AIR - Air NZ.

[macduffy]

Foran is just being realistic. The govt wage subsidy is to keep viable businesses and employment intact. There are unemployment benefits for workers whose jobs disappear. Harsh, perhaps, but that's the situation that the airline sector's in at present.

[Beagle]

Beagle can you help me make the numbers work ? , $ 500 mio revenue , labour cost $110 Mio a month , lets say that is reduced to $ 75 mio ( just over 30 % reduction ) lease payments etc etc
Disc : short
Except from above link is below.
"Our monthly labour cost alone is $110m. We have $960m in cash reserves today, but with very little revenue coming in, our cash balance will fall by tens of millions of dollars each week." My estimate is about $60m -$70m per week.

According to CNBC this morning after 9/11, (which was a one-off event), demand did not return to normal for 3 years !

[winner69]

At least not spending much on fuel ...... shame it’s so cheap at the moment

[stoploss]

[QUOTE=winner69;803654]At least not spending much on fuel ...... shame it’s so cheap at the moment[/QUOTE
Be a few years to work off all the hedged stuff at this rate of flying , either that or a massive hit to cut the position out ....

[blackcap]

[QUOTE=winner69;803654]At least not spending much on fuel ...... shame it’s so cheap at the moment[/QUOTE
Be a few years to work off all the hedged stuff at this rate of flying , either that or a massive hit to cut the position out ....

By my rough back of the envelope calcs about $300m NZD to cut the position.

[stoploss]

[QUOTE=stoploss;803659]

By my rough back of the envelope calcs about $300m NZD to cut the position.

that would be at 9% as well .........

[blackcap]

[QUOTE=blackcap;803660]

that would be at 9% as well .........

Well not yet.. they still have $1b in the bank minus a months worth of Opex say $300m. So $700m left in the kitty? That will go very fast though.

[peat]

so they are locked into buying fuel at pre Covid prices and they cant even use it??

Hard to believe , surely options on fuel would have been used.

[Arbroath]

I would advise against cutting the hedging position with oil at $20. Better to just work there way through it and maybe mix in some spot purchases in 2021 once they are hopefully using a bit more jet fuel again. Might take 2-3 years to use it all up but they will.
The key here is to have a decent size domestic service running (and being used of course) by August/September. In stable domestic conditions they can probably make $100m+ a year. The long haul flying has very poor yields compared to domestic.
At the end of the day its very hard to make a bullish case for AIR - this is 100% about survival and they will need to raise capital later this year at maybe 50c or so. Best case if they survive and if you can own them at less than $1 a share after recapitalisation you might stand a chance of making some money on a 3-4 year view. Worst case if its throwing good money after bad and it ends up 100% Government owned.

[stoploss]

so they are locked into buying fuel at pre Covid prices and they cant even use it??

Hard to believe , surely options on fuel would have been used.

Check out post 15708 to 15718 .....

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/349043/317650.pdf

Fuel hedge position is here. A lot depends upon the amount of flying after the lockdown as to how much of each quarters hedge position they can use.

Spot close out today would go to $250m net cost, based on Brent only. I haven't looked at Jet crack spreads but would have thought they would have come in heaps as well so the total extra cost they would be paying compared to spot Jet fuel could be close to the $300m another poster has suggested ?

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12320854
Excerpt "Chief executive Greg Foran is clear that it will become a domestic airline with limited international services. That's a reversal of where it all started nearly exactly 80 years ago - its forerunner, TEAL, launched with an international flying boat flight from Auckland to Sydney".

[BlackPeter]

At least not spending much on fuel ...... shame it’s so cheap at the moment

<deleted> should have read the thread to the end before commenting ...

[Ecks]

AIR Net profit per FY NZ$m
https://scontent-syd2-1.xx.fbcdn.net/v/t1.15752-9/91350023_218233746050718_5830381648637591552_n.png ?_nc_cat=108&_nc_sid=b96e70&_nc_oc=AQnjpYFesFZoQqgP2K-R_ccihCC0WVFkcRKbGOmtplUEG0yyai9OTyylurLqefkmlwo&_nc_ht=scontent-syd2-1.xx&oh=1cc2528a4a86be5ed56395479538d8e7&oe=5EA951B7

GFC hit during the 2008 FY, took 4.5 years for AIR to recover, I think realistic expectation are 5 years for AIR to recover earnings and business confidence with P/E ~ 6 and share price ~ $2.

My expectation is a national owned airline as per the successful examples of Qatar and Emirates, it's the only logical way airlines can proceed in the future given the ever increasing regulatory environments.

My question to you all is what would happen to the minority share holders, the Mum and Dad investors that have already purchased shares at $0.90 due to FOMO, will they be forced to close their position after the government debt to equity swap giving the crown ~ 90% ownership and then takes the extra step of becoming nationalised? Would they simply offer let's say $0.25 per share and would it be the obligation of the shareholder to sell?

[blackcap]

AIR Net profit per FY NZ$m
https://scontent-syd2-1.xx.fbcdn.net/v/t1.15752-9/91350023_218233746050718_5830381648637591552_n.png ?_nc_cat=108&_nc_sid=b96e70&_nc_oc=AQnjpYFesFZoQqgP2K-R_ccihCC0WVFkcRKbGOmtplUEG0yyai9OTyylurLqefkmlwo&_nc_ht=scontent-syd2-1.xx&oh=1cc2528a4a86be5ed56395479538d8e7&oe=5EA951B7

GFC hit during the 2008 FY, took 4.5 years for AIR to recover, I think realistic expectation are 5 years for AIR to recover earnings and business confidence with P/E ~ 6 and share price ~ $2.

My expectation is a national owned airline as per the successful examples of Qatar and Emirates, it's the only logical way airlines can proceed in the future given the ever increasing regulatory environments.

My question to you all is what would happen to the minority share holders, the Mum and Dad investors that have already purchased shares at $0.90 due to FOMO, will they be forced to close their position after the government debt to equity swap giving the crown ~ 90% ownership and then takes the extra step of becoming nationalised? Would they simply offer let's say $0.25 per share and would it be the obligation of the shareholder to sell?

These things can get complicated. But if it got to a situation that without the crown AIR was no longer a going concern, well then the crown can give you 10 cents for your shares. Take it and get 10 cents. Leave it and get nothing. Really that simple. It is possible that the crown takes a larger equity stake before AIR fold (if they ever get there) and then there will be some theoretical fair value that is arrived at by debt and equity holders. Another scenario is that AIR use the crown loan, trade profitably, pay the crown back and no one gets diluted.

[Beagle]

Its not possible to trade profitably in FY20 or FY21 and very unlikely in FY22 either in my opinion.

My sense is we simply get a rinse and repeat of the last bailout that occurred after 9/11.

This time I expect the N.Z. Govt to end up with ~ 90% of the airline at ~ 25 cents and when the storm has finally passed they will look to do a sell-down again, just as per past practice.

Rinse and repeat whenever necessary in the future. Very hard for minority shareholders to win and get a feed in the long run when each year the senior staff eat like its a banquet, The Govt clean up moist of the scraps in PAYE, GST Taxes, and dividends and minority shareholders are literally left with crumbs.

[Ecks]

Currently fair value would be $0.50, once their cash reserves have been exhausted and debt with the government all but used (expected to happen by end of Q2) I think we could see AIR reach this fair value and 6 months from now the government exercise their clause to swap debt to equity at half the fair value, lets say $0.25. This is all speculative but the only logical path I can see, just a shame you can't short the market in NZ. I think it's unlikely AIR attempts to raise capital from shareholders already on their knees given the economic environment due to Covid19. Q3 is going to be interesting, you would need to be brave to jump into AIR today, now's not the time to buy.

[BlackPeter]

AIR Net profit per FY NZ$m
https://scontent-syd2-1.xx.fbcdn.net/v/t1.15752-9/91350023_218233746050718_5830381648637591552_n.png ?_nc_cat=108&_nc_sid=b96e70&_nc_oc=AQnjpYFesFZoQqgP2K-R_ccihCC0WVFkcRKbGOmtplUEG0yyai9OTyylurLqefkmlwo&_nc_ht=scontent-syd2-1.xx&oh=1cc2528a4a86be5ed56395479538d8e7&oe=5EA951B7

GFC hit during the 2008 FY, took 4.5 years for AIR to recover, I think realistic expectation are 5 years for AIR to recover earnings and business confidence with P/E ~ 6 and share price ~ $2.

My expectation is a national owned airline as per the successful examples of Qatar and Emirates, it's the only logical way airlines can proceed in the future given the ever increasing regulatory environments.

My question to you all is what would happen to the minority share holders, the Mum and Dad investors that have already purchased shares at $0.90 due to FOMO, will they be forced to close their position after the government debt to equity swap giving the crown ~ 90% ownership and then takes the extra step of becoming nationalised? Would they simply offer let's say $0.25 per share and would it be the obligation of the shareholder to sell?

There is no requirement for the government to nationalize, but if we assume that their holding goes up to 90% due to CR's, than I guess the remaining shareholders deserve to be paid only a small amount per share given that they obviously didn't contribute to their company fighting for its life.

Still would expect that whatever they offer is a fair representation of the NTA at that time, but this might not be a lot.

So - lets see, current NTA for AIR is $1.63 per share. I assume that most of that are planes which won't hold a lot of value if nobody needs them. Say discounted NTA is half of the initial number - i.e. 81.5 cents.

If you assume that the state holds 90% of shares (instead of currently 50%), then this means that the state must have roughly quadrupled their holding with the reminder of the shareholders sitting at the sidelines and asking the taxpayer to bail out their company, i.e. number of shares would be 2.5 times what it is now.

Assuming the bailout is to cover the mess they are in (i.e. not increasing the NTA), than the new discounted NTA of the AIR shares would be roughly 32 cents.

Well, yes - this is probably close enough to what you proposed. Sounds like a fair offer to you?

[Ecks]

Its not possible to trade profitably in FY20 or FY21 and very unlikely in FY22 either in my opinion.

My sense is we simply get a rinse and repeat of the last bailout that occurred after 9/11.

This time I expect the N.Z. Govt to end up with ~ 90% of the airline at ~ 25 cents and when the storm has finally passed they will look to do a sell-down again, just as per past practice.

Rinse and repeat whenever necessary in the future. Very hard for minority shareholders to win and get a feed in the long run when each year the senior staff eat like its a banquet, The Govt clean up moist of the scraps in PAYE, GST Taxes, and dividends and minority shareholders are literally left with crumbs.

Brilliant response! Thank you and appreciate your answer blackcap, if you guys don't mind i'll be sticking around - day 1 of joining the forum!

[Beagle]

Brilliant response! Thank you and appreciate your answer blackcap, if you guys don't mind i'll be sticking around - day 1 of joining the forum!

Welcome to the forum. Unsurprisingly the unions have a different view. Pretty safe to say if you're the head of the airline pilots association and a Dreamliner pilot, (probably making north of $300K) they see it differently. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12321283

[Beagle]

There is no requirement for the government to nationalize, but if we assume that their holding goes up to 90% due to CR's, than I guess the remaining shareholders deserve to be paid only a small amount per share given that they obviously didn't contribute to their company fighting for its life.

Still would expect that whatever they offer is a fair representation of the NTA at that time, but this might not be a lot.

So - lets see, current NTA for AIR is $1.63 per share. I assume that most of that are planes which won't hold a lot of value if nobody needs them. Say discounted NTA is half of the initial number - i.e. 81.5 cents.

If you assume that the state holds 90% of shares (instead of currently 50%), then this means that the state must have roughly quadrupled their holding with the reminder of the shareholders sitting at the sidelines and asking the taxpayer to bail out their company, i.e. number of shares would be 2.5 times what it is now.

Assuming the bailout is to cover the mess they are in (i.e. not increasing the NTA), than the new discounted NTA of the AIR shares would be roughly 32 cents.

Well, yes - this is probably close enough to what you proposed. Sounds like a fair offer to you?

I think its extremely unlikely that s single tranche of $900m support gets them right to the other side of this where the airline is profitable again.

[Ecks]

I think its extremely unlikely that s single tranche of $900m support gets them right to the other side of this where the airline is profitable again.

Very unlikely, would take 2 or even 3x that amount. Comparison to the NTA to arrive at $0.32 is genius. I only said $0.25 based on what the government paid during the last bailout.

[BlackPeter]

I think its extremely unlikely that s single tranche of $900m support gets them right to the other side of this where the airline is profitable again.

You work hard to make this stock look good ;): and no, I didn't say that this would be enough money to rescue the airline as is. Just tried to get a house number for a potential takeover value.

But just while you mention it - if we assume the airline is currently (or predictably in some months) as a going concern basically worthless, there must be ways to cut profitable business out of it.

I am pretty sure that they could generate a pretty successful national transport network if they would be allowed to drop all the surplus overhead. They don't even have any competition ...

I am as well pretty sure that they could operate a pretty successful international freight network if they are allowed to drop the remaining overhead. Freight volumes unlikely to drop, would just need to be somewhat re-organised (away from passenger plus freight to pure freight).

Potentially they could split AIR into one or several "good" airlines and a "bad" airline, make money with the good ones and allow the bad one to go into receivership. Similar like they did with banks after the GFC.

No idea, though what this would mean for shareholders - probably nothing good, but as a country we could move very swift to having a profitable national airline again ...

I agree - passenger traffic will take some time to pick up again, but then - it might get up in a way which makes it easier to accommodate. Example - Let's assume for arguments sake that Singapore, Taiwan, South Korea and China do have the virus under control. Give NZ two months, lots of discipline and a bit of luck, than we might be in the same position. Nothing at that stage would e.g. stop these countries to take up passenger flights among them (and with us) and international tourists and students might flow again. Might be even more from this nick of the woods, given that they won't have a lot of other countries to go to.

Obviously - the first passenger flight back to Trump land (or whats left of it) might be a year or two away, but then - who really cares?

Based on above assumption we might even want to keep some of the large long haul passenger planes?

While I agree that the situation for our national carrier as is looks bleak, I don't think it must be desperate. But no, I don't have long enough barge poles to handle this share at the current moment.

[Beagle]

Very unlikely, would take 2 or even 3x that amount. Comparison to the NTA to arrive at $0.32 is genius. I only said $0.25 based on what the government paid during the last bailout.

Yeap, that's how I see it too. Of course the senior air crew on hundreds of thousands per annum want the taxpayer to keep them in the style and luxury to which they've become well accustomed but how long before there's a realistic level of business for those long haul pilot's ?

Today I wandered down to our local beach and looked out across the Manukau harbour towards the Auckland airport...staring at it for ages and enjoying the sun. I was in quite a philosophical mood, still am. There's no hurry to do anything these days is there !

I pondered if the world ever goes back to the way it was where people take flights like I used to take the bus to school as a kid ? I only saw 1 Q300 plane take off in over 45 minutes of watching. Maybe if the world changes forever in some ways its a good thing ? Maybe Kiwi's can go back to places like Queenstown again and enjoy the serenity of the place like I used to as a kid 50 years ago, perhaps that's a good thing that the maddening throngs of tourists are gone so Kiwi's can enjoy it ?

[Beagle]

BP - mate, if burning through ~ $60-70m in cash each week, (my estimate), is not a desperate situation then I am not sure what qualifies ?

Unions are the obstacle to a pragmatic reorganisation of the company...naturally this vested interest group only want to focus on keeping as many jobs as possible and couldn't care less who carries the can for losses in the meantime. Already they're out in the media today saying redundancies should be put on ice until they can be done face to face. Just burn the full $70m per week for another (more realistically another 6-7 weeks ? while this lockdown is in effect), no worries, its not their money.

