AIR - Air NZ.

[SCOTTY]

With 3.368 billion shares now on issue there is a lot of work to do for a return on capital. A 1cps dividend would require $33,684,301

[Poet]

And after the exemplary baggage handling on the first NZ1 to Auckland we have the sequel - flight diverted to Fiji.

If they are true to their recent form, PAX will probably be told to find their own accommodation and denied compensation

[Recaster]

The twin-engined planes, although more efficient than their predecessors are struggling to fly the route apparently in certain weather conditions.

[Marilyn Munroe]

The twin-engined planes, although more efficient than their predecessors are struggling to fly the route apparently in certain weather conditions.

This is common practice in the industry. Many a passenger on Queer and Nasty's DFW MEL service have been surprised by a landing in the lucky country at BNE instead because of fuel endurance issues.

Long duration flights require lot of fuel and then even more fuel to carry this extra fuel. Fuel endurance on these flights is so close to safety margins a sparrow farting in front of the aircraft can cause a fuel diversion.

This issue should not cause people to freak out, though a bit of honesty from airlines about the likelihood of diversions and the risk of baggage off loads would be helpful.

Boop boop de do
Marilyn

[mikelee]

No, definitely normal for plane to make tech stops, in fact I'd rather enjoy the experience, if I were homeward bound and don't have any commitments lined up on my return LOL.

[Zaphod]

And after the exemplary baggage handling on the first NZ1 to Auckland we have the sequel - flight diverted to Fiji.

If they are true to their recent form, PAX will probably be told to find their own accommodation and denied compensation

We've had the exact same experience with multiple airlines including AIR.

One memorable one was NZ8 SFO-AKL.

After sitting on plane at the gate for 2 hours I watched as our bags were offloaded apparently due to a mechanical issue that ground-crew at the time refused to fix due to a strike. The airline had tried to put the entire aircraft up in a hotel, but couldn't due to lack of availability so a decision to continue the flight was made. Most baggage and fuel was offloaded but looking out the window an argument between the fuel truck driver and one of the ground staff was visible. It turned out the truck wasn't large enough to offload the fuel required, so another truck was bought in. Four hours later at 1am, the flight left SFO headed to Fiji (without baggage), given approval to land in HNL to refuel was declined.

We landed in Fiji and another argument ensued between the security staff, one of which wanted to screen all passengers before entering the terminal, while the other argued there was no point because the flight arrived directly from SFO and hadn't made any stops. They battled it out for approximately 10 mins before someone else just open the door and let everyone through. We eventually landed in AKL some 12 hours late.

The airline handled it as best they could. We received food vouchers for Nandi, and extra meals were served on the plane, including while we waited at the gate. Our bags were delivered directly to our house by airport staff the following day.

These unforeseen issues occur reasonably frequently, so it's not worth getting worked up about it.

[Sideshow Bob]

These unforeseen issues occur reasonably frequently, so it's not worth getting worked up about it.

Yep, pretty much the nature of flying in a metal tube half way around the world.

Much of the time have to go with the flow - airline don't want delays, and getting worked up about it isn't going to change the outcome.....

[biker]

And after the exemplary baggage handling on the first NZ1 to Auckland we have the sequel - flight diverted to Fiji.

If they are true to their recent form, PAX will probably be told to find their own accommodation and denied compensation

The thing is…….. they actually never diverted to Fiji ! They came direct to Auckland.
Where is that in the media?
I believe they flight planned to fly to Nandi and “diverted” to Auckland ie, came direct.

[biker]

Biker, congrats on picking this one up and running with it. Looking back a few pages, you've been a keen supporter of it as a cyclical stock even when quite a few were bagging it. As you say, being prepared to take on a bit of risk and increase ones wealth via the sharemarket. 37% return on at least some of your purchases in 2 months (54cps - 74cps)!! Well done for following your conviction.

Hey Ordop, that’s very kind. Thanks Dad/Mum! :-)

Actually it only helps to make up for some that I picked up and ran with but shouldn’t have, and the risk is still very much on, but so far so good.

