AIR - Air NZ.

[Marilyn Munroe]

The shacking up arrangement between Queer and Nasty Airlines and Cullen Airlines is a body blow to Virgin(Under Arm Bowlers Division) and risks Lee Kwan Yew Airlines losing their investment in Virgin. They must respond or quit the skies.

Here comes TigerAir and Scoot.

Boop boop de do
Marilyn

[Beagle]

Pretty tough year
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12062689

[winner69]

Pretty tough year
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12062689


Hope the mention of cockroaches is not preempting a series of profit downgrades

[winner69]

An Airbus A350-900 parked up at Wellington under lights

Testing how it can handle short runways and windy conditions

Rumour AIR quite keen on these as replacements for the 777s .....and if capable of flying long haul out Wellington (maybe even Dunedin) would Give them further optionality.

[Valuegrowth]

Hope they will make sure safe landing. If they expand runway it is so much better in safety wise. Experience wise both Singapore airlines and AIR are in front.Malaysian Airlines also was doing well but disappearance and crash of some flights stopped me using their airlines although I used once after those incidence. I seriously think safety before anything.

[winner69]

Hope they will make sure safe landing. If they expand runway it is so much better in safety wise.......


Never will extend the runway .....pipe dream that idea


It would usually.[/QUOTE]

[777]

An Airbus A350-900 parked up at Wellington under lights

Testing how it can handle short runways and windy conditions

Rumour AIR quite keen on these as replacements for the 777s .....and if capable of flying long haul out Wellington (maybe even Dunedin) would Give them further optionality.

Long haul out of Wellington will never happen with the existing runway. Payload penalty to the north would make it unprofitable. AIR could operate long haul out of Christchurch but elect not to. The airline is Auckland centric. Always has been and always will.

[Subway]

Long haul out of Wellington will never happen with the existing runway. Payload penalty to the north would make it unprofitable. AIR could operate long haul out of Christchurch but elect not to. The airline is Auckland centric. Always has been and always will.

Unsubsidised long haul out of Wellington even with the runway extension won't happen period.

The Singapore Airlines Capital Express was a half assed long haul connection, the new connection through Melbourne is nice, but its not truely long haul.

Also long haul out of Dunedin will never happen. Its barely even sustaining the Virgin Brisbane route.

[Beagle]

Long haul out of Wellington will never happen with the existing runway. Payload penalty to the north would make it unprofitable. AIR could operate long haul out of Christchurch but elect not to. The airline is Auckland centric. Always has been and always will.


Agree. All this A350 nonsense of trailing it out of Wellington was about was impressing AIR's management of its short take off and landing abilities. Hopefully they see through the fun of lightly loaded full throttle takeoff's and they see some realism that these A350's are a super expensive option and carbon fiber is useless if all that happens is that airlines pass on the fuel savings to customers with lower airfares.

[Raz]

Long haul out of Wellington will never happen with the existing runway. Payload penalty to the north would make it unprofitable. AIR could operate long haul out of Christchurch but elect not to. The airline is Auckland centric. Always has been and always will.

Word perfect...

https://www.stuff.co.nz/business/industries/104525008/air-nz-gives-queenstowns-business-community-a-new-wellington-schedule-but-makes-christchurch-more-difficult

classic... 4wd down every time now.....

[Joshuatree]

The times they are a changing -bob dylan
Boeing bets on robot pilots, air taxis with Aurora takeover Computer algorithms and artificial intelligence are set to play a key role in flying. (https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11930141)

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12066924

[Raz]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12066924

However do you get much more than half a seat to travel on :-)

[Sideshow Bob]

However do you get much more than half a seat to travel on :-)

Same seat width as Air NZ Dreamliner - 17.2" but pitch is 29" on China Southern, but 31-32" on Air NZ.

[Beagle]

Same seat width as Air NZ Dreamliner - 17.2" but pitch is 29" on China Southern, but 31-32" on Air NZ.

There's the catch right there. Nightmareliner seat width is a joke but that pitch :eek2: For anyone over 5ft 10 that is absolutely intolerable on long haul. Good friend of mine who's 5 ft 11 and a relatively trim 85kg's said he simply didn't fit into the China Southern seat and told me it was the most excruciating long haul trip of his entire lifetime. As Raz quite correctly quipped, you're basically getting half a seat

[Raz]

Sounds right Beagle :-) Interesting piece below...on AIRs 787 engines...

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12068039

[Beagle]

Makes you wonder if these engines will always have a weakness even when patched up and also whether the so called newer Ten version will be durable.
I see AIR's problems with these engines stretching well past this winter.
Its not a given that they will get their 330 mins ETOPS rating back either.

[winner69]

Makes you wonder if these engines will always have a weakness even when patched up and also whether the so called newer Ten version will be durable.
I see AIR's problems with these engines stretching well past this winter.
Its not a given that they will get their 330 mins ETOPS rating back either.

Like I said before once broken always broken or not quite right ever again

[Beagle]

Like I said before once broken always broken or not quite right ever again


Hmmmm...yes I think if you push an engine right out to the edge of the technological envelope in the search for fuel efficiency you can create systemic weaknesses.
Good example in the automotive field that's easier for a lot of us to understand is the BMW N63 V8 petrol engine. https://www.roadandtrack.com/car-culture/buying-maintenance/a25710/enginerdy-strange-connections-bmw-n63-v8/ In a nutshell BMW went on a mission to create a very fuel efficient V8 engine to meet new mandated fuel efficiency standards and now customers are facing numerous issues.

Rolls Royce probably pushing that engine too far in the hope of new efficiencies and now there are two separate serious issues which may be systemic weaknesses not properly fixed by the technical update that goes with the ten version ? Only time will tell if that latter ten version is durable and problem free, just like only time will tell if the updated BMW N63 tu2 engine will prove to be durable. Who wants to be a Guinea pig when they don't have to be !

[dreamcatcher]

Normal monthly traders pump & dump occurring again ................

[Robomo]

Makes you wonder if these engines will always have a weakness even when patched up and also whether the so called newer Ten version will be durable.
I see AIR's problems with these engines stretching well past this winter.
Its not a given that they will get their 330 mins ETOPS rating back either.

I'm much more optimistic. As I wrote in a previous post I well remember the unreliability of the early 747 engines and planes having to transport spare engines in a '5th engine' manner' all over the world to rescue stuck planes. They eventually fixed all the problems and the 747 eventually became one of the most reliable aircraft ever.

I suggest that the first iteration of any new technology, be it planes boats trains or phones, will have unforeseen problems. They all get fixed eventually.

[BlackPeter]

I'm much more optimistic. As I wrote in a previous post I well remember the unreliability of the early 747 engines and planes having to transport spare engines in a '5th engine' manner' all over the world to rescue stuck planes. They eventually fixed all the problems and the 747 eventually became one of the most reliable aircraft ever.

I suggest that the first iteration of any new technology, be it planes boats trains or phones, will have unforeseen problems. They all get fixed eventually.

Well, I could think about a number of examples where this theory didn't hold water. Problem is just - given that they are unsuccessful they don't stay for long in peoples minds ...

Remember the good old W-a-n-k-e-l engine (btw this censor program around here is really stupid ...) which not just (the inventor) NSU but neither GM, Mercedes Benz nor Citroen or Mazda managed to make reliable?

A little bit further back - remind me when they turned the Zeppelin into a reliable and trust worthy mode of transport?

Ah yes - and closer to home - what about the Stirling engine?

I guess it is fair to say that many engine and transport concepts never get off ground, some do but never become reliable and a few mature and succeed. History will tell us into which of these categories the latest RR engines belong. I don't hold my breath.

Discl: happy non-holder ;);

[stoploss]

Well, I could think about a number of examples where this theory didn't hold water. Problem is just - given that they are unsuccessful they don't stay for long in peoples minds ...

Remember the good old W-a-n-k-e-l engine (btw this censor program around here is really stupid ...) which not just (the inventor) NSU but neither GM, Mercedes Benz nor Citroen or Mazda managed to make reliable?

A little bit further back - remind me when they turned the Zeppelin into a reliable and trust worthy mode of transport?

Ah yes - and closer to home - what about the Stirling engine?

I guess it is fair to say that many engine and transport concepts never get off ground, some do but never become reliable and a few mature and succeed. History will tell us into which of these categories the latest RR engines belong. I don't hold my breath.

Discl: happy non-holder ;);
1991 Le Mans 24 hour winner was a rotary engine . That’s a race that breaks a lot of engines... so arguably it can be made reliable .

[BlackPeter]

1991 Le Mans 24 hour winner was a rotary engine . That’s a race that breaks a lot of engines... so arguably it can be made reliable .

Well, RR better hope it doesn't take 50 years with their new turbines to get one of them accidentally reliable ;). And BTW - one engine surviving one race does not prove that it is possible to manufacture a reliable rotary engine in volumes ...

[Beagle]

I'm much more optimistic. As I wrote in a previous post I well remember the unreliability of the early 747 engines and planes having to transport spare engines in a '5th engine' manner' all over the world to rescue stuck planes. They eventually fixed all the problems and the 747 eventually became one of the most reliable aircraft ever.

I suggest that the first iteration of any new technology, be it planes boats trains or phones, will have unforeseen problems. They all get fixed eventually.


A fleet of 787's operating properly would be a very good thing where fuel prices are now because that's when I believe the capex invested in them gives proper payback in terms of operational efficiency but the key question is how long does this whole fleet overhaul process take ? Let's not kid ourselves, all those engines will need to be overhauled.
Air announcing 3-5% international fare increases and holding an institutional investor day on 14th. We are seeing very little transparency from AIR on how long they expect the process to take. Maybe they'll give us some clue during the forthcoming investor day or maybe they really have no idea and are at the mercy of limited RR overhaul capability and massive worldwide demand ?

[Jantar]

...
Remember the good old W-a-n-k-e-l engine (btw this censor program around here is really stupid ...) which not just (the inventor) NSU but neither GM, Mercedes Benz nor Citroen or Mazda managed to make reliable?......
Not quite true. When Suzuki developed the ****le engine for their motorcycles, they did overcome the seal reliability issue by using carbon seals and a fusion coating in the chamber. they sold this design to Mazda for use in the 13 series engines.

What they could never overcome were the economy and emission issues. ****les are thirsty, and could never meet any of the imposed emission standards.

[BlackPeter]

Not quite true. When Suzuki developed the ****le engine for their motorcycles, they did overcome the seal reliability issue by using carbon seals and a fusion coating in the chamber. they sold this design to Mazda for use in the 13 series engines.

What they could never overcome were the economy and emission issues. ****les are thirsty, and could never meet any of the imposed emission standards.

Thanks for confirming my point ... but yes, I know the W_ankel-engine always had its fans. Interesting technology as well. And this is absolutely o.k. as long as I don't need to drive (or fly ) with it or pay the bills ... Same thing with the RR engines ...

[Snow Leopard]

whilst you all chat about ****el rotary engines RR have announced that they have now discovered a "similar" issue [to the one in Package C] in the Package B engines.

Probably does not make AirNZ woes any worse (I think they have non of these)!

I also hear that AirNZ are upping their international fares

[BlackPeter]

https://uk.reuters.com/article/us-rolls-royce-hldg-trent1000/rolls-royce-preparing-to-cut-thousands-of-jobs-says-engine-problem-has-spread-idUKKBN1J70JS

Interesting - so how are they fixing and at the same time redesign all their broken engines when they make at the same time 10% of their staff redundant because they can't afford to pay their salaries anymore?

[Beagle]

Interesting - so how are they fixing and at the same time redesign all their broken engines when they make at the same time 10% of their staff redundant because they can't afford to pay their salaries anymore?

Apparently they have increased staff numbers 300% in the engine overhaul division repairing these faulty engines.

[winner69]

Another infamous Investor Day for institutional gurus

Wonder what little gems will be hidden away in the presentation this time around

[Beagle]

Another infamous Investor Day for institutional gurus

Wonder what little gems will be hidden away in the presentation this time around

Remember 2 years ago mate when they had one and it included a slight downgrade and executives were selling left right and centre leading into the investor day including one large sale of several hundred thousand shares the very day before ! Of course we didn't get to see those disclosure notices until after the event.

This time around the SP has been quite weak since the start of this month and there is now a clear break down through the 100 day MA...join the dots...
If she blows through the previous recent support at about $3.13 it could test support at $3.00 fairly quickly in my opinion.

You're right in regard to those engines...where there's smoke there's fire. More issues, I wish I could say I was surprised. Dreamliner now officially a nightmareliner for AIR ?

[Filthy]

Well, update this morning is that 'all is good'.... still need to go through the presentation though.

- the Company has reaffirmed the outlook for the 2018 financial year, stating "Based upon the current market conditions and despite the increased price of jet fuel, the Company continues to expect 2018 earnings before taxation to exceed the prior year"

[Filthy]

just had a quick flick. couldn't see any mention about the RR engine issues? fuel headwinds in FY19?

[couta1]

Well, update this morning is that 'all is good'.... still need to go through the presentation though.

- the Company has reaffirmed the outlook for the 2018 financial year, stating "Based upon the current market conditions and despite the increased price of jet fuel, the Company continues to expect 2018 earnings before taxation to exceed the prior year"

990 million, that's bullish considering the difficulties faced, onward and upward it is.