Shorting a few stocks has been very lucrative this month ;)

[winner69]

Government decrees have rightly or wrongly completely monstered the viability of Air NZ and many other tourism businesses. If Government decree out of the blue eliminated 90% of revenue, most businesses would be stuffed. Charging 9% interest on money loaned rubs salt into the wound. Wonder if this was on their risk management matrix? Can’t see how anything but nationalisation buy out wiping out for minority shareholders is possible unless someone Magic’s up a vaccination asap.

I feel for Air NZ and all their staff and community. However The talk of $1b rainy day fund from Air NZ very disingenuous given their huge debts and lease liabilities.

As said before anytime AIR raves on about a billion in the bank they go broke and need a bail out.

And that huge amount is prepaid fares so not really theirs.

[Baa_Baa]

As said before anytime AIR raves on about a billion in the bank they go broke and need a bail out.

And that huge amount is prepaid fares so not really theirs.

One has to have been around for a few decades to have that insight, Winner has, as have some others. Can't believe this is still trading near a buck, the future SP looks bleak, maybe even a wipe out for minnows.

Not a safe place to be holding unless your a nimble day trader, imho.

[Beagle]

I remember the last time they said they had a billion in the bank, like it was yesterday. The speed at which the bailout was required after that time at 9/11 was breathtaking, just like it was this time that they needed that $900m loan. The difference this time is that with the international network shut down many passengers will be eligible for a cash refund and as at 31/12/2019 prepaid travel was $1.38 billion so I am with Mogul on this and their claim of this money being a decent sized contingency fund paints a deliberately disingenuous picture of apparent prudence and conservatism.

Parking space could be a challenge and who knew each turboprop plane would require 20 engineering hours a week just to be parked up ! Can't help wondering how many engineeriung man hours per week for each jet ? https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12321321

[winner69]

Aussie paper headline Virgin shareholders face wipe out

I’d say that could easily read ‘Air NZ shareholders face wipe out’

At least the biggest shareholder will end up with an airline ....other shareholders zilch (or a consolation prize)

[winner69]

Very unlikely, would take 2 or even 3x that amount. Comparison to the NTA to arrive at $0.32 is genius. I only said $0.25 based on what the government paid during the last bailout.

Ecks...that 25 cents was really 5 cents

[Beagle]

Aussie paper headline Virgin shareholders face wipe out

I’d say that could easily read ‘Air NZ shareholders face wipe out’

At least the biggest shareholder will end up with an airline ....other shareholders zilch (or a consolation prize)

Big fight shaping up over Govt support for Aust Airlines https://www.abc.net.au/news/2020-03-31/virgin-seeks-coronavirus-bailout-qantas-warns-against-payouts/12105654?section=business&utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+1 +April+2020

I guess the worry is that if Virgin is allowed to collapse then in due course one of its international shareholders will buy the planes from the receivers for pennies on the dollar and with dirt cheap oil and new low cost employment terms from staff desperate to get back into the industry have an unfair advantage over its competitors.

On the other hand it would be hard to make a case that Virgin has been well managed over the years...surely one of only a tiny handful of airlines to make fairly consistent losses in the good times. How all this might affect AIR down the track, who knows ?

[BWH]

I took 3 flights yesterday as an essential worker, all on ATRs and a Q300. 5 on the first flight, 3 on the second and I was the only passenger on the last. The flight attendant was saying she did a round trip from Wellington to Blenheim for 1 passenger earlier in the day.

[ananda77]

Big fight shaping up over Govt support for Aust Airlines https://www.abc.net.au/news/2020-03-31/virgin-seeks-coronavirus-bailout-qantas-warns-against-payouts/12105654?section=business&utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+1 +April+2020

I guess the worry is that if Virgin is allowed to collapse then in due course one of its international shareholders will buy the planes from the receivers for pennies on the dollar and with dirt cheap oil and new low cost employment terms from staff desperate to get back into the industry have an unfair advantage over its competitors.

On the other hand it would be hard to make a case that Virgin has been well managed over the years...surely one of only a tiny handful of airlines to make fairly consistent losses in the good times. How all this might affect AIR down the track, who knows ?

Air NZ tries to add to the freight business. It's too early to tell what financial impact that future business will have as they currently negotiate with new customers, but according to my son, who works in freight, they are busy and trying to buiid

[Beagle]

Good that AIR are maintaining a skeleton international network for freight so we can all get essential medical supplies. Freight was 6.7% of their revenue base last year.
Easily now the biggest part of their business. Wonder what air freight rates are going to look like going forward ?

Crikey BWH - that is very grim.

[steveb]

AIR will soon slap a surcharge on outgoing freight.They will justify this by saying inbound flights are empty,but what they will actually mean is " we no longer have much competition so lets start gouging our customers"

[dobby41]

AIR will soon slap a surcharge on outgoing freight.They will justify this by saying inbound flights are empty,but what they will actually mean is " we no longer have much competition so lets start gouging our customers"

Wouldn't empty inbound planes change the economics?
Is that gouging or charging what it costs?

[Ecks]

Ecks...that 25 cents was really 5 cents
:t_up: I'm waiting until Q3 to make my move with AIR, 5 cents would be devastating for the Mum and Dad investors!

[Marilyn Munroe]

AIR will soon slap a surcharge on outgoing freight.They will justify this by saying inbound flights are empty,but what they will actually mean is " we no longer have much competition so lets start gouging our customers"

Cullen Airlines should not get too greedy.

Other carriers have wide bodied aircraft sitting idle, aircrew twiddling thumbs, fuel at $US20 a barrel and are desperate for cash flow.

Boop boop de do
Marilyn

[macduffy]

The AIR shareprice is a bit baffling, at least to me. Perhaps some brave souls are anticipating an "attractive" issue, a la Kathmandu?

;)

[bottomfeeder]

RIP Air New Zealand. Aotearoa Air will rise like a phoenix from the ashes as a Government Corporation. There will be several, National Airlines, International Freight and the wholly subsidised International Passenger.

Air freight may be attractive at the moment, but wait until they all start getting into it. The competition will be horrendous.

[Dassets]

Here's a big issue going forward. This crisis will lead to a new generation of airlines with very different cost structure. First up will be the cost of rolling stock. eg those 400 Boeing Max, circa USD120m, sitting at the factory carpark, are worth USD50-60m. All the widebodied fleet especially A340 and B777, seller no buyer.

So new operator can lease or buy fleet at a fraction of the cost of the legacy airlines. Head offices, marketing functions, terminal facilities a fraction of the size and cost. See how it all unfolds.

[dobby41]

Here's a big issue going forward. This crisis will lead to a new generation of airlines with very different cost structure. First up will be the cost of rolling stock. eg those 400 Boeing Max, circa USD120m, sitting at the factory carpark, are worth USD50-60m. All the widebodied fleet especially A340 and B777, seller no buyer.

So new operator can lease or buy fleet at a fraction of the cost of the legacy airlines. Head offices, marketing functions, terminal facilities a fraction of the size and cost. See how it all unfolds.

Foran already alluded to this a few days back

[bottomfeeder]

Perhaps Govt will buy fleet and lease back as was done with rail track many years ago.

[BlackPeter]

AIR will soon slap a surcharge on outgoing freight.They will justify this by saying inbound flights are empty,but what they will actually mean is " we no longer have much competition so lets start gouging our customers"

Why would inbound flights be empty? Somebody needs to transport all these medical supplies, computers and airmail parcels ...

[Beagle]

Virgin look to be "in it" good and proper. Could be a fire sale of their fleet coming up later this year.

[Ecks]

RIP Air New Zealand. Aotearoa Air will rise like a phoenix from the ashes as a Government Corporation. There will be several, National Airlines, International Freight and the wholly subsidised International Passenger.

Air freight may be attractive at the moment, but wait until they all start getting into it. The competition will be horrendous.

As soon as this happens the better, this will pull the executive salaries into line! Currently AIR is milking the tax payer!

[Jaa]

Good that AIR are maintaining a skeleton international network for freight so we can all get essential medical supplies. Freight was 6.7% of their revenue base last year.
Easily now the biggest part of their business. Wonder what air freight rates are going to look like going forward ?

Crikey BWH - that is very grim.

Why is AIR NZ doing this if it costs them money? Likewise with the national network? If its not profitable but vital for the country the government and/or the respective businesses should subsidise it.

What a bad time to have a travel newbie at the helm. Was hoping Rob Fyfe might return as an adviser at least but see he has a task somewhere else. Guess why would you come back just to swing the axe.

Foran has been far too slow in a time that requires decisiveness. Ground the whole fleet and call everyone's bluff. Management, the workforce and the government all need to chip in. Subsidies, pay cuts, redundancies and compulsory unpaid leave will see the airline through.

Not a fan of Alan Joyce but he is showing how its done. 70% of staff gone or on unpaid leave, no international flights and 30% pay cuts for management. AIR NZ in comparison just sleep walking.

PS: thanks John Key for all that great forex/oil hedging advice !! :mad ;:

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12321484

[Chinesekiwi]

Why is AIR NZ doing this if it costs them money? Likewise with the national network? If its not profitable but vital for the country the government and/or the respective businesses should subsidise it.

What a bad time to have a travel newbie at the helm. Was hoping Rob Fyfe might return as an adviser at least but see he has a task somewhere else. Guess why would you come back just to swing the axe.

Foran has been far too slow in a time that requires decisiveness. Ground the whole fleet and call everyone's bluff. Management, the workforce and the government all need to chip in. Subsidies, pay cuts, redundancies and compulsory unpaid leave will see the airline through.

Not a fan of Alan Joyce but he is showing how its done. 70% of staff gone or on unpaid leave, no international flights and 30% pay cuts for management. AIR NZ in comparison just sleep walking.

PS: thanks John Key for all that great forex/oil hedging advice !! :mad ;:

Hi Jaa

I believe Australian law allows the LWOP to be implemented as it has been. So QANTAS was able to apply the law ASAP.

NZ law does not allow for this.

Companies cannot force accrued leave to be taken BUT can force (after consultation, if that 'fails' then by law can force) Due and Excess leave to be taken. These two leave types are leave balances on 12 months or more.

My understanding is that Air NZ has asked the question and the response was fast from employees. Even given 30% will go soon (overseas offices are getting the haircuts this week, locals soon thereafter) another 750 asked for voluntary exit, 2700 for LWOP and 4000 for part time.

I think Air NZ people, aside from wanting their jobs post crisis - actually like working where they work.

Foran has told employees this week that management have foregone 'tens of millions' in salary cuts, bonus cancellations and incentive schemes stopped. I know that one large group within the flying part of the business has handed back half a million dollars in the next 3 months without having been asked to do so as a solidarity gesture to the company.

Maybe Air NZ isn't as sleepy as we think.

[iceman]

Hi Jaa

I believe Australian law allows the LWOP to be implemented as it has been. So QANTAS was able to apply the law ASAP.

NZ law does not allow for this.

Companies cannot force accrued leave to be taken BUT can force (after consultation, if that 'fails' then by law can force) Due and Excess leave to be taken. These two leave types are leave balances on 12 months or more.

My understanding is that Air NZ has asked the question and the response was fast from employees. Even given 30% will go soon (overseas offices are getting the haircuts this week, locals soon thereafter) another 750 asked for voluntary exit, 2700 for LWOP and 4000 for part time.

I think Air NZ people, aside from wanting their jobs post crisis - actually like working where they work.

Foran has told employees this week that management have foregone 'tens of millions' in salary cuts, bonus cancellations and incentive schemes stopped. I know that one large group within the flying part of the business has handed back half a million dollars in the next 3 months without having been asked to do so as a solidarity gesture to the company.

Maybe Air NZ isn't as sleepy as we think.

A good post Chinesekiwi thanks for injecting some reality

[Snow Leopard]

Apparently AIR doing 12 round trips to London this month, presumably to repatriate displaced tourists.

Virgin Australia donating all their grounded loo-roll to good causes, must be worth bailing out then.

I would love to get on a plane, with or without loo-roll and go 'home' but I am locked out of my country of residence until further notice :eek2:

[kiora]

Apparently AIR doing 12 round trips to London this month, presumably to repatriate displaced tourists.

Virgin Australia donating all their grounded loo-roll to good causes, must be worth bailing out then.

I would love to get on a plane, with or without loo-roll and go 'home' but I am locked out of my country of residence until further notice :eek2:

Ouch
I hoped holed up somewhere where plenty of wine SL

[mondograss]

A good post Chinesekiwi thanks for injecting some reality

Actually, under NZ law a company can mandate one shutdown per year. Typically businesses do this over the Xmas period, but since Air NZ wouldn't normally do that being a busy period, they can do it now and force people to take leave regardless of their balance, even if it means tipping them into a negative balance. But they can't force LWOP.

[Benny1]

Hi Jaa

I believe Australian law allows the LWOP to be implemented as it has been. So QANTAS was able to apply the law ASAP.

NZ law does not allow for this.

Companies cannot force accrued leave to be taken BUT can force (after consultation, if that 'fails' then by law can force) Due and Excess leave to be taken. These two leave types are leave balances on 12 months or more.

My understanding is that Air NZ has asked the question and the response was fast from employees. Even given 30% will go soon (overseas offices are getting the haircuts this week, locals soon thereafter) another 750 asked for voluntary exit, 2700 for LWOP and 4000 for part time.

I think Air NZ people, aside from wanting their jobs post crisis - actually like working where they work.

Foran has told employees this week that management have foregone 'tens of millions' in salary cuts, bonus cancellations and incentive schemes stopped. I know that one large group within the flying part of the business has handed back half a million dollars in the next 3 months without having been asked to do so as a solidarity gesture to the company.

Maybe Air NZ isn't as sleepy as we think.

Great post ChineseKiwi ..there are lots of things going on behind the scenes around the company and I am sure between the company and the major shareholder.. The Government.
Some on here can smell blood and can't wait to get there pound if flesh...
I am pretty sure some of this manpower reduction in some areas was planned and would have happened this year anyway... This virus has brought some of it forward somewhat.
There are charter flights coming up which has put back the storage of the 777-300 aircraft for around a month.. Details set to be released soon apparently..
For Beagle... Around 70 manhours for widebodies while in storage... However this is still being planned... These upcoming extra flights have delayed things abit.

[winner69]

@CamWallace_NZ
Our @FlyAirNZ revised domestic schedule is out. We will be flying to AKL, WLG, CHC, NSN and DUD only. One or two return services a day, eff 3 Apr. This represents a 95% reduction pre - C19. Demand is down about 99%. @andykirton

[Beagle]

@CamWallace_NZ
Our @FlyAirNZ revised domestic schedule is out. We will be flying to AKL, WLG, CHC, NSN and DUD only. One or two return services a day, eff 3 Apr. This represents a 95% reduction pre - C19. Demand is down about 99%. @andykirton

I shall head down to the beach again at 4.00 today and watch the last, (for a while) Q300 flight take off and head overhead on its way up north. Yesterday the view from our local beach out across the manukau harbour towards the airport and Hunua ranges, the air was the clearest I have ever seen it.

Thanks Benny. 70 hours a week for each parked jet means plenty of work for engineers so that's good. I don't think anyone wants to see the airline fail....they just can't see how realistically it can survive in its current form. It won't fail, the Govt won't let it. In financial terms though, for minority shareholders this looks like a one way journey to Argentina with not enough fuel to get there.