[kiora]

"‘It was wonderful’: Eviation’s Alice electric airplane wins praise after its first flight test"
https://www.geekwire.com/2022/eviation-all-electric-alice-airplane-first-flight-test/

[Sideshow Bob]

https://www.nzx.com/announcements/399605

Potential bond offer to replace existing bonds maturing 28/10/22

[STr]

Kiwibank changing the Airpoints Credit card benefits - was 1 AP per $85 spend - now 1 AP per $115 spend.
I am not sure if this is a KiwiBank initiative or Air NZ tightening the belts and reducing Airpoint incentives. But thats quite a jump

[winner69]

Kiwibank changing the Airpoints Credit card benefits - was 1 AP per $85 spend - now 1 AP per $115 spend.
I am not sure if this is a KiwiBank initiative or Air NZ tightening the belts and reducing Airpoint incentives. But thats quite a jump

They blame interchange rates whatever that means …fees up as well so I think it’s Kiwibank doing the tightening.

[Ricky-bobby]

I have just sent kiwibank a dirty email. I suggest all holders do the same!

[Zaphod]

They blame interchange rates whatever that means …fees up as well so I think it’s Kiwibank doing the tightening.

The Government introduced legislation in 2021 to cap the interchange rates which are the fees charged by banks when customers use a credit card. This will officially take effect from 13 November 2022. KiwiBank and AirNZ will be relying on these relatively high interchange rates to subsidise the earning rates on the credit cards. Now that the rates have been capped, they've predictably responded by lowering the earning rate and increasing the annual card fees.

Although the most pain will be felt by those using rewards cards (AirPoints, Cash Bank etc.), IMO the annual card fee increases are likely to flow through to all card types eventually.

I note that KiwiBank will also not offer a lounge pass for every $30k spent on the card.

Sometime over the next couple of weeks I'll complete some modeling on our spend and see whether we're better off converting to a different rewards card, or just a standard non-rewards type card.

[Ricky-bobby]

Let us know what you come up with. Be interesting to see a comparison

[Teatree]

Yep I'd be interested too. Had a quick look earlier and there isn't a lot of choice. American express certainly gives the best reward. Double whammy in fee increases as well as reduction in earnings. We had 6 lounge vouchers but they expired over the lockdown. For some reason we have not earned any more while still spending same amount of dollars.

[stoploss]

Let us know what you come up with. Be interesting to see a comparison
This might help
https://www.moneyhub.co.nz/best-credit-cards.html

[BWH]

I used to have a platinum AMEX card years ago but then changed to the Kiwibank one, which has been slowly falling behind in value ever since. The biggest problem with AMEX is that hardly anyone in NZ accepts it.

[Airw0lf]

I used to have a platinum AMEX card years ago but then changed to the Kiwibank one, which has been slowly falling behind in value ever since. The biggest problem with AMEX is that hardly anyone in NZ accepts it.Amex Airpoints Platinum gives you one Airpoints dollar for every $59 spent - easily the best earn rate. You'd be surprised how many places accept it - all supermarkets, fuel stations, PayPal, many national retailers, any decent restaurant or hotel. They also do some really good cash-back promotions through the year (e.g., I recently spent over $100 at PB Tech and got $20 back. There's usually 4 or 5 of these sorts of events each year that I can take advantage of.) Customer service is excellent as well - the call centre staff are clearly well trained.

[Ggcc]

I used to have a platinum AMEX card years ago but then changed to the Kiwibank one, which has been slowly falling behind in value ever since. The biggest problem with AMEX is that hardly anyone in NZ accepts it.
Amex is a huge cost for small businesses. I remember it being something in the vicinity of 5-6% of the purchase price in costs for the retailer and if you are signed up to an association similar to the retailers association. It is higher if you are not, from memory 8-10%and also not all banks do this. Kiwibank was offering 4-5% for Visa or Mastercard for the retailer. I believe They don’t have an association that can make it cheaper.

[Snow Leopard]

So back in good old 2001 I started a new job and that came with a corporate AMEX card.
When I realised that you could sign up for AIRpoints with them, [note the tenuous link to the thread subject] I duly did.
Much to my surprise a 2nd AMEX card arrived. I queried this and they told me to use the new one and cut up the old one. I duly did.
Next I came to use my AMEX it did not work and it transpired they had cancelled the new card instead of the old one.
So they then sent a replacement card....
....for both cards and then it went downhill from there.

Meanwhile AIR are quite the butt of a few jokes in aviation circles in that they are struggling to get their planes back from New York without regularly needing to leave something behind to save weight and fuel.

But I am sure they will get it sorted.

Disc: I have more AMEX and other credit card stories to bore you with if required.

[Recaster]

Air New Zealand has always been an embarrassment but they may have outdone themselves this time:

https://www.newshub.co.nz/home/travel/2022/10/air-new-zealand-announces-worldpride-2023-flights-to-sydney-from-auckland-san-francisco.html

[777]

Air New Zealand has always been an embarrassment but they may have outdone themselves this time:

https://www.newshub.co.nz/home/travel/2022/10/air-new-zealand-announces-worldpride-2023-flights-to-sydney-from-auckland-san-francisco.html

That is like saying all posters on sharetrader are drop kicks.