[winner69]

990 million, that's bullish considering the difficulties faced, onward and upward it is.

So they’ve absorbed $110m more than expected to make a few more bob than last year

See .....fuel costs and yield are inextricably linked .....and keep RASK undercontrol and it’s all honky dory

[Oliver Mander]

just had a quick flick. couldn't see any mention about the RR engine issues? fuel headwinds in FY19?

thought there was plenty in there on the fuel outlook, and a good bit on fleet strategies (including RR cover). Good to see the hedge position protecting them at a US$71 average until December this year - that explains why they still see themselves as doing alright in FY2019. And the other takeaway for me was the fleet investment capex forecast - ongoign steady investment, with no horrendous lumps. Maintains the average of $600m pa.

Fantastic update.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/319297/280962.pdf

Lazy hound slept in and hasn't read it yet. Plenty in there to digest.

[stoploss]

990 million, that's bullish considering the difficulties faced, onward and upward it is.
Jonesy will love it , he might have both barrels firing today ...

[winner69]

Jonesy will love it , he might have both barrels firing today ...

The $990m is the fuel bill ...not the profit

[Beagle]

Quick skim read all looks pretty good. Might have to trim my expectations for special divvies in 2020 2021 and 2022 down as they're obviously gearing up for massive capex in 2023-2025 with 8 replacement widebody aircraft in 3 years, that's probably something in the order of $2b+

Must admit Luxon has built a good culture there. Good they're leasing 2 x 777 aircraft to cover for RR problems. RR will cop some serious heat in terms of cost recovery.
Excellent that their business model has been able to be adjusted to cope with rising fuel costs.

Pretty slick operation really.

[777]

Quick skim read all looks pretty good. Might have to trim my expectations for special divvies in 2020 2021 and 2022 down as they're obviously gearing up for massive capex in 2023-2025 with 8 replacement widebody aircraft in 3 years, that's probably something in the order of $2b+

Must admit Luxon has built a good culture there. Good they're leasing 2 x 777 aircraft to cover for RR problems. RR will cop some serious heat in terms of cost recovery.
Excellent that their business model has been able to be adjusted to cope with rising fuel costs.

Pretty slick operation really.

The culture is a continuation of what Fyfe created. And Norris before him. It is a different company since the exit of Brierley's.

[Beagle]

The culture is a continuation of what Fyfe created. And Norris before him. It is a different company since the exit of Brierley's.

Agreed, you don't build a culture like that overnight. http://www.sharechat.co.nz/article/f4c90706/air-nz-shrugs-off-rising-fuels-costs-still-sees-increased-earnings.html?utm_medium=email&utm_campaign=Air%20NZ%20shrugs%20off%20rising%20fu els%20costs%20still%20sees%20increased%20earnings&utm_content=Air%20NZ%20shrugs%20off%20rising%20fue ls%20costs%20still%20sees%20increased%20earnings+C ID_06f2a4a8e708d4a2587c81fec3194dea&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlef4c90706air-nz-shrugs-off-rising-fuels-costs-still-sees-increased-earningshtml

Based on 22 cps annual dividends fully imputed (22 / 0.72) / 315 the forecast gross yield is 9.7%. I see that going forward as sustainable, (plus possible special's in the next few years) and the company is trading in an environment where according to IATA forecasts international demand is growing at ~ 7%.

Now we have this update in and confirmation of profit forecast we know their business model is demonstrating good resilience so despite the fuel price headwind for FY19 I think $3.15 is pretty sound buying in a market that's broadly considered to be very fully priced.

[couta1]

The $990m is the fuel bill ...not the profit Yes indeed, my bad. I'm very impressed with this update, they say the test of any relationship or business is hard times and this company have shown iron clad character to date. Disc-Holding.

[Benny1]

Looks a solid presentation from a quick skim... Noticed the 777-200 replacements have slipped back a couple of years..
Extra domestic A320 capacity all good too.
Not too sure if this stock could get slammed at some stage if/ when some international institutions decide to pull some money out of the NZ market seeing US interest rates are on the slow rise.. especially with AIR having such a large percentage owned by these institutions..
Something like (78%) of the free float stock?
Any thoughts?

[Beagle]

AIR's gross yield amongst the very highest in the world for airlines and compares extremely favorably with all the U.S. airlines so I see the shares as still be very attractive to hold in that and other regards despite a slowly rising interest rate environment. As Couta1 suggested they have weathered some pretty challenging things this year very well....Rolls Royce wearing the vast majority of the pain, that's the principle's of natural justice playing out very nicely !

As you suggest mate, that's a solid presentation from a team that look like they're in good form. Notwithstanding the possible fuel price headwind for FY19 trading cum a ~ 11 cent fully imputed divvy in Sept I think there's a reasonably sound case to be made for holding a few for dividend yield as part of a well diversified portfolio.
I'm expecting about $400m after tax for eps of ~ 36 cps so the FY18 PE is about 8.75 on my forecast. Headwind for fuel already fully priced in ?, you folks be the judge.

[Beagle]

Magic Leap partnership http://www.scoop.co.nz/stories/BU1806/S00303/air-nz-announces-partnership-with-magic-leap.htm
Could produce an experience that's pretty cool.

[Joshuatree]

:DCool Roger!. as long as they put the headphones on after the plane has left for NZ etc or they may never feel the need to fly, and live the virtual life at home.:scared:

[couta1]

I really love those graphs on p13&p14 of that presentation, low earnings volatility and a 418% shareholder return over 10yrs, yet some go on about the highly cyclical nature of the stock Lol.

[winner69]

I really love those graphs on p13&p14 of that presentation, low earnings volatility and a 418% shareholder return over 10yrs, yet some go on about the highly cyclical nature of the stock Lol.

Very fortunate choice of timeframe methinks

In June 2007 (just over 10 years ago) the share price was $3.13 ....what is it today ....be hard pushed to get 418% return in that 11 year period


But that chart does look really cool eh ....give them credit for telling an amazing story .....give a few the warm fuzzies no doubt

Share price chart shows cyclical tendencies

[value_investor]

I didn't realise how much extra capacity the A321s will offer, especially with the domestic market being so critical to the business' future success. Certainly from all the talk now, I don't expect the CAPEX spending holiday that we thought was going to happen in a few years is going to happen anymore.

I think that yields in this area have been identified as a area for the company to keep squeezing, and they have to continue at this pace to be ahead of the game. It's also better to take advantage from a gearing perspective of these record low interest rates before the door shuts.

[Raz]

I didn't realise how much extra capacity the A321s will offer, especially with the domestic market being so critical to the business' future success. Certainly from all the talk now, I don't expect the CAPEX spending holiday that we thought was going to happen in a few years is going to happen anymore.

I think that yields in this area have been identified as a area for the company to keep squeezing, and they have to continue at this pace to be ahead of the game. It's also better to take advantage from a gearing perspective of these record low interest rates before the door shuts.

Its a great presentation however those growth projections are dependent on sorting out the infrastructure in NZ and AIR keeping its share of the pie. The more you dig on that one the worse it gets.

Taking a look at what is now happening without AIR into and out of Christchurch is great for the region yet AIR should have been in the middle of it. The potential they leave on the table for others as they are Auckland centric has been a mistake for the country as a whole and as a shareholder.

All I can say is at least we have a decent ex-Aucklander running Christchurch Airport :-)

[Marilyn Munroe]

Taking a look at what is now happening without AIR into and out of Christchurch is great for the region yet AIR should have been in the middle of it. The potential they leave on the table for others as they are Auckland centric has been a mistake for the country as a whole and as a shareholder.


It must be getting to the stage where Lee Kwan Yew Airlines are considering an additional arrival and departure for Christchuch. If they are seeking a use for cascaded 777's after deployment of A350's CHC x 2 seems to me to be a good option.

Lee Kwan Yew Airlines are probably unfavorably disposed towards Cullen Airlines after the family fight with Virgin(Under Arm Bowlers Division).

Boop boop de do
Marilyn

[Zaphod]

I] The potential they leave on the table for others as they are Auckland centric has been a mistake for the country as a whole and as a shareholder.

AIR have obviously made a commercial decision on this, therefore if another carrier wants to make fill the gap left then good on them.

[Subway]

Its a great presentation however those growth projections are dependent on sorting out the infrastructure in NZ and AIR keeping its share of the pie. The more you dig on that one the worse it gets.

Taking a look at what is now happening without AIR into and out of Christchurch is great for the region yet AIR should have been in the middle of it. The potential they leave on the table for others as they are Auckland centric has been a mistake for the country as a whole and as a shareholder.

All I can say is at least we have a decent ex-Aucklander running Christchurch Airport :-)

NZ is too small for two hubs, and no other airline would use ChCh as a hub, so i'm not entirely sure what you are suggesting as an alternative.

[mikeybycrikey]

NZ is too small for two hubs, and no other airline would use ChCh as a hub, so i'm not entirely sure what you are suggesting as an alternative.

I was thinking exactly that this morning. Many of AIR's international flights run daily out of Auckland. That's once per day, every day, from our largest city.

If you run anything out of Christchurch, it would only be something like twice a week which then don't work for most passengers and uses up planes at peak times.

Much easier with just one hub unless you can run a full quota of flights out of that second hub.

[Raz]

I was thinking exactly that this morning. Many of AIR's international flights run daily out of Auckland. That's once per day, every day, from our largest city.

If you run anything out of Christchurch, it would only be something like twice a week which then don't work for most passengers and uses up planes at peak times.

Much easier with just one hub unless you can run a full quota of flights out of that second hub.

I could say a lot here on the subject however this is the AIR thread, do a little research and you will start to appreciate the volumes now going into & out of Christchurch, there are already full quota flights, examples - China Southern, Singapore airlines and Emirates. In certain market segments more Chinese come into Christchurch than Auckland for the first time in 2017. I have a good handle of the numbers from the inside as I'm involve with the freight out with several south island businesses for export. An example is the most profitable meat exports in NZ are via a carrier exiting Christchurch. Can't happen via Auckland. Even smaller businesses are working with the data link with Christchurch Airport & Alibaba SL to sell directly to visitors when they return home.

Interesting to see the other airports are also into catch up wrt thiswith Auckland airport signing a strategic alliance with Christchurch airport recently in this particular area.

Don't assume..take a real look. As a taxpayer and shareholder I want to see all routes in NZ exploited where the kpi's are compelling and markets developed, if they can have 777s flying domestic between Auckland and Christchurch there is clearly some scope.

The economic multiplier to the region from the Airport is around 50 to 1. Perhaps a little cutting edging thinking with that development fund Mr Jones because my understanding is its hardly spent at the minute.

[Robomo]

About 10 or more years ago Air NZ tried direct services Christchurch to Los Angeles using a 747 but stopped after about a year, presumably because of insufficient passengers/profit. Since then the USA-NZ passenger numbers have more than doubled and I just wonder if this CHC-LAX service might be tried again, particularly as there is no competition. Using a 787 has less seats than a 747 and much better economics and would offer ex-USA tourists another choice in much the same way that ex-NZ travellers now have a choice of 4 USA destinations (LAX, SFO, IAH plus ORD later this year) compared to just LAX 10+ years ago. All the Air NZ facilities are in place in Christchurch and I'm sure the CHC airport authorities would love another international service.

Just putting it out there....

[Beagle]

LOL Raz, asking Shane Jones for a contribution from his development fund to assist Air New Zealand...
Pretty sure you're whistling into the wind with that one.

[Raz]

LOL Raz, asking Shane Jones for a contribution from his development fund to assist Air New Zealand...
Pretty sure you're whistling into the wind with that one.


Naturally, give it to Christchurch Airport or associated market arm..not to that myopic lot :-)

[Beagle]

Naturally, give it to Christchurch Airport or associated market arm..not to that myopic lot :-)

Okay I see where you're coming from but still reckon you're whistling Dixie. I suppose its only natural that AIR's competitors are looking to take market share bringing in tourists to Chch seeing as many probably have the South Island's attraction's as their main agenda here. I'm not sure whether Chch's outbound Kiwi market in terms of its size is especially supportive of major route expansion but perhaps when they finally get all their "Dream"liners working properly again ?

Anyway...speaking of dividends, anyone quick enough to snap up some shares at $3.15 at the open on Thursday morning after reading the investor day briefing has done pretty well in two days of holding, up 16 cps ! I think they were pretty sound value at $3.15 first thing Thursday and its amazing how quickly the market gapped up to fair value isn't it ! Poor shareholders relying on analyst updates...by the time they receive the updated recommendation from their brokers the anomalous pricing has disappeared.

[Marilyn Munroe]

I have a good handle of the numbers from the inside as I'm involve with the freight out with several south island businesses for export. An example is the most profitable meat exports in NZ are via a carrier exiting Christchurch.


Do you remember the good old days?

When the aircraft of choice was an Antonov. When the cargo was getting too warm the crew would open the vents wider to allow in more cold high altitude air and when refueling at some airport in Central Asia the local bandits would try to steal the cargo.

Boop boop de do
Marilyn

[Raz]

Okay I see where you're coming from but still reckon you're whistling Dixie. I suppose its only natural that AIR's competitors are looking to take market share bringing in tourists to Chch seeing as many probably have the South Island's attraction's as their main agenda here. I'm not sure whether Chch's outbound Kiwi market in terms of its size is especially supportive of major route expansion but perhaps when they finally get all their "Dream"liners working properly again ?