[Chinesekiwi]

Actually, under NZ law a company can mandate one shutdown per year. Typically businesses do this over the Xmas period, but since Air NZ wouldn't normally do that being a busy period, they can do it now and force people to take leave regardless of their balance, even if it means tipping them into a negative balance. But they can't force LWOP.


Hi Mondograss

Thanks for your post and you are correct re LWOP

As I have had explained to me and my colleagues in my company - a company cannot force ACCRUED leave to be taken - that is the law. It has been clarified twice this week to me in employment law skype calls from both company HR GM and Union Leaders.

An employee can bring forward future leave to be used currently but they run the risk of if having used it and then are made redundant they have a negative balance to be paid back to the employer.


The leave they can force Due, Excess and Alternative days (days worked on public holidays).

I'm not a contracts or legal expert just an employee thrust into this arena due the virus and have had to be deeply involved in these types of discussions.

[mondograss]

Hi Mondograss

Thanks for your post and you are correct re LWOP

As I have had explained to me and my colleagues in my company - a company cannot force ACCRUED leave to be taken - that is the law. It has been clarified twice this week to me in employment law skype calls from both company HR GM and Union Leaders.

An employee can bring forward future leave to be used currently but they run the risk of if having used it and then are made redundant they have a negative balance to be paid back to the employer.


The leave they can force Due, Excess and Alternative days (days worked on public holidays).

I'm not a contracts or legal expert just an employee thrust into this arena due the virus and have had to be deeply involved in these types of discussions.

This would appear to contradict what you've been told, but technically it's not an annual closedown that's occurring so probably you've been advised correctly. I was just pointing out that potentially companies could use the annual close down rule as a loophole to force people to take leave. But it depends whether a business can exercise the right to an annual closedown if it had never done it before (I mean it there has to be some rule that allows a company to begin doing it right?).

https://www.employment.govt.nz/leave-and-holidays/annual-holidays/annual-closedowns/

The employer can have further or other closedowns (ie not regular annual closedowns under the Holidays Act 2003) but they will need to agree with their employees on how those closedowns will be treated and what leave or holidays arrangements will apply.

Instead of having an annual closedown and requiring employees to take annual holidays, there are other options, eg an employer may choose to continue to pay employees but not require them to attend work.

The employer can’t make employees take annual holidays for a closedown except when it is an annual closedown under the Holidays Act 2003 (although they could require them to take annual holidays if they have been unable to reach agreement on when the employee can take annual holidays and they give them 14 days’ notice).

An employee’s date of entitlement to annual holidays can’t be affected by a second or subsequent closedown.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12321801

[kiwico]

British Airways is going the route of up to 80% of cabin crew, ground staff, engineers and those working at head office having their jobs suspended, but no staff are yet expected to be made redundant.

https://www.bbc.com/news/business-52130021

[Jaa]

Hi Jaa

I believe Australian law allows the LWOP to be implemented as it has been. So QANTAS was able to apply the law ASAP.

NZ law does not allow for this.

Companies cannot force accrued leave to be taken BUT can force (after consultation, if that 'fails' then by law can force) Due and Excess leave to be taken. These two leave types are leave balances on 12 months or more.

My understanding is that Air NZ has asked the question and the response was fast from employees. Even given 30% will go soon (overseas offices are getting the haircuts this week, locals soon thereafter) another 750 asked for voluntary exit, 2700 for LWOP and 4000 for part time.

I think Air NZ people, aside from wanting their jobs post crisis - actually like working where they work.

Foran has told employees this week that management have foregone 'tens of millions' in salary cuts, bonus cancellations and incentive schemes stopped. I know that one large group within the flying part of the business has handed back half a million dollars in the next 3 months without having been asked to do so as a solidarity gesture to the company.

Maybe Air NZ isn't as sleepy as we think.

Thanks for the replies Chinesekiwi and everyone else. As you say there is plenty happening but is it enough, fast enough?

If management and employees have forgone significant sums it should be publicised. It increases the airline's leverage in negotiations with other players especially the NZ government. Shareholders are down 70% and missing an ex-date dividend.

[Ecks]

Anyone know why AIR SP is stagnating at around 88 cents, no movement for 3 trading days...? Surely it should be falling faster than a fat kid fighting gravity!

[Ecks]

I shall head down to the beach again at 4.00 today and watch the last, (for a while) Q300 flight take off and head overhead on its way up north. Yesterday the view from our local beach out across the manukau harbour towards the airport and Hunua ranges, the air was the clearest I have ever seen it.

Thanks Benny. 70 hours a week for each parked jet means plenty of work for engineers so that's good. I don't think anyone wants to see the airline fail....they just can't see how realistically it can survive in its current form. It won't fail, the Govt won't let it. In financial terms though, for minority shareholders this looks like a one way journey to Argentina with not enough fuel to get there.

One way journey to Argentina with not enough fuel to get there! I LOVE IT, still laughing as I type this one, that's your best call yet Beagle! AirNZ will be forever changed!

[Dassets]

You can't short it and haven't been able to be at least 2 weeks despite what people say on this site.

[Beagle]

Some people have had their short positions on for much longer than that.

[Chinesekiwi]

Anyone know why AIR SP is stagnating at around 88 cents, no movement for 3 trading days...? Surely it should be falling faster than a fat kid fighting gravity!

aaah I needed a good chuckle.

[Scrunch]

Anyone know why AIR SP is stagnating at around 88 cents, no movement for 3 trading days...? Surely it should be falling faster than a fat kid fighting gravity!

Maths is a strange thing.

How much would you pay to receive $3.00 if a standard, unbiased dice were rolled and the result was a 5 or a 6?. 50c, 70c, 88c or perhaps almost $1.00.

The most likely outcome is that a 1,2,3 or 4 is rolled and you lose your wager. Beagle thinks the most likely outcome is the government doing a huge bailout of Air NZ diluting minority interests down to nearly nothing. He's basically betting that a 1-4 is rolled on this dice. He may be correct and in this theoretical instance 67% of the time would be.

The interesting question is are there possibilities that have Air NZ getting through without a hugely diluting capital raise (the 5's and 6's in rolling a dice). I think there might be but I don't know if they are sufficiently likely to justify 88c. At least two exist:

1. The level 4 lock-down works and domestic traffic returns to fairly normal levels. Sure there's less international connections but then there's a whole heap of additional domestic tourism as all those people who want a holiday but can't go internationally travel domestically and "see NZ". Can NZ get through on this level of activity until a full international network is resumed? Possibly.

2. Developments such as finger-prink covid tests mean international flights resume as the entire flight is pre-tested as part of the check-in process. What is the health risk to the people on the flight and to the destination country if all the people on the flight have been confirmed not to have the virus before boarding the plane? I'd say its pretty much zero (if the test is very accurate). Does the test below have sufficient accuracy - I don't know.
https://www.medicaldevice-network.com/news/biomerica-finger-prick-covid-19/

[Marilyn Munroe]

Over the ditch Queer and Nasty Airlines and Virgin (Under Arm Bowlers Division) are trash talking one another over who is entitled to dip their snout into the Aussie taxpayers trough.

https://www.abc.net.au/news/2020-04-02/coronavirus-airline-bailout-virgin-qantas-failure/12110064

Boop boop de do
Marilyn

[Ecks]

Maths is a strange thing.

How much would you pay to receive $3.00 if a standard, unbiased dice were rolled and the result was a 5 or a 6?. 50c, 70c, 88c or perhaps almost $1.00.

The most likely outcome is that a 1,2,3 or 4 is rolled and you lose your wager. Beagle thinks the most likely outcome is the government doing a huge bailout of Air NZ diluting minority interests down to nearly nothing. He's basically betting that a 1-4 is rolled on this dice. He may be correct and in this theoretical instance 67% of the time would be.

The interesting question is are there possibilities that have Air NZ getting through without a hugely diluting capital raise (the 5's and 6's in rolling a dice). I think there might be but I don't know if they are sufficiently likely to justify 88c. At least two exist:

1. The level 4 lock-down works and domestic traffic returns to fairly normal levels. Sure there's less international connections but then there's a whole heap of additional domestic tourism as all those people who want a holiday but can't go internationally travel domestically and "see NZ". Can NZ get through on this level of activity until a full international network is resumed? Possibly.

2. Developments such as finger-prink covid tests mean international flights resume as the entire flight is pre-tested as part of the check-in process. What is the health risk to the people on the flight and to the destination country if all the people on the flight have been confirmed not to have the virus before boarding the plane? I'd say its pretty much zero (if the test is very accurate). Does the test below have sufficient accuracy - I don't know.
https://www.medicaldevice-network.com/news/biomerica-finger-prick-covid-19/

Entertaining analogy! Everyone likes a gamble! My thinking is that the likely debt to equity swap and government ownership increase should shed light on existing investors decision to sell and salvage any value they have left in their shares but it simply isn't happening, are people just willing to stay in the boat until it sinks!? Or in this case, on the plane with not enough fuel (as Beagle was correctly barking)

[Beagle]

Forbar reckon a debt to equity swap is almost certain, I think it is certain.

Took 3 years after 9/11 for demand to come back to normal. Sharemarket reaction around the world speaks for itself that this is much worse than 9/11 or the GFC.

[BlackPeter]

Forbar reckon a debt to equity swap is almost certain, I think it is certain.

Took 3 years after 9/11 for demand to come back to normal. Sharemarket reaction around the world speaks for itself that this is much worse than 9/11 or the GFC.

The economical impact is clearly faster than the GFC was - and it probably will be deeper (though this depends on a lot of decisions we still need to make and developments nobody can predict).

I don't think anybody can predict the duration. Sure - it won't be just a handful of months, but whether it will be over in say 12 months (after the successful roll out of a cure), in 18 months (after they successfully tested and rolled out a vaccine) or in 3 years or later - who could tell?

Agree however that the new normal will look different - there clearly will be both less tourism and less business travel. However - it should be possible to operate a successful airline based on the new normal, however it might look like.

[Beagle]

Possible, sure, provided the unions are reasonable. When does that new normal arrive whatever it looks like ?
How much cash do they burn between now and then ? I reckon they're burning at least $300m a month in the lockdown. Sure that will slowly start to ease when people start travelling again in reasonable volume sometime maybe mid 2021. Lot of months of massive cash burn between now and then mate.
$900m is just the first tranche of support in my opinion.

There's more chance of a chimpanzee piloting the next space shuttle to the moon than AIR getting through this without heaps more support.

[BlackPeter]

Possible, sure, provided the unions are reasonable. When does that new normal arrive whatever it looks like ?
How much cash do they burn between now and then ? I reckon they're burning at least $300m a month in the lockdown. Sure that will slowly start to ease when people start travelling again in reasonable volume sometime maybe mid 2021. Lot of months of massive cash burn between now and then mate.
$900m is just the first tranche of support as clearly barked about already.

There's more chance of a chimpanzee piloting the next space shuttle to the moon than AIR getting through this without heaps more support.

Absolutely - it all can turn to custard, and unions are (particular under a left leaning government) rarely known for being reasonable. Why milk a cow if you could butcher it as well?

I am just pointing out that some more positive developments might be possible - whether they do happen depends on lots of things.

But hey - life would be sad (and not very successful) if we always just plan for the worst case - wouldn't it?

[Beagle]

Its possible to throw 12 with a pair of dice, I will grant you that. I am sure a smart chap like you knows the odds of that.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12321706

[Traderwannabe]

Not sure if this is the best place to post but it is related to Air NZ. I managed to spend a few of my Airpoints today on the Mitre 10 online shopping website. They are selling a very limited selection of goods and you can pay using Airpoints. Just thought I would share.

[Arbroath]

[QUOTE=Beagle;804543]Possible, sure, provided the unions are reasonable. When does that new normal arrive whatever it looks like ?
How much cash do they burn between now and then ? I reckon they're burning at least $300m a month in the lockdown. Sure that will slowly start to ease when people start travelling again in reasonable volume sometime maybe mid 2021. Lot of months of massive cash burn between now and then mate.
$900m is just the first tranche of support in my opinion.

Beagle when they were operating a full domestic and international airline they were using $400m of cash a month. They will easily have this well below $300m by May. Although there is quite a bit of cost they can't eliminate there is also a lot they can. $300m is way too pessimistic to me, more like $200m (UBS estimate $207m). Don't get me wrong. I'm not saying its worth buying as it will very likely be recapitalised at a lower level by the Govt.
They need to maintain adequate liquidity, maybe $300-400m so my guess is draw on the Govt credit line by July at the latest...how much they end up drawing is the key here as to how much dilution is suffered by everyone thats not the Govt.

[Beagle]

Not sure if this is the best place to post but it is related to Air NZ. I managed to spend a few of my Airpoints today on the Mitre 10 online shopping website. They are selling a very limited selection of goods and you can pay using Airpoints. Just thought I would share.

Thank you. Just bought a couple of items to keep the family warm this winter. Might as well use these airpoints up. Still got more to burn though.

[Beagle]

[QUOTE=Beagle;804543]

Beagle when they were operating a full domestic and international airline they were using $400m of cash a month. They will easily have this well below $300m by May. Although there is quite a bit of cost they can't eliminate there is also a lot they can. $300m is way too pessimistic to me, more like $200m (UBS estimate $207m). Don't get me wrong. I'm not saying its worth buying as it will very likely be recapitalised at a lower level by the Govt.
They need to maintain adequate liquidity, maybe $300-400m so my guess is draw on the Govt credit line by July at the latest...how much they end up drawing is the key here as to how much dilution is suffered by everyone thats not the Govt.

I need to update for Govt subsidy on wages of $585 per week, (which doesn't go far when the average employee earns over $2,000 per week).
Opex last year were $4,605m. Add rental and lease costs classified elsewhere of $245m and finance costs of $79m and you're close to $5 billion actual costs before additional non cash expense of depreciation of $567m, (which will be over $600m in FY20.

Cash operating expenses were $411m a month. If we strip out 30% of labour $405m, 99% of fuel $1,258m, add back approx. $250m for cost to exit fuel hedge, $1018m of other opex (50%) on a real quick back of the envelope, yes you might be right, once they have executed these savings (whenever that may be) they might get the monthly cash burn down to about UBS's estimate of $207m. I think their operational cash burn for April will be ~ $300m less Govt subsidy of $585 per week approx. $30m = $270m net and will slowly decline from there.

The issue with their cash reserves and cash burn is that in addition to the above many passengers may be entitled to cash refunds due to cancellations of services so how much of the (as at 31/12/2019) $1,380m in prepaid travel will they have to refund ?

[iceman]

Thank you. Just bought a couple of items to keep the family warm this winter. Might as well use these airpoints up. Still got more to burn though.

How does a JetStar customer get to use Airpoints ? By the way mate, your joke about "half way to Argentina" running out of fuel was not at all funny for someone stuck in Argentina for several months. But them's the breaks !!

[Beagle]

How does a JetStar customer get to use Airpoints ? By the way mate, your joke about "half way to Argentina" running out of fuel was not at all funny for someone stuck in Argentina for several months. But them's the breaks !!

Sorry mate, couldn't use the one way trip to a certain mountain starting with E.....would have been too insensitive but that was definitely the first one way trip that came to mind and a better analogy. Sorry to hear you are stuck over there.
I did fly Jethole last April one way. They were the last flight out of Wellington to come home from the SUM meeting and that gave me another hour drinking time with my mates. Just as well I had consumed a few as it dulled the pain from having my knees jammed in so hard to the seat in front. It should be illegal to have 29 inch pitch seats...breech of human rights.

[Ecks]

:t_up: Crackup! Best thread to date!

[Raz]

:t_up: Crackup! Best thread to date!