A totally ignorant statement.

[Baa_Baa]

Air New Zealand has always been an embarrassment but they may have outdone themselves this time:

https://www.newshub.co.nz/home/travel/2022/10/air-new-zealand-announces-worldpride-2023-flights-to-sydney-from-auckland-san-francisco.html

If you want to be taken seriously as an analyst, which apparently you do from posting your various reports, you might consider refraining from emotional comments about the companies you report on. Keep it factual. Reputation is hard won but easily lost. This comment does you no favours.

[causecelebre]

Air New Zealand has always been an embarrassment but they may have outdone themselves this time:

https://www.newshub.co.nz/home/travel/2022/10/air-new-zealand-announces-worldpride-2023-flights-to-sydney-from-auckland-san-francisco.html

Now that Preachy Luxon is gone they can bring back the pink flights

[mikelee]

Now that Preachy Luxon is gone they can bring back the pink flights

Air NZ used to tell their staff that they do these sort of things to get free promo 'cos they can't afford to spend big on ad like the big boys, and if you follow them on Linkedin you'll read nothing but good news on the newly launched route and everyone celebrating the end of the lock down.
If I didn't know better I'd think a big dividend is coming.:p

[peat]

I guess at 6% and pseudo govt guarantee some will find the bond offer attractive

lol

[Charlie]

Im up 17% in 3 months ,buying small amounts as it rises, nice to be winning for a change:eek2:

[Poolboy]

I wish... I'm about 20% down.

[Charlie]

any chartists out there want to predict the 50 crossing the 200 ????

[winner69]

This group taking Z Energy tpo Commerce Commision for a bit of greenwashing

Probably getting a case against Air NZ as next target - wasn't that recent Sustainability Report from AIR something to behold



https://www.lawyersforclimateaction.nz/news-events/z-energy-to-face-commerce-commission-complaint-for-greenwashing

[biker]

The market has been liking AIR for a while now. Good to see it getting closer to where the punters who took up the cash issue will end up square.

[Snow Leopard]

I here that Virgin Australia are now flying the Tasman again, but only into & outof Queenstown. :confused:

[Snow Leopard]

Like your new airplane:

https://static1.simpleflyingimages.com/wordpress/wp-content/uploads/2022/11/air-new-zealand-s-all-black-star-alliance-aircraft.jpg?q=50&fit=contain&w=640&h=&dpr=1.5

SimpleFlying.com (https://simpleflying.com/air-new-zealand-star-alliance-a321neo-landed-looks-fantastic/)

[Marilyn Munroe]

I here that Virgin Australia are now flying the Tasman again, but only into & outof Queenstown. :confused:

The Commissars of the Airport Directorate of the Peoples Republic of Christchurch will not be pleased.

Expect to see increased agitprop about Tarras Airport.

Boop boop de do
Marilyn

[winner69]

More Govt help for cargo ……$168 million subsidy

Incredible

Shareholders should be rejoicing

[nztx]

but wait there's a Fuel problem

https://www.nzherald.co.nz/business/jet-fuel-rationing-pilots-say-its-an-issue-the-industry-doesnt-need/SOPZR2QCHNFYFE2NGHTFTWSR64/

Pilots say jet fuel rationing is an issue the industry doesn’t need

(Premium content)

and no local Oil Refinery to fix things in a hurry now on a fuel clean up

Surely harnessing all the excess emissions off Wellington's Labour Politician's
copious quantities of bureaucratic BS couldn't save the day ? ;)

there has to be a better means of re-purposing some of the useless blind
and clueless talent that Wellington has been inflicted with :)

[Sideshow Bob]

https://www.nzx.com/announcements/403747

Continued strong travel demand across the domestic and international networks, as well as a recent decline in jet fuel prices has accelerated the airline’s financial recovery. As a result, Air New Zealand is today upgrading half year earnings guidance for the 2023 financial year.

The airline now expects earnings before other significant items and taxation for the first half of the financial year to be in the range of $295 million to $325 million. This compares to the previous guidance range provided on 21 September 2022 of $200 million to $275 million for the half year. The updated range is based on current forward sales expectations and assumes an average jet fuel price of around US $127/bbl for the six months to 31 December 2022. It also assumes we will fly approximately 75 percent of pre-Covid capacity levels across the entire network in December, with Domestic running at just under 100 percent, short haul at about 85 percent and international at around 70 percent.