Anyway...speaking of dividends, anyone quick enough to snap up some shares at $3.15 at the open on Thursday morning after reading the investor day briefing has done pretty well in two days of holding, up 16 cps ! I think they were pretty sound value at $3.15 first thing Thursday and its amazing how quickly the market gapped up to fair value isn't it ! Poor shareholders relying on analyst updates...by the time they receive the updated recommendation from their brokers the anomalous pricing has disappeared.

I did buy in again based on the investor update although not as many as I would have liked. The update did answer a few key questions didn't it, take the uplift on SP as well although not the full whack you mentioned.

Concerning the regional stuff I don't expect anything to happen and it was tongue in cheek to expect Government help in any shape or form...I try to help where I can as not many lobby for the South.

[Raz]

Do you remember the good old days?

When the aircraft of choice was an Antonov. When the cargo was getting too warm the crew would open the vents wider to allow in more cold high altitude air and when refueling at some airport in Central Asia the local bandits would try to steal the cargo.

Boop boop de do
Marilyn

Was involved with a industrial level pipe cleaning business at that time.. all you mention was certainly going on and still with all the security and due diligence possible we still found our supplies used for Saddam Hussein's 'supergun', that caused us a few PR issues...

[Beagle]

I did buy in again based on the investor update although not as many as I would have liked. The update did answer a few key questions didn't it, take the uplift on SP as well although not the full whack you mentioned.

Concerning the regional stuff I don't expect anything to happen and it was tongue in cheek to expect Government help in any shape or form...I try to help where I can as not many lobby for the South.

Yes I think they've coped very well with the challenges they've faced this year which augers well for FY19 and beyond. Some of the uptick on Friday could be to do with NZX50 rebalancing, (third Friday of the third month of each quarter) so maybe we'll see it settle in the low 320's next week ?

With this one though its a case of buying the dips rather than the peaks.

[winner69]

At least it was only an oil pump this time as Dreamliner turned back

https://www.stuff.co.nz/business/104770174/dreamliner-turns-back-to-singapore-after-engine-problems

It was Zk-nzg so don’t think one of lemon Dreamliners

[unhuman]

RNZ article quotes Air NZ saying unrelated, not ideal though.

http://www.radionz.co.nz/news/national/359762/engine-problems-force-air-nz-flight-to-turn-around

[winner69]

Air NZ best place to work

Tight battle just heading off a few government departments ...hmmm

https://www.stuff.co.nz/business/104817959/where-do-new-zealanders-want-to-work

[Onion]

Air NZ best place to work

Tight battle just heading off a few government departments ...hmmm

https://www.stuff.co.nz/business/104817959/where-do-new-zealanders-want-to-work

A few of the comments below the article would suggest that AIR haven't got everything perfect.

... and we all know that the comments on Stuff articles are always from the most erudite people too :p

[winner69]

Pretty amazing stats for May

No wonder guidance pretty good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/319731/281451.pdf

[Beagle]

Load factors steady, RPK's up about 8% which is good but yields up just 1.8% and with the much higher fuel costs prevailing get's them a C+ or B- grade in my book.

[winner69]

Interesting appointment

https://www.stuff.co.nz/national/politics/104936906/labours-general-secretary-understood-to-be-taking-new-job-with-air-nz

[minimoke]

An Air NZ plane engine apparently on fire - circling Hawkes Bay airport

[Beagle]

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12076004

[Snow Leopard]

I see that AIR have been trying to fly under the radar in Australia [investigation (http://www.atsb.gov.au/publications/investigation_reports/2017/aair/ao-2017-113/)]...


It is the '...alerted to the error, but the aircraft continued descent...' bit that could be the real worry...

Investigation concluded [ATSB link (https://www.atsb.gov.au/publications/investigation_reports/2017/aair/ao-2017-113/)]: flight crew error & then one thing leading to another.

[Beagle]

They did better here.
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12076821
but the Federal Court has dismissed their appeal and found they were naughty dogs here https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12078728

[Beagle]

Bit off topic but wouldn't it be cool if this really does come to pass. https://www.msn.com/en-nz/news/world/boeing-making-plane-that-can-fly-five-times-the-speed-of-sound/ar-AAzgjn9?ocid=spartandhp

[Jerry]

Hmmm. The USA was so welcoming to the last supersonic jet, Concorde (Mach 2), produced by the UK and Europe that they refused it landing rights!

[winner69]

AIR not highly ranked in this survey

Nor is AIA

https://www.oag.com/on-time-performance-star-ratings-2018?utm_campaign=OTP%20Stars&utm_medium=email&_hsenc=p2ANqtz--NXLxsMLRTA2CzzI9lkwKptyuMFJ7ZSy5llrjyof8tc4qMFEKsl WqI_IctnWdycCbgvHz7_8OhxcU97W-JLoUQxIx6vw&_hsmi=64103169&utm_content=64103169&utm_source=hs_email&hsCtaTracking=8cbd2b81-9bc6-43ef-977a-7b5d2855cb6e%7C581b2ca2-d9b0-46da-bac0-9e1df215286e

[winner69]

Flightradar24 tracked over 200,000 flights yesterday

This is a cool animation of where all those planes flew

https://twitter.com/flightradar24/status/1013088775973556224

[Valuegrowth]

Growth in the travel sector will benefit few sectors and companies in those sectors mostly. In other words cousin stocks will benefit. Could AIR NZ also become one winner because of the travel sector?

https://realassets.ipe.com/reports/travel-sector/travel-sector-markets-that-move/10025358.article

[peat]

Flightradar24 tracked over 200,000 flights yesterday

This is a cool animation of where all those planes flew

https://twitter.com/flightradar24/status/1013088775973556224

that is so amazing , and I just want to know why the heck so many people want to be somewhere else?

Thankfully they do though for companies like AIR

I wasnt going to post this but now I will - a cup I found in the unpackings from when I worked at Air New Zealand in the Group Financial Systems dept.
97789779

sorry about the memorabilia but where else could I post this stuff - i dont think there is a reddit subthread.



Yeh the divvies look really attactive. I may have to buy a few just for that even though airlines scare me as investments.

[Beagle]

http://www.scoop.co.nz/stories/AK1807/S00020/air-chathams-to-bring-back-kapiti-coast-to-auckland-service.htm
AIR going above and beyond to help Air Chatams make a go of their new Kapiti service.
This hound thinks many canny retired residents of Kapiti will still drive to Wellington and pick up much cheaper fares on AIR or JetStar, (in the same manner Wanganui residents do with Palmerston North specials) especially when the new transmission gully motorway opens and reduces travel time to even further below the time the average Aucklander takes to get to Auckland airport. Good luck to Air Chatams with their ancient Saab aircraft.

[blackcap]

http://www.scoop.co.nz/stories/AK1807/S00020/air-chathams-to-bring-back-kapiti-coast-to-auckland-service.htm
AIR going above and beyond to help Air Chatams make a go of their new Kapiti service.
This hound thinks many canny retired residents of Kapiti will still drive to Wellington and pick up much cheaper fares on AIR or JetStar, (in the same manner Wanganui residents do with Palmerston North specials) especially when the new transmission gully motorway opens and reduces travel time to even further below the time the average Aucklander takes to get to Auckland airport. Good luck to Air Chatams with their ancient Saab aircraft.

Not going to happen Beagle, well not on the scale you may think. My partner lives in Kapiti and she would no way drive to Wellington (stop start stop start) (where do you park?) and then take the flight to Wellington. She regularly took the 7am out of Kapiti to Auckland, was happy paying $229 (give or take and paying 169 on the return flight at 6.10pm) IF you have to drive to Wellington for equivalent flight times, you would need to leave here at 5am, and would not be back home till 8:30pm as opposed to 7:30pm. Its only a 10 min drive to the airport here so a 7am flight means leaving home at 6:30 is plenty easy.

[peat]

yeh going to Palmy isnt nearly as convenient on quite a few counts and while you can often get a cheap flight one way by the time you pay a good price for the return it just doesnt stack up time/money wise.

[mikeybycrikey]

AIR going above and beyond to help Air Chatams make a go of their new Kapiti service.

I don't think that AIR are going above and beyond here. More like getting a PR win at a cheap price (after shooting themselves in the foot last year with the manner of their withdrawal).

[Beagle]

http://www.scoop.co.nz/stories/BU1807/S00054/air-new-zealand-serves-up-the-impossible.htm

[winner69]

http://www.scoop.co.nz/stories/BU1807/S00054/air-new-zealand-serves-up-the-impossible.htm


not too tempting for beagles

[Beagle]

not too tempting for beagles

Not at all, I'd be barking mad if someone tried to serve me a synthetic burger. Might suit Raz though on his business class flights to LA.

[Rossimarnz]

How long before Shane Jones rants about this being anti New Zealand farming and calls on Air NZ to support their local story more?

[Sideshow Bob]

http://www.scoop.co.nz/stories/BU1807/S00054/air-new-zealand-serves-up-the-impossible.htm

I wonder what NZ red meat processors who send their airfreight on Air NZ think of this?

[winner69]

Not at all, I'd be barking mad if someone tried to serve me a synthetic burger. Might suit Raz though on his business class flights to LA.

If it’s cool and hip it has to be good

[peat]

Not at all, I'd be barking mad if someone tried to serve me a synthetic burger. Might suit Raz though on his business class flights to LA.

Mate you should try one , while I havent eaten an Impossible Burger , the vege burgers from BurgerFuel are very awesome. NB its only an option on their menu.

I picked up some more flights to BNE this morning. They are giving them away, price not much more than the taxes and charges.

[Raz]

Mate you should try one , while I havent eaten an Impossible Burger , the vege burgers from BurgerFuel are very awesome. NB its only an option on their menu.

I picked up some more flights to BNE this morning. They are giving them away, price not much more than the taxes and charges.

It will go down well with the LA hip crowd, half are vegan and the other half vegetarians..should see the billboards...if you eat meat you as good as killed the animal yourself :-)

Will have the option of tasting in two weeks...

[Beagle]

How long before Shane Jones rants about this being anti New Zealand farming and calls on Air NZ to support their local story more?

:lol: :lol:


It will go down well with the LA hip crowd, half are vegan and the other half vegetarians..should see the billboards...if you eat meat you as good as killed the animal yourself :-)

Will have the option of tasting in two weeks...

Good luck with that mate. When hell freezes over as far as I am concerned...

[Raz]

:lol: :lol:



Good luck with that mate. When hell freezes over as far as I am concerned...


As mentioned above this was hardly a surprise

https://www.stuff.co.nz/business/farming/105216779/air-nzs-impossible-burger-criticised-by-former-primary-industries-minister

I do think the board will eventually get changed as a result of the politics around this..they are myopic on considering NZ Inc. and it does show...often..especially if the COL get a second term, watch out.

[Beagle]

As mentioned above this was hardly a surprise

https://www.stuff.co.nz/business/farming/105216779/air-nzs-impossible-burger-criticised-by-former-primary-industries-minister

I do think the board will eventually get changed as a result of the politics around this..they are myopic on considering NZ Inc. and it does show...often..especially if the COL get a second term, watch out.

LOL as sure as night follows day. Speaking of controversy, if Shane jones ever gets appointed to the board I will immediately sell.
Business confidence is already plumbing lows not seen since just after the GFC. If this lot get another term...:eek2:
You know "you're it" now with this new artificial burger and we're all counting on you to try it and report back...assuming you're still alive after eating it :)

[Marilyn Munroe]

LOL as sure as night follows day. Speaking of controversy, if Shane jones ever gets appointed to the board I will immediately sell.

Come on now Shane's chairmanship of Sealord was stellar.

Ordinary Maori Jokers are hovering around their letter boxes waiting for a juicy dividend cheque from Te Ohu Kaimoana (the Māori Fisheries Commission).

Sarc/ tag for those who miss my point.

Boop boop de do
Marilyn

[jimmybuffett]

How long before Shane Jones rants about this being anti New Zealand farming and calls on Air NZ to support their local story more?

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12082773

(well, Shane must have been busy so asked a mate to fill in for him...)

[Beagle]

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12082773

(well, Shane must have been busy so asked a mate to fill in for him...)

LOL I actually agree with them on this one. I think its a disgrace that they're actively promoting a red meat substitute and it is a slap in the face for beef farmers in N.Z.
Remember this...they said this was the wonder drug that solves all ills and it was really good for you https://www.theguardian.com/society/2009/jul/29/thalidomide-birth-defects-asbestos-drugs
Eat real meat and tell em they're dreaming with their lab concocted synthetic rubbish. (Disc: Not the start of a new campaign, I'm too old to be bothered with campaign's anymore).

[Joshuatree]

I guess the next logical step to reduce staff costs will be hosts ala Westworld made from synthetic meat burgers serving synthetic meat burgers.:t_up::ohmy::scared:. First and Business class travellers will have a choice , host or sentient being servers.

[peat]

LOL I actually agree with them on this one. I think its a disgrace that they're actively promoting a red meat substitute and it is a slap in the face for beef farmers in N.Z.
Remember this...they said this was the wonder drug that solves all ills and it was really good for you https://www.theguardian.com/society/2009/jul/29/thalidomide-birth-defects-asbestos-drugs
Eat real meat and tell em they're dreaming with their lab concocted synthetic rubbish. (Disc: Not the start of a new campaign, I'm too old to be bothered with campaign's anymore).