Well its really sad thread, not being able to fly anywhere..talk about a total change in lifestyle.

[Beagle]

Well its really sad thread, not being able to fly anywhere..talk about a total change in lifestyle.

Well, just get the Holden Colorado out, suit up with mask and gloves and head around the corner for an enjoyable drive to the supermarket. I did that with my Holden Calais today....would have been a LOT more fun in an M5 though :)

[xp04]

Well its really sad thread, not being able to fly anywhere..talk about a total change in lifestyle.

Yep, with inevitable collapse of AirNZ and Jet* flying days are over. Only monorail to oz will save us.

xp

[Cyclical]

...would have been a LOT more fun in an M5 though :)

Indeed. I sold my M3 to a BMW dealer about 3 weeks ago. Covid didn't seem to factor into his decision process, but I couldn't take the cash off him quick enough. Might be able to buy it back in 6 months at a 50% discount :-)

[Raz]

Indeed. I sold my M3 to a BMW dealer about 3 weeks ago. Covid didn't seem to factor into his decision process, but I couldn't take the cash off him quick enough. Might be able to buy it back in 6 months at a 50% discount :-)

Nice timing, my 2020 M5 is sitting in my garage in LA doing no milage and depreciating with no chance to drive it....for how long. Beagle... Colorado for farm use only...to que to go to the supermarket like you are going on a ride...what fun!

AIRs planes parked up at Christchurch are a site...not that I recommend anyone drive by....any parked up at Auckland airport or too pricey by AIA to park up North...

[Beagle]

Nice timing, my 2020 M5 is sitting in my garage in LA doing no milage and depreciating with no chance to drive it....for how long. Beagle... Colorado for farm use only...to que to go to the supermarket like you are going on a ride...what fun!

AIRs planes parked up at Christchurch are a site...not that I recommend anyone drive by....any parked up at Auckland airport or too pricey by AIA to park up North...

Can't think of many things more frustrating than that. Like having a private jet you can't use. This might make you feel a bit better, or maybe worse with missing it more lol https://www.youtube.com/watch?v=hxsBUkm9vBs

I think if I get through this Covid 19 thing okay my days of making do with an average Joe Bloggs car are going to be very few. Might as well enjoy what you love eh mate !

[peat]

I see in their latest email Air NZ tell us that "we even brought more currency into New Zealand for the banking system".
If they brought in that 30B and take that 900m then .9/30 = 3%. Seems like a fair cut . So why do they still have to pay it back with interest? :p

[Beagle]

LOL Peat.
AIR might have one less competitor soon. https://www.abc.net.au/news/2020-04-03/virgin-australia-is-running-out-of-cash-downgrade-coronavirus/12117640?section=business&utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+4+ April+2020

[BlackPeter]

LOL Peat.
AIR might have one less competitor soon. https://www.abc.net.au/news/2020-04-03/virgin-australia-is-running-out-of-cash-downgrade-coronavirus/12117640?section=business&utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+4+ April+2020

True - but then, their planes won't magically disappear, and anybody buying them on the cheap from e.g. receiver liquidator might be able to start another low cost airline with the advantage that they can time when to start with the business ...

[dreamcatcher]

True - but then, their planes won't magically disappear, and anybody buying them on the cheap from e.g. receiver liquidator might be able to start another low cost airline with the advantage that they can time when to start with the business ...

Could be someone with a vested interest will buy just for spare parts and destroy ............

[Cyclical]

"we even brought more currency into New Zealand for the banking system"

Excuse my ignorance, but what do they mean by that? Does it reference revenue from non NZ'ers?

[Beagle]

True - but then, their planes won't magically disappear, and anybody buying them on the cheap from e.g. receiver liquidator might be able to start another low cost airline with the advantage that they can time when to start with the business ...

That's going to be a big problem for legacy carriers down the track. New entrants with dirt cheap planes, much cheaper labour from redundant staff desperate to get back into the industry and cheap fuel without legacy fuel hedging issues = some very important commercial advantages.

[Cyclical]

That's going to be a big problem for legacy carriers down the track. New entrants with dirt cheap planes, much cheaper labour from redundant staff desperate to get back into the industry and cheap fuel without legacy fuel hedging issues = some very important commercial advantages.

You're dead right. Air NZ etc need to use this as a proper reset, not just expect tax payers to tide them over and hope to come out the other side BAU with their fat salaries. There is no way they can feasibly operate at a much reduced size while only axing 30% of the current labour base. Tough as it will be to swallow, realistically they need to have everyone reapply for their jobs at rates more in line with the new paradigm. But I guess that won't happen under the left leaning government, so we'll be shafted as tax payers and also on domestic flights for a long time to come.

[Leftfield]

Crikey, even Buffet dropping Berkshire's investments in airlines.......see article here. (https://www.bloomberg.com/news/articles/2020-04-03/u-s-airlines-apply-for-government-aid-with-sales-in-freefall?srnd=premium-asia)

[winner69]

Crikey, even Buffet dropping Berkshire's investments in airlines.......see article here. (https://www.bloomberg.com/news/articles/2020-04-03/u-s-airlines-apply-for-government-aid-with-sales-in-freefall?srnd=premium-asia)

..but warren should have listened to beagle and sold out completely

[Balance]

Breaking News :

Virgin Airlines shut down NZ operations - 600 staff redundant.

Union disappointed that Virgin did not attempt to at least obtain the wage subsidy from NZ government to tide the next few months over.

[BlackPeter]

..but warren should have listened to beagle and sold out completely

He probably should have just listened to himself and not have bought them in the first place :):

[Beagle]

https://www.rnz.co.nz/news/business/413455/loss-of-600-jobs-as-virgin-australia-shuts-its-nz-operations

[Baa_Baa]

..but warren should have listened to beagle and sold out completely

And gone short?

[Balance]

He probably should have just listened to himself and not have bought them in the first place :):


https://www.cnbc.com/2017/02/27/warren-buffett-investing-why-i-jumped-into-airline-stocks.html

Why he bought :

"These aren’t last century’s airline companies, and that’s why legendary investor Warren Buffett is spending money on them."

[Beagle]

Major downside of being a huge investor like Buffett is you can't be as nimble as smaller investors. Being able to execute easily well within one days average volume is the single biggest advantage a small investor has. People need to keep that key advantage in mind and use it whenever appropriate.

[Beagle]

You're dead right. Air NZ etc need to use this as a proper reset, not just expect tax payers to tide them over and hope to come out the other side BAU with their fat salaries. There is no way they can feasibly operate at a much reduced size while only axing 30% of the current labour base. Tough as it will be to swallow, realistically they need to have everyone reapply for their jobs at rates more in line with the new paradigm. But I guess that won't happen under the left leaning government, so we'll be shafted as tax payers and also on domestic flights for a long time to come.

The established fat cats don't want a cost reset and that's AIR's biggest weakness going forward.
Govt have admitted they can't let the airline fail and they're not going to "manage" AIR so management know they can count on the Govt for as long as they need too.
The competitive disadvantage this will place AIR at in the long term is something to keep front and central of mind for anyone considering reinvesting for the long haul at some stage down the track.

[Cyclical]

The established fat cats don't want a cost reset and that's AIR's biggest weakness going forward.
Govt have admitted they can't let the airline fail and they're not going to "manage" AIR so management know they can count on the Govt for as long as they need too.
The competitive disadvantage this will place AIR at in the long term is something to keep front and central of mind for anyone considering reinvesting for the long haul at some stage down the track.

Yep, and it's wrong, as it's us that will be paying for it. The only chance of a proper reset as I see it is if Qantas make an aggressive play at the NZ domestic market, and the chances of that happening in the next year or two are near zero.

[kiora]

We still need air freight for exporters & importers

[Lease]

The established fat cats don't want a cost reset and that's AIR's biggest weakness going forward.
Govt have admitted they can't let the airline fail and they're not going to "manage" AIR so management know they can count on the Govt for as long as they need too.
The competitive disadvantage this will place AIR at in the long term is something to keep front and central of mind for anyone considering reinvesting for the long haul at some stage down the track.

"Govt have admitted they can't let the airline fail and they're not going to "manage" AIR."

Where did you get this Beagle? Any link can provide?

[winner69]

Zillions of dollars worth of credits waiting to be used .... a big chunk of that $1 billion cash on hand isn't really theirs eh

Personally I'm glad I insisted and got a full refund ...non of this credit stuff

https://www.stuff.co.nz/business/money/120801079/coronavirus-whats-the-deal-with-air-new-zealands-credits

[Beagle]

"Govt have admitted they can't let the airline fail and they're not going to "manage" AIR."

Where did you get this Beagle? Any link can provide?

Its been in the media in the last couple of weeks. Was around the time of the $900m loan.

[Lease]

Its been in the media in the last couple of weeks. Was around the time of the $900m loan.

Well, that means Government have no intention to nationalize AIR. That's great!

Coronavirus will eventually pass and life will return to normal, so as AIR. May take years but will be, and SP as well.

[Cyclical]

Personally I'm glad I insisted and got a full refund ...non of this credit stuff.

How much effort was required for that? Any advice? My in-laws were booked to head our way (paid for by the wife and I) before it all turned to custard...personally I'd rather have that in my pocket than Air NZ's.

[winner69]

How much effort was required for that? Any advice? My in-laws were booked to head our way (paid for by the wife and I) before it all turned to custard...personally I'd rather have that in my pocket than Air NZ's.

Wanted to give a credit but after saying no twice and saying rather have the cash they said OK and got in bank 3 days later. London trip for 4 of us so was quite a lot and they weren’t Flexi fares or anything like that.

[Sideshow Bob]

Wanted to give a credit but after saying no twice and saying rather have the cash they said OK and got in bank 3 days later. London trip for 4 of us so was quite a lot and they weren’t Flexi fares or anything like that.

Wise move W69 - because they are stopping flying to London from October anyhow! :scared:

[winner69]

Wise move W69 - because they are stopping flying to London from October anyhow! :scared:

They were through Hong Kong and Singapore code share jobs on a AIR ticket.

[Cyclical]

Wanted to give a credit but after saying no twice and saying rather have the cash they said OK and got in bank 3 days later. London trip for 4 of us so was quite a lot and they weren’t Flexi fares or anything like that.

Oh, fair enough, bit bloody cheeky of them to think people will be happy with a credit when you're talking those sort of figures...I'm not sure I'd sleep at night if I knew Air NZ was looking after that kind of money for me...would rather risk it on the shares, almost!

[Beagle]

Well, that means Government have no intention to nationalize AIR. That's great!

Coronavirus will eventually pass and life will return to normal, so as AIR. May take years but will be, and SP as well.
Inferences were made that if their stake in AIR went up they would take a more proactive hands on role. $900m loan will get converted to equity as sure as night follows day so there's going to be a major cash issue at some stage. How much a major future rights issue might be supported by existing minority shareholders will determine the Govt's ultimate stake but I think its a fair bet that the Govt will have to underwrite the issue. I doubt they will nationalize it but its quite conceivable they could end up with 80% like they did in the last bailout in 2001 or potentially even 90% this time.

They haven't got the capital to last years, maybe not even enough to survive 2020 hence my contention a massive rights issue is a certainty at some stage later this year.

[Flugenbear]

Agree Beagle.
I'd say they definitively have not got the cash to last until the end of the year.
The way I see it their international is poked until late 2021, domestic will be 50% for the next year, I reckon they need another 1 billion to get through this, assuming our borders are largely closed the next 1
year.

[Independent Observer AUNZ]

Are the AIR directors relying on the safe-harbours yet? Only a matter of time. Tick tock. Now is the time for at least half the management (exec, senior, middle) to go (and yes I feel for them, but they'll find roles elsewhere).

[Cyclical]

Yep, it's time for AIR to do a full reset and become lean and mean. The future has no place for a fat overweight airline, even if they do have a domestic monopoly...it won't last.

A bit off topic, but will be interesting to see if Rolls Royce manage to use this issue to get on top of those shoddy engines. And how old are those new 737 Max planes going to be by the time Boeing clears all of it's stock? What are Airbus and Boeing going to look like out the other side of all this?

[dreamcatcher]

One million Chinese students stranded in America wishing to return home, one student saying she paid a travel agency $12,000 for an economy class ticket from Chicago to Xiamen.......... This may be the cost of FUTURE FLYING limited seats and high costs

Old Saying.......... User Pays

[IAK]

One million Chinese students stranded in America wishing to return home, one student saying she paid a travel agency $12,000 for an economy class ticket from Chicago to Xiamen.......... This may be the cost of FUTURE FLYING limited seats and high costs

Old Saying.......... User Pays
Well, that will keep the freedom campers out 👍

[cyclist]

Well, that will keep the freedom campers out 👍

And the Kiwis in.

[macduffy]

One million Chinese students stranded in America wishing to return home, one student saying she paid a travel agency $12,000 for an economy class ticket from Chicago to Xiamen.......... This may be the cost of FUTURE FLYING limited seats and high costs

Old Saying.......... User Pays

Just like the old days of aviation, eh? Before mass tourism!

;)

[Beagle]

Interesting anecdote about the old days of flying and the cost. When AIR turned 75 years old on 30 April 2015 I was in Wellington to attend the Summerset annual meeting so stopped by at Te Papa afterwards to visit AIR's excellent exhibition commemorating their anniversary. Firstly the interior of the old flying boats was vastly more spacious than you would expect and standard economy seats put the new business class seats of the Dreamliners on display to shame.

The interesting parts was the warm jackets and scarf's you had to wear to withstand the cold at altitude but most interesting was the cost. It took half a years average income to afford the 9 hour one way journey to Sydney. In today's dollars that would be something like $25,000 one way.

What I find most curious about the airline industry that gives a valuable insight into the pervasive culture of growth and expansion and ego driving it, is that as soon as some new technology or fuel efficiency measure comes available, airlines pass all the savings on to customers in their ravenous attempt to grow. Prices like $1,599 return to Europe on a quality carrier really are absurdly cheap.

Will this sort of pricing ultimatly be a thing of the past ? I doubt it. In time the same grow at all costs that seems to be all pervasive and endemic within the ego's of airline CEO's worldwide will raise its ugly head again. It seems the industry itself is systemically flawed so in terms of ever expecting long run return on equity commensurate with the risks involved, the sector is forever destined to be an underperformer. No doubt Warren Buffet is coming to the same conclusion after his very costly exercise in irrational exuberance.

[blackcap]

The interesting parts was the warm jackets and scarf's you had to wear to withstand the cold at altitude but most interesting was the cost. It took half a years average income to afford the 9 hour one way journey to Sydney. In today's dollars that would be something like $25,000 one way.

.

What I find interesting too is that when my grandmother used to come here in the 80's it would cost her about $2,500 for a return flight to Europe. You make some real good points there Beagle about the cost and subsequent discounting of flying. For her back then it really was a matter of saving hard for a lot of years to even be able to make the trip. In my lifetime a return trip Europe has gone from being a half years salary to a fortnights salary.

[macduffy]

Is it a matter of growth at all costs or fear of being competed out of the market? Seems to me that competitors would pounce quickly on any routes where the incumbent didn't react to cost reductions.

Yes, the AIR exhibit at Te Rapa was first class, including the virtual reality aspect. Just about the first use of that technology in NZ, I would think.

[stoploss]

Is it a matter of growth at all costs or fear of being competed out of the market? Seems to me that competitors would pounce quickly on any routes where the incumbent didn't react to cost reductions.

Yes, the AIR exhibit at Te Rapa was first class, including the virtual reality aspect. Just about the first use of that technology in NZ, I would think.