Ticket sales over the past two months have remained strong as New Zealanders continue to book travel overseas and at home, and as the majority of our remaining international destinations re-open for passenger travel.

Fuel prices have also moderated in recent weeks, with current jet fuel prices of approximately US$102/bbl. While fuel prices are around 20 percent higher than pre-Covid levels at present, the six-month average has declined since the airline’s last market update in September, adding almost $20 million upside to the guidance range. Whilst fuel is a contributor to this earnings update, it is not the only factor.

Capacity remains constrained which will continue to impact pricing. Air New Zealand is focussed on ensuring operational reliability while also adding capacity to alleviate this pressure. Since February 2022 the airline has hired over 2,200 employees into the organisation and welcomed two new A321 neo aircraft into the fleet. These new aircraft add an additional 200,000 seats per year into the domestic network and alongside the additional employees, will help ease capacity restraints.

There are many factors that have the potential to slow the airline’s recovery and significantly impact earnings. These include ongoing fuel price volatility, global recessionary risks, continued inflationary pressures and increased costs. Consequently, the airline is not providing full year guidance at this time.
Ends.

[sb9]

Today's update from Air NZ bodes well for the likes of AIA, THL, SKO and GTK being associated with wider travel, leisure and airport sector in some form.

[Dassets]

It is interesting that there is no mention of cashflow.....

[nztx]

It is interesting that there is no mention of cashflow.....


What cashflow ? :)

Don't all jump on at once with bookings .. a mandatory call up of buyers only with fart machines
and pushbikes might be required to keep the birds up in the air - with a very real fuel problem
threatening things :)

[winner69]

Another upgrade and it could be a record H1 for AIR

Guidance $325m same as achieved H118 and not far off recent high of $457m in H1166

Incredible performance

[Snow Leopard]

My friends electric:
https://resources.stuff.co.nz/content/dam/images/4/z/2/f/0/q/image.related.StuffLandscapeSixteenByNine.710x400. 4z2f2f.png/1670960234702.jpg?format=pjpg&optimize=medium
https://i.stuff.co.nz/travel/news/300764103/air-new-zealand-unveils-zeroemission-planes

[na2m1]

Would love to get in on an electric plane. I always wonder when we will be able to ride one domestically.

[mwri]

Would these planes be more limited in size or range? They look like they world struggle the Auckland to Wellington trip

[kiora]

My friends electric:
https://resources.stuff.co.nz/content/dam/images/4/z/2/f/0/q/image.related.StuffLandscapeSixteenByNine.710x400. 4z2f2f.png/1670960234702.jpg?format=pjpg&optimize=medium
https://i.stuff.co.nz/travel/news/300764103/air-new-zealand-unveils-zeroemission-planes

May need a few more pilots?

[winner69]

Good Megan sorted out jet fuel crisis ….well done the Government

@Megan_Woods
Great news! Jet fuel allocations back to normal after work between Government, fuel companies, airlines and airports to manage a temporary shortfall due to ‘off-spec’ shipment of fuel last week. Monday’s shipment available to Akl airport from tomorrow & 3 more due by 26 Dec ✈️

[winner69]

When Mike says AIR have stuffed up digitally they must have stuffed up big time

Air New Zealand has taken a big step backwards in customer experience


https://www.stuff.co.nz/business/opinion-analysis/300765850/air-new-zealand-has-taken-a-big-step-backwards-in-customer-experience

[Zaphod]

Would these planes be more limited in size or range? They look like they world struggle the Auckland to Wellington trip

Compared with the ATR-72 600, Alice has less than 1/3 the range*, 2/3 cruising speed, 1/7 passenger load, and 1/6 total payload capability.

EDIT: I've omitted the A320 figures because IMO it's not a fair comparison between a turbofan with electric-prop based aircraft. The ATR's also service the sectors you've mentioned.

*The manufacturer has listed the VFR day range, but in the short time I researched this, I couldn't find figures for average conditions, hence 1/3 is probably optimistic.