Woah woah
Impossible Burgers say @Our burger is made from simple, all-natural ingredients such as wheat, coconut oil, and potato.
Whats that got to do with thalidomide?

[Beagle]

Woah woah
Impossible Burgers say @Our burger is made from simple, all-natural ingredients such as wheat, coconut oil, and potato.
Whats that got to do with thalidomide?

Okay maybe the analyogy was a little "out there" but in my opinion the devil is often in the detail with these synthetic products. Its what they don't tell you that's in there that should have sensible people wondering. Beagle's eat real meat, "the best or nothing" oh wait a minute isn't that a Mercedes-Benz marketing catch-phrase :blush: Anyway we're off track here and its just a menu item and thankfully nobody is force-feeding anyone this latest experiment in synthetic food engineering.

Back to AIR - Should be close to an all time record result when they announce in late August.

[workingdad]

Well its certainly good advertising for them. I cant see the big deal, if someone wants one order it, if not get the alternatives. Expecting a NZ company to make decisions based on agriculture is not sound and I wouldn't expect them to start putting wool lining on their seats just because we have a wool industry here either.

On a different note, the Christchurch domestic lounge was standing room only for a reasonable period late yesterday afternoon.

[winner69]

Well its certainly good advertising for them. I cant see the big deal, if someone wants one order it, if not get the alternatives. Expecting a NZ company to make decisions based on agriculture is not sound and I wouldn't expect them to start putting wool lining on their seats just because we have a wool industry here either.

On a different note, the Christchurch domestic lounge was standing room only for a reasonable period late yesterday afternoon.

...and plenty of pretty reasonably comfortable seats outside for the plebs .....and nice and quiet as well

[Blue Skies]

Recently a dairy farmer told me his cows were individually monitored monthly with KPI's around their individual milk production (vol, fats etc) .As soon as any cow's KPI's dropped below a certain level, due to old age, foot rot, or any illness or infection, off they were sent to the works to basically mushed up with all the others, turned into hamburger meat ( pumped full of additives) which was then shipped off to the US to be sold as grass fed prime beef hamburger patties. I guess there's a difference between perception & reality, & an Impossible Burger using natural plant products sounds much healthier to me, for both human consumption & the planet. There's no doubt it's the future & good on forward thinking Air NZ for leading the way by offering alternatives. Although this is a little off topic, it's another small example in my book, of why Air NZ is one of the world's best airlines.
Disc - shareholder

[James108]

LOL I actually agree with them on this one. I think its a disgrace that they're actively promoting a red meat substitute and it is a slap in the face for beef farmers in N.Z.
Remember this...they said this was the wonder drug that solves all ills and it was really good for you https://www.theguardian.com/society/2009/jul/29/thalidomide-birth-defects-asbestos-drugs
Eat real meat and tell em they're dreaming with their lab concocted synthetic rubbish. (Disc: Not the start of a new campaign, I'm too old to be bothered with campaign's anymore).

Wouldn’t want to help save the planet, might offend those beef farmers!

[Beagle]

https://www.forbes.com/sites/quora/2017/08/31/how-the-impossible-burger-revealed-some-disturbing-fda-practices/#473f20276aa9
Hmmm FDA disapproves of one of the key ingredients. Thankfully nobody has a gun to your head making you be the Guinea Pig and eat this experiment. Good luck Raz :D

[Sideshow Bob]

Recently a dairy farmer told me his cows were individually monitored monthly with KPI's around their individual milk production (vol, fats etc) .As soon as any cow's KPI's dropped below a certain level, due to old age, hoof disease or any illness or infection, off they were sent to the works to basically mushed up with all the others, turned into hamburger meat ( pumped full of additives) which was then shipped off to the US to be sold as grass fed prime beef hamburger patties.

Dead right - all the milk sucked out of them and end of their economic dairy life, off to the works, into a box and sold to a burger maker - usually mixed with US domestic trimmings - high in fat to balance the lean NZ product. Need fat for succulence in burgers! But hardly 'premium'.

NZ First are just poking their head to make some noise. Mark Patterson is a farmer so always going to come out against it - just reminding everyone that he is in parliament, for his annual media headlining. Winnie says that he wouldn't eat one. But everyone knows he lives on just whiskey right?

Back to flying around metal tubes jammed full of people.....

[mfd]

Very surprised at the concern over air NZ offering a vegetarian alternative when there is a clear link between regular burgers and bowel cancer. Are you all similarly concerned that air NZ are selling products with a well established link to a deadly disease? Note that Australia and New Zealand are world leaders in terms of bowel cancer incidence.

[winner69]

When Z starting selling vegan pies they were ‘embarrased’ when it was revealed that they included an ingredient that was basically ground up poultry feathers

[Marilyn Munroe]

Cullen Airlines and AIA are sniping at one another over landing charges before the Transport and Infrastructure Select Committee.

Of course Cullen Airlines could use the alternative of more international routes via the Peoples Republic of Christchurch airport, feeding lower North Island travelers through there to bolster bums on seats.

Or is Cullen Airlines top managements vision limited to the Waitemata and the Sky Tower they can see out their office window?

Boop boop de do
Marilyn

[macduffy]

Synthetic meat burgers are AIR's contribution to offset all those nasty fumes emitted from their aircraft!

;)

[BlackPeter]

https://www.forbes.com/sites/quora/2017/08/31/how-the-impossible-burger-revealed-some-disturbing-fda-practices/#473f20276aa9
Hmmm FDA disapproves of one of the key ingredients. Thankfully nobody has a gun to your head making you be the Guinea Pig and eat this experiment. Good luck Raz :D

Not sure this is an AIR discussion, but given that some posters here seem to promote the consumption of unhealthy carcinogenic red meat including hormones and antibiotics over the consumption of plant materials ... I think it would be fair to say that the FDA didn't approve to eat the meat either (and didn't had to - same thing as with the impossible burger).

I really think we should take this discussion out of this thread ... and try to stay objective independent from personal diet habits. While I personally enjoy as well from time to time to eat a good steak, am I aware of the risks of eating (particularly red) meat. No reason to assume that the impossible burger carries more health risks than the meat ...

Good luck to all meat eaters ;);

[Beagle]

Fair enough BP, lets get back to discussing AIR's record forthcoming profit :t_up:

http://www.sharechat.co.nz/article/f58692f0/air-nz-slams-excessive-pricing-by-nz-airports-says-law-changes-could-cut-plane-ticket-costs.html?utm_medium=email&utm_campaign=Air%20NZ%20slams%20excessive%20pricin g%20by%20NZ%20airports%20says%20law%20changes%20co uld%20cut%20plane%20ticket%20costs&utm_content=Air%20NZ%20slams%20excessive%20pricing %20by%20NZ%20airports%20says%20law%20changes%20cou ld%20cut%20plane%20ticket%20costs+CID_2ac347c7fbf6 6167c5097cc145453d1b&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlef58692f0air-nz-slams-excessive-pricing-by-nz-airports-says-law-changes-could-cut-plane-ticket-costshtml

[carrom74]

Can someone please help me on these questions about the link between the oil price and share price of Air NZ?

July 6th 2017 the sp was $3.41 and today it is $316.5 vs Jet Fuel price was about $53/barrel(2017 July) and now about $85 now.

I am aware AIR NZ does fuel hedging but does it have a direct link to profitability? as the oil price is unpredictable...and how does the sp react negtively despite the airline performing stupendously in terms of increasing passenger numbers both YTD and MTD.In short does the oil price have such impact?

http://www.iata.org/publications/economics/fuel-monitor/Pages/index.aspx

https://www.investopedia.com/articles/investing/081415/4-ways-airlines-hedge-against-oil.asp

[workingdad]

...and plenty of pretty reasonably comfortable seats outside for the plebs .....and nice and quiet as well

Actually I was thinking Christchurch domestic general seating area looked pretty alright too. The other benefits outside of lounge access with frequent flyer or Koru are pretty hard to ignore though.

That article in the papers recently about how AIR's lounge access is not as exclusive as it once was certainly has me thinking though. A week or two ago I had to fly with a few hours notice on Samoa Airways, their business class wasn't too bad, nice meal, decent seats (no entertainment but I always have my laptop so no issue there) and it came with a strata club lounge pass, only half a dozen people in there and although the food selection wasn't as good the peace and quiet did cause me to wonder a bit.....

[winner69]

Can someone please help me on these questions about the link between the oil price and share price of Air NZ?

July 6th 2017 the sp was $3.41 and today it is $316.5 vs Jet Fuel price was about $53/barrel(2017 July) and now about $85 now.

I am aware AIR NZ does fuel hedging but does it have a direct link to profitability? as the oil price is unpredictable...and how does the sp react negtively despite the airline performing stupendously in terms of increasing passenger numbers both YTD and MTD.In short does the oil price have such impact?

http://www.iata.org/publications/economics/fuel-monitor/Pages/index.aspx

https://www.investopedia.com/articles/investing/081415/4-ways-airlines-hedge-against-oil.asp

Beagle says fuel prices and yield are inextricably linked. I agree with him


Simply put fares tend to rise as fuel prices rise. And the hedging gives some time to puch through the fare increases.


But fuel isn't anything and if they can fly more passengers etc without spending that more more (other than fuel) all the better. Things change a bit if fuel raeches say US$100

Share price generally driven by sentiment rather than actual earnings performance so share price movements are impacted by both.

Somebody (probably my mate Hoop) once posted a chart of AIR share price v fuel ....wasn't much of a correlation at all


T

[winner69]

Carrom -- this is interesting

https://crucialperspective.com/rising-oil-prices-hurt-airline-stocks/

Even though it says

INVESTORS TEND TO AVOID AIRLINE STOCKS WHEN OIL PRICES RISE – NEARLY 90% OF THE ASIA PACIFIC AIRLINE STOCKS HAVE HISTORICALLY BEEN NEGATIVELY CORRELATED WITH SPOT JET FUEL PRICES

it also says

AUSTRALIA/NEW ZEALAND AND JAPANESE CARRIERS HAVE THE MOST DEFENSIVE EARNINGS AGAINST HIGHER OIL PRICES

and the bottom chart shows AIR has only a slightly negative correlation (not significant) between share price and fuel -- as Hoops old chart showed



Let me know if you are now a lot wiser ...

[winner69]

Carrom, don’t forget that AIR have absorbed $100m plus extra fuel costs and still maintain guidance to achieve second highest profit ever .....that’s being resilient eh and no doubt a big part of why share price is holding up so well.

[carrom74]

Carrom -- this is interesting

https://crucialperspective.com/rising-oil-prices-hurt-airline-stocks/

Even though it says

INVESTORS TEND TO AVOID AIRLINE STOCKS WHEN OIL PRICES RISE – NEARLY 90% OF THE ASIA PACIFIC AIRLINE STOCKS HAVE HISTORICALLY BEEN NEGATIVELY CORRELATED WITH SPOT JET FUEL PRICES

it also says

AUSTRALIA/NEW ZEALAND AND JAPANESE CARRIERS HAVE THE MOST DEFENSIVE EARNINGS AGAINST HIGHER OIL PRICES

and the bottom chart shows AIR has only a slightly negative correlation (not significant) between share price and fuel -- as Hoops old chart showed



Let me know if you are now a lot wiser ...
Thanks Winner for helping me out..and pasting the link which was quite good.

I ended up analyzing one of the airlines mentioned in the link(Jet airways-randomly picked) and due to the rise in the oil prices the airlines reported a loss this quarter and the share price tanked to a 52 week low.Whereas AIR which is a "safe hedge bet" has pretty much weathered the storm(7% drop YOY on SP)and forecasting a record profit...

https://www.odt.co.nz/business/air-nz-confident-position

You may have read this report... Both Morningstar and Craigs have highly conservative target prices...

[winner69]

Carrom - just for you a longish term chart of AIR share price v Oil in NZD

Sometimes oil goes up and AIR goes down and then again sometimes oil goes up and AIR goes up


Interesting but oil not a particularly reliable indicator of AIR share price movements - except that when oil prices are over NZ$110 the AIR share price tends to be at its weakest ....and we could be approaching that danger zone now


Statistically over that 15 year time frame there is reasonable negative correlation between the two and oil accounts for about 30% of the change in AIR share price (not allowing for any possible lag effect)

What you think?

[percy]

Current share price $3.165
Craigs target price $2.85
Morningstar target price $2.60.
So stand to lose 10% or 18%.????
Will leave it to others to choose.?

[carrom74]

Carrom - just for you a longish term chart of AIR share price v Oil in NZD

Sometimes oil goes up and AIR goes down and then again sometimes oil goes up and AIR goes up


Interesting but oil not a particularly reliable indicator of AIR share price movements - except that when oil prices are over NZ$110 the AIR share price tends to be at its weakest ....and we could be approaching that danger zone now


Statistically over that 15 year time frame there is reasonable negative correlation between the two and oil accounts for about 30% of the change in AIR share price (not allowing for any possible lag effect)

What you think?

Winner--I agree that oil is not thesole contributor for sp movement but i suspect if some judiciously strategies are formulated on fuel hedging then that can help add more $$$ towards the bottom line.

Also oil is inching towards the danger zone now-Gulp!

