erebus-crash-upset-antarctica-will-be-setting-for-next-air-nz-safety-video

You would think with serious logistical issues this might run to seven figures ? Suppose its part of their extensive marketing budget but I would have thought given sensitivities about historical events Chris and his team could have chosen another way to try and build their argument that they care for the environment. Taking the other side of the argument, one supposes that they're never going to please everyone, all of the time with their safety video's and this may raise awareness of environmental issues. Remember the infamous one with the body paint and also the safety in paradise one which upset a lot of P.C. people. I guess we should reserve our opinion until we've seen it in due course ?

[winner69]

Latest operating stats


Weakest revenue growth this financial year with Decembers revenues only up 1%/2%
No profit guidance so half year likely to be about the same as last year?
Bit ho-hum on the broken planes ecept to say maintence is being done and we have those charter planes


https://stocknessmonster.com/announcements/air.nzx-313547/

[Beagle]

Group RASK for YTD up just 2%, 2.74% higher yield if you adjust for lower group load factors 82.5% compared to 83.1% last year and 3.2% higher yield if you adjust for FX changes.
I remain underwhelmed in the context of the fact that:-
Operating environment for the first half this year compared to last year
Dramatically higher fuel cost this year and many airlines don't hedge so you would have hoped to see yield improvements at a higher rate than that.
10 new entrants on new or expanded routes last year operating sustained opening specials using cheap oil to launch their new or expanded route, about half of which have retrenched since then so you would have hoped to have seen a far less competitive environment supportive of yields similar to those enjoyed in 1H FY16.
Overall although there have been some fairly modest improvement from 1H FY17 yields we are tracking well south of yields enjoyed in FY16.
As a former shareholder I had been hoping to see yields up 4-5% this half compared to the previous corresponding period. While the YTD RASK together with very high level's of forward cover on fuel prices is supportive of a solid first half to be announced late next month how they'll go once their fuel hedges run out later this year is something the market appears to be concerned about and quite rightly in my opinion.

[dreamcatcher]

AIRLINES SET FOR RECORD PROFIT, FARE RISE FORECAST..................2 months ago

Would expect air to increase fares accordingly to compensate them for any future fuel increases.

America is currently drilling wells everywhere to increase oil supply which could eventually undermine the Russian - Saudi oil reductions which has been pushing prices higher.

Interesting times ahead for fuel and waiting to see where prices settle.



https://www.reuters.com/article/us-airlines-iata/airlines-set-for-record-profit-in-2018-fare-rise-forecast-idUSKBN1DZ1DE

http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview

[value_investor]

Interesting operating results, I like the passenger numbers increasing and the yield % increasing. I think you could see a HY result which won't reflect on the current market yet with the fuel prices being so dramatically off. I'm just hoping that management gives enough information in terms of guidance and what we can expect.

The last thing I would want is to have them not address the situation getting worse or to play it off as not being here for a long term. Who knows, it could be over tomorrow, but I know companies use language that is most favourable to them. Not saying AIR would but hey, its hard to discount these days.

[stoploss]

Sounds like some of the fares were more of a bargain than I first thought ( hence my initial thoughts AIR.nz should just wear it ) Looks like they were between a rock and a hard place .
https://www.marketwatch.com/story/my-350-round-trip-flight-to-new-zealand-sounded-too-good-to-be-true-because-it-was-2018-01-30

[winner69]

Sounds like some of the fares were more of a bargain than I first thought ( hence my initial thoughts AIR.nz should just wear it ) Looks like they were between a rock and a hard place .
https://www.marketwatch.com/story/my-350-round-trip-flight-to-new-zealand-sounded-too-good-to-be-true-because-it-was-2018-01-30

That bit about it’s morally wrong to book something you know is probably a mistake (costs shareholders they say)

Loved the comment below -

Morally wrong to book a super low airfare? REALLY? Because those companies NEVER do anything that's morally wrong. IDIOT.

[Raz]

That bit about it’s morally wrong to book something you know is probably a mistake (costs shareholders they say)

Loved the comment below -

Morally wrong to book a super low airfare? REALLY? Because those companies NEVER do anything that's morally wrong. IDIOT.

Yeah, crazy comment, actually when AA opened it LAX - AKL flights ..they had some launch flight specials from the US end in that price range... today AIR at 749$ ret return

[iceman]

Yeah, crazy comment, actually when AA opened it LAX - AKL flights ..they had some launch flight specials from the US end in that price range... today AIR at 749$ ret return

Agree. There are some "crazy" specials around all the time and people grab them when they see them. Agree with winner. IDIOT

[peat]

That bit about it’s morally wrong to book something you know is probably a mistake (costs shareholders they say)


I see what you did there.

[Beagle]

I understand the corrosion affected fan blades of the suspect Rolls Royce engines are now on very tight inspection intervals pending their eventual replacement when parts become available. CAA seem to be comfortable with this for reasons best known to them however I also understand that one of the engine failures (which also caused some damage to the aircraft itself) had just come off inspection.

There's no extra risk whatsoever to passenger safety flying these aircraft powered by these engines seeing as they're are under such tight inspection intervals or is there as shown by the recent failure ? This was a one off event and extremely unlikely to happen again, or is it that exceptionally unlikely ?
Surely a very small amount of extra risk to passenger safety is not being accepted for the sake of keeping the airline profitable, or is it ?

[dobby41]

I understand the corrosion affected fan blades of the suspect Rolls Royce engines are now on very tight inspection intervals pending their eventual replacement when parts become available. CAA seem to be comfortable with this for reasons best known to them however I also understand that one of the engine failures (which also caused some damage to the aircraft itself) had just come off inspection.

There's no extra risk whatsoever to passenger safety flying these aircraft powered by these engines seeing as they're are under such tight inspection intervals or is there as shown by the recent failure ? This was a one off event and extremely unlikely to happen again, or is it that exceptionally unlikely ?
Surely a very small amount of extra risk to passenger safety is not being accepted for the sake of keeping the airline profitable, or is it ?

You seem to have gone from 'this airline can do no wrong and management are just the best' to seeing conspiracy everywhere.
Same management??

[BlackPeter]

You seem to have gone from 'this airline can do no wrong and management are just the best' to seeing conspiracy everywhere.
Same management??

Nothing wrong with people using both eyes ;) and pointing out the good but as well the bad and the ugly - isn't it?

[Exodia]

Apologies if this has already been posted but a recent report was published by the International Council on Clean Transportation on the 16th Jan 2018, ranking airlines that serve the US across the Pacific in terms of fuel efficiency. The rankings are valid for 2016 and Air NZ ranked 3rd out of 20, with Qantas coming last burning an average of 63% more fuel per passenger-kilometer than Air NZ. This is the same org that discovered the VW diesel cheating scandal, link to report is here: https://www.theicct.org/publications/transpacific-airline-fuel-efficiency-ranking-2016

[winner69]

The halo effect in business is an interesting concept

Chris’s halo has gone from being pretty lack lustre to having a brilliant glow and back again a few times over the years ....and now is in the losing it’s lustre stage.

You can tell how bright Chris’s halo is shining by tracking the AIR share price.

Chris presently not the Chris of old. I think he’s bored and been in the job too long and is looking around for a new job. Profits have peaked and too many things turning to custard. Been lucky with the timing of his appointment so may as well get out near the top. Probably sorry he didn’t take the Fonterra job when headhunted a while ago but got a few million extra for staying at AIR. Chris will be looking overseas I reckon.

[dreamcatcher]

SHARP DECREASE IN JET FUEL.................will it continue ?

http://airlines.org/argus-us-jet-fuel-index/

[workingdad]

Interesting bounce in SP last couple of days..... Decent volume yesterday and today not too bad either. Not sure a 4% dip in jet fuel is the underlying cause but its a roller coaster, see if it can build again from here.

[Marilyn Munroe]

The creditor tigers are crouching in the bamboo waiting for the HNA Aviation Group to falter.

HNA aviation own the portion of Virgin(Under Arm Bowlers Division) Cullen Airlines sold.

Will Cullen Airlines CEO Christopher Luxon do a Kerry Packer and buy the stake back at a knock down price?