[Poet]

I see that AIR has now rescheduled 2000 flights for next year. They say 90% will leave within sixty minutes of original schedule (that's probably just about as good as flights that haven't been rescheduled:p).
But on a more serious note, they say that 10% of these flights, presumably international, have been rescheduled for a different date - no mention of compensation for the inconvenienced passengers (extra accommodation, food, ground transport, extra days off work, missed activity bookings etc). AIR seems to think they will get away with this but in reality they are on the hook for damages under the Civil Aviation Act up to $8800 per pax whether they like it or not.
So let's say the average cost to pax is $1500 and 10% of 2000 planes are affected, say 100 pax per plane, I think AIR is looking at some serious compensation - circa $30m. And the extra damage to reputation

[nztx]

When Mike says AIR have stuffed up digitally they must have stuffed up big time

Air New Zealand has taken a big step backwards in customer experience


https://www.stuff.co.nz/business/opinion-analysis/300765850/air-new-zealand-has-taken-a-big-step-backwards-in-customer-experience

Gawd Struth .. all those accolades in the Article Comments section - Not :)

Air NZ hold your head in shame or at least consider a name change SH*TAIR
seems to be the best suggestion ;)

At this rate all of the South American Airlines would likely run rings around AIR
by a country mile :)

Any wonder so many of the best Staff probably aren't in least interested in having
anything further to do with AIR after the way they were treated in recent years

[Sideshow Bob]

https://thebull.com.au/18-share-tips-16-january-2023/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+16+J anuary+2023

Sell recommendation on Air NZ.


The airline recently upgraded earnings before other significant items and tax to between $295 million and $325 million for the first half of fiscal year 2023. This compares with previous guidance of between $200 million and $275 million for the half year. In our view, higher interest rates and rising cost of living expenses may curtail airline travel after the holiday season ends.

[Justin]

https://thebull.com.au/18-share-tips-16-january-2023/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+16+J anuary+2023

Sell recommendation on Air NZ.

the SP going up now because We are in holiday season?

[Balance]

the SP going up now because We are in holiday season?

Fund managers and institutions have been back since beginning of the week. Some of them have started implementing their 2023 portfolio strategy.

[nztx]

https://www.nzherald.co.nz/nz/passengers-left-fuming-after-air-nzs-nyc-to-auckland-flight-delayed-by-more-than-48-hours/YW6ANEGBIFEEZCIMUCWRAWFUIM/

Passengers left fuming after Air New Zealand New York to Auckland flight delayed by more than 48 hours

it wont take too much of this sort of AIR NZ screw up to send patrons off over to the circling
competition ;)

AIR might not only be operating on borrowed cash, but also borrowed brownie points
and borrowed time before the consequences hit ..

[nztx]

Oh look .. the Competition just announced they're flying back in:


https://www.stuff.co.nz/travel/news/131045057/doubledecker-airbus-a380-to-restart-daily-flights-to-christchurch-in-march

Double-decker Airbus A380 to restart daily flights to Christchurch in March

No 48 hour delays with their flights - I bet :)

[dobby41]

No 48 hour delays with their flights - I bet :)

Not flying you to New York either.

[nztx]

Not flying you to New York either.


Maybe not yet .. but wasn't the World's largest on the way from the States in recent news ?

Don't remember who :)

bound to generate a fair bit of turbulence for AIR's bubbles of Red and Debt on wings ;)

[dobby41]

Maybe not yet .. but wasn't the World's largest on the way from the States in recent news ?

Don't remember who :)

bound to generate a fair bit of turbulence for AIR's bubbles of Red and Debt on wings ;)

Qantas is going to fly Auckland-New York in the future.
Do you think that they are immune to the weather (what are we up to there - 6 incidents in 7 days or something?).

[nztx]

https://www.stuff.co.nz/travel/news/300789302/one-of-the-worlds-biggest-airlines-confirms-first-ever-service-to-auckland

One of the world's biggest airlines confirms first ever service to Auckland


If they like what they see - what does that spell for both AIR and Aussie's Kangaroo Air ?

[nztx]

Qantas is going to fly Auckland-New York in the future.
Do you think that they are immune to the weather (what are we up to there - 6 incidents in 7 days or something?).

Turbulence was earlier used with a different non-weather meaning .. you dont appear to have picked up on it :)

[Fortunecookie]

Imo long haul is just a branding exercise for the airline. I would actually encourage more competitor flights on all long haul routes as ultimately Air NZ would benefit from it.

[BlackPeter]

https://www.stuff.co.nz/travel/news/300789302/one-of-the-worlds-biggest-airlines-confirms-first-ever-service-to-auckland

One of the world's biggest airlines confirms first ever service to Auckland


If they like what they see - what does that spell for both AIR and Aussie's Kangaroo Air ?

Wow - this could be a game changer and add real competition for the trip to Europe ...

[Fortunecookie]

Long haul only accounts for 12-13% of Air NZ revenue.