[winner69]

Winner--I agree that oil is not thesole contributor for sp movement but i suspect if some judiciously strategies are formulated on fuel hedging then that can help add more $$$ towards the bottom line.

Also oil is inching towards the danger zone now-Gulp!

You holding ...or thinking of buying

[carrom74]

You holding ...or thinking of buying

My Biggest holding winner.Kept adding on dips.

[Beagle]

Current share price $3.165
Craigs target price $2.85
Morningstar target price $2.60.
So stand to lose 10% or 18%.????
Will leave it to others to choose.?

The average of all six analysts that cover the stock is $3.21, see http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/consensus/

My sense is the shares are worth about that. Disc: Own a quite modest stake as part of a well diversified portfolio.

[percy]

The average of all six analysts that cover the stock is $3.21, see http://www.4-traders.com/AIR-NEW-ZEALAND-LIMITED-6491407/consensus/

My sense is the shares are worth about that. Disc: Own a quite modest stake as part of a well diversified portfolio.

Thank you I did look at 4-traders.I have been looking to buy.
Only thing holding me back at present is AIR's chart,with their share price under both the 90 day and 180 day moving averages.
Otherwise I am happy with their performance and outlook.

[Beagle]

Thank you I did look at 4-traders.I have been looking to buy.
Only thing holding me back at present is AIR's chart,with their share price under both the 90 day and 180 day moving averages.
Otherwise I am happy with their performance and outlook.

You're welcome. I agree from a TA perspective it doesn't look all that good right at the minute. For what its worth I am holding for its dividend yield and the diversification it gives my portfolio.

I'm expecting annual fully imputed dividends of ~ 22 cps 22 / 0.72 = 30.55 cps gross which gives close to a 10% gross dividend yield. There is also the prospect of one or two special divvies in the years ahead. I'm not expecting great things in terms of share price appreciation but the yield has its attractions and its different to any other NZX listed company so adds worthwhile diversification in my opinion. I hold just a 2.4% portfolio allocation but am favorably inclined towards adding some more on any further weakness as the next ~ 11 cps divvy is just on 2 months away. As I understand it they have a couple of leased 777-200's to cover the engine issue resolution process now so the main risk I see, (although one can't completely rule out the prospect of another Rolls Royce engine shatting itself with further collateral damage to another plane) is some extravagant move northwards in the oil price.

As you can see I am not nearly as bullish on this as I was in the past when it was cheaper. That said I think management have done a good job this last year with dealing with quite a number of difficult challenges.

[percy]

You're welcome. I agree from a TA perspective it doesn't look all that good right at the minute. For what its worth I am holding for its dividend yield and the diversification it gives my portfolio.

I'm expecting annual fully imputed dividends of ~ 22 cps 22 / 0.72 = 30.55 cps gross which gives close to a 10% gross dividend yield. There is also the prospect of one or two special divvies in the years ahead. I'm not expecting great things in terms of share price appreciation but the yield has its attractions and its different to any other NZX listed company so adds worthwhile diversification in my opinion. I hold just a 2.4% portfolio allocation but am favorably inclined towards adding some more on any further weakness as the next ~ 11 cps divvy is just on 2 months away. As I understand it they have a couple of leased 777-200's to cover the engine issue resolution process now so the main risk I see, (although one can't completely rule out the prospect of another Rolls Royce engine shatting itself with further collateral damage to another plane) is some extravagant move northwards in the oil price.

As you can see I am not nearly as bullish on this as I was in the past when it was cheaper. That said I think management have done a good job this last year with dealing with quite a number of difficult challenges.

My airline chief advisor [Murray of avionics fame] would agree with you.
He also says the type of planes they are flying in NZ are a lot lighter than previous planes, and the sayings on fuel are considerable.
ps.Yield will be higher at $2.99....lol.

[couta1]

Current share price $3.165
Craigs target price $2.85
Morningstar target price $2.60.
So stand to lose 10% or 18%.????
Will leave it to others to choose.? I wouldn't choose either, around fair value at the moment IMO, should go up at result time and leading up to the ex divvy date. Very resilient business that has proved it's mettle over the last year in particular. PS-A lot of smart money paid north of the current price for this stock. PPS-Makes up a healthy 10% of my portfolio.

[dreamcatcher]

imo................. undervalued and a solid dividend payer

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11897087

[value_investor]

imo................. undervalued and a solid dividend payer

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11897087

They might just have to order all those new planes after all

[dreamcatcher]

Boeing's first-half deliveries up seven percent, orders surge past Airbus

https://www.reuters.com/article/us-boeing-deliveries/boeing-says-first-half-orders-soar-past-airbus-idUSKBN1K025F

[BlackPeter]

Boeing's first-half deliveries up seven percent, orders surge past Airbus

https://www.reuters.com/article/us-boeing-deliveries/boeing-says-first-half-orders-soar-past-airbus-idUSKBN1K025F

Amazing .... looks like airlines want to buy more nightmare-liners :scared:. Hard to understand as well why anybody would want these days to buy American over European. Maybe better to fly less.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12088610

Virgin acting like a partner jilted at the alter and determined to take revenge.

[percy]

No surprises there.!

[peat]

The Tasman is a very rough little sea. Both the waves and the competition.
Many travellers are very price sensitive though so a price war can ensue, which obviously doesn't help margins.
But its inconceivable that AIR give up the Tasman so competing on price is only bad for everybody and Virgin cannot win.

[Beagle]

The Tasman is a very rough little sea. Both the waves and the competition.
Many travellers are very price sensitive though so a price war can ensue, which obviously doesn't help margins.
But its inconceivable that AIR give up the Tasman so competing on price is only bad for everybody and Virgin cannot win.

They have a VERY weak balance sheet and very poor brand following in N.Z. in my opinion. I agree they're on a hiding to nothing.

[Jerry]

Virgin, inedible meals, no in-flight entertainment unless you BYO = a poor experience.

[iceman]

Virgin, inedible meals, no in-flight entertainment unless you BYO = a poor experience.

Most of today's travelers simply don't care about that. They want to get from A to B as cheap as possible. Basically a bus service.

[couta1]

Air NZ in code share with Qantas equals less for Virgin even though it's only on domestic routes.

[Patient Panda]

Most of today's travelers simply don't care about that. They want to get from A to B as cheap as possible. Basically a bus service.


And why wouldn’t you? When I can plop into my seat with my ipad which seems to have about double the resolution of the backseat screen on the plane alreay loaded with all my favourite stuff.

virgin will be killed because of their extremely weak brand presence here.

pretty much the only time its worth paying more for ‘quality’ for me is when flying to europe in which I’m more than happy to pay $200 more for singapore airlines as they’re my favourite


Looking forward to Tiger air coming here soon and hopefully someday Air Asia too.

disc; airline user not shareholder.

[Beagle]

Okay I will make the case why a proper airline is worth more. Quite obviously people do want edible meals on long haul flights. Then there's the caliber of the inflight "service" Read this and consider this https://www.msn.com/en-nz/news/world/ryanair-flight-loses-cabin-pressure-and-descends-26000ft-in-minutes-leaving-33-people-in-hospital/ar-AAA4qlw?li=AAaeXZz&ocid=spartandhp
Suppose you were on that flight and for 15 minutes there's no announcement from the cabin crew, no reassurance that things are going to be okay, no explanation of why the aircraft has been put into a steep dive. You're bleeding profusely from your earns and nose, and so are your kids...what are you supposed to think other than the obvious that this could well be the end ? What are you supposed to tell your kids ? How do you reassure them and stop them from panicking ? All you get fropm the flight deck and flight crew is a big fat nothing. Oh wait.... emergency, emergency...you don't say ! (sarcasm intended)

I don't know what AIR's standard procedure is but I would imagine some announcement would have been made along the lines of "ladies and gentlemen, we have lost cabin pressure and are following standard procedure to quickly reduce altitude, please ensure your face masks are fitted tightly and then ensure your children's facemasks e.t.c…..there is nothing to worry about, the engines are going fine and we are diverting to the nearest airport" something like that means a LOT to traumatized really scared people.

Rynair go on to apologize for any inconvenience…..they really don't get it that apart for the 30 something people with injuries there's probably another 100 + who are seriously traumatized and thought they were going to die and that traumatization was severely exacerbated by really poor in flight customer service in terms of not reassuring passengers properly.

Airlines are all ostensibly flying similar metal, its about how well passengers are looked after, that's the difference. Is it worth paying more for a well known quality airline ?....Is it worth more paying for a quality hotel when you get there rather than some cockroach infested fleapit ?

[Snow Leopard]

And yet when things go wrong for Air New Zealand we read of 'abandoned' passengers:
https://www.stuff.co.nz/travel/travel-troubles/100811637/stranded-passengers-abandoned-by-air-new-zealand-after-snow-storm-hits-tokyo.

Glibly imagining that AIR are going to send some kid around with the lollies whilst in the middle of an emergency descent is living in La La Land.

I have travelled with many more airlines than most people. I have been treated badly by 'proper' airlines and excellently by 'cheap' airlines and vice-versa.

Happy Flying :)

[Beagle]

Wonder how paper tiger airlines performs in their emergency descent's ? probably reinvent themselves as someone else..lol

[Snow Leopard]

Wonder how paper tiger airlines performs in their emergency descent's ? probably reinvent themselves as someone else..lol

Roger that.

[Beagle]

Roger that.


Welcome back...I kind of missed sparring paws with you. Brilliant service standards on another cut price carrier leading to more traumatized passengers.
https://www.msn.com/en-nz/news/world/pilot-smoking-e-cigarette-forces-flight-to-plunge/ar-AAA3dqs?ocid=spartandhp I would think that would be a firing offence on an AIR aircraft. Wonder how the top brass would discipline that Air China Pilot ? We bus ticket slap on the paw PT ? Note the reasonably lengthy incarceration of a British Airways pilot...an indication that for want of a better description "traditional" carriers take these sort of issues more seriously ?

[Bobdn]

Roger that.

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

Fascinating :) Sharetrader takes one to all sorts of places.

Air NZ is 7% of my portfolio. Would love to buy more but I'll leave it at that I think.

[Subway]

Counted up the different airlines i've flown in the last couple of years, over 20, chosen purely on price.

Although I do have to admire those that invest and only swear by flying airnz, you're helping generate your own returns. I guess when you're only flying economy its not a big deal who you fly with. My last trip to London was via Taipei for less than half the price of Air NZ on China Airlines flying a literally brand new a350 and i couldnt fault the service at all.

[Beagle]

Counted up the different airlines i've flown in the last couple of years, over 20, chosen purely on price.

Although I do have to admire those that invest and only swear by flying airnz, you're helping generate your own returns. I guess when you're only flying economy its not a big deal who you fly with. My last trip to London was via Taipei for less than half the price of Air NZ on China Airlines flying a literally brand new a350 and i couldnt fault the service at all.

Seat pitch and width in economy doesn't look too bad by 2018 standards either. https://www.seatguru.com/airlines/China_Airlines/China_Airlines_Airbus_A350-900.php

There will always be people who choose based on price alone and others based on other factors. I wouldn't underestimate the number of people who choose AIR for parochial reasons and / or people who are nervous flyers and choose based on a brand they know and trust. To others its literally a bus in the air. and the cheapest bus is the best bus. Each to their own. I am happy with AIR's metrics, cheap PE and close to 10% gross dividend yield. Happy to fly them too...didn't even bother to look at JetStar's website when booking just recently. Nothing wrong with $104 each way Auckland to Queenstown especially when paying with free airpoints :) 2 million or thereabouts airpoints members best I can recall which has probably got a lot to do with brand loyalty too :t_up:

[winner69]

Industry speculation is it’s Air NZ

But it could be anybody eh

https://www.airbus.com/newsroom/press-releases/en/2018/07/undisclosed-customer-orders-eight-a350-900s.html

[Beagle]

Industry speculation is it’s Air NZ

But it could be anybody eh

https://www.airbus.com/newsroom/press-releases/en/2018/07/undisclosed-customer-orders-eight-a350-900s.html

I would think AIR's next order will be for aircraft not powered by RR engines !

Airlines making it very tough to join the mile high club https://www.stuff.co.nz/travel/news/105562329/tiny-toilets-airlines-shrink-bathrooms-in-order-to-fit-in-more-seats

[Snow Leopard]

Not celebrating AIR being the 17th best airline in the world with the best Premium Economy ?

https://www.worldairlineawards.com/worlds-top-100-airlines-2018/

https://www.worldairlineawards.com/worlds-best-airline-premium-economy-class-2018/

[Bobdn]

Not celebrating AIR being the 17th best airline in the world with the best Premium Economy ?

https://www.worldairlineawards.com/worlds-top-100-airlines-2018/

https://www.worldairlineawards.com/worlds-best-airline-premium-economy-class-2018/

under discussion at the moment here:

https://www.geekzone.co.nz/forums.asp?forumid=179&topicid=239446

According to poster sbiddle Air has never been in the top 10 of this award "....since 2012 they've been 17th, 18th, 16th, 17th, 17th, 19th and 17th this year."

[Snow Leopard]

under discussion at the moment here:

https://www.geekzone.co.nz/forums.asp?forumid=179&topicid=239446

According to poster sbiddle Air has never been in the top 10 of this award "....since 2012 they've been 17th, 18th, 16th, 17th, 17th, 19th and 17th this year."