Boop boop de do
Marilyn

[Filthy]

morningstar has downgraded AIR to a sell with a target of $2.60

although, one should always take their 'recommendations' with a pinch of salt. more 'often-than-not' it is best to the complete opposite.

reckon we hold in this little pattern until results day




filthy

[Jantar]

I booked a flight to Canberra on Singapore airlines, but now find I am actually on AIr NZ and Virgin. The fare is exactly half what it would have been had I booked via AIR. Someone is making a loss on this ticket and I suspect it is NOT Singapore Air.

[Benny1]

The creditor tigers are crouching in the bamboo waiting for the HNA Aviation Group to falter.

HNA aviation own the portion of Virgin(Under Arm Bowlers Division) Cullen Airlines sold.

Will Cullen Airlines CEO Christopher Luxon do a Kerry Packer and buy the stake back at a knock down price?

Boop boop de do
Marilyn

No! Think AIR has publicly stated they are through with buying into other Airlines.
Virgin especially offer no advantage to them.

They have had a sound if not slightly limited commercial agreement with them that has suited each others interests over the last few years (although have read speculation on another internet forum ..and that all it is.. That AIR may seek not to renew this agreement later this year) .

[stoploss]

I booked a flight to Canberra on Singapore airlines, but now find I am actually on AIr NZ and Virgin. The fare is exactly half what it would have been had I booked via AIR. Someone is making a loss on this ticket and I suspect it is NOT Singapore Air.

It might be Singapore Air taking the hit if your flight is after April when the service stops ? Presumably they would have to make good and put you on another service ?
https://www.stuff.co.nz/business/100839185/capital-express-ended-with-singapore-now-linking-wellington-to-melbourne

[winner69]

I booked a flight to Canberra on Singapore airlines, but now find I am actually on AIr NZ and Virgin. The fare is exactly half what it would have been had I booked via AIR. Someone is making a loss on this ticket and I suspect it is NOT Singapore Air.

and a bit longer to get there eh

Singapore will be paying with the help of Wellington ratepayers

[stoploss]

and a bit longer to get there eh

Singapore will be paying with the help of Wellington ratepayers

Don't get me started ...WCC lol

[sb9]

morningstar has downgraded AIR to a sell with a target of $2.60

although, one should always take their 'recommendations' with a pinch of salt. more 'often-than-not' it is best to the complete opposite.

reckon we hold in this little pattern until results day

filthy

No wonder price is flying today....just do the opposite to Morningstar's recommendation...it'll all be fine.

[Beagle]

No wonder price is flying today....just do the opposite to Morningstar's recommendation...it'll all be fine.

LOL I hold them in a similar level of derision but occasionally even a broken clock is right and I think this is one of those occasions.

[sb9]

LOL I hold them in a similar level of derision but occasionally even a broken clock is right and I think this is one of those occasions.

Might as well be but the broken clock is of no value in the first place, just that its "broken"....

[couta1]

No wonder price is flying today....just do the opposite to Morningstar's recommendation...it'll all be fine. More likely the article in the Herald this morning titled "Bright outlook for Airline profits".

[Oliver Mander]

It would be great if Morningstar could issue "SELL" ratings on the other shares in my portfolio...
I actually took some heart from their Air NZ downgrade yesterday, with the share price reacting in the usual Morningstar manner....thanks guys :-)!

[winner69]

Suppose many of you will think this is fantastic news and money well spent

I think it’s wasteful ...and a few other things I won’t mention (Couts might understand what)

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11987689

[blackcap]

Suppose many of you will think this is fantastic news and money well spent

I think it’s wasteful ...and a few other things I won’t mention (Couts might understand what)

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11987689

As much as I may have voted National, I think this is a disgrace as well, and think Obama is a traitor amoungst other things. Cannot stand the man and no way Key should be meeting him.

[winner69]

As much as I may have voted National, I think this is a disgrace as well, and think Obama is a traitor amoungst other things. Cannot stand the man and no way Key should be meeting him.

....at AIR’s expense by reading this ...and no doubt more for John’s gratification than anything else.

.....but justified by saying it will put zillions of bums on seats ...what a rort

[iceman]

....at AIR’s expense by reading this ...and no doubt more for John’s gratification than anything else.

.....but justified by saying it will put zillions of bums on seats ...what a rort

I think it will be a big advertising coup for AIR, particularly if they are announcing a new route to Chicago, where Obama is a hero hometown boy !

[RGR367]

I'm not sure whether AIR will really benefit on it but c'mon guys this is all about marketing of AIR. Let JKey do what he can do. I would rather have us pay Obama for his visit than pay the Vulgar_ian comedian occupying the WH now to visit us.

[winner69]

I'm not sure whether AIR will really benefit on it but c'mon guys this is all about marketing of AIR. Let JKey do what he can do. I would rather have us pay Obama for his visit than pay the Vulgar_ian comedian occupying the WH now to visit us.

...but main thing is keeping Director John happy isn’t it?

And Chris better hone up his golfing skills if he is play in the foursome.

Egos gone mad

[Raz]

...but main thing is keeping Director John happy isn’t it?

And Chris better hone up his golfing skills if he is play in the foursome.

Egos gone mad

I agree, it simply using your contacts and shareholders money for spin off gain....I'm sure not all the gain is AIR.

[Fatboyj]

I'm tempted to send Obama an I'm with stupid t-shirt.

[Beagle]

Some very nice golf courses in Queenstown and another in Arrowtown. Nice perk for John Key.
You would hope there's a commercial spinoff for AIR in this and it doesn't cost too much and its tied in with a new route announcement / promotion but I can certainly understand others cynicism.

[percy]

I think it will be a big advertising coup for AIR, particularly if they are announcing a new route to Chicago, where Obama is a hero hometown boy !

Yes a fantastic advertising coup.
If it comes about well done AIR and JK.

[winner69]

AIR strategy included a bit about objectively orchestrating plug-and-play ROI from progressively recaptiualising viral value

I now know what that means

[winner69]

Some very nice golf courses in Queenstown and another in Arrowtown. Nice perk for John Key.
You would hope there's a commercial spinoff for AIR in this and it doesn't cost too much and its tied in with a new route announcement / promotion but I can certainly understand others cynicism.

I’ll have to get some anti-nausea pills when this happens ....the media coverage will be sickening .....all about John but little about AIR

[workingdad]

I’m not so sure it’s actually stating air nz is spending considerable funds on this. Newspapers barely get facts right these days so I will withhold judgement until there is more than speculation.

[Zaphod]

I’ll have to get some anti-nausea pills when this happens ....the media coverage will be sickening .....all about John but little about AIR

Perhaps AIR should use the current flavour of the month, Jacinda Ardern then?

[peat]

I heard last year that David Higgins (Duco - Joseph Parker) was lining up Obama for a visit.

[Beagle]

Rather interestingly TV1 reported in the main six o'clock bulletin almost as a statement of fact that Obama was coming to N.Z. on (from recollection 21 March) and this coincided with AIR's announcement of the new route to Chicago. Must say I've been a little surprised by their recovery back above $3 and their resilience today but I remain cautious as I remain of the opinion that they will caution about higher fuel prices going forward with their half year commentary later this month.

[winner69]

Be good if Obama and his entourage come down here and do a bit of travel to the South Island and travel Air NZ in doing so

Paying a decent fare for that travel will increase AIRs yield

[dobby41]

Be good if Obama and his entourage come down here and do a bit of travel to the South Island and travel Air NZ in doing so

Paying a decent fare for that travel will increase AIRs yield
AIR will be paying - reduce the yield?

[Raz]

Rather interestingly TV1 reported in the main six o'clock bulletin almost as a statement of fact that Obama was coming to N.Z. on (from recollection 21 March) and this coincided with AIR's announcement of the new route to Chicago. Must say I've been a little surprised by their recovery back above $3 and their resilience today but I remain cautious as I remain of the opinion that they will caution about higher fuel prices going forward with their half year commentary later this month.

Well I now know which golf courses have been blocked out, some serious security detail involved, AIR and the Government can share the costs....we are so lucky!

[Beagle]

Well I now know which golf courses have been blocked out, some serious security detail involved, AIR and the Government can share the costs....we are so lucky!
We are lucky indeed...not to be the shareholders footing the bill.

[Raz]

We are lucky indeed...not to be the shareholders footing the bill.

Yes currently not a shareholders although still a tax payer..sure a tax accountant knows how much he pays to the cent...