Was that Pegasus air ?

[Cyclical]

...or fear of being competed out of the market? Seems to me that competitors would pounce quickly on any routes where the incumbent didn't react to cost reductions.

Yeah, hence my point above about AIR needing to take this opportunity to reset and make themselves lean and mean. If they continue to be fat, the Aussies (or someone else with cheap planes and labour) will be back in to put pressure on AIR's domestic monopoly quick smart. If AIR are going to be "mainly a domestic airline" going forward, than they can't afford tough competition.

[stoploss]

Yeah, hence my point above about AIR needing to take this opportunity to reset and make themselves lean and mean. If they continue to be fat, the Aussies (or someone else with cheap planes and labour) will be back in to put pressure on AIR's domestic monopoly quick smart. If AIR are going to be "mainly a domestic airline" going forward, than they can't afford tough competition.

If they had a 'monopoly" nobody would be able to compete ... It's not beyond comprehension that the Govt says we have had enough of people like Virgin & Jetstar pulling up stumps when the going gets tough .
Then all they have to do is not issue them with a license to operate ...

[steveb]

If they had a 'monopoly" nobody would be able to compete ... It's not beyond comprehension that the Govt says we have had enough of people like Virgin & Jetstar pulling up stumps when the going gets tough .
Then all they have to do is not issue them with a license to operate ...
then of course the aussie govt retaliates by pulling AIR's license and on and on it goes

[dobby41]

then of course the aussie govt retaliates by pulling AIR's license and on and on it goes

Does AIR have a license to operate WITHIN Aus?

[steveb]

Does AIR have a license to operate WITHIN Aus?
I know they fly sydney to perth ( there is a flight leaving this a.m in fact).Probably have other routes as well.So I guess they must have a licence,otherwise Aus would be a free for all!

[Ecks]

Interesting anecdote about the old days of flying and the cost. When AIR turned 75 years old on 30 April 2015 I was in Wellington to attend the Summerset annual meeting so stopped by at Te Papa afterwards to visit AIR's excellent exhibition commemorating their anniversary. Firstly the interior of the old flying boats was vastly more spacious than you would expect and standard economy seats put the new business class seats of the Dreamliners on display to shame.

The interesting parts was the warm jackets and scarf's you had to wear to withstand the cold at altitude but most interesting was the cost. It took half a years average income to afford the 9 hour one way journey to Sydney. In today's dollars that would be something like $25,000 one way.

What I find most curious about the airline industry that gives a valuable insight into the pervasive culture of growth and expansion and ego driving it, is that as soon as some new technology or fuel efficiency measure comes available, airlines pass all the savings on to customers in their ravenous attempt to grow. Prices like $1,599 return to Europe on a quality carrier really are absurdly cheap.

Will this sort of pricing ultimatly be a thing of the past ? I doubt it. In time the same grow at all costs that seems to be all pervasive and endemic within the ego's of airline CEO's worldwide will raise its ugly head again. It seems the industry itself is systemically flawed so in terms of ever expecting long run return on equity commensurate with the risks involved, the sector is forever destined to be an underperformer. No doubt Warren Buffet is coming to the same conclusion after his very costly exercise in irrational exuberance.

As always, brilliantly put Beagle!
Airlines seemingly to do everything EXCEPT to put their own company first. They service first and foremost the government, held to account over extreme costly regulation and secondly service the customer. Perhaps a more monopolised airline could see more of a return to putting the airline first with higher prices rather than the competitive driven pre-covid bums on seats policies that was seemingly at all cost. State Owned 100% is the only way AIR will function to the same profitability and stability as the likes of Qatar and Emirates, I can assure you that their rates are the highest in the industry, our Export freight rates are 3x more expensive should we opt to complete loadouts with them compared to AIR.

[mcdongle]

As always, brilliantly put Beagle!
Airlines seemingly to do everything EXCEPT to put their own company first. They service first and foremost the government, held to account over extreme costly regulation and secondly service the customer. Perhaps a more monopolised airline could see more of a return to putting the airline first with higher prices rather than the competitive driven pre-covid bums on seats policies that was seemingly at all cost. State Owned 100% is the only way AIR will function to the same profitability and stability as the likes of Qatar and Emirates, I can assure you that their rates are the highest in the industry, our Export freight rates are 3x more expensive should we opt to complete loadouts with them compared to AIR.


Qatar and Emirates not doing that well....

https://www.reuters.com/article/us-qatar-airways-results/qatar-airways-annual-loss-widens-to-639-million-amid-lingering-gulf-dispute-idUSKBN1W31MK


https://www.ft.com/content/f99315ac-7226-11e9-bf5c-6eeb837566c5.....

These are last years results

[IAK]

Coronavirus: Air New Zealand begins pilot redundancies. Poor blighters, just the start I'm afraid.

https://www.stuff.co.nz/business/industries/120863685/coronavirus-air-new-zealand-begins-pilot-redundancies

[samjaynz]

Coronavirus: Air New Zealand begins pilot redundancies. Poor blighters, just the start I'm afraid.

https://www.stuff.co.nz/business/industries/120863685/coronavirus-air-new-zealand-begins-pilot-redundancies


Very rough. Two friends of mine had recently (within last 6 months) joined Air NZ as 'entry' pilots - they will probably be looking down the barrel of huge student loans and no income ... what do you go and do with your pilot qualification?

[blackcap]

Very rough. Two friends of mine had recently (within last 6 months) joined Air NZ as 'entry' pilots - they will probably be looking down the barrel of huge student loans and no income ... what do you go and do with your pilot qualification?

I hear supermarkets are looking for shelf stackers. But all joking aside, I was talking to my partner, who is quite active in the aviation space, about this very issue this morning. A lot of those pilots have very specific qualifications and with the global demand for pilots currently plummeting, its going to be a tough gig for some for quite a while. That is the bit that worries me about the economy going forward. If unemployment gets to over 10% for a sustained period of time it could get quite bleak.

[steveb]

with cheap fuel,airplanes and landing fees,there should be a few cheap startups coming along,pilots who have been let go should be able to get something but at what sort of salary who knows.Perhaps the more junior pilots will find slots as they won't be looking for as much as the more senior pilots were paid

[stoploss]

Very rough. Two friends of mine had recently (within last 6 months) joined Air NZ as 'entry' pilots - they will probably be looking down the barrel of huge student loans and no income ... what do you go and do with your pilot qualification?

Student loan only comes out as a % , and if you are not working or below the threshold nothing is payable .
I think if they are motivated to be a pilot they will find plenty of work , just have to knuckle down and accept the new normal.

https://www.dailymail.co.uk/news/article-8191031/British-Airways-pilot-work-coronavirus-Tesco-delivery-driver.html

[iceman]

I hear supermarkets are looking for shelf stackers. But all joking aside, I was talking to my partner, who is quite active in the aviation space, about this very issue this morning. A lot of those pilots have very specific qualifications and with the global demand for pilots currently plummeting, its going to be a tough gig for some for quite a while. That is the bit that worries me about the economy going forward. If unemployment gets to over 10% for a sustained period of time it could get quite bleak.

Yes indeed I think the situation will be quite bleak, particularly for them guys in the middle I reckon. The older guys will many be ok with an early retirement or lower paying jobs in different industries and the younger guys will have no option than to retrain for something else or work at lower salaries for new cheaper startups. Sadly with this industry and many others badly affected from this, there will be some very serious mental health problems to deal with. Very sad.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12322688
Seems like a very low number considering their business has shrunk by 95%+ and isn't going back to anything remotely like normal anytime soon.
Thin end of the wedge or AIR nor really facing up to the reality of the situation ? You be the judge.

The opportunity here is for a full reset of the cost structure of the airline and looks like its being squandered. Hordes of staff on $300K plus...

[Chinesekiwi]

Under the Open Skies agreement in place I do believe Air NZ has the ability operate domestically within Australia however our 'friends' across the ditch have made it a very financially unattractive proposition to do so.

The Pilot redundancies are the first cut only and that has been publicly flagged.

They remain committed to 30% staff reduction (despite the govt. subsidy) and will act on these numbers this week and next.

Here's what is odd. 70% of those who applied for voluntary exit have been approved ergo 30% have been declined. The vast majority of those declined were for financial reasons, the cost is seen as too high.

So cheaper costed staff get approved and expensive do not. Net result is that if these 30% survive redundancy (and a lot will due to superior/older contracts) their 'ongoing cost' to the business will be far in excess of new reset employees and they will stay for many years to come.

I don't think Air NZ is necessarily worse off for not following say QANTAS's LWOP of it's workforce (it cant follow OZ companies anyway as Oz law permits forced LWOP and NZ law does not).

Once QANTAS resume they will have the same extremely expensive workforce to contend with cost wise. Air NZ will be a lot slimmer and with renewed cost structures I would imagine.

Foran has made a point as Beagle has alluded to that yes once the crisis ends and some form of normality resumes the new normal globally may very well be new low cost operators who get aircraft and crew for dirt cheap and off they go.

Would Air NZ consider approaching the govt. to clip the Open Skies policy to prevent or minimise this to the benefit of Air NZ as per most other countries?

Foran won't be drawn on this but he flashes his pro competition credentials when he muses more that if they get the company in the 'right shape' sooner and the market recovers enough then maybe they will get first mover advantage in markets where incumbents are wounded and slow to respond.

[Chinesekiwi]

I hear it's announced that roughly 1500 Cabin crew to be made redundant.

IEA's will be 'consulted' first then the Unions for those covered by collectives.

Should cheer those in the market I would think.

[Zaphod]

I hear it's announced that roughly 1500 Cabin crew to be made redundant.

IEA's will be 'consulted' first then the Unions for those covered by collectives.

Should cheer those in the market I would think.

Temper that with only servicing around 6 domestic airports in NZ. Who of the top ten misses out? TGA? NPE? NPL? PMR? Hopefully this is only for a short duration. Details to follow I suppose, along with bailouts by the government for all airports in NZ.

[Cyclical]

Temper that with only servicing around 6 domestic airports in NZ. Who of the top ten misses out? TGA? NPE? NPL? PMR? Hopefully this is only for a short duration. Details to follow I suppose, along with bailouts by the government for all airports in NZ.

They're just applying the finishing touches to a lovely new airport here in New Plymouth...first Jetstar gone, and then...surely not!

[arc]

So.. anyone interested in creating an airline service startup, using good ol Zepplins/Dirigible's... imagine a slower trip but located in a large floating luxurious lounge room in the sky, good seats, hot meals served on china plates, cups of tea or something stronger if you desire...

Perhaps a good Tourist attraction when things get "better"

:)

[winner69]

So.. anyone interested in creating an airline service startup, using good ol Zepplins/Dirigible's... imagine a slower trip but located in a large floating luxurious lounge room in the sky, good seats, hot meals served on china plates, cups of tea or something stronger if you desire...

Perhaps a good Tourist attraction when things get "better"

:)

I’m often tempted to do this

https://www.pacifictrailways.co.nz/shop/DC3+Air+Tours/DC3GrandNZAirTour2021/x_sku/01409.html

[arc]

I’m often tempted to do this

https://www.pacifictrailways.co.nz/shop/DC3+Air+Tours/DC3GrandNZAirTour2021/x_sku/01409.html


I didnt know about that one, sounds interesting, will look into it

[winner69]

Amazing 12 hour program on Prime ... Go Further South

Trip to the Antartica on a ship visiting the islands on the way

Cool ..it’s going through to 7.30pm

[DoctorG]

surely there is a good buying opportunity here ?

[Cyclical]

surely there is a good buying opportunity here ?

The general consensus here I think would suggest you'd have to be pretty brave and that currently it's overpriced. Have a read of the last few pages to get a feel for it.

[traineeinvestor]

A piece from Ian Wishart suggesting that restrictions on international travel could become the new normal. I hope he's wrong.

https://investigatemagazine.co.nz/28018/fortress-new-zealand-what-will-our-post-lockdown-world-look-like/?fbclid=IwAR1sd7zsEB5em6Big19ycvvtPaqgdlLkbQc37R9g r_q3BmMz_bm6gxvvLNo

[BlackPeter]

A piece from Ian Wishart suggesting that restrictions on international travel could become the new normal. I hope he's wrong.

https://investigatemagazine.co.nz/28018/fortress-new-zealand-what-will-our-post-lockdown-world-look-like/?fbclid=IwAR1sd7zsEB5em6Big19ycvvtPaqgdlLkbQc37R9g r_q3BmMz_bm6gxvvLNo

Lets face it - neither Ian Wishart (nor anybody else I am aware of) was able to predict in November 2019 how travel and tourism will look in April 2020. I am pretty sure that the virus didn't improve his or anybody else's forecasting capabilities, i.e. he just did a piece of linear extrapolation which is so convenient (because easy to do), but nearly always wrong.

Experts currently seem to agree that it is more likely than not that mankind will develop a vaccine and a cure - with roll out more likely in 2021 than in 2020.

After that I don't see why tourism and travel should not normalize again. I could however imagine that this new normal might be lower than the 2019 normal. People are currently just learning that a lot of business and communication can be done without travelling. I guess they will learn later this year that holidaying close to home can be nice as well. Why should people unlearn this experience again?

But no matter which future virus scenario we expect - there clearly will be ongoing need for air travel and transport. Whether Air New Zealand benefits from this demand depends on how nimble they are.

These are great times for flexible and adaptable businesses and bad times for the dinosaurs.

I guess we will see in which category Air New Zealand falls.

[Bobdn]

Bit of a negative take from the media. The important thing is that the plane was flying to Raro whether it had passengers in it is kind of neither here nor there I would have thought.

This is the time for positivity.

https://www.stuff.co.nz/business/industries/120968053/coronavirus-air-new-zealand-flies-empty-plane-to-rarotonga-extends-timeframe-for-reduced-covid19-network

[Marilyn Munroe]

Bit of a negative take from the media. The important thing is that the plane was flying to Raro whether it had passengers in it is kind of neither here nor there I would have thought.

This is the time for positivity.

https://www.stuff.co.nz/business/industries/120968053/coronavirus-air-new-zealand-flies-empty-plane-to-rarotonga-extends-timeframe-for-reduced-covid19-network

From the Sruff article;

"Wallace said Air New Zealand engineers were even toying with the idea of modifying a 777-200 so it could get more cargo onto the passenger deck."

Here is a YouTube which shows examples of this;

https://www.youtube.com/watch?v=FY-bdNPUGtI

Boop boop de do
Marilyn

[Beagle]

Bit of a negative take from the media. The important thing is that the plane was flying to Raro whether it had passengers in it is kind of neither here nor there I would have thought.

This is the time for positivity.

https://www.stuff.co.nz/business/industries/120968053/coronavirus-air-new-zealand-flies-empty-plane-to-rarotonga-extends-timeframe-for-reduced-covid19-network

Positivity - Beautiful picture of an A320.

[Marilyn Munroe]

Here is a sermon on the future of Cullen Airlines and its relationship with the government. Stop fiddling in the pews and pay attention.

It is an unfair burden on taxpayers if every couple of decades they must reach into their pockets and bail out Air New Zealand. Can the Government justify this spending again and again to the taxpayer who earns this money by standing in the dust on a potato digger?

I hope the Government after the latest crisis has a deep think about what it will do next time. Unfortunately any Government Ministers who ponder this question will have to rely on the advice of the tea drinkers and biscuit nibblers at the Ministry of Transport.

Never fear Ministers Marilyn will guide you.