They were top 10 for four or five years in a row upto and including 2011.

I seem to recall that one year they placed ahead of Qantas.

[Bobdn]

Ah, ok. So many awards for airlines and everything else these days it seems. I wonder when this award madness kicked off? I imagine it's a relatively recent thing in western civilization, not more than 40 years old.

[Blue Skies]

Not celebrating AIR being the 17th best airline in the world with the best Premium Economy ?

https://www.worldairlineawards.com/worlds-top-100-airlines-2018/

https://www.worldairlineawards.com/worlds-best-airline-premium-economy-class-2018/


Ahh..... these awards rate Garuda in Top 10 Airlines in the World ?? Scary!

[Snow Leopard]

Ahh..... these awards rate Garuda in Top 10 Airlines in the World ?? Scary!

You obviously know absolutely nothing about the modern Garuda Airlines.

[Snow Leopard]

Ah, ok. So many awards for airlines and everything else these days it seems. I wonder when this award madness kicked off? I imagine it's a relatively recent thing in western civilization, not more than 40 years old.

That reminded me of this wonderful post:

because there are so many different awards out there...nothing more than a PR sham. The next award will be from a weetbix box.

[Blue Skies]

You obviously know absolutely nothing about the modern Garuda Airlines.

Just my opinion based on observation of Garuda's deteriorating performance in recent months, passenger complaints increasing due spate of delays & major flight cancellations since December, even pilots talking about Garuda's good reputation being ruined, pilot & union discontent with new management cost cutting due to huge losses in 2017 & new board members with no airline experience contributing to deteriorating performance, $64.3 million loss for Jan- March period. Not great when an airline has all it's pilots threatening to strike (called off at last minute) & claiming management not listening.

I've flown a few airlines too & worked (in management) for a few as well, & the point I was making was just Imo wouldn't rate Garuda above Air NZ although happy to accept others may see differently.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12091693

Relax RR has your back with their forthcoming robots.

[dobby41]

Welcome back...I kind of missed sparring paws with you. Brilliant service standards on another cut price carrier leading to more traumatized passengers.
https://www.msn.com/en-nz/news/world/pilot-smoking-e-cigarette-forces-flight-to-plunge/ar-AAA3dqs?ocid=spartandhp I would think that would be a firing offence on an AIR aircraft. Wonder how the top brass would discipline that Air China Pilot ? We bus ticket slap on the paw PT ? Note the reasonably lengthy incarceration of a British Airways pilot...an indication that for want of a better description "traditional" carriers take these sort of issues more seriously ?
Should be a firing offence?
It was - pilots lost their license
http://www.radionz.co.nz/news/world/362152/air-china-vaping-pilots-fired-flights-cut-over-e-cigarette-emergency

[Beagle]

Should be a firing offence?
It was - pilots lost their license
http://www.radionz.co.nz/news/world/362152/air-china-vaping-pilots-fired-flights-cut-over-e-cigarette-emergency

My goodness...that certainly was taken extremely seriously !

[Snow Leopard]

My goodness...that certainly was taken extremely seriously !

"Once the crew saw that the air conditioning had been turned off, they reactivated it and brought the flight back to its normal altitude."

The smoking and turning the air-con off is actually the minor part of the incident.
Once the emergency oxygen had been deployed they should have stayed low and landed as was practible. Climbing back to altitude with a spent oxygen system was a critical, life-threatening action that had no justification in the circumstances.

[Snow Leopard]

Just my opinion based on observation of Garuda's deteriorating performance in recent months, passenger complaints increasing due spate of delays & major flight cancellations since December, even pilots talking about Garuda's good reputation being ruined, pilot & union discontent with new management cost cutting due to huge losses in 2017 & new board members with no airline experience contributing to deteriorating performance, $64.3 million loss for Jan- March period. Not great when an airline has all it's pilots threatening to strike (called off at last minute) & claiming management not listening.

I've flown a few airlines too & worked (in management) for a few as well, & the point I was making was just Imo wouldn't rate Garuda above Air NZ although happy to accept others may see differently.

Several of those ahead of AIR in the rankings have similar and other problems, but the awards are about customer satisfaction as determined by consensus of the many.

[Beagle]

"Once the crew saw that the air conditioning had been turned off, they reactivated it and brought the flight back to its normal altitude."

The smoking and turning the air-con off is actually the minor part of the incident.
Once the emergency oxygen had been deployed they should have stayed low and landed as was practible. Climbing back to altitude with a spent oxygen system was a critical, life-threatening action that had no justification in the circumstances.

Good point !
https://www.nbr.co.nz/article/farnborough-orders-surge-new-transtasman-route-and-more-ng-p-216928

[winner69]

nothing like a bit of rivalry between competitors

They'll be a nusiance to AIR for a while

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12096646

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/321504/283581.pdf

Steady performance for June.

[Enjay]

July
August
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total



Passengers carried 2014/15
1,055
1,046
1,330
1,093
1,090
1,431
1,071
1,138
1,507
1,167
1,030
1,341
14,154



Passengers carried 2015/16
1,355
1,126
1,433
1,144
1,185
1,514
1,139
1,240
1,534
1,204
1,071
1,215
14,979
5.83%


Passengers carried 2016/17
1,356
1,175
1,500
1,226
1,232
1,595
1,182
1,268
1,613
1,285
1,165
1,357
15,954
6.51%


Passengers carried 2017/18
1,404
1,228
1,567
1,318
1,332
1,691
1,254
1,335
1,753
1,384
1,239
1,471
16,976
6.41%



















Revenue passenger kilometres 2014/15
2,247
2,193
2,741
2,141
2,117
2,960
2,604
2,442
3,055
2,410
2,105
2,919
28,519



Revenue passenger kilometres 2015/16
3,001
2,428
3,157
2,401
2,381
3,497
2,858
2,694
3,294
2,568
2,257
2,688
31,476
10.37%


Revenue passenger kilometres 2016/17
3,069
2,589
3,371
2,614
2,570
3,583
2,954
2,749
3,321
2,711
2,401
2,922
34,854
10.73%


Revenue passenger kilometres 2017/18
3,058
2,660
3,408
2,781
2,667
3,678
3,026
2,923
3,682
2,933
2,608
3,220
36,644
5.14%



Passengers still steadily increasing, although revenue passenger kms have a slight dent in them. Graphs attached.
9831

PS Has had a peek at the AIR's fuel hedging recently? 2017H2 saw -952k net compensation. 2018H2 on track for 48M net compensation. Not an accountant so unsure how that flows through to financials.

[winner69]

Enjoy, good stuff

Have you thought of presenting those passenger numbers and RPKs as a moving annual total .....would be only 2 lines on a chart and we could see how fast the line is going up

[Beagle]

July
August
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total



Passengers carried 2014/15
1,055
1,046
1,185
1,093
1,090
1,431
1,071
1,138
1,507
1,167
1,030
1,341
14,154



Passengers carried 2015/16
1,355
1,126
1,252
1,144
1,185
1,514
1,139
1,240
1,534
1,204
1,071
1,215
14,979
5.83%


Passengers carried 2016/17
1,356
1,175
1,500
1,226
1,232
1,595
1,182
1,268
1,613
1,285
1,165
1,357
15,954
6.51%


Passengers carried 2017/18
1,404
1,228
1,567
1,318
1,332
1,691
1,254
1,335
1,753
1,384
1,239
1,471
16,976
6.41%



















Revenue passenger kilometres 2014/15
2,247
2,193
1,326
2,141
2,117
2,960
2,604
2,442
3,055
2,410
2,105
2,919
28,519



Revenue passenger kilometres 2015/16
3,001
2,428
1,409
2,401
2,381
3,497
2,858
2,694
3,294
2,568
2,257
2,688
31,476
10.37%


Revenue passenger kilometres 2016/17
3,069
2,589
3,371
2,614
2,570
3,583
2,954
2,749
3,321
2,711
2,401
2,922
34,854
10.73%


Revenue passenger kilometres 2017/18
3,058
2,660
3,408
2,781
2,667
3,678
3,026
2,923
3,682
2,933
2,608
3,220
36,644
5.14%



Passengers still steadily increasing, although revenue passenger kms have a slight dent in them. Graphs attached.
9830

PS Has had a peek at the AIR's fuel hedging recently? 2017H2 saw -952k net compensation. 2018H2 on track for 48M net compensation. Not an accountant so unsure how that flows through to financials.

Excellent work and welcome to the forum.

[Snow Leopard]

...Passengers still steadily increasing, although revenue passenger kms have a slight dent in them. Graphs attached.
9830

...

Absolutely fascinated by that September dip in RPK in 2014 & 2015.

So obviously wrong, you used the short haul total instead of the group total, did you not think to sanity check them?

[Enjay]

Absolutely fascinated by that September dip in RPK in 2014 & 2015.

So obviously wrong, you used the short haul total instead of the group total, did you not think to sanity check them?

Have a check yourself here: https://www.airnewzealand.co.nz/monthly-operating-data-2016

The figures are the group, not short haul. Prepared late at night, as is the custom with hobby traders. Mistakes my own.

[Snow Leopard]

Have a check yourself here: https://www.airnewzealand.co.nz/monthly-operating-data-2016

The figures are the group, not short haul. Prepared late at night, as is the custom with hobby traders. Mistakes my own.

Yes I checked before I first posted which is why I can repeat, but in a reworded way, that for Sept-14 & Sept-15 you used the short haul numbers instead of the group numbers that you used elsewhere.

Otherwise, the explanation for the September dip would be that passengers decided to get off about half way through the flight.

[Enjay]

Yes I checked before I first posted which is why I can repeat, but in a reworded way, that for Sept-14 & Sept-15 you used the short haul numbers instead of the group numbers that you used elsewhere.

Otherwise, the explanation for the September dip would be that passengers decided to get off about half way through the flight.

Yes, you'll notice the two figures have been corrected.

Do you have any views on AIRs remarkable net compensation from fuel hedging? Be more interested to hear analysis on that than four year old passenger numbers etc.

[Beagle]

Yes, you'll notice the two figures have been corrected.

Do you have any views on AIRs remarkable net compensation from fuel hedging? Be more interested to hear analysis on that than four year old passenger numbers etc.


AIR's policy with fuel hedging is to hedge in such a way as to give them time to adjust their business model. Over the long run AIR pays a handsome price to achieve this objective as the cost of hedging is quite substantial and ongoing regardless of whether they end up in the money or out of it with their fuel collars. They seem to persist with it so clearly believe the ~ $15m cost per annum is worth it in terms of giving them time to adjust pricing and capacity as required. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/318567/279987.pdf

They don't hedge everything so their net fuel cost will still be quite significantly higher this year than last, (notwithstanding significant net compensation from this year's hedging program) when fuel costs were significantly lower but that said they recently maintained they're on track to beat last years profit so everything looks satisfactory to hold this company for its 9% gross dividend yield. Oil price is a key risk in regard to FY19 earnings but perhaps worth noting that according to the last fuel hedge disclosure in May 2018 they had 74% of their fuel requirements covered for the first half of FY19 with a net compensation of ~ $29.5m.
They seem to be "on a roll" with their fuel hedging recently.

[dreamcatcher]

https://www.stuff.co.nz/business/industries/105902988/air-nz-chairman-tony-carter-retires-dame-therese-walsh-named-as-replacement

[winner69]

This leased plane from EVA seems a pretty good one ......must be to tout EVA as an award winning airline (maybe better than AIR themselves)

https://www.airnewzealand.co.nz/travel-alerts

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12097653

I am almost speechless. I would have thought plugging into the airports electricity and route / thrust setting / load optimization would have been something that should have been happening going back decades. Who knows, maybe Joe public is fooled by this latest public relations greenwashing.

[percy]

What a total disgrace.
And to think I thought they were saving the planet by using more fuel efficient aircraft.

[777]

If you read what was actually written you will realise that the savings referred to the last year. The practices have been in for sometime.

[percy]

If you read what was actually written you will realise that the savings referred to the last year. The practices have been in for sometime.

In that case it was a very poorly constructed article.
Misleading to say the least,especially referring to the savings made during the Marsden fiasco.

[steveb]

In that case it was a very poorly constructed article.
Misleading to say the least,especially referring to the savings made during the Marsden fiasco.
But the marsden pipeline leak was last year?

[Beagle]

If you read what was actually written you will realise that the savings referred to the last year. The practices have been in for sometime.


Air New Zealand says it has saved the enough fuel for 20 flights between Auckland and Los Angeles by plugging in to mains power while on the ground here during the past year.
Instead of using big Auxiliary Power Units in their tails, jets are running off mains power to run onboard lighting, air conditioning and mechanical systems at the gate when the main engines are off.

They are implying this is a new way of doing things. If they've been doing this for ages then what AIR had to say was disingenuous or misrepresented / misreported by the N.Z. Herald in my opinion. I suppose at least 20 flights to the U.S. is something somewhat meaningful. From memory their entire electric vehicle fleet is saving them 70,000 liters per annum...less than 1 flight to the U.S. !

[Beagle]

Nobody seems to care and are buying the greenwashing hook line and sinker. SP heading up into blue sky zone leading to reporting date. Heading for close to a record result ?

[winner69]

Nobody seems to care and are buying the greenwashing hook line and sinker. SP heading up into blue sky zone leading to reporting date. Heading for close to a record result ?