[dreamcatcher]

CRUDE OIL CRASHES ON SURGING US OUTPUT and JET FUEL follows


http://www.afr.com/business/energy/oil/crude-oil-crashes-on-surging-us-output-20180207-h0vozg

http://airlines.org/argus-us-jet-fuel-index/

[Benny1]

https://www.bloomberg.com/news/articles/2018-02-10/airbus-halts-pratt-a320neo-shipments-as-new-engine-issues-emerge

A320neo engine issues.

Oh dear....here we go again....
At least Air NZ aren't operating any of these as of yet...

Don't know if this will impact on the delivery schedule for these later this year

[Beagle]

This is just the latest in a series of issues with those engines as you know. Probably just better to fit engines that have proven to be reliable.

[Robomo]

To be fair, just about all new engines in the past 70 years have had their problems in early service before finally being fixed enough to be reliable. The engines on the early 747 planes in the early '70s were a problem for years with replacement engines being regularly taken to remote places - they were mounted as a dummy '5th engine' on other 747s.
The newer engines are technologically more advanced, hence the enormous amount of design, testing and refinement that goes into them. However, not all problems can be foreseen; one of the problems I've read about relates to slightly uneven cooling of a rotorblade shaft that caused quicker wear & tear than expected and this was only picked up after thousands of hours of service.
How about going back to piston engines....

"Federal Aviation Administration studies indicate that piston engines in aircraft have a failure rate, on average, of one every 3,200 flight hours while turbine engines have a failure rate of one per 375,000 flight hours. Accordingly, for every turbine engine experiencing a failure, 117 piston engines will have failed."

Https://www.profsurv.com/magazine/article.aspx?i=1950

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11991912 Taking into account their only slightly superior load capability I struggle to see the c apex economics of these $500m aircraft vs a Dreamliner which can carry ~ 85% of the load for half the retail price ? AIR let it slip that their Dreamliners cost just $150m so Airbus wanting anything like close to $500m retail looks like a stretch to me. Shareholders will be hoping AIR have enough problems with their shiny new toys to keep them busy from being tempted with this one, (which uses a another variant of the Rolls Royce Trent engine).

[BlackPeter]

Booked this weekend our flights for a trip to Singapore later this year. Checked four alternatives and AIR was in terms of price the most expensive option. In terms of flight-quality (duration, convenience - all four are safe airlines ;)) was the AIR option in the middle of the range.

You guess it - we booked an alternative (in this case the one with the Kangaroo on the tail). Their route to SIN is quite competitive - and we even can take more luggage with us (not that we are likely to use the full 30 kg per passenger).

Start to wonder, whether I still need to include AIR on my short list for future (overseas) trips - it is some time since they made the race.

[Beagle]

Great that there hasn't been any more Trent 1000 engine failures this summer so far. Hopefully Rolls Royce are making steady progress working through the overhaul program. AIR are well positioned to compete with oil at the current level with these aircraft once all the engines have been overhauled and all Dreamliners are up and flying again.

[workingdad]

still dealing with the fall out though, I was looking at flying to perth this week at short notice, see the direct flight is a hifly one as replacement planes, no business class, alternative is to take two flights with a stopover, one with airnz the other with virgin...... not looking good for my preference to airnz :(

[Jay]

Know a couple who just flew back from Perth on one of those Hifly. Some AirNZ crew, but some things did not work, limited content on entertainment side, some screens not working at all, personal light hanging down.
Sooner they get their Dreamliner's back in the AIR the better.

On the plus side - article in NZ Herald Travel lift out yesterday, praising the way AIR handled a delay due to fault - delayed 6 hours, were kept informed, given meal vouchers etc

[winner69]

beagle told us all this about Qantas's fleet a while ago

http://www.smh.com.au/business/aviation/qantas-could-be-flying-towards-fleet-renewal-spending-cliff-says-s-and-p-20180215-p4z0gd.html

[RTM]

“Domestic passenger numbers were up 7.7% to 4.6 million, “
https://www.nzx.com/announcements/314316

Above from the Auckland Airport Result. Surely this has to be good for AIR.

[workingdad]

Yes you would think it would be considering AIR generates most of its profits from the domestic market and even with jet star operating a domestic service it hasn't really impacted greatly over the years. Not sure what the financial impact of the engines issue and the fuel crisis at AIA but the stats are looking good for a favourable year.

[Seti]

Simply Wall St (https://simplywall.st/stocks/nz/transportation/nzx-air/air-new-zealand-shares/news/air-new-zealand-limited-nzeair-is-trading-at-a-35-69-discount-to-its-intrinsic-value/) has a DCF valuation of $4.60

[Beagle]

Analysts are starting to pick up on the potentially quite substantial free cash flow in the early 2020's after AIR has ostensibly completed its fleet upgrade.
That valuation is at a very wide divergence to other valuations though.

[winner69]

Simply Wall St (https://simplywall.st/stocks/nz/transportation/nzx-air/air-new-zealand-shares/news/air-new-zealand-limited-nzeair-is-trading-at-a-35-69-discount-to-its-intrinsic-value/) has a DCF valuation of $4.60

Wow ....that’s pretty bullish

[Beagle]

Wow ....that’s pretty bull Sh eh

I'm starting to hope that this Trent 1000 engine fiasco might be brought to a conclusion earlier than first envisaged. Every engine that Rolls overhaul with the new fan blade design and every week that passes without another engine failure is one step closer to this unfortunate saga drawing to a conclusion. I don't think there's any question about the degree of free cash flow in the early 2020's.

[couta1]

Wow ....that’s pretty bullish Take their valuations with an extremely large chunk of salt, have a look at some of their other valuations to confirm that.

[Scrunch]

Take their valuations with an extremely large chunk of salt, have a look at some of their other valuations to confirm that.

It doesn't take that long to find examples of DFC valuations that are 2 or more times current share prices. There's also some DFC valuations that are less than 1/10th of market prices. This creates the quirky position that their DFC valuation per share of CAV is higher than that of RYM or MET.

[winner69]

These the new generation RR engines
https://www.rolls-royce.com/products-and-services/civil-aerospace/airlines/trent-xwb.aspx?utm_source=t.co&utm_medium=referral

[BlackPeter]

These the new generation RR engines
https://www.rolls-royce.com/products-and-services/civil-aerospace/airlines/trent-xwb.aspx?utm_source=t.co&utm_medium=referral

Is this before or after they disassemble in air?

[Beagle]

These the new generation RR engines
https://www.rolls-royce.com/products-and-services/civil-aerospace/airlines/trent-xwb.aspx?utm_source=t.co&utm_medium=referral

Trent XWB is an updated version of the Trent 100 currently experiencing significant issues for AIR. Interestingly this RR engine is the only power option for the new A350 aircraft. Latest stat's are out and are a bit of a "yawn' really. Much the same as before.
Latest fuel hedging is out. Approx 70% fuel hedging for the rest of this financial year, (bet they wish it was 100%). Fuel hedges at $30m in the money which they'll need with other costs they face this half and fuel significantly more expensive and yields only up 2%.

[couta1]

Those stats still look pretty solid and the passenger loadings are good.

[workingdad]

Trent XWB is an updated version of the Trent 100 currently experiencing significant issues for AIR. Interestingly this RR engine is the only power option for the new A350 aircraft. Latest stat's are out and are a bit of a "yawn' really. Much the same as before.
Latest fuel hedging is out. Approx 70% fuel hedging for the rest of this financial year, (bet they wish it was 100%). Fuel hedges at $30m in the money which they'll need with other costs they face this half and fuel significantly more expensive and yields only up 2%.

Fuel prices have dropped 15% odd in last 3 weeks and likely to continue to head south, I said it a while back, shale in the USA coming back on line providing significant reserves and trump will only increase this with is corporate tax rate drop meaning they can be more profitable even as fuel prices come down.

The engine situation is more of an unknown to me and the potential and amount of compensation is the big key. Be interesting to see the results and guidance Thursday

[Benny1]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11997690

Hmm.. Interesting and quite surprising I think.
Emirates launching daily AKL-DPS-DXB from June this year.
Will be very interesting to see how AIR responds...at the moment they only flying to DPS on a seasonal basis and offer a "seats to suit " service.
Emirates will offer a far Superior full service
AIR may have to either up their schedule to yearly and up their service offering, or face the alternative possibly of withdrawing from this market and code share with Singapore airlines through SIN.