[Marilyn Munroe]

Any courageous investors out there?

"Virgin mulls ASX return after Ukraine and rates weigh on share market floats in 2022"

https://www.abc.net.au/news/2023-01-26/asx-markets-ipo-shares-public-float-virgin/101893004

Boop boop de do
Marilyn

[Rep]

Wow - this could be a game changer and add real competition for the trip to Europe ...

Saying it's a game changer is a bit of a stretch - it will probably see some price competition for Air New Zealand on the route that it's had to itself for a long time.
Delta partner with Virgin Atlantic, KLM and Air France.

A LAX-LHR leg will be on Virgin Atlantic if you want non-stop and maximise SkyMiles (their alliance program) - otherwise you are going a US Domestic stop at somewhere like:

- MSP (Minneapolis St Paul)
- Detroit
- JFK New York
- Atlanta
- Salt Lake City

Believe me when I say US Domestic Legs aren't the greatest experience you will have travelling.

American Airlines used to do the AKL-LAX non-stop before the pandemic but now are flying into Auckland from Dallas-Fort Worth, United still do the AKL-SFO non-stop.
There are SFO - LHR and DFW-LHR options.

[Sideshow Bob]

About 3 years earlier than scheduled if it happens??


https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/pattrick-smellie-businessdesk-managing-editor-on-jarden-predicting-a-full-year-dividend-for-air-new-zealand-in-august/

Jarden is predicting Air New Zealand will announce a full-year dividend in August.
This will be the first full dividend for Air New Zealand since pre-Covid.
BusinessDesk managing editor Pattrick Smellie says this is a departure from two years ago, where the company was relying on Government subsidies to keep them afloat.
Pattrick Smellie says this proves Air New Zealand was able to bounce back quickly and maintain high profit margins due to lack of competition on several routes.

[nztx]

About 3 years earlier than scheduled if it happens??


https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/pattrick-smellie-businessdesk-managing-editor-on-jarden-predicting-a-full-year-dividend-for-air-new-zealand-in-august/

Jarden is predicting Air New Zealand will announce a full-year dividend in August.
This will be the first full dividend for Air New Zealand since pre-Covid.
BusinessDesk managing editor Pattrick Smellie says this is a departure from two years ago, where the company was relying on Government subsidies to keep them afloat.
Pattrick Smellie says this proves Air New Zealand was able to bounce back quickly and maintain high profit margins due to lack of competition on several routes.


Hahaha .. will believe it when I see it .. did the last lot airfreight out get billed at three times the going rates, twice in error ? ;)

or did something cause the perch somewhere else to unexpectedly bounce :)

[Fortunecookie]

About 3 years earlier than scheduled if it happens??


https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/pattrick-smellie-businessdesk-managing-editor-on-jarden-predicting-a-full-year-dividend-for-air-new-zealand-in-august/

Jarden is predicting Air New Zealand will announce a full-year dividend in August.
This will be the first full dividend for Air New Zealand since pre-Covid.
BusinessDesk managing editor Pattrick Smellie says this is a departure from two years ago, where the company was relying on Government subsidies to keep them afloat.
Pattrick Smellie says this proves Air New Zealand was able to bounce back quickly and maintain high profit margins due to lack of competition on several routes.

In some ways I am not surprised
Qantas have reintroduced their dividend.

I dont take too much interest in what analysts say. They seem to have vested interest when and what to say.

[Sideshow Bob]

https://www.nzx.com/announcements/407175

Air New Zealand – demand driving strong recovery

1H 2023 Financial summary

• Statutory earnings before taxation of $299 million , compared to a loss of $376 million for the equivalent six-month period last year
• Operating revenue of $3.1 billion driven by strong demand particularly across the peak summer period
• Flew eight million passengers compared to three million for the same period last year
• Domestic capacity at 94% of pre-Covid levels, and International at 60% capacity
• 3,000 people recruited since January 2022, 2,000 of which were recruited in the six months to 31 December – biggest recruitment drive in the airline's history

Air New Zealand’s recovery is well underway, with the airline today announcing statutory earnings before taxation of $299 million1 and revenue of $3.1 billion for the six months ending 31 December 2022 – progress that will enable the airline to support New Zealand’s economic recovery.

Following three years of Covid-related losses, Air New Zealand’s interim result reflects sustained demand strength, particularly across the summer peak period, a return in business travel and overseas tourists, as well as cargo revenues above pre-Covid levels.

Air New Zealand Chair Dame Therese Walsh says she is incredibly proud of the Air New Zealand whānau and