After deep thought Ministers may conclude air passenger transport is a vital part of public infrastructure requiring them to, next time, once again wade in throwing around the hard earned tax dollars from citizens like the potato digger person.

Perhaps they can limit the taxpayer’s future liability

Marilyn proposes what she calls the NAC option. Those of you of a similar vintage to a faded movie star will recall NAC, National Airways Corporation, was the government owned domestic air carrier until it was merged into the Air New Zealand combined domestic and international carrier.

The NAC option would restrict the burden on the taxpayer by rescuing only the domestic arm of Cullen Airlines.

But what about the vital role Cullen Airlines international arm plays in the economy I hear you ask? Marilyn says it is not worth the risk. There is no evidence other international carriers would not step into the breach and provide replacement services.

Ocean freight from New Zealand is well served by competing international shipping without the need for a New Zealand owned shipping service. Marilyn predicts air travel would follow this pattern if a future Government implements the NAC plan.

If implemented the Government might have the money to treat the potato diggers work related repertory disease.

Boop boop de do
Marilyn

[Valuegrowth]

Quoted from the following link.

https://www.stuff.co.nz/business/opinion-analysis/120931792/coronavirus-will-air-nz-and-qantas-be-winners-losers-or-merely-survivors
Winners and losers will be decided by their pre-pandemic financial strength, their ability to obtain any necessary additional funding, and the strategic position they adopt.
Qantas, British Airways, American Airlines, Cathay Pacific, and a number of others have dedicated teams looking at post-pandemic opportunities, and they are positioning themselves now to be able to move when appropriate.
The future will belong to the airlines that emerge with a regrowth game plan ready to be executed. That means keeping your specialist skills close, and having training and checking systems operating at maximum to ensure flight crew availability does not impede recovery.
Qantas and Air New Zealand seem to be setting different paths.
Time will tell who got it right.

Just like other industries, there will be winners and losers in the Airline industry as well in the post corona world. Anyone with a strong balance sheet will do very well. A weak balance sheet means going out of business. Companies with huge cash reserves not only well positioned to weather the current market storm, when the dust finally settles they may end up stronger. They also may acquire less well-off rivals. Before travel people have to take care of their health and food. It may take some time to rebound airline industry fully.

[Arbroath]

Marilyn

I don't buy into that hogwash. The Govt makes money on these bailouts. They sold down about 30% of their post Ansett recapitalisation stake at a reasonable profit and the 53% they hold now has a negative cost basis after deducting all those dividends they've been paid over the past 17 years.
If they convert the $900m loan to equity in the next 6-12 months which I think likely I'd wager that by 2030 you'll be able to look back and see another sell down in the Govt stake at a profit and no doubt healthy dividends from about 2023 onwards. As a taxpayer I'm more than comfortable with the Govt stepping into the breach to support AIR every 20 years or so.

[Balance]

Marilyn

I don't buy into that hogwash. The Govt makes money on these bailouts. They sold down about 30% of their post Ansett recapitalisation stake at a reasonable profit and the 53% they hold now has a negative cost basis after deducting all those dividends they've been paid over the past 17 years.
If they convert the $900m loan to equity in the next 6-12 months which I think likely I'd wager that by 2030 you'll be able to look back and see another sell down in the Govt stake at a profit and no doubt healthy dividends from about 2023 onwards. As a taxpayer I'm more than comfortable with the Govt stepping into the breach to support AIR every 20 years or so.

The government (representing taxpayers) is perfectly entitled to make money after bailing out companies - especially after private enterprises steer clear so the government becomes buyer of last resort.

[Beagle]

AIR really is a rich golden conduit of profit for the Govt. Every year they help bring in a share of the $41 billion of tourist dollars that returns 15% thereof in GST, (over $6 billion a year in GST). There's also the well known multiplier effect in our economy from all those tourism dollars spent here.
The wages bill of $1.3 billion a year itself draws close to $400m a year in PAYE for the Govt plus the direct tax the company pays and its share of the dividends. All this is before they go through the rinse and repeat exercise every so often of buying assets at truly distressed prices and then flogging them off to hapless investors and aviation enthusiasts who should know better, for top dollar.

If there was any reason to separate out two aspects of the airline then a variation of Marilyn's proposal might be considered appropriate. AIR could be rebranded as "TEAL" and as in the old days of TEAL stick to its core knitting of N.Z. Australia and the close pacific islands. https://en.wikipedia.org/wiki/TEAL Those with a sense of occasion might see fit to announce this on the 80th anniversary of TEAL on 30 April this month. The more "adventurous" aspects of AIR flying to far flung places could then be carved off into another sister company perhaps called "STEAL", wherein every decade or two that's exactly what they do to shareholders pockets to keep themselves afloat.

[macduffy]

There's still a lot of former NAC people who deplore the merger with TEAL and would like nothing better than to see a demerger, even at this late stage. Be that as it may, the best reason for the govt supporting (rescuing?) AIR IMO would be to prevent foreign airlines from scooping all the cream from the eventual resumption of international tourism, as Beagle suggests.

:cool:

[Zaphod]

From my perspective I can't see splitting or re-branding the company would add any value at this point. AirNZ is still an internationally recognised brand and they should stick with it IMO.

It'll be interesting to see what their proposed domestic network looks like in the coming week, and what it will evolve into. I'm sure that the top 14 airports can sustain varying levels of service once the lockdown is lifted.

[Beagle]

From my perspective I can't see splitting or re-branding the company would add any value at this point. AirNZ is still an internationally recognised brand and they should stick with it IMO.

It'll be interesting to see what their proposed domestic network looks like in the coming week, and what it will evolve into. I'm sure that the top 14 airports can sustain varying levels of service once the lockdown is lifted.

Sure will be interesting to see how AIR cope with radically lower demand. Perhaps they need a "new" aircraft type that's easier to fill ? A few Beagle Pups might be more appropriate for current demand ! https://en.wikipedia.org/wiki/Beagle_Aircraft "Beagle airlines, taking a dogged approach to proving first class service" has a nice ring to it :cool:

Anyway...on a more serious note, perhaps we can have a trans-tasman bubble ? https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12324415

[Zaphod]

Sure will be interesting to see how AIR cope with radically lower demand. Perhaps they need a "new" aircraft type that's easier to fill ? A few Beagle Pups might be more appropriate for current demand ! https://en.wikipedia.org/wiki/Beagle_Aircraft "Beagle airlines, taking a dogged approach to proving first class service" has a nice ring to it :cool:

It's time for you to put the money where your muzzel is; Start competing with AirNZ directly as Beagle Airlines! I'll buy the first ticket, even if the snacks are just dog treats!

[Beagle]

It's time for you to put the money where your muzzel is; Start competing with AirNZ directly as Beagle Airlines! I'll buy the first ticket, even if the snacks are just dog treats!

:lol: :lol: :lol:

[Arbroath]

The government (representing taxpayers) is perfectly entitled to make money after bailing out companies - especially after private enterprises steer clear so the government becomes buyer of last resort.

100% agree with that. Can't expect the Government to step up and not make a reasonable return.
i think the only real uncertainty with AiR right now is what price the Govt converts there loan to equity at and how bad it is for existing holders. If AIR escapes without having that forced on them I'd be very very surprised.

[winner69]

Good to admire Cam’s positiveness

@CamWallace_NZ
Reviewing yesterday’s revenue performance it’s clear that @FlyAirNZ demand continues to track at 1% (I think that sounds more positive than -99%) of pre-C19 levels for domestic travel for June.

[Timesurfer]

Good to admire Cam’s positiveness

@CamWallace_NZ
Reviewing yesterday’s revenue performance it’s clear that @FlyAirNZ demand continues to track at 1% (I think that sounds more positive than -99%) of pre-C19 levels for domestic travel for June.

You certainly have to admire a man faced with 99 reasons not be positive and he focuses on the one reason to be positive. Lets all be like Cam.

[dreamcatcher]

Nice bounce this morning .................

[mikeybycrikey]

Good to admire Cam’s positiveness

@CamWallace_NZ
Reviewing yesterday’s revenue performance it’s clear that @FlyAirNZ demand continues to track at 1% (I think that sounds more positive than -99%) of pre-C19 levels for domestic travel for June.

So what's that, about $5 million per month in revenue, maybe?

[Beagle]

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12324485

Reckless endangerment. Shocking behaviour.

[Cadalac123]

Nice bounce on 1 percent performance

[BlackPeter]

Nice bounce on 1 percent performance

Quite amazing - I guess whatever happens and even if we manage to extinct the virus in both NZ as well as in Australia, airlines will clearly be sitting for many months to come on high fixed cost and low income.

Looking at the current SP action - is this what delusion looks like?

[Beagle]

Quite amazing - I guess whatever happens and even if we manage to extinct the virus in both NZ as well as in Australia, airlines will clearly be sitting for many months to come on high fixed cost and low income.

Looking at the current SP action - is this what delusion looks like?

Hope is obviously a viable strategy lol...probably take at least 3 years before their business goes back to anything like what it was....and in the meantime they're burning millions every day, (close to $10m a day at present by my calculations).

[Cadalac123]

Some guy living near me who has never done stocks before bought a parcel recently .

To be fair he’s probably up right now wonder if he’ll cash out or have the courage to wait around 2 years

[sb9]

Some guy living near me who has never done stocks before bought a parcel recently .

To be fair he’s probably up right now wonder if he’ll cash out or have the courage to wait around 2 years

That seem to be the trend across board going by past few days trading on NZX. Suddenly a whole lot of people who never bought stocks come to realisation that stocks are the way to go, I think caution is required here and we may see lot of them burning their fingers and hands if not careful.

[blackcap]

That seem to be the trend across board going by past few days trading on NZX. Suddenly a whole lot of people who never bought stocks come to realisation that stocks are the way to go, I think caution is required here and we may see lot of them burning their fingers and hands if not careful.

All the chatter on sharesies FB is about AIR and many are thinking its cheap and a once in a lifetime opportunity. They are all piling in.

[sb9]

All the chatter on sharesies FB is about AIR and many are thinking its cheap and a once in a lifetime opportunity. They are all piling in.

Agree, I can see people plunging in without understanding businesses. In this case AIR is far from coming back normal for at least 3 years or more and in the meantime it could head lower than today's price. I can't help but feel sorry that lot of novices are being sucked into this pump and dump scenario currently.

[Independent Observer AUNZ]

All the chatter on sharesies FB is about AIR and many are thinking its cheap and a once in a lifetime opportunity. They are all piling in.

It is a bit of a worry. Facebook groups are seeing a proliferation of snake oil or crystal ball (or a crystal ball dipped in snake oil perhaps). Having said that its bound to survive in some form or another so maybe give the benefit of the doubt as the value may be there the medium to long -term.

[winner69]

This sharsies Facebook group seems to be a bit of fun

Where is it ...link?

Quick look couldn’t find it

[mikeybycrikey]

All the chatter on sharesies FB is about AIR and many are thinking its cheap and a once in a lifetime opportunity. They are all piling in.

I just recently joined the Sharesies FB group. Whole range from complete novices asking for really basic advice, through to people wanting to invest in crypto and other crazy things. Lots of good things about Sharesies but there might be a lot of people getting caught up in the hype and doing things they don't really understand.

[blackcap]

I just recently joined the Sharesies FB group. Whole range from complete novices asking for really basic advice, through to people wanting to invest in crypto and other crazy things. Lots of good things about Sharesies but there might be a lot of people getting caught up in the hype and doing things they don't really understand.

That is how I see it. The financial illiteracy is astounding. But there are genuine questions. Some of the investment criteria they use are a worry though.

[bull....]

looks like the market likes 1300 odd people getting the sack , stocks on a tear

[Ecks]

It's obvious why AIR is bouncing (up 15% to $1.04 today) = 100,000 blind investors each with $40 a week to invest clearly outweigh the handful of us willing to stump up 100k. AIR is currently uninvestable in the near term. It's only the passion for the brand, the sense of adventure, the love for exploration that each person currently investing holds close to their heart.....blehhhh! They have no idea of the upcoming government debt to equity swap or the seriously damaged balance sheet that will be tabled until it's too late!

[Arbroath]

AIR is a very difficult investment situation at the moment and as some would say perhaps univestable because of the degree of uncertainty. However a couple of things stand out for me on this thread at the moment:
- there are a lot of haters of AIR that can't entertain any other scenario than a bad one for AIR holders;
- a fair amount of arrogance about the little sharesies people...what would those novices know etc.
- today is the highest volume day since the the stock came out of trading halt (crashed from $1.54 to below a buck that day) and the stock is strong on the day so far.

Not saying I'm bullish but its useful to keep an open mind that anyone base case scenario can be wrong and sometimes wrong in a big way.

[bull....]

no way the borders are opening up this year , air will need more money by then too.

[winner69]

Cam said that Australia pre crisis was 22% of AIR’s ASK

Talk of a Aussie NZ ‘bubble’ might have got punters excited

[King1212]

Master winner.....there are a lot of newbies buying SKC n AIR.

My wife colleague...never invest in the share....but saw this opportunity n bought some. No clues.....

[Cyclical]

This sharsies Facebook group seems to be a bit of fun

Where is it ...link?

Quick look couldn’t find it

It's probably just that you are spelling Sharesies incorrectly.

[Cyclical]

Cam said that Australia pre crisis was 22% of AIR’s ASK

Talk of a Aussie NZ ‘bubble’ might have got punters excited

Would that necessarily be a good thing? The Aussie carriers might want to go for the jugular...

[justakiwi]

Well maybe if forums like this one did a better job of encouraging and supporting beginners, they would come here instead. We all had to start somewhere, and at least those who post there are trying to learn and improve their situations by getting started with investing. How about giving them a break and offering them some guidance and encouragement rather than arrogantly dissing their efforts?

i didn’t understand jack **** either when I started out. But I wanted to learn and give it a go. Coming here to do that wasn’t easy. It was downright intimidating and when I first joined ST, the arrogance and lack of genuine support was significant. I left because I didn’t have the balls to deal with that. Yeah, I came back, with a bit more confidence and a lot less tolerance for the bull****. But this is not an ideal place for beginners, especially women. ST has been mentioned over on the Sharesies Facebook group at times and I have posted to say, yes, there are some very helpful people here and yes, there is much to learn. But I have also pre-warned beginners that they might need a thick hide and the ability to sort the wheat from the chaff. I make no apologies for that.

Sharesies is making an effort to educate, encourage and support beginning investors. They set the groups up as part of this and as far as I am concerned that is a very good thing. They also lurk on the groups and will step in to correct any incorrect information or inappropriate suggestions/recommendations as needed.


I just recently joined the Sharesies FB group. Whole range from complete novices asking for really basic advice, through to people wanting to invest in crypto and other crazy things. Lots of good things about Sharesies but there might be a lot of people getting caught up in the hype and doing things they don't really understand.


That is how I see it. The financial illiteracy is astounding. But there are genuine questions. Some of the investment criteria they use are a worry though.

[Gerald]

This sharsies Facebook group seems to be a bit of fun

Where is it ...link?

Quick look couldn’t find it

https://www.facebook.com/groups/sharesiesshareclub/

Home to some of the finest analysts and deepest thinkers in NZ :)

Interesting seeing all these people showing off $100-$200 portfolios without realising they are spending 15% of that each year in fees.

[justakiwi]

Read my post above.

They are just starting out for goodness sake. Not everyone has huge buckets of money to invest. Some of us have to start with small regular amounts, and Sharesies allows us to do that. Most of us couldn’t do it if we were investing via a traditional broker and paying their fees.