[Zaphod]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11997690

Hmm.. Interesting and quite surprising I think.
Emirates launching daily AKL-DPS-DXB from June this year.
Will be very interesting to see how AIR responds...at the moment they only flying to DPS on a seasonal basis and offer a "seats to suit " service.
Emirates will offer a far Superior full service
.

Personally I'm not sure that I'd call EK's soft product "far superior" to that which is offered in NZ's equivalent products in BP, PE and "The Works". As long as pricing on the lower tiers of NZ's S2S is sharp, it'll continue to attract a segment of customers EK isn't even attempting to attract.

It will however be interesting to see how NZ's reaction to the increased competition on that sector, and conversely the lower levels of competition on the trans-Tasman sectors.

[winner69]

Ironic one of the biggest contributors to climate change now faces the challenges from the consequence of it.

Was surprised Air NZ cancelled all its Wellington flights so early yesterday and in hindsight they probably agree. Jetstar for once provided the more reliable service.


https://www.theguardian.com/environment/2018/feb/19/climate-change-spells-turbulent-times-ahead-for-air-travel

[Jantar]

Ironic one of the biggest contributors to climate change now faces the challenges from the consequence of it...... Nothing to do with climate change, just the opposite. This summer's La Nina has reduced the normal easterly influence at the equator resulting in COOLER global temperatures. That same change in circulation patterns has moved warmer waters south west to the Tasman Sea and provided a track for tropical cyclones to approach NZ. Under the climate change scenario we should see more El Ninos with warmer equatorial waters and cooler sea surface temperatures in the Tasman moving the tropical cyclone tracks to the east of NZ.

[winner69]

Nothing to do with climate change, just the opposite. This summer's La Nina has reduced the normal easterly influence at the equator resulting in COOLER global temperatures. That same change in circulation patterns has moved warmer waters south west to the Tasman Sea and provided a track for tropical cyclones to approach NZ. Under the climate change scenario we should see more El Ninos with warmer equatorial waters and cooler sea surface temperatures in the Tasman moving the tropical cyclone tracks to the east of NZ.

Some researchers say that La Niña events could happen more often (twice as often has been mentioned) because of climate change / global warming.

[777]

I wonder what caused global warming to get us out of the ice age? Must have been all those camp fires. Mind you I don't really know when fire was discovered.

Must get back to the ATM thread where all those farting cows are making me heaps.

[Jantar]

Some researchers say that La Niña events could happen more often (twice as often has been mentioned) because of climate change / global warming. All the papers I have read on the subject say it is El Nino events that will occur twice as often. El Nino is associated with warming in equatorial regions and La Nina with cooling

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/314564/274887.pdf

Solid result. Outlook sound.

[Oliver Mander]

There is an awful lot of "self-help" in AIR's result today...really good to see. Fuel cost increase well and truly offset by revenue improvements, really the only difference between last year and this year is the Virgin AU result.
Looks like a really good set of numbers to me at first blush...

[Benny1]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/314564/274887.pdf

Solid result. Outlook sound.

Yep not bad! On track for possibly their second best full year result.
Direct service up to 5 times a week to Taipei from this November was a bit of a surprise. All the talk has been on Obama coming to help launch flights to Chicago

[winner69]

I gave up reading the presentation after looking at Page 5 titled A high quality result after adjusting for prior 2018 INTERIM RESULT period gain and impact of fuel price

Touted a 27% increase in earnings before tax

I can allow ‘adjusting’ for the $22m gain on sale of Virgin but taking the $72m of extra fuel costs out of the equation to paint a better picture and tout a 27% increase in earnings is just plain inexcusable. Surely fuel is a day to day cost of doing business.

Most blatant piece of misrepresenting profits i’ve Come across - inexcusable and very disappointing

Don’t want to read the rest but will sometime ....probably a whole lot of other embellishments as well.

For the record with fuel costs included earnings before tax were down $4m on last year.

[Oliver Mander]

Bit harsh winner. They're trying to tell the story of how they've offset fuel cost increases; they're not trying to excuse it. Hence my comment on "self-help".

[Beagle]

I gave up reading the presentation after looking at Page 5 titled A high quality result after adjusting for prior 2018 INTERIM RESULT period gain and impact of fuel price

Touted a 27% increase in earnings before tax

I can allow ‘adjusting’ for the $22m gain on sale of Virgin but taking the $72m of extra fuel costs out of the equation to paint a better picture and tout a 27% increase in earnings is just plain inexcusable. Surely fuel is a day to day cost of doing business.

Most blatant piece of misrepresenting profits i’ve Come across - inexcusable and very disappointing

Don’t want to read the rest but will sometime ....probably a whole lot of other embellishments as well.

For the record with fuel costs included earnings before tax were down $4m on last year.

It was pretty creative but I guess they're just trying to highlight the underlying profit without the fuel price increase.
That said as Chris Luxon has often commented yield and fuel cost are linked so yields are up 2.5% excl FX changes which on 2.3b of pax revenue is just under $60m in revenue gain which more or less offsets the extra fuel costs so yes it was a little creative but not to the point of offence to me that you suggest mate.

Got to hand it to them though, they've coped well with the various external challenges thrust upon them, like the fuel supply crisis and the Rolls Royce engine issue.
Outlook for the year of still having profit growth despite higher fuel costs is better than I expected.

[babymonster]

good result... tho yet to read into details...

[Beagle]

Yep not bad! On track for possibly their second best full year result.
Direct service up to 5 times a week to Taipei from this November was a bit of a surprise. All the talk has been on Obama coming to help launch flights to Chicago
Yes second half outlook better than I expected and yes you are right mate, they're starting the 777-200 replacement program earlier than I expected in 2022. Have to re-gauge my expectations regarding special dividends in the early 2020's. That said their new liquidity policy looks like they trying to drive their balance sheet a little harder which is possibly a good thing. Hope they get some thoroughly deserved absolutely whopping discounts on the Trent engines on those A350's if they choose to go that way,

[winner69]

Bit harsh winner. They're trying to tell the story of how they've offset fuel cost increases; they're not trying to excuse it. Hence my comment on "self-help".

Still a gross misrepresentation - so early in the presentation

And isn’t that 27% in the circle pretty big - all you see really

Beagle says creative ....I say misleading and disappointing

Even worse than Sky City excluding any above average winnings by the high rollers

[winner69]

Is it worth reading past Page 5

[babymonster]

Still a gross misrepresentation - so early in the presentation

And isn’t that 27% in the circle pretty big - all you see really

Beagle says creative ....I say misleading and disappointing

Even worse than Sky City excluding any above average winnings by the high rollers

maybe air just want to show how good their operation and cost control is? excluding things that they cannot control?

[Beagle]

Is it worth reading past Page 5

Yes mate. No point getting one's tail in a spin over how they talk about jet fuel price differences, in my opinion. Get your snout into the rest of it and let us know your thoughts. Pretty resilient result I reckon but that said I'm not sure how they'll cope in FY19 when they don't have such attractive fuel hedging in place ?

[babymonster]

read page 21 :)

[couta1]

Still a gross misrepresentation - so early in the presentation

And isn’t that 27% in the circle pretty big - all you see really

Beagle says creative ....I say misleading and disappointing

Even worse than Sky City excluding any above average winnings by the high rollers We can't have any of those fat cats losing any of their bonuses for non performance winner, creative enough to fool the punters aye.

[winner69]

Yes mate. No point getting one's tail in a spin over how they talk about jet fuel price differences, in my opinion. Get your snout into the rest of it and let us know your thoughts. Pretty resilient result I reckon.

Just hate companies, esp those who tout high levels of governance and transparencies, who misrepresent things so badly...they could have just used Page 9 ...more honest

If they had just said fuel costs were up a lot but we managed to recover most of that from blah blah all the good ...but touting a 27% increase in earnings come on.

Sent my feelings to Luxon anyway ...but he probably won’t listen

Won’t say anymore

[workingdad]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11999469

good press :)

[winner69]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11999469

good press :)h

Pays to take the journos out for a few lunches eh

[Beagle]

h

Pays to take the journos out for a few lunches eh

Yes i think you have a point there. No question that some media were invited on the very recent 1.5 hour A350 demonstration / sales pitch flight out of Auckland. Probably had a nice lunch after that hosted by some pretty Air Hostesses and senior management. Influencing the press to write good articles ?...you be the judge.