Investors / Fund Managers / instos don’t care much about climate change / environmental stuff. It’s all about P
E ratios and squiggly lines on a chart

They do just as much ‘greenwashing’ as the companies.

[Marilyn Munroe]

For a bit of background about aircraft power when the main engines are shut down and on the apron go here;

http://www.cavotec.com/en/your-applications/airports/gate

Cavotec will be familiar to Sharetraders as the company which brought out Mooring Systems.

Jet aircraft are supplied with electricity and cabin air from one of the main engines while they are running. They have an auxiliary power plant located in the tail which is refereed to as the APU(Auxiliary power unit) which provides these services(1) when the main engines are stopped.

The third source is GPU(Ground power unit) in which a power cable is connected to the aircraft. There is also the option in some cases to provide cabin air from a ground source as well.

Turbo prop aircraft do not have an APU. Travelers on Cullen Airlines ATR aircraft will have noticed a GPU cart with a diesel engine and a cable connected to the aircraft on the apron.

With the fast turn around times airlines are trying to achieve it is often less hassle to leave the APU running than to hook up a GPU.

This is slowly changing because of APU air and noise pollution, fuel costs and save the planet sensitivities.

Boop boop de do
Marilyn

(1) Also can be used to provide power for engine start up.

[winner69]

Stupid Tinker Bell for getting our company onnStuff again

https://www.stuff.co.nz/business/industries/106194466/tinker-bells-wings-clipped-by-air-new-zealand

[Raz]

With the falling NZD... has anyone here sited any decent research on air travel demand and changes in the NZD currency. ps All over the hedge strategy, I'm thinking more market demand.

I would think domestic would be inelastic..international not so sure...

[Beagle]

With the falling NZD... has anyone here sited any decent research on air travel demand and changes in the NZD currency. ps All over the hedge strategy, I'm thinking more market demand.

I would think domestic would be inelastic..international not so sure...


No research mate but as you know N.Z. is widely regarded by overseas tourists as an expensive destination both in terms of logistics, getting here,and costs while they're here. Like you I think a lower $Kiwi would help tourism demand. I am neutral on AIR at the current price and only hold a modest stake.

[traineeinvestor]

FWIW, Air NZ has launched a promotion offering HK/Auckland round trip tickets in all classes at below the usual prices (and below Cathay's current prices on the same route).

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12108044

They should call this new ultra long range flight the DVT special lol

[Blue Skies]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12108044

They should call this new ultra long range flight the DVT special lol

Exactly!

Something I found really does make a difference on long flights & recommend, is wearing those long DVT pressure socks (to just below the knee) even if you're not in risk category.
Understand (young super fit) athletes & sports teams like the All Blacks use them on long flights so they arrive in better condition & have quicker recovery.
Of course reducing risk of DVT is added benefit.

[winner69]

Whoever looks after problem international flights having a busy day today

HKG-AKL returns to HKG overnight and AKL-SYD returned to AKL this morning

Not even Dreamliner ...the trusty 777s

[Beagle]

SP been creeping up in the lead up to reporting this Thursday. Good sign that we're in for a solid result.

[winner69]

SP been creeping up in the lead up to reporting this Thursday. Good sign that we're in for a solid result.

....and a positive outlook

This year’s 2nd best year on record will be the 3rd best year on record this time next year eh

[Beagle]

....and a positive outlook

This year’s 2nd best year on record will be the 3rd best year on record this time next year eh

Yeah I'm not worried about the rising oil price, makes the long skinny route to N.Z. far more marginal for other carriers and lessens competition.

Guy at Craigs says we need to get our head around "brand power" this year. There are those that have the brand power to put up prices to account for rising costs and those that don't. If AIR ever get all those fancy dream birds working properly again they'll be well positioned.

As usual Chris Luxon will gloss over the whole Dreamliner drama in the call on Thursday but I reckon they're really putting their claws into RR for mega compensation.

[Beagle]

Pretty good start to FY19 with July RPK's up 7.3%, $16m in the money with fuel hedges for the forthcoming year and about 70% of FY19's fuel hedged at good prices.
9.1% gross dividend yield if they pay 22 cps in the year ahead.
I hold.

[Oliver Mander]

Pretty good start to FY19 with July RPK's up 7.3%, $16m in the money with fuel hedges for the forthcoming year and about 70% of FY19's fuel hedged at good prices.
9.1% gross dividend yield if they pay 22 cps in the year ahead.
I hold.

Yes, that hedging graph is a dream come true...nearly 3/4 of fuel needs hedged at a cap price well below market. Good bit of cost reduction there...
Not sure its good news that they are running at 86% international capacity...in July. Does that imply further capex for 'expansion' of aircraft (not just replacement)? Good in the long-term though.

Also hold.

[iceman]

More bad publicity for AIR https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12110581

[winner69]

More bad publicity for AIR https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12110581

Just the daily trials and tribulations of an airline eh Iceman

Probably punters think they just unlucky if they get caught up in these incidents

Main thing is AIR continue to make heaps

[winner69]

Annual result much as expected

Next year going to make less -

Based upon current market conditions and assuming an average jet fuel price of US$85 per barrel, 2019 underlying earnings before taxation is expected to be in the range of $425 million to $525 million.

This excludes an estimated $30 million to $40 million impact from schedule changes prompted by the global Rolls-Royce engine issues.


With such a wide range makes you wonder why they bother put out a forecast ..all I know $385m is a long way from $540m and even $485m is not that good compared to $540m (10% down)

Never mind ...still making heaps and got heaps of cash to throw aroundbon new toys and staff bonuses and shareholders

[bull....]

good result , agree big downgrade in earnings next year

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/322646/285099.pdf

Based on mid point of forecast including engine issue costs, (finally they are coming clean and saying this is a real issue that's costing them serious money) pre tax profit is estimated at $440m compared to $540m this year. $440m compares to average analyst forecast as of yesterday for FY19 of $494m $54m less than previous estimate.
Mostly this is lower due to the impact of the RR issue, (an impact which the company appears to saying is non recoverable from RR?).
Final divvy as expected. Noting the forecast is based on a jet fuel price of $U.S.85.
I am hoping the RR issue will finally be resolved properly during the year ahead so the $30-40m cost is really an extraordinary item and normalized pre tax profit forecast at the mid point is $475m, more or less in line with analyst expectations of $494.
Shares about fair value in my opinion cum an 11 cent fully imputed divvy which is already priced in, in my opinion. Hold.

[Beagle]

Further thoughts. Analysts are generally positive on FY20 and indications are that the current dividend rate is sustainable.
The market is hungry for yield with ANZ Bank this week coming out and predicting the next move in interest rates is down !

Market will be disappointed with FY19 outlook which at mid point forecast treating the RR costs as a one-off is 4% below average analyst expectations.
Logic would suggest this might lead to a 4% correction in the SP from $3.41 yesterday to $3.27 today...but these things often overshoot so maybe we'll see $3.20 soon still trading cum an 11 cent divvy.

There is still the possibility of special'(s) in FY20 - FY 22 but forgetting about those what does the investment case on a yield basis look like going forward ?

At $3.20 cum divvy, (theoretical ex price of $3.09), investors are expecting gross divvies of 22 / 0.72 = 30.55 cps going forward which gives a gross yield of 9.9% plus the possibility of specials in due course. I think there's a sound investment case at that level and I would be prepared to add around there. Happy to hold a modest stake in the meantime.

Forward PE for FY19 looks to be about 11. Shares priced about right at present in my opinion.

[sb9]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12111737

Boomer of a result from across the ditch for Qantas.

[Bobdn]

Cool, thanks for the info Beagle. The dividend returns are incredible with this company. I get these Motley Fool emails talking about dividend plays on the ftse yielding 5%!, and here we are with yields almost twice that. My net dividend is 8.3% now. I think 8.7% GROSS was the absolute highest big bank term deposit you could get in the 2000s. I remember thinking when the GFC hit "gee I wish I had got one of them 5 year term high term deposits when they available". No regrets now.

I'd like to celebrate by buying a model aircraft. I wonder if they'll be bring out a model A320neo? I'll stay away from the 787-9, almost got that one before the troubles.

https://merchandise.airnewzealand.co.nz/aircraft

[winner69]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12111737

Boomer of a result from across the ditch for Qantas.

Pretty good airline that Qantas

[Beagle]

Pretty good airline that Qantas

Yeap that is a cracker. Shows their strong focus on cost control is paying dividends....something AIR need to work harder at.

[winner69]

Yeap that is a cracker. Shows their strong focus on cost control is paying dividends....something AIR need to work harder at.


CASK improved

I reckon our man Chris must be getting bored now and not as enthusiastic as he was a few years ago. Been at AIR too long and maybe looking around for a new challenge / job. That retention amount probably keeping him but staying on for a few million isn’t always the most motivating.

What you think beagle

[value_investor]

I second Beagle's analysis.

Just a few points to make in airline stocks. A lot of the time, airlines can do things right and operate efficiently like AIR has done delivering better CASK numbers and still see adverse results because of factors outside their control. The fuel costs were $135m higher which is almost the same cost of paying an 11c dividend as per their FS ($130m).

Looking at the outlook, I'm not sure if an 11c dividend would be maintainable if jet fuel prices climbed again to higher levels especially at the lower end of that $425-525m range. The dividend itself at 11c twice a year is $260m and then you have to factor in further investment which is bound to happen. Then you have to factor in potential raise in interest rates in the next 1-2 years.

I still think that the yield justifies holding the stock in the short term. However, if you are going to be in this one for longer than that just be prepared to have some ups and downs, especially investing in this industry.

[couta1]

Happy with that result, forecast is just playing it safe IMO, great resilient business so buying today. PS-Happy to chase it down if anyone's keen to offer any up under $3.30.

[Beagle]

CASK improved

I reckon our man Chris must be getting bored now and not as enthusiastic as he was a few years ago. Been at AIR too long and maybe looking around for a new challenge / job. That retention amount probably keeping him but staying on for a few million isn’t always the most motivating.

What you think beagle

Sorry I didn't get time to listen in on the call today mate. Been looking after myself a bit today. Getting out and enjoying the odd bit of sunshine and eating well. Read an interesting long article on depression in a mens magazine. Will try and get time tomorrow to have a listen to the replay...must be a link somewhere and post some further thoughts including whether Chris seems enthusiastic. Its been a pretty tough year with one thing and another...good resilience but that RR issue looks sticky and that sort of thing must be grinding his gears a bit.

Might start a new thread on coping with the winter blues in the off market section soon...see what idea's others have.

[blackcap]

Might start a new thread on coping with the winter blues in the off market section soon...see what idea's others have.

That's easy if you can take the time off work and have a place that you can call home: Fly AIR to Europe from about mid July to mid August and lose 1 month of the worst of winter and get a month of the best of summer. Trying to do that every year from now on, have done the last 3 years and can recommend. If you book early enough can get a return ticket for about $2,000 incl taxes and we normally get a few days in either Shanghai, Hong Kong, Singapore to break the trip and see some other part of the world at the same time :)

[Raz]

That's easy if you can take the time off work and have a place that you can call home: Fly AIR to Europe from about mid July to mid August and lose 1 month of the worst of winter and get a month of the best of summer. Trying to do that every year from now on, have done the last 3 years and can recommend. If you book early enough can get a return ticket for about $2,000 incl taxes and we normally get a few days in either Shanghai, Hong Kong, Singapore to break the trip and see some other part of the world at the same time :)

Yeah why not just work six months of the year and make sure you use air as much as possible to get away, it does seem to help as well😂 the person and me as a shareholder 🤔

[Beagle]

That's easy if you can take the time off work and have a place that you can call home: Fly AIR to Europe from about mid July to mid August and lose 1 month of the worst of winter and get a month of the best of summer. Trying to do that every year from now on, have done the last 3 years and can recommend. If you book early enough can get a return ticket for about $2,000 incl taxes and we normally get a few days in either Shanghai, Hong Kong, Singapore to break the trip and see some other part of the world at the same time :)

Work pressure much too intense at this time of year. Happy for you though.
Price down 4% today much as I expected as stated in post #13712.
Looking forward to the analyst downgrades and recommendation to clients coming through tomorrow to reduce. They will take this as good research without realizing the SP has already adjusted and hopefully smack this down below fair value, maybe to $3.20 or hopefully even less. This hound is poised to pounce :D

[couta1]

Work pressure much too intense at this time of year. Happy for you though.
Price down 4% today much as I expected as stated in post #13712.
Looking forward to the analyst downgrades and recommendation to clients coming through tomorrow to reduce. They will take this as good research without realizing the SP has already adjusted and hopefully smack this down below fair value, maybe to $3.20 or hopefully even less. This hound is poised to pounce :D My itchy fingers got the better of me and I loaded up today just in case some sanity prevails and it stabilises tomorrow. If people follow hollow analyst recommendations them I'm ready to add more of course.

[Snow Leopard]

Fuel this year was $927M
Current estimate for next year is $423M more or 45% high​er at $1,350M

[compare QAN: $3B23 to $3B92 21% higher ??]

With a 'normalised' mid-point forecast of $475 NPBT down only $65M on this FY18 then they are doing pretty well.

Assuming that US$85 per barrel and NZ$/US$ of 0.66 into FY2020 that would raise the fuel bill again.