Why do so many of you feel the need to constantly rain on someone else’s parade?

if you, and others here, have joined the Facebook group just to have a laugh at our expense, go get your kicks somewhere else :angry:




https://www.facebook.com/groups/sharesiesshareclub/

Home to some of the finest analysts and deepest thinkers in NZ :)

Interesting seeing all these people showing off $100-$200 portfolios without realising they are spending 15% of that each year in fees.

[RGR367]

Read my post above.

They are just starting out for goodness sake. Not everyone has huge buckets of money to invest. Some of us have to start with small regular amounts, and Sharesies allows us to do that. Most of us couldn’t do it if we were investing via a traditional broker and paying their fees.

Why do so many of you feel the need to constantly rain on someone else’s parade?

if you, and others here, have joined the Facebook group just to have a laugh at our expense, go get your kicks somewhere else :angry:

Just persevere kiwi lady. You'll get there in the end as you're already in the right place/direction of starting somewhere/somehow.

[bottomfeeder]

The only way to learn is to lose money and you start to learn the hard way, but you never forget. Then when you make money, you dont pat yourself on the back and think how great am I.

[Beagle]

Reminds me of the old joke... how do you make a small fortune in the airline industry ? Answer, Start with a big fortune.

I've been an investor off and on with AIR for more than 25 years. They have never been anywhere near so comprehensively snookered into a can't win situation.
The only reason anyone would buy at over $1 is because they don't understand the business and more especially the position its currently in.

[nztx]

Master winner.....there are a lot of newbies buying SKC n AIR.

My wife colleague...never invest in the share....but saw this opportunity n bought some. No clues.....

know one who similarly was a new investor looking at AIR until put wise on recent developments etc

[tim23]

Reminds me of the old joke... how do you make a small fortune in the airline industry ? Answer, Start with a big fortune.

I've been an investor off and on with AIR for more than 25 years. They have never been anywhere near so comprehensively snookered into a can't win situation.
The only reason anyone would buy at over $1 is because they don't understand the business and more especially the position its currently in.

With todays huge volume it has to be institutions buying not just the "anyones" - and of course there are sellers on the other side of the trade!

[nztx]

How about Govt buying to increase their stake ?

[Cadalac123]

Read my post above.

They are just starting out for goodness sake. Not everyone has huge buckets of money to invest. Some of us have to start with small regular amounts, and Sharesies allows us to do that. Most of us couldn’t do it if we were investing via a traditional broker and paying their fees.

Why do so many of you feel the need to constantly rain on someone else’s parade?

if you, and others here, have joined the Facebook group just to have a laugh at our expense, go get your kicks somewhere else :angry:

I think it's better we don't have people spamming these forums like that facebook group asking what to buy and when to buy it and showing off their "gains".

Half the posts on there are people blindly buying companies and profiting from a distorted market. It would be a shame if we have those types of spam posts on ST.

[justakiwi]

Asking what to buy and showing their gains, doesn’t constitute spamming or trolling in my opinion. It is simply people getting enthusiastic about their investing journey, and wanting to share that enthusiasm. Sure, many there, have much to learn - some, even just the very basics - but they have to learn somewhere. For every newbie there are several more experienced posters, who do their best to support, educate, guide where possible. I have made several such posts in an attempt to help newbies get their head around the purpose of investing, and the basics of buying shares. I am a beginner who is still learning, but even I have some knowledge I can share.

Investing is no longer only for the rich “old boys.” The likes of Sharesies, Hatch and others, now make it possible for the rest of us to invest as a way to be proactive about our financial situations. I sometimes get the feeling that some here (not necessarily you) resent that. If I can grow my measly little $5000 portfolio to even just $10,000 over the next 5-10 years, that will be a huge help to me in retirement. The size of one’s investment doesn’t matter. It is what we can achieve with it over the time we have, that’s important. One person’s $5000 is no less important to them than another person’s $1,000,000. One could argue that investing is even more important for us “small fry.”


I think it's better we don't have people spamming these forums like that facebook group asking what to buy and when to buy it and showing off their "gains".

Half the posts on there are people blindly buying companies and profiting from a distorted market. It would be a shame if we have those types of spam posts on ST.

[tommy_d]

there might be a lot of people getting caught up in the hype and doing things they don't really understand.
i resemble that accusation ;)
fun time to jump in eh...
"i'm gonna be a day-trader", right?

obviously i've just opened a sharesies account. Fun times.

[justakiwi]

Some will understand that. Some will not. We all learn from the decisions we make along the way.

My own daughter bought some AIR. Yes, I did explain to her the risks of doing so, but she is an adult, earning her own money, who can make her own decisions. She didn’t buy many and only spent an amount she was prepared to lose. She is a total beginner, but she’s a smart girl. She understands that buying AIR was a calculated risk “lottery ticket” gamble. She has no intention of buying any more, and considers them a long term “let’s see what happens” purchase.

And who knows? None of us know how this will pan out. Not really. In 10-20 years the rest of us might be kicking ourselves.


I just hope people know the risk they are taking buying Air NZ at these levels (and i picked Air NZ in the 2020 competition before this all happened). Unless a miracle happens, shares are almost certain to be worth close to zero given government restrictions, demand collapse, fixed costs, haemorrhaging cash position and the likelihood the $900 m government loan will have to be converted to equity at knock down price.

[Beagle]

I just hope people know the risk they are taking buying Air NZ at these levels (and i picked Air NZ in the 2020 competition before this all happened). Unless a miracle happens, shares are almost certain to be worth close to zero given government restrictions, demand collapse, fixed costs, haemorrhaging cash position and the likelihood the $900 m government loan will have to be converted to equity at knock down price.

The mind truly boggles as to what on earth they will do with their billions of dollars of 777's and Dreamliners just sitting there eating their heads off with depreciation, maintenance and funding costs ? They won't even be able to keep their fleet of A320, A321, ATR's and Q300's anywhere near busy. It took 3 years for demand to come back from 9/11, a one-off event that killed a few thousand people. One wonders how long (if ever?) before things return to normal for international travel this time ?

I can't see any other outcome than them burning at the very least the total $2b in equity that was on their balance sheet as at 31 December 2019 before this company is profitable again, probably considerably more. They'll be burning through at least $270m a month in cash at present, ($320m a month total loss including depreciation). It only takes 6 months of that and all the equity is gone ! They're not coming back in any big way within 6 months, its simply not possible. Even if domestic comes back to 40-50% of normal later this year that's only going to slow that burn rate down a little. Until there's a vaccine that's widely available the size of the daily cash bonfire at AIR is truly confronting.

[stoploss]

Interesting the large shareholders who hold 90% don’t sound like they are going to step up to the plate...
Crushed under $5 billion of debt, Virgin Australia waits to see if the government will bail it out.
https://www.stuff.co.nz/business/world/121006606/virgin-australia-enters-trading-halt-as-it-weighs-financial-options?cid=app-iPad

[Cyclical]

Read my post above.

They are just starting out for goodness sake. Not everyone has huge buckets of money to invest. Some of us have to start with small regular amounts, and Sharesies allows us to do that. Most of us couldn’t do it if we were investing via a traditional broker and paying their fees.

Why do so many of you feel the need to constantly rain on someone else’s parade?

if you, and others here, have joined the Facebook group just to have a laugh at our expense, go get your kicks somewhere else :angry:

Yep, well it's fair to say the FB group is pretty low rent haha. But hey, I agree with what you are saying about ST being intimidating for the novice and it's great that starters these days have things like Sharesies and the FB group to get a leg up. I joined up their myself a couple of weeks ago, and while ST is the place I come to learn, I have added the odd helpful (hopefully) post over there on FB.

While I'm no expert, I've been busy losing money on and off since about '86 and have learnt plenty along the way. If I can impart some of that knowledge on today's noobs just starting out, then that's great.

I do worry that a lot of them are about get horribly burnt and put off for life though, just like '87.

[Cyclical]

Interesting the large shareholders who hold 90% don’t sound like they are going to step up to the plate...
Crushed under $5 billion of debt, Virgin Australia waits to see if the government will bail it out.
https://www.stuff.co.nz/business/world/121006606/virgin-australia-enters-trading-halt-as-it-weighs-financial-options?cid=app-iPad

Will be interesting to see what the Aussie government does here. One would assume they will let it fall. They can't even make a profit during boom times, so why have the tax payer keep it going just to add some price competition to the other what will be national airline?

[mp52]

The mind truly boggles as to what on earth they will do with their billions of dollars of 777's and Dreamliners just sitting there eating their heads off with depreciation, maintenance and funding costs ? They won't even be able to keep their fleet of A320, A321, ATR's and Q300's anywhere near busy.

It'd be interesting to look at a breakdown on demand/supply on 777s and Dreamliners pre-Covid - lease and orders actual and planned. Thinking being, if there is a shortage in supply of these fuel efficient and relatively low maintenance long distance airliners, there may be a market in AirNZ leasing a portion of its fleet to another airline on a no-compete basis? One way for an airline to generate revenue and quickly build code-share routes in the post-covid environment?

[mp52]

Fuel efficiency unfortunately less impactful with super low oil prices. I would think all passenger airliners have a surplus of aircraft so a little hard to fathom where lease demand would come from.

Yes indeed. Perhaps viable if an airline is already committed to retiring aged aircraft from their fleet and decides to cancel back-orders for new aircraft in favour of leasing? The glut of airlines likely looking to offload though would make it a buyers market.

These numbers make interesting reading:
https://en.wikipedia.org/wiki/List_of_Boeing_777_orders_and_deliveries#Orders_an d_deliveries_by_type_and_year

Some huge delivered and on-order numbers for Emirates on 777-300s pre-Covid for example.

[Beagle]

You make a good point. There does not appear to be a future worth saving given persistent failure to achieve profitability during the boom years. You can see why the big shareholders don’t want to throw good money after bad into this bottomless pit. Have to give it to Luxon, prescient to extract Air NZ from Virgin shareholding a year or two ago.

Yes, well done to Luxon and to the board for their decision to pay out the full 25 cents per share received from the sale of their stake in that zombie airline. That was his single best decision while at AIR.

[thedrunkfish]

Are you guys watching the share price this morning? This is crazy

[BlackPeter]

Are you guys watching the share price this morning? This is crazy

Exuberance? Might be a timely warning to take profits and leave ...

But on the other hand - hype can do amazing things to share prices and impossible to predict when the bubble will burst.

[BlackPeter]

This might be relevant for anybody still pondering to jump on the recent bounce:

https://edition.cnn.com/2020/04/07/business/lufthansa-shuts-germanwings-on-coronavirus/index.html


Lufthansa' (DLAKY)s assessment is that "it will take months until the global travel restrictions are completely lifted and years until the worldwide demand for air travel returns to pre-crisis levels." Based on this, it has decided on "extensive measures to reduce the capacity of flight operations and administration long term," it said.

Anyway - good luck to holders ...

[mikeybycrikey]

I guess in the last two days we've had a trading halt for Virgin and now a support plan for US airlines.... and AIR is up 30% or something.

Even despite both of those things I don't see AIR being back to anything close to their earlier profitability within 3 years or maybe even more. And they will be on track for an absolutely enormous loss this year.

I've still got a small holding of AIR that I neglected to sell earlier. Might have to get out while I still can.

[percy]

"regional services should be operated by a fleet of Dash 8's and ATRs
for public service routes, and "charter by demise" arrangements made
with operators like Alliance". " The Brisbane-based
carrier, with an all Fokker fleet of 49 aircraft, has been touted as a
possible "replacement" for Virgin Australia should the airline fail to
see out the crisis. When Virgin Blue, stepped up to take the place of
Ansett in late2001, the airline had a mere nine aircraft in its fleet".

[Blue Skies]

What’s going on with AIR!
From .85 to 120 in the last 6 days.
Can’t see any planes in the sky above Auckland, must be flying all over the rest of the country! ;)

[BIRMANBOY]

A timely reminder that the Share Market is NOT about the intrinsic value of the company it is ALL about market sentiment...Its a market...same as the Abu Dhabi camel market just the participants here generally are better dressed.....or in the case as present, probably not.

[Hoop]

What’s going on with AIR!
From .85 to 120 in the last 6 days.
Can’t see any planes in the sky above Auckland, must be flying all over the rest of the country! ;)
Likewise, "whats going on" to the whole Global Equities market..I have been investing for 47 years now and I must admit I have got no idea what the Equity market is doing atm...The equity market is meant to be forward looking and in my opinion that suggests the market is extremely over valued..As far as AIR (a cyclical stock dependent on economic conditions) is concerned the price rise, a relief rally or not, makes no sense to me fundamentally..

Market runs on sentiment and when sentiment conflicts with Value TA becomes the better investment measure, as TA measures sentiment...

The chart below shows the recent 40ish% gain off a shocking plunge..AIR is a bear and in market theory the price rally suggests a bear market correction which will end with a lower high at a resistance point (line)..The nearest resistance line is a gap line and today AIR has ignored it and broken through thanks to the positive momentum of the markets overnight...However this TAer takes this optimistic price break as a precaution that AIR is still a hold..but buying/accumulating needs confirmation as to how far further this rally can go..after this break trough the $1.50 is the next resistance area which coincides with closing the gap, I monumental task I would have thought but at the moment the markets are insane so I don't disregard any targets..
11300

[Independent Observer AUNZ]

Likewise, "whats going on" to the whole Global Equities market..I have been investing for 47 years now and I must admit I have got no idea what the Equity market is doing atm...The equity market is meant to be forward looking and in my opinion that suggests the market is extremely over valued..As far as AIR (a cyclical stock dependent on economic conditions) is concerned the price rise, a relief rally or not, makes no sense to me fundamentally..

Market runs on sentiment and when sentiment conflicts with Value TA becomes the better investment measure, as TA measures sentiment...

The chart below shows the recent 40ish% gain off a shocking plunge..AIR is a bear and in market theory the price rally suggests a bear market correction which will end with a lower high at a resistance point (line)..The nearest resistance line is a gap line and today AIR has ignored it and broken through thanks to the positive momentum of the markets overnight...However this TAer takes this optimistic price break as a precaution that AIR is still a hold..but buying/accumulating needs confirmation as to how far further this rally can go..after this break trough the $1.50 is the next resistance area which coincides with closing the gap, I monumental task I would have thought but at the moment the markets are insane so I don't disregard any targets..
11295

Buuuuuut does any of this traditional analytical logic apply given the underlying conditions? I would see this as a fresh opportunity to short these shares...

[mp52]

The chart below shows11295

Getting an "Invalid Attachment" error mate.

[biker]

What’s going on with AIR!
From .85 to 120 in the last 6 days.
Can’t see any planes in the sky above Auckland, must be flying all over the rest of the country! ;)

Is this not the distortion large scale shorting creates in the market place?

[Beagle]

Likewise, "whats going on" to the whole Global Equities market..I have been investing for 47 years now and I must admit I have got no idea what the Equity market is doing atm...The equity market is meant to be forward looking and in my opinion that suggests the market is extremely over valued..As far as AIR (a cyclical stock dependent on economic conditions) is concerned the price rise, a relief rally or not, makes no sense to me fundamentally..


Likewise. I have been investing since the early 1980's and have never before seen the market so totally divorced from the underlying fundamental's of the economy.
I know we're in a new environment of helicopter money but still, the market strength beggars belief relative to the underlying performance and there's no finer example in the market than AIR.

Economic reality will bite eventually, like it always does so I am happy, (with the odd exception of extreme value), to sit this irrationality out and sit on my cash from the 11 year Bull run and happy to maintain a modest short position in AIR.

[blackcap]

Is this not the distortion large scale shorting creates in the market place?