[workingdad]

sounds like great management to me haha

[carrom74]

My take on this result would be..if AIR repeats or exceeds last year's stellar results, then i see no reason for it to be back in its 340's range...(subject to jet fuel surge)...

Mr.Trump keep fracking mate!

[Beagle]

sounds like great management to me haha

As cunning as a hungry Beagle :) Pleased and pleasantly surprised with the solid outlook. Increased interim dividend gives confidence their base dividend level is now 22 cps per annum which is 30.5 cps inclusive of full imputation credits which gives a gross yield of exactly 10% at the current SP of $3.05.
Currently trading cum an 11 cent fully imputed dividend record date, 9 March. Time for the dividend hounds to reconsider their position given the yield and solid outlook ?

[winner69]

read page 21 :)

Page 4 is interesting

Earnings before tax Dec15 $457m and Dec16 $349m and Dec17 down to $323m

Seems a downward trend and full year looks pretty flat

And we want to share price to go higher .....remember AIR is very cyclical

[Joshuatree]

Still a gross misrepresentation - so early in the presentation

And isn’t that 27% in the circle pretty big - all you see really

Beagle says creative ....I say misleading and disappointing


Even worse than Sky City excluding any above average winnings by the high rollers

Just a little influence from John Key speak oozing through :D

[winner69]

Just a little influence from John Key speak oozing through :D


Possibly ...with a bit of help from Joyce maybe

[King1212]

wow...11c dividend in 2 weeks...

[Beagle]

From the call the information you really want to know...

RR engine issue. Chris Luxon said - Brilliant progress is being made on working our way through that. We have a very good relationship with RR.
Expect to have this concluded by mid April 2018.This is VERY good news !

Dreamliner to be put on the 11 hour flight to Taipai - 4-5 times a week.

14th leased Dreamliner will fully cover expected fleet requirements until 2022. 2021 expected to be a gap year in capex unless short haul capacity growth is required faster than expected due to demand growth exceeding expectations.

I note:- 2020 also a low year for capex.

My thinking - All going well expect good special dividends in 2020 and 2021 and they move to lower their need for working capital and work their balance sheet more efficiently. (previous liquidity guideline $1 - $1.5b, new one $700m - $1.0b)

Looks like a pretty good dividend hounds stock for the foreseeable future.

[King1212]

Hem..tempted to buy in....where to get dividend of 11c net? Tourism still booming in nz....

[Beagle]

Going off the presentation material presented in graphical bar chart form capex for 2020 looks like just $270m and 2021 about $40m. This is against depreciation, (non cash item) currently running at $516m per annum. Total capex for those two years approx. $310m, depreciation approx $1032M. Surplus cash flow circa $722m or just over 60 cents per share.

Liquidity reduction and lack of much capex this half presents the possibility of a special dividend to recognize what will probably be their second highest ever profit result this year too. Gross yield approx 10% at the current price plus special(s) over the next few years. RR engine issue almost sorted out. Time for divvy hounds to get their snouts back into this one ? 11 cps interim divvy fully imputed, record date 9 March.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/314564/274886.pdf Tony Carter looks a "little" more pleased with this result that FBU lol

[Raz]

Going off the presentation material presented in graphical bar chart form capex for 2020 looks like just $270m and 2021 about $40m. This is against depreciation, (non cash item) currently running at $516m per annum. Total capex for those two years approx. $310m, depreciation approx $1032M. Surplus cash flow circa $722m or just over 60 cents per share.

Liquidity reduction and lack of much capex this half presents the possibility of a special dividend to recognize what will probably be their second highest ever profit result this year too. Gross yield approx 10% at the current price plus special(s) over the next few years. RR engine issue almost sorted out. Time for divvy hounds to get their snouts back into this one ? 11 cps interim divvy fully imputed, record date 9 March.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/314564/274886.pdf Tony Carter looks a "little" more pleased with this result that FBU lol

I would suggest no one else buy into this one... :-)

[iceman]

From the call the information you really want to know...

RR engine issue. Chris Luxon said - Brilliant progress is being made on working our way through that. We have a very good relationship with RR.
Expect to have this concluded by mid April 2018.This is VERY good news !

Dreamliner to be put on the 11 hour flight to Taipai - 4-5 times a week.

14th leased Dreamliner will fully cover expected fleet requirements until 2022. 2021 expected to be a gap year in capex unless short haul capacity growth is required faster than expected due to demand growth exceeding expectations.

I note:- 2020 also a low year for capex.

My thinking - All going well expect good special dividends in 2020 and 2021 and they move to lower their need for working capital and work their balance sheet more efficiently. (previous liquidity guideline $1 - $1.5b, new one $700m - $1.0b)

Looks like a pretty good dividend hounds stock for the foreseeable future.

Great indeed Beagle that they seem to be on top of the RR/Dreamliner issue. Gives me back confidence and time to start buying in again on the dips.

[Baa_Baa]

When the Beagle's tail wags like it has today, that's a sure sign he's bought back in. You'd have to read the ATM thread to find out though.
;) I was enjoying the trash talk for the past few months, hopefully it's not back to ramping. Lol.
AIR is dangerous, best left to the traders who buy confirmed changes in trend. Notice it didn't like poking it's head too far above the 200dma today?

Tomorrow's another day. An engine could blow up, or two engines (that'd be really bad) who knows.
:scared:

[Raz]

When the Beagle's tail wags like it has today, that's a sure sign he's bought back in. You'd have to read the ATM thread to find out though.
;) I was enjoying the trash talk for the past few months, hopefully it's not back to ramping. Lol.
AIR is dangerous, best left to the traders who buy confirmed changes in trend. Notice it didn't like poking it's head too far above the 200dma today?

Tomorrow's another day. An engine could blow up, or two engines (that'd be really bad) who knows.
:scared:

Just love it :-)

[winner69]

Qantas seem to be going well ...record profits

Odd that it seems fuel costs had less impact in $ terms than it did for AIR (even though it flys further)

At least aviation iindudtry doing well ...but QAN still the better investment?

http://www.smh.com.au/business/aviation/qantas-posts-record-interim-profit-promises-500m-shareholder-bonanza-20180221-p4z17a.html

[Raz]

Qantas seem to be going well ...record profits

Odd that it seems fuel costs had less impact in $ terms than it did for AIR (even though it flys further)

At least aviation iindudtry doing well ...but QAN still the better investment?

http://www.smh.com.au/business/aviation/qantas-posts-record-interim-profit-promises-500m-shareholder-bonanza-20180221-p4z17a.html

With their old gas guzzling planes one would not think so..just getting dream liners and their service sucks...still...

[Beagle]

When the Beagle's tail wags like it has today, that's a sure sign he's bought back in.
lol I thought that much was plane-ly obvious :)

[Baa_Baa]

The trusty weekly chart shows an indecision doji (candle). Hardly surprising coming up a smidge off a low in a medium (getting long) term down trend, showing respect for the 50ema (and dma) and closing down for the day. Still well below the 200dma. Brave bobbies buy down trends, today's punters buying in are sitting on a loss already. And it's happening right around the horrible $3.00 mark that seems a galvanising SP for AIR.

[Beagle]

I raise your TA with some compelling FA.
Second half robustness of forecast really surprised me as did the speed at which they've been working their way through the RR engine issue.
Company confident it can beat FY17's result so 35-37 cps appears to be on the cards putting the current year PE at just under 8.5. This is about a PE of 3 lower than the average of a group of other airlines I follow. I am surprised how well the company has dealt with some curly challenges in the last few months and am happy to be back for the increased dividend at a price some 40 cents lower than the average price I exited my stake for several months ago when the risks were significantly higher.
SP got whacked down at close buy VWAP was around my buy-back price so I am a happy dog.
Shall enjoy some Kailua and A2 milk for supper and watch the planes fly over the Manukau harbor on their way into land at Auckland airport from my deck later this evening.

If I'm really lucky I might catch the faint whiff of some spent aviation fuel to enjoy with my A2 milk, (added especially for your benefit Raz and Baa Baa) :D

[winner69]

With their old gas guzzling planes one would not think so..just getting dream liners and their service sucks...still...