Also I have heard sensible talk of future expanded margins on Jet over Crude due to the increased demands of aircraft, and the low sulphur regs for shipping in 2020, though of course some disagree.

But the price of a barrel rarely stays still for long, so who knows?


On another note I am confused as to just how many A32XNEOs AIR have on order, I hear 24 from reliable sources but I can not match that to the AIR docs.

[winner69]

Dreamliner to Shanghai turned back to AKL this morning

[blackcap]

Dreamliner to Shanghai turned back to AKL this morning

Not good is it, for the PR, people's feeling of safety, and also the huge cost that AIR faces having to re book all those passengers that were going on to other destinations. How long is this issue going to go on for? My partner is flying Vancouver to Auckland shortly but not on an AIR plane but one they have hired for the time being. Hope the service is up to usual standards. Hope AIR have some good insurance to get back all their lost income and also lost reputation and loyalty...

[iceman]

Chris admits it has been a tough year, or SUBOPTIMAL, with the Dreamliners :-) https://www.nzherald.co.nz/business-video/news/video.cfm?c_id=1503079&gal_cid=1503079&gallery_id=197366

I was on a flight from Auckland to Nelson a couple of weeks ago. We sat onboard for nearly 2 hours because of overloading of luggage, while they moved the luggage backwards and forwards. In the end they cancelled the flight because they couldn' t sort it out and the full plane load of people was told to go back inside and book another flight. Pilots and crew were appalling.

[dobby41]

I was on a flight from Auckland to Nelson a couple of weeks ago. We sat onboard for nearly 2 hours because of overloading of luggage, while they moved the luggage backwards and forwards. In the end they cancelled the flight because they couldn' t sort it out and the full plane load of people was told to go back inside and book another flight. Pilots and crew were appalling.

That just sounds crazy. Cancel the flight because they can't work out where to put the bags!

[iceman]

That just sounds crazy. Cancel the flight because they can't work out where to put the bags!

Yes it is and you can imagine the anger from passengers, including yours truly. I'd just flown in from London (with AIR) and ended up flying via Wellington to Nelson extending my trip by 8 hours beyond schedule. Have never had service like that from any airline. Appalling.

[Beagle]

That's it, keep up the negative talk folks, lets get this down to $3.00 and then pounce ! Might wait another day or two for the analyst recommendations to work their magic.

[Arbroath]

That's it, keep up the negative talk folks, lets get this down to $3.00 and then pounce ! Might wait another day or two for the analyst recommendations to work their magic.

FY19 might prove a difficult year but I'd love AIR to retreat as the cashflow/dividends in FY20-22 could be crazy big but a cost base of say $2.50-2.80 would seal the deal for me....

[winner69]

Chris admits it has been a tough year, or SUBOPTIMAL, with the Dreamliners :-) https://www.nzherald.co.nz/business-video/news/video.cfm?c_id=1503079&gal_cid=1503079&gallery_id=197366

I was on a flight from Auckland to Nelson a couple of weeks ago. We sat onboard for nearly 2 hours because of overloading of luggage, while they moved the luggage backwards and forwards. In the end they cancelled the flight because they couldn' t sort it out and the full plane load of people was told to go back inside and book another flight. Pilots and crew were appalling.

And they got a bonus for that ....

[Beagle]

Read the behind the paywall NBR article on this and have also read the FAA release when they reduced the ETOPS rating on RR powered Dreamliners.

What is now (sadly) clear is this ETOPS reduction is costing AIR $30-40m per annum as flights to North and South America cannot be undertaken with these aircraft and some flights to Asia are also affected. Asia flights may involve a suboptimal route to stay within range of a diversionary airport to meet new ETOPS requirements.

Thoughts.
1. It is now clear that AIR are not getting any compensation from RR for the flight restriction impact of this amended rating. I think this is extremely disappointing.
2. What's clear from the behind the paywall article on NBR is that RR are really, really struggling with this issue. Originally the engines were all to be inspected by April 2018. RR have over 300 of these engines in service and are now talking 12 months before engines come back...wasn't especially clear in the NBR article but what is clear is this issue is "sticky".
3. The analyst on NBR thought as this $30-40m was a one off its ok to treat it as an extraordinary item and ignore it going forward, (and to be honest that was my thinking yesterday too)
4. Reflecting on this overnight and recalling the text of the FAA ETOPS rating change I recall distinctly that renewal of 340 min ETOPS is by no means a certainty and it is very clear this will take quite some time.

In my opinion there is a chance that the better rating may never be achieved again which would render the dreamliners as sub optimal for AIR's requirements going forward.
More likely it will take several years for RR to prove the newly designed replacement components are reliable. We have discussed on here before how sometimes problematic engines can go on to be exactly that despite changes in components. I think there is a real chance of that.

Best case in my opinion is that extended twin operating rating is restored in about 3 years. Impact in the meantime is about $30-40m per annum, about 3 cps in annual earnings. Obviously if the rating is never restored the impact on earnings is very sticky.

I think there's about a 50/50 chance the rating doesn't get restored. I have lowered my valuation of AIR by 15 cps. I see fair value at $3.20 cum dividend, $3.09 ex divvy. I am okay to modestly increase my stake at $3.20 cum dividend but that's a yield story at that price and its no bargain in my view, just fair value there.

I also think snow leopard made a good point recently on fuel.

[blackcap]

ETOPS = engines turn or passengers swim :)

[Beagle]

ETOPS = engines turn or passengers swim :)

:lol: :lol:

[winner69]

Beagle ...didn’t I say once a lemon always a lemon or something like that,

[Beagle]

Beagle ...didn’t I say once a lemon always a lemon or something like that,

Yes you did mate. I've enhanced my understanding of this engine somewhat since then and without in any way pretending to be a jet engine engineer my understanding is that from a design point of view they really pushed the operational parameters of the engine to get the extra fuel efficiency. When you really squeeze something hard maybe reliability and longevity suffer and maybe that's a systemic problem going forward ?

[dobby41]

Yes you did mate. I've enhanced my understanding of this engine somewhat since then and without in any way pretending to be a jet engine engineer my understanding is that from a design point of view they really pushed the operational parameters of the engine to get the extra fuel efficiency. When you really squeeze something hard maybe reliability and longevity suffer and maybe that's a systemic problem going forward ?

At what point is it cheaper just to swap out the engines (doing whatever that takes) to be the same as their other, good, ones?

[Raz]

At what point is it cheaper just to swap out the engines (doing whatever that takes) to be the same as their other, good, ones?

Yeah depends on how long it goes on, those engines do not come cheap! What a screw up to your strategic plans..

[777]

Has it been stated that the Shanghai turn back is engine related or is that just sharetrader speculation?

[dobby41]

Has it been stated that the Shanghai turn back is engine related or is that just sharetrader speculation?

"NZ289 returned to Auckland shortly after departure when pilots received an indication in the cockpit of a possible technical issue," the spokeswoman said.

"The indication has since been confirmed to be false."

[winner69]

"NZ289 returned to Auckland shortly after departure when pilots received an indication in the cockpit of a possible technical issue," the spokeswoman said.

"The indication has since been confirmed to be false."

Bloody flashing lights ...but an expensive false positive ...or is that PEB talk

[777]

"NZ289 returned to Auckland shortly after departure when pilots received an indication in the cockpit of a possible technical issue," the spokeswoman said.

"The indication has since been confirmed to be false."

You can have faults that are not necessarily related to the engines.

[Beagle]

At what point is it cheaper just to swap out the engines (doing whatever that takes) to be the same as their other, good, ones?

https://en.wikipedia.org/wiki/Boeing_787_Dreamliner Plane was designed so that interchangeability is possible in 24 hours. Even if AIR bit the bullet on a full changeover, (which is incredibly unlikely in my opinion) the issue is GE are not going to have 20 or so GEnx engines sitting in a warehouse for immediate delivery even at something like $US20m each.

AIR are caught between a rock and a hard place with these engines and RR are struggling. Just got to hope that RR's newly designed components fix the problems and prove to be durable. I see AIR shares touched my buy price of $3.20 earlier today. I was out and didn't have a limit buy order in at that price and to be honest for whatever reason I do not feel disappointed to have missed that opportunity. My gut feel is there could be a slightly better one in due course. Momentum is a powerful force. Maybe a bit more of a correction coming.

[peat]

(Anecdotal)
We had a 3 hour wait in the plane (777-300) on the tarmac the other day before take off due to a bung pilots chair. BNE-AKL
There were over 300 people on the plane and their seats were all good but the captains chair had some failing in a component which we were advised was required by the regulations. It took an engineer 3 hours to fix. The extra gall was added by us being told when the fix job had been completed but they now needed to furnish photographs and gain approval from HO to fly. This took almost half an hour itself !! I think they must have used carrier pigeons.

We missed our connecting flight ( Air Chathams ) and despite not being obliged to assist AIR put us up for the night in a hotel.I was immensely grateful as was travelling with 86 year old Mum - but shareholders might not be so happy.

I hate airlines as a sector but even with that strangely I do want to nibble at AIR. Stop your barking Beagle. :p You are probably right about it having a place in a portfolio though.


Edit
Oh and Queensland has been very summery during my time there over the last few weeks. Weather app only needed the sunshine icon the whole time. No need to go to Europe for summer really , if you dont want to.

[couta1]

Guidance range for FY19 is wide, some punters don't like that, I remember last time they gave a wide range like that the price dropped then they upgraded along the way and nailed the top end.

[dobby41]

We missed our connecting flight ( Air Chathams ) and despite not being obliged to assist AIR put us up for the night in a hotel.I was immensely grateful as was travelling with 86 year old Mum - but shareholders might not be so happy.

I hate airlines as a sector but even with that strangely I do want to nibble at AIR. Stop your barking Beagle. :p You are probably right about it having a place in a portfolio though.

This shareholder would be quite happy that you were looked after - repeat business is very important. More important than short term profit.

[dobby41]

You can have faults that are not necessarily related to the engines.

Exactly!
Could been anything that would make the pilots uncomfortable for the next 10 hrs.
I'd rather they turn back than go 'oh bugger' later.

[Beagle]

https://edge.media-server.com/m6/p/83kn7br9 The call.

[peat]

Could been anything that would make the pilots uncomfortable for the next 10 hrs.

Like a broken seat ? :p
(see my earlier post)

[couta1]

Good support on close at $3.235, with a nice fat divvy locked into that price and a Sept 6th Ex date I'm expecting divvy seekers to turn up next week.

[dreamcatcher]

Good support on close at $3.235, with a nice fat divvy locked into that price and a Sept 6th Ex date I'm expecting divvy seekers to turn up next week.

AIZ finished @ A$3.02 which equates to NZ$3.305 so be interesting on Monday

[Beagle]

https://www.marketscreener.com/AIR-NEW-ZEALAND-LIMITED-6491407/consensus/

As expected some pretty sizeable downgrades for FY19. Average broker 12 month ahead target price now just $3.15. In line with where I see it too. Worth a bit more trading cum an 11 cent divvy but ostensibly a yield story at this level.
On a theoretical ex divvy price of $3.125 and assuming they can pay 22 cps going forward (they could be stretched a bit to do this in FY19 with fairly sizeable capex and only 28 cps earnings but I still think it is likely the board will maintain it because capex eases off significantly in FY20 and then further again in FY21). Lots of references to sustainable dividends in their presentation this week so the board won't want egg on their face next year if they can help it will they !

(22 / 312.5) / 0.72 = 9.78% gross yield + possible special(s) early next decade. Pretty sound investment case from a yield perspective in my opinion although not without risk in terms of where the fuel price will go and how long the RR fiasco will continue to be a thorn in the companies side.

HOLD.

[couta1]

https://www.marketscreener.com/AIR-NEW-ZEALAND-LIMITED-6491407/consensus/

As expected some pretty sizeable downgrades for FY19. Average broker 12 month ahead target price now just $3.15. In line with where I see it too. Worth a bit more trading cum an 11 cent divvy but ostensibly a yield story at this level.
On a theoretical ex divvy price of $3.125 and assuming they can pay 22 cps going forward (they could be stretched a bit to do this in FY19 with fairly sizeable capex and only 28 cps earnings but I still think it is likely the board will maintain it because capex eases off significantly in FY20 and then further again in FY21). Lots of references to sustainable dividends in their presentation this week so the board won't want egg on their face next year if they can help it will they !

(22 / 312.5) / 0.72 = 9.78% gross yield + possible special(s) early next decade. Pretty sound investment case from a yield perspective in my opinion although not without risk in terms of where the fuel price will go and how long the RR fiasco will continue to be a thorn in the companies side.

HOLD. Maybe $3.20 ex the divvy I'd say but could trade up to $3.40 depending on the big boys, retail fish have no influence on the SP for more than a short period, the Govt and insto's own 97% of the stock.

[BlackPeter]

Maybe $3.20 ex the divvy I'd say but could trade up to $3.40 depending on the big boys, retail fish have no influence on the SP for more than a short period, the Govt and insto's own 97% of the stock.

Not sure - price is set by trading, not by owning. Government might have impact on the stock price every time one of their populist ministers is making inappropriate noises, but otherwise: their ownership is quite irrelevant to the price finding. Same with instos - they only impact on the price if & when they are actively trading (but yes, they might).