No, I don't think so. It is almost impossible to short in the NZ market. Far more difficult than in Australia and the US. Even my CDF provider will not allow me to short AIR at this point in time. If I could I would. Please tell me how shorting distorts markets any more than going long distorts markets?

[Flugenbear]

Don't think I've ever seen such a screaming sell....ever....

[Raz]

No, I don't think so. It is almost impossible to short in the NZ market. Far more difficult than in Australia and the US. Even my CDF provider will not allow me to short AIR at this point in time. If I could I would. Please tell me how shorting distorts markets any more than going long distorts markets?

https://www.stuff.co.nz/travel/news/121030141/coronavirus-air-new-zealands-big-regional-problem

Love what they signed up for to get a loan..just love it..as we are in reverse logic territory is this a buy sign? :)

[Beagle]

Truth is even AIR's smallest plane the Q300 is far too big for the domestic loads they currently carrying. Sounds AIR were bleating like stuck pigs in the media yesterday saying they're about to go broke if they don't get some of the Govt's $600 assistance for the aviation sector. Maybe the Govt have a cunning plan to let them go broke so AIR can get some cheap appropriately sized aircraft !
https://www.soundsair.com/

Without any meaningful international network for the foreseeable future, perhaps AIR should go back to their roots and invest in service for provincial N.Z. towns and smaller cities ? Perhaps an opportunity for Shane Jones regional lolly scramble money ?

[Hoop]

Getting an "Invalid Attachment" error mate.

Hmmm.had a bit of trouble trying to post the image...as well I have been for sometime now unable to enlarge it onto the thread..Don't know if it is me or ST..probably me.
I have clicked on the attachment and it seems OK to me..
MP52 do you have a browser with an installed pop-up blocker extension.


Buuuuuut does any of this traditional analytical logic apply given the underlying conditions? I would see this as a fresh opportunity to short these shares...
TA (Technical Analysis) does not apply logic..

Yes its so much easier to see the charts in hindsight...

After AIR's melt down to 80c who would have thought AIR would gain 50%....I certainly didn't..Independant Observer...as you say with underlying conditions the way they are..who would have thought...
TA reflects this recent rally and TA has not signaled that the rally could be over...so why would you want to short during a correctional rally with no sell signals...eh?

[Independent Observer AUNZ]

Hmmm.had a bit of trouble trying to post the image...as well I have been for sometime now unable to enlarge it onto the thread..Don't know if it is me or ST..probably me.
I have clicked on the attachment and it seems OK to me..
MP52 do you have a browser with an installed pop-up blocker extension.


TA (Technical Analysis) does not apply logic..

Yes its so much easier to see the charts in hindsight...

After AIR's melt down to 80c who would have thought AIR would gain 50%....I certainly didn't..Independant Observer...as you say with underlying conditions the way they are..who would have thought...
TA reflects this recent rally and TA has not signaled that the rally could be over...so why would you want to short during a correctional rally with no sell signals...eh?

I also cannot see the attachment.

Why would you want to short? Because although the sell signals your looking for are not there, I'm saying you are looking for the wrong signals. The fundamentals are bad. TA is not a reliable indicator of the future performance of these shares. This bounce would appear to be a result of factors based in fantasy. It's my opinion and the advice I'd give to my family/friends if they asked for it.

[samjaynz]

A timely reminder that the Share Market is NOT about the intrinsic value of the company it is ALL about market sentiment...Its a market...same as the Abu Dhabi camel market just the participants here generally are better dressed.....or in the case as present, probably not.

A picture paints a thousand words:

https://www.rawstory.com/wp-content/uploads/2020/04/kramer.jpeg

American stats, but reinforces your point.

[biker]

Don't think I've ever seen such a screaming sell....ever....

Well, today, I’m sorry, but the market and 18 million dollars of buyers money says your wrong.
Yes, there were sellers of those shares but the market has proved that under a dollar these were actually a screaming buy.

[BIRMANBOY]

You obviously are unaware of the latest research that appears to show that the virus is neutralized when exposed to high altitude flying at 35,000 feet. Airlines expected to be in high demand shuttling air from ground level up to cruising altitude...exchanging air and returning to ground level...reported on fox news recently. Now does that make sense? :p

Unless there has been a vaccine breakthrough that we haven’t yet heard about, this sanguine market and Air NZ major bounce makes no sense.???

[JeremyALD]

The market is bananas at the moment. AIA can also join the club of having me completely puzzled. Reading some of the comments on Sharsies I think buying shares are turning more into gambling, than buying into the future or financials of a company at this point.

[nztx]

The market is bananas at the moment. AIA can also join the club of having me completely puzzled. Reading some of the comments on Sharsies I think buying shares are turning more into gambling, than buying into the future or financials of a company at this point.

You're telling me nothing, have had a glance at movement in AIR AIA & KMD today ...

[Flugenbear]

Well, today, I’m sorry, but the market and 18 million dollars of buyers money says your wrong.
Yes, there were sellers of those shares but the market has proved that under a dollar these were actually a screaming buy.

Quite true biker, I agree with you 100%.
I guess my point is I just don't understand it.
I don't see any positives.
Are people hankering down for the long long term thinking ANZ will never fail, is it FOMO, is it the share price was a third of recent prices?
Anyway it's an interesting watch.
From 5 billion revenue we have gone to 10% of that, with just a little upside in the near term future.
And as of now the share price is close to 50% pre covid.
You do the math.
I have.
But back to your post...I can't fault it.

[peat]

so who is it buying all these AIR then?
Coz it sure aint the Sharesies crowd there was over 15 mill traded today.
So are there some funds getting a nod and a wink from some official?
Or what could induce big money, (usually smart money) to invest?
Or is it possible there is value there I ask myself and its very hard to see

So yeh weird.
No position.

[Flugenbear]

so who is it buying all these AIR then?
Coz it sure aint the Sharesies crowd there was over 15 mill traded today.
So are there some funds getting a nod and a wink from some official?
Or what could induce big money, (usually smart money) to invest?
Or is it possible there is value there I ask myself and its very hard to see

So yeh weird.
No position.

It's really easy to make a small fortune in aviation.
Just start with a large one.

[Hoop]

I also cannot see the attachment.

Why would you want to short? Because although the sell signals your looking for are not there, I'm saying you are looking for the wrong signals. The fundamentals are bad. TA is not a reliable indicator of the future performance of these shares. This bounce would appear to be a result of factors based in fantasy. It's my opinion and the advice I'd give to my family/friends if they asked for it.

Not fantasy...sentiment!!!!!! The optimists outweigh the pessimists atm.

quote:-..."Because although the sell signals your looking for are not there, I'm saying you are looking for the wrong signals...." No I'm not :)At the moment I'm using mostly momentum indicators which react the quickest to any trading behaviour change...

Independent Observer I have some good news for your "shareprice forever down" bias..
1...The Charts and all other disciplines say AIR is Bear..therefore Bear Market theory says this rally is a correction and soon this correction will have run its course and the price will recommence its downward trend.
2..A Bear Market Cycle have a series of capitulation events..It is rare to see only one..
3...AIR price closed at 118c up 14c +13.5%...not exactly a shorters paradise...eh...but hang on, maybe it is a shorters paradise in the making, as from lunch time today the very short term TA started throwing up momentum sell signals (-ve divergence)..That warning is being confirmed by the BB (Bollinger Bands) on the 5 Day/15min chart (https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=NZ%3AAIR&time=3&startdate=1%2F4%2F1999&enddate=4%2F15%2F2020&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=6&maval=50+100+200&uf=8&lf=4&lf2=1024&lf3=2&type=4&style=320&size=4&x=50&y=9&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11)are squeezed indicating a trend change....There's a good chance tomorrow will be a down day, and as AIR has a high Beta value at the moment I wouldn't be surprised if any secondary trend reversal is volatile.

Caution:..Working with very short term TA there is a big risk of being whipsawed to bits ..so..lets see what happens tomorrow...eh

Quote:- "..I also cannot see the attachment...." Thanks...Fixed the link back to my earlier post with the chart is here (https://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ&p=807311&viewfull=1#post807311)

[JeremyALD]

so who is it buying all these AIR then?
Coz it sure aint the Sharesies crowd there was over 15 mill traded today.
So are there some funds getting a nod and a wink from some official?
Or what could induce big money, (usually smart money) to invest?
Or is it possible there is value there I ask myself and its very hard to see

So yeh weird.
No position.

I think institutional investors are also playing game as well, just look at Afterpay on the ASX over the last 2 months. From $40 to $8 then back to $27 which has all happened in six weeks

[Cyclical]

Interesting article on where their thinking is at.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12324948

...Cam Wallace held out a glimmer of hope for the airline's international future at a tourism summit today, but says the most immediate steps out of lockdown won't help it much.
He has seen revenue plunge during the past two months to a point where it the airline is targeting earnings of $500 million, rather than $6 billion it had projected. It now faces drawing on a $900m bailout loan from the Government as it burns through cash.

If the airline was out of markets such as Chicago, San Francisco and Buenos Aires for too long it would be challenging to restart them and recapture tourists.

''And we're competing against an awful lot of hungry nations with deeper pockets than New Zealand.''


That bit concerns me. What if we have this "bubble" between Oz and NZ, will Oz go for the jugular?

Also read on Stuff the other day that the Commerce Commission had been fielding complaints about refunds, or lack of, with guidance supposed to be released yesterday...anyone seen said guidance?

https://www.stuff.co.nz/business/money/120998329/coronavirus-air-new-zealand-credits-spark-complaints-to-commerce-commission

[arc]

I think a large portion of the dead cat bounces happening will be Shorters taking a chance to close their positions. When the price was so low it triggered the get-out-now reflex. And I think that spree triggered the algo trading systems responses. The algos rush ahead of the upward trend and take multiple parcels that they hold for either a few minutes or an hour or two and then resell at the inflated price... wash...rinse..repeat. expect algos to be dominating the market when an actual recovery arrives, look for rapid price hikes, a sure sign the algos are out to play

[Beagle]

so who is it buying all these AIR then?
Coz it sure aint the Sharesies crowd there was over 15 mill traded today.
So are there some funds getting a nod and a wink from some official?
Or what could induce big money, (usually smart money) to invest?
Or is it possible there is value there I ask myself and its very hard to see

So yeh weird.
No position.

Sure is. Maybe the word is out that AIR will get some form of non refundable Govt grant ?
Maybe parties friendly to the Govt have been told to buy to jack up the price for a massive cash issue ?
I might even be tempted to wonder if its all a carefully orchestrated litany of lies ?

Who knows...one thing we do know though, their business is in a total mess at present and likely to stay that way for a considerable period of time.
With them running what amounts to a BBQ where the fuel is $10m a day in cash, maybe they could throw a few thousand sausages on that BBQ each day and feed the homeless people and get the staff doing something useful ?

[macduffy]

That may be the effect, arc, but it needs buyers to start a dead cat bounce in the first place. Difficult and risky to try and initiate it otherwise.

[biker]

Speculation is easy and free, but maybe they are gearing up for a cash issue which will ensure the on going viability of the company in its present form and rule out a debt to equity swap with the Government.
Surely a cash issue would be making sense?
The question then is, are some institutions in the know, and buying accordingly?
The second question is, with no new information and continuing huge cash burn, why is there not a question to the company by the NZX for the inexplicable share price rise?
From 80c to 1.28 today, a 60% rise in less than a month for a company that is ostensibly on the road to going broke?

[Hoop]

Today AIR share price rockets away upwards..presently 127c up 9c +7.6% on lower volume.. momentum has increased BB released with price trend Gapped up...but the -ve divergence is still there... (https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=NZ%3Aair&time=3&startdate=1%2F4%2F1999&enddate=4%2F15%2F2020&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=6&maval=50+100+200&uf=8&lf=1&lf2=65536&lf3=2&type=4&style=320&size=4&x=54&y=7&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11)
From my previous 1 year chart (https://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ&p=807311&viewfull=1#post807311)the breakout (orange arrow) is now blue with confirmation of the yesterdays squeezed BB now being released and the change of price trend is upwards not downwards...good news eh?..Next Price target 133c ?

[dreamcatcher]

Today AIR share price rockets away upwards..presently 127c up 9c +7.6% on lower volume.. momentum has increased BB released with price trend Gapped up...but the -ve divergence is still there... (https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=NZ%3Aair&time=3&startdate=1%2F4%2F1999&enddate=4%2F15%2F2020&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=6&maval=50+100+200&uf=8&lf=1&lf2=65536&lf3=2&type=4&style=320&size=4&x=54&y=7&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11)
From my previous 1 year chart (https://www.sharetrader.co.nz/showthread.php?1088-AIR-NZ&p=807311&viewfull=1#post807311)the breakout (orange arrow) is now blue with confirmation of the yesterdays squeezed BB now being released and the change of price trend is upwards not downwards...good news eh?..Next Price target 133c ?

Today Morningstar - Accumulate TP $2.10

[Arbroath]

Today Morningstar - Accumulate TP $2.10

No that was on March 21st that MS said they downgraded their valuation to $2.10 which was after the event i.e. the share price had collapsed. As we all know events have changed since then.

Whatever you think of the business the share price will meet serious resistance in the $1.35-$1.50 zone so now its better to head to the sidelines and wait for the rights issue which is likely coming in the next couple of months. By then it might be clearer what the next couple of years looks like for them and how much cash they need to raise to survive for better times.

[mikeybycrikey]

It really has been a big jump in a short space of time. I have pretty low expectations about how quickly international travel will recover so I'm out for now.

I'm half expecting that the price rise might keep going right up until 4.01pm today when the PM starts outlining what the near future holds.

Feels to me like expectations of the future are getting way ahead of reality. But I've been wrong many times before and I guess there is a chance that AIR will be back to normal in just a handful of months.

I can't see them even being at 50% of their previous passenger numbers/revenue in 12 months from now and most of that will surely be domestic.

[dreamcatcher]

No that was on March 21st that MS said they downgraded their valuation to $2.10 which was after the event i.e. the share price had collapsed. As we all know events have changed since then.

Whatever you think of the business the share price will meet serious resistance in the $1.35-$1.50 zone so now its better to head to the sidelines and wait for the rights issue which is likely coming in the next couple of months. By then it might be clearer what the next couple of years looks like for them and how much cash they need to raise to survive for better times.

MS on ASB shows 15th April Accumulate #2.10 downgrade due to price change..........not that many people take notice.

Still have a small holding in AIR and was not expecting such a huge bounce so will continue to watch with interest

[Independent Observer AUNZ]

I'm still incredulous about this. Another significant dip must be coming. I can't see any realistic way otherwise.

[justakiwi]

Maybe many of these buyers are younger, with decades till retirement, looking at a long term hold. In 10-15 years (or more) things could look very different for AIR. Couldn’t they?


It really has been a big jump in a short space of time. I have pretty low expectations about how quickly international travel will recover so I'm out for now.

I'm half expecting that the price rise might keep going right up until 4.01pm today when the PM starts outlining what the near future holds.

Feels to me like expectations of the future are getting way ahead of reality. But I've been wrong many times before and I guess there is a chance that AIR will be back to normal in just a handful of months.

I can't see them even being at 50% of their previous passenger numbers/revenue in 12 months from now and most of that will surely be domestic.

[Cadalac123]

Maybe many of these buyers are younger, with decades till retirement, looking at a long term hold. In 10-15 years (or more) things could look very different for AIR. Couldn’t they?

It’s not these “buyers” you think driving the shareprice unless all your friends are millionaires , it’s institutions .