Qantas - increase in fuel costs A$58 million, (or about 4 per cent to A$1.54 billion (SMH article)

AIR - increase in fuel costs of NZ$80 million (or about 20 per cent to NZ$470 million (AIR Accounts)

Dont the old gas guzzlers fly heaps further than AIRs super efficient fleet

Even in $ terms QAN increased fuel bill less than AIRs ....in % terms heaps better

Something don't gel

[Beagle]

I guess leasing in those old inefficient planes to temporarily replace Dreamliners didn't help. A340 in particular with its 4 engines known to be a fuel hog. RR might be picking up the lease cost but AIR wearing the extra fuel cost ?

You'll probably find the answer lies in different level's of hedging between AIR and QAN for their relative first half's compared to PCP. It is what it is and a solid result for AIR and a good outlook that really surprised. Fleet age going down to just over 6.5 years in due course. Once all those 787's back in the AIR it'll all be good. PE is cheap as chips and risk dissipating by the day on the RR engine issue.

[Raz]

Qantas - increase in fuel costs A$58 million, (or about 4 per cent to A$1.54 billion (SMH article)

AIR - increase in fuel costs of NZ$80 million (or about 20 per cent to NZ$470 million (AIR Accounts)

Dont the old gas guzzlers fly heaps further than AIRs super efficient fleet

Even in $ terms QAN increased fuel bill less than AIRs ....in % terms heaps better

Something don't gel


The smartest people in the room on hedging seem to work for QAN...

[Baa_Baa]

TA never lies because it's already happened, but granted it's a matter of interpretation. FA is very helpful because it's now with a sniff of the potential future, but granted it's a matter of interpretation. That's why we use both.

So let's look at some market price logic. In AIR's best year ever, it chinned the bar at $3.60ish then fell back to the SP highs going back to 2007 (that's now, by the way), so assuming this is its second best year ever it shouldn't get quite that high again - also assuming the current SP down trend does reverse, which isn't apparent at this stage.

I get it that there's a tasty dividend stream along the way and you can buy an earner if you don't worry about capital, but this punter doesn't do capital losses on the off chance that dividend payouts are greater than the head share loss.

With AIR the capital movements far exceed the dividends per share, hence the analogy to being a trading stock firstly, a divi stripper if you're onto it and lucky, but a long term hold .. yeah nah. Too many things go wrong with airlines to risk capital just for the dividends.

I think AIR is a great trading share, the savvy can make a truck load more money getting in and out around the highs and lows with a few divies as a bonus if coincidentally holding when the divi is paid out (a nice bonus). So for AIR TA is more helpful imho than all the intricacies of interpreting FA, let alone using FA to decide an entry or exit.

Jmho, lucky we're all different or there wouldn't be a market.
BAA

[Joshuatree]

Im focused on USA and Global mkts are we in for a few more crazy super fast corrections? Otherwise i would have been tempted back in today.

[Beagle]

TA never lies because it's already happened, but granted it's a matter of interpretation. FA is very helpful because it's now with a sniff of the potential future, but granted it's a matter of interpretation. That's why we use both.

So let's look at some market price logic. In AIR's best year ever, it chinned the bar at $3.60ish then fell back to the SP highs going back to 2007 (that's now, by the way), so assuming this is its second best year ever it shouldn't get quite that high again - also assuming the current SP down trend does reverse, which isn't apparent at this stage.

I get it that there's a tasty dividend stream along the way and you can buy an earner if you don't worry about capital, but this punter doesn't do capital losses on the off chance that dividend payouts are greater than the head share loss.

With AIR the capital movements far exceed the dividends per share, hence the analogy to being a trading stock firstly, a divi stripper if you're onto it and lucky, but a long term hold .. yeah nah. Too many things go wrong with airlines to risk capital just for the dividends.

I think AIR is a great trading share, the savvy can make a truck load more money getting in and out around the highs and lows with a few divies as a bonus if coincidentally holding when the divi is paid out (a nice bonus). So for AIR TA is more helpful imho than all the intricacies of interpreting FA, let alone using FA to decide an entry or exit.

Jmho, lucky we're all different or there wouldn't be a market.
BAA

Fair enough Baa. Probably drunk on profits from A2 milk and gone back to my old stomping ground like a dog returning to its own vomit lol
Lets see how we go. Only dipped a paw in the water so can't get my fur burned too badly :)

[Raz]

TA never lies because it's already happened, but granted it's a matter of interpretation. FA is very helpful because it's now with a sniff of the potential future, but granted it's a matter of interpretation. That's why we use both.

So let's look at some market price logic. In AIR's best year ever, it chinned the bar at $3.60ish then fell back to the SP highs going back to 2007 (that's now, by the way), so assuming this is its second best year ever it shouldn't get quite that high again - also assuming the current SP down trend does reverse, which isn't apparent at this stage.

I get it that there's a tasty dividend stream along the way and you can buy an earner if you don't worry about capital, but this punter doesn't do capital losses on the off chance that dividend payouts are greater than the head share loss.

With AIR the capital movements far exceed the dividends per share, hence the analogy to being a trading stock firstly, a divi stripper if you're onto it and lucky, but a long term hold .. yeah nah. Too many things go wrong with airlines to risk capital just for the dividends.

I think AIR is a great trading share, the savvy can make a truck load more money getting in and out around the highs and lows with a few divies as a bonus if coincidentally holding when the divi is paid out (a nice bonus). So for AIR TA is more helpful imho than all the intricacies of interpreting FA, let alone using FA to decide an entry or exit.

Jmho, lucky we're all different or there wouldn't be a market.
BAA

That is how I see it usually however taking the dividend out does provide a buffer for the play...now we will see if we get an uplift...

[fish]

That is how I see it usually however taking the dividend out does provide a buffer for the play...now we will see if we get an uplift...

I took my eye off the ball with this one.I havnt much margin-lending capital left to invest .
SP AIR is influenced by so many factors.
I only like too invest when I am confident sp is oversold and less chance of losing capital
Really wish I was in at this time.

[winner69]

QAN and their old gas guzzlers and their ****e service outperformed AIR (financially if not operationally) by quite a margin in the last half year



QAN earnings up 15% while AIR down or flat if that sounds better
QAN RASK up 3.5% while AIR only up 2.0%
QAN npbt Margin up 0.7% points to 12.3% while AIR margin down 1.1% points to 12.0%
QAN management of fuel price increases FAR FAR better





No wonder QAN trades at higher multiples than AIR — deserves to on financial performance as well as the trans-Tasman ‘premium’ of being the main airline on the bigger ASX

[Raz]

I took my eye off the ball with this one.I havnt much margin-lending capital left to invest .
SP AIR is influenced by so many factors.
I only like too invest when I am confident sp is oversold and less chance of losing capital
Really wish I was in at this time.

It really depends on your position, I have money to burn as Trump is giving silly money from his company tax cuts..so this just as much a personal challenge of instincts for me, I expect good media traction and we will see...given the windfall above I can be more aggressive....

[see weed]

Fair enough Baa. Probably drunk on profits from A2 milk and gone back to my old stomping ground like a dog returning to its own vomit lol
Lets see how we go. Only dipped a paw in the water so can't get my fur burned too badly :)
That's a coincidence,I also jumped back in at 2.965c on Wednesday afternoon...Big div coming;).

[Raz]

QAN and their old gas guzzlers and their ****e service outperformed AIR (financially if not operationally) by quite a margin in the last half year



QAN earnings up 15% while AIR down or flat if that sounds better
QAN RASK up 3.5% while AIR only up 2.0%
QAN npbt Margin up 0.7% points to 12.3% while AIR margin down 1.1% points to 12.0%
QAN management of fuel price increases FAR FAR better





No wonder QAN trades at higher multiples than AIR — deserves to on financial performance as well as the trans-Tasman ‘premium’ of being the main airline on the bigger ASX

compelling..not going to try to argue with that..

[Beagle]

QAN and their old gas guzzlers and their ****e service outperformed AIR (financially if not operationally) by quite a margin in the last half year



QAN earnings up 15% while AIR down or flat if that sounds better AIR had quite a number of material challenges to deal with this half. The fuel supply mdisruption would undoubtedly have cost it many millions as fuel tankers had to deliver fuel around the clock to try and keep up with supply demands. The Rolls Royce issue would also have cost it probably tens of millions in direct and indirect costs, extra fuel for the leased in fuel guzzlers but one example
QAN RASK up 3.5% while AIR only up 2.0% Accepted, RASK has underwhelmed me a bit
QAN npbt Margin up 0.7% points to 12.3% while AIR margin down 1.1% points to 12.0% Fuel costs, RR engine disruption costs
QAN management of fuel price increases FAR FAR better One swallow does not a summer make. You need to look at that issue over a number of years to draw that conclusion

No wonder QAN trades at higher multiples than AIR — deserves to on financial performance as well as the trans-Tasman ‘premium’ of being the main airline on the bigger ASX
QAN has always traded at a PE premium.
QAN were buying their own shares back for as much as $6.52, how is that in the best interests of shareholders ?
Compare their dividend yields mate and consider that we get to claim back full imputation credits.
Have a look at how little tax QAN are paying and you might find something quite interesting.

My position I took yesterday is a small one <3% of my portfolio. Its a calculated risk based on the very low PE of 8.5 the very good dividend yield of 10% gross, the potential for special dividends in the years ahead as well as this year and was taken because I am impressed with how well they've coped with a number of tough challenges to their business this year.
I think there's value at this level but each to their own.

[Raz]

That's a coincidence,I also jumped back in at 2.965c on Wednesday afternoon...Big div coming;).

Can already collect that dividend...

[macduffy]

...... and, QAN gave notice recently that they will be paying "full" tax in the near future.

[Beagle]

...... and, QAN gave notice recently that they will be paying "full" tax in the near future.

Bingo ! Almost every metric looks better when you're not paying tax because of a $2.8 Billion dollar loss in 2014 !
Tax losses as at 31/12/17 estimated by QAN to now be just $368m.
So now we finally have our answer to the difference in the PE ratio's between these two companies over recent years.
AIR has been paying full tax at 28%, QAN next to nothing.
All that changes when QAN starts paying tax again, assuming they don't incur another $2.8 Billion loss in the meantime.
Noodles you reading this ? Here's the answer to the question you asked me the other day.

[winner69]

...... and, QAN gave notice recently that they will be paying "full" tax in the near future.

Bingo ! Almost every metric looks better when you're not paying tax because of a $2.8 Billion dollar loss in 2014 !
Tax losses as at 31/12/17 estimated by QAN to now be just $368m.
So now we finally have our answer to the difference in the PE ratio's between these two companies over recent years.
AIR has been paying full tax at 28%, QAN next to nothing.
All that changes when QAN starts paying tax again, assuming they don't incur another $2.8 Billion loss in the meantime.
Noodles you reading this ? Here's the answer to the question you asked me the other day.[/QUOTE]

QAN PE will likely be higher when they start paying tax ...lower EPS and all that

And RASK doesn’t give a stuff if a company pays tax or not

Just saying mate

[Beagle]

And RASK doesn’t give a stuff if a company pays tax or not


For years we've wondered why QAN has traded on a higher PE, hard to believe neither you, I or anyone else picked up the fact that they haven't been paying much tax isn't it !
If you normalize their profit for the Aussie tax rate that solves that riddle and the PE's are ostensibly very similar.
We could debate minor variances in other metrics till the cows come home mate. Revenue per available seat kilometer will vary depending on FX changes, who's up gaging aircraft size or not, establishment of new routes or not e.t.c. For example AIR's RASK excl FX changes was 2.5% up last time I looked so a third of the difference is just in FX changes. Not a major variation between the two in RASK growth but I agree as noted above RASK did disappoint me a little for the first half.

My main point of buying back in is for the net yield of 7.3% and full imputation credits. AIR has vast quantities of imputation credits so all dividends including any specials in the years ahead will be fully imputed. The 10% gross yield is attractive to me + the distinct possibility of specials in the years ahead.
On the other hand QAN attaches no franking credits to its pretty miserable dividends and even if they did Kiwi's wouldn't be able to claim them back.

QAN were great buying, (for those with nerves of steel), at the deeply distressed level of $1 after their $2.8 Billion loss in 2014 but the horse has bolted and I for one won't be running after it. Quite apart for the tax headwind QAN now face, their 3 year wage freeze deal with the unions, (after the horrific loss) must have recently come to an end. You think there might be "just a little" pent up pressure building from Australian unions for their share of the success QAN has enjoyed in recent years ? Industrial trouble for QAN on the horizon ? QAN also have quite an old fleet by comparison so capex looms large as an issue going forward.

I might go for some more if I can nick them for under $3 cum the near term 11 cent divvy but its not going to be a big position for me, i.e. not a high conviction position like last time. SP seems about right at present all things considered...just a nice yield story and any specials will be the icing on the cake.

[Snow Leopard]

For years we've wondered why QAN has traded on a higher PE, hard to believe neither you, I or anyone else picked up the fact that they haven't been paying much tax isn't it !
If you normalize their profit for the Aussie tax rate that solves that riddle and the PE's are ostensibly very similar...

There are many reasons why Qantas and AIR trade on different PE's but the tax situation is not 'the one'

Accounts:
https://stocknessmonster.com/announcements/qan.asx-2A1066290/

read (at least) page 16

note the $250M tax expense

note the $607M statutory profit

check that the latter number is used in determining the EPS (and thus the PE).

Go read prior year's accounts and find same.


Best Wishes
Paper Tiger

Disc: I had a very nice lunch.

[Beagle]

Fair enough PT. Its been a VERY busy week with quite a significant number of companies in which I hold shares reporting and I really haven't had the time to look in any depth whatsoever at QAN or to be honest any other company in which I don't have a direct financial interest. Been busy wrapping my head around ATM's stunning result and the SUM one as well as several others. AIR good too and solid outlook pleasantly surprised me. Nice to see you back on the forum, where have you been ?

[Raz]

Bingo ! Almost every metric looks better when you're not paying tax because of a $2.8 Billion dollar loss in 2014 !
Tax losses as at 31/12/17 estimated by QAN to now be just $368m.
So now we finally have our answer to the difference in the PE ratio's between these two companies over recent years.
AIR has been paying full tax at 28%, QAN next to nothing.
All that changes when QAN starts paying tax again, assuming they don't incur another $2.8 Billion loss in the meantime.
Noodles you reading this ? Here's the answer to the question you asked me the other day.



CAPEX also a factor:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12001090

[dreamcatcher]

Solid and improving results from AIR been rewarded by positive Analyst Ratings Goldman $3.22

11cent tax free dividend and fleet fully operational shortly will be exciting times again

[King1212]

Solid and improving results from AIR been rewarded by positive Analyst Ratings Goldman $3.22

11cent tax free dividend and fleet fully operational shortly will be exciting times again

darn...should bought in yesterday.......:(...

[value_investor]

Given in the six month period, the company had to fair with a dramatic rise in fuel costs,their new shiny toys breaking down as well as the fuel shortages at AIA for a short period of time, its a good result. While I'm not fond of companies skewing their results like they did in the presentation. They have done well to get to where they did in the 6 months.

I'm not too sure about how they will hit their guidance of exceeding last years result. That part of the presentation, needed more clarification. They have a lot of catching up to do and I sympathise because its not entirely their fault. Such is the nature of the airline game. Either, fuel costs push back considerably right now or they go through some dramatic cost cutting measures.

In terms of special dividends being paid in the future, the gearing is healthy in the 45-55% range at 52.4% so the headroom is their to gradually ramp up dividends if need be. Keep in mind the airline business is a cruel one, in 6 months we had all those things happen I stated above. Imagine what can happen between now and FY2020!

[workingdad]

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12001697

Obama coming

[Beagle]

Some other Airline PE's
United 10.7
Delta 10.7
American Airlines 13.7
Qantas 10.9
AIR 8.5

[Oliver Mander]

The next wave of capex...
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12001761

Although good that its planned, and there's no "legacy" to catch up on (ie, one faced by a certain Australian airline...)

[winner69]

Some other Airline PE's
United 10.7
Delta 10.7
American Airlines 13.7
Qantas 10.9
AIR 8.5


AIR’s PE will continue to trade at a ‘discount’ to those in the group you listed ...no matter how good a company it may be.

That’s the nature of the game .....a piddly company with its main listing on a minor exchange

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11999442

Interesting discussion about the extra cost of the fuel outage cost $5m, extreme weather events and Rolls Royce engine issues.
Interestingly the only engine option with the A350's is the Tent XWB a more power iteration of the same Trent 1000 that's given them some considerable grief.

My thoughts. Taking into account a significant number of challenges the company has faced in the six months to 31 December and since, I think the fact that their outlook is still for profit to grow over 2017's excellent result is pretty impressive.

[Beagle]

AIR’s PE will continue to trade at a ‘discount’ to those in the group you listed ...no matter how good a company it may be.

That’s the nature of the game .....a piddly company with its main listing on a minor exchange

Quite probable that you're correct mate but the value on a PE and gross dividend yield basis (10%) is there nonetheless, (in a market that's otherwise widely considered to be pretty expensive) for those that enjoy investing in value based companies.

[winner69]

Good for share holders - a bit more cash

Essentially a price increase for savvy business people with their flexi fares - love it when business travellers get screwed

Only Wellington / Chch / Dunedin at the moment by the sounds of it but the rest of the country will follow

https://www.stuff.co.nz/travel/news/101796813/air-new-zealand-increases-fares-on-domestic-flights

[BlackPeter]

Good for share holders - a bit more cash

Essentially a price increase for savvy business people with their flexi fares - love it when business travellers get screwed

Only Wellington / Chch / Dunedin at the moment by the sounds of it but the rest of the country will follow

https://www.stuff.co.nz/travel/news/101796813/air-new-zealand-increases-fares-on-domestic-flights

Well, yes - but isn't driving up the price the best way to invite more competition?

[winner69]

Buffett talks airlines again ....airline stocks soar

[iceman]

Good for share holders - a bit more cash

Essentially a price increase for savvy business people with their flexi fares - love it when business travellers get screwed

Only Wellington / Chch / Dunedin at the moment by the sounds of it but the rest of the country will follow

https://www.stuff.co.nz/travel/news/101796813/air-new-zealand-increases-fares-on-domestic-flights

That´s a bit unfair winner69, especially as you´re in the priviliged poition of being able to use Jacinda´s "heating" subsidy to subsidise your travel and recreation :-)
I´m afraid more than just business travelers will be hit with this increase. My uni student daughter in Dunedin sure wouldn´t class herself as a business traveler but will be hit with this increase. More likely to fly Jetstar now though !

[Beagle]

Baggage handling staff are not free. Costs plenty of time and money to handle, load, carry and offload baggage, $15 is more than fair in my opinion. Expecting Jetstar to "mysteriously" review their baggage charges sometime soon.

[winner69]

Baggage handling staff are not free. Costs plenty of time and money to handle, load, carry and offload baggage, $15 is more than fair in my opinion. Expecting Jetstar to "mysteriously" review their baggage charges sometime soon.

Business travellers moaning about the increase in Flexi stuff. Flexi Fare includes a bag but many of them travel without checked luggage.

They the ones with oversized cabin bags ha ha

Good to seeing them charging more to help keep that divie up ....wonder what’s next ...surcharge for printing boarding passes when you can do at home ....but a fuel surcharge would be good for shareholders

[workingdad]

Had some mates go to queenstown on jetstar and were looking to be charged more than their ticket price for taking skis as oversize baggage, didn't have this hassle when we flew air for the same reason a while back but maybe this has changed, haven't looked but plan to go again this year.

[Beagle]

I raise your TA with some compelling FA...

See my post 22/2/18. Well against some "doggy" looking TA this happy hound is quite pleased so far that FA is winning the day...oh wait..is that now a clear break above the 100 day MA I see :D

[couta1]

Had some mates go to queenstown on jetstar and were looking to be charged more than their ticket price for taking skis as oversize baggage, didn't have this hassle when we flew air for the same reason a while back but maybe this has changed, haven't looked but plan to go again this year. No change unless your skis are 2m plus and weigh over 23kg (Only a few old school guys ski on that length nowdays) so you'll be all good. PS-I remember flying Jetstar 5 years ago from WGTN to Q/Town and we took 2 carry on bags each weighing around 10kg, no probs back then, plenty of people were loaded like pack horse's.

[workingdad]

No change unless your skis are 2m plus and weigh over 23kg (Only a few old school guys ski on that length nowdays) so you'll be all good. PS-I remember flying Jetstar 5 years ago from WGTN to Q/Town and we took 2 carry on bags each weighing around 10kg, no probs back then, plenty of people were loaded like pack horse's.

Oversized handling fees include any bag with a dimension bigger than 100cm including skis mate. And it ain’t cheap. https://www.jetstar.com/nz/en/flights/baggage


Last minute dash to Brisbane yesterday. Business class on Virgin was adequate. Nothing like air nz but it was a timing issue and still have my favorite airline. Lounge was pretty quiet too...

[winner69]

Good on Dave - cashing in just short of a million.

Deserves every penny of it

He’s pretty clever at picking the spikes in the share price or has a good fin advisor

[Beagle]

Good on Dave - cashing in just short of a million.

Deserves every penny of it

He’s pretty clever at picking the spikes in the share price or has a good fin advisor

He's a recidivist offender when it comes to selling his shares, can't wait to get his snout into the trough.

[couta1]

He's a recidivist offender when it comes to selling his shares, can't wait to get his snout into the trough. That's the trouble with owning this stock, your supporting a lot of elitist troughers to get extra fat.

[Beagle]

That's the trouble with owning this stock, your supporting a lot of elitist troughers to get extra fat.
Very true mate but the fat beagle can get his snout into a few good feeds off the dividends so I can't help myself being a dividend hound. No point fighting who you really are is there :)

[Baa_Baa]

That's the trouble with owning this stock, your supporting a lot of elitist troughers to get extra fat.

Sadly some of those you refer to are Directors and senior management, always cashing out to bolster their pathetic salaries. Oh .. hang on, they're not pathetic salaries are they, some would say they very very well paid, along with super profits from dividends and quitting stocks while they're 'in the know' (in the allowable window to divest) whereas the majority of shareholders aren't, in the know. Some have been scathing of that recidivist behaviour but are now ameliorating their stance based on their own opportunity for sustained fat dividends. Truth is stranger than fiction and some shareholders are more fickle than evidenced by a few, or even many, posts on Sharetrader.

[Baa_Baa]

On a another note AIR has bounced nicely off $2.86 pushing above all MA's resistance and put on some decent capital gains, so maybe the market will brush aside the insider sales this time, as it has done so many times before. Capital upside + super sized dividends, it's no wonder some are attracted to AIR. Best to be cognisant of the chart, imho. Run with the upside, quit the downside. Be quick and nimble with this cyclical with so many moving parts, discount the rhetoric (of which this is also probably, lol).

BAA

[couta1]

Very true mate but the fat beagle can get his snout into a few good feeds off the dividends so I can't help myself being a dividend hound. No point fighting who you really are is there :) My snout is currently jammed firmly in a certain Milk Pail, so extreme divvy hunting is on the back-burner this year.

[ratkin]

See my post 22/2/18. Well against some "doggy" looking TA this happy hound is quite pleased so far that FA is winning the day...oh wait..is that now a clear break above the 100 day MA I see :D

So Beagle, last month (the day after you sold your shares) the company was a disaster waiting to happen, post after post rubbishing it. I seem to remember you saying you would only be interested in picking some up for around 2.50. Yet now it appears you back on board at a much higher price, and suddenly Air is a bargain.
How do you account for this abrupt about face?? one you have repeated on numerous other stocks. A casual observer might be forgiven for suspecting you of unsportsmanlike behavior

[Beagle]

As usual Ratkin your observations are conspicuously wide of the mark. Shares were sold several months ago as one engine after another imploded on itself. The risks were clear to see for even a casual observer, there's a good chap try and keep up. AIR management made it clear at the half year result in late February that they are well on their way through the Rolls Royce engine problem fix and they also made it clear that the outlook for full year profit, (much to my surprise given the significant challenges they've faced) is still for profit growth over FY17. The stock has been substantially de-risked since December 2017 and the shares when I bought them were considerably better value than previously. Further, the outlook is now considerably better than some people including myself were expecting it might be several months ago. Aviation is a fast paced and dynamic environment. Those not prepared to follow closely are probably better suited to other types of shares. A casual observer could be well advised to watch more closely or not bother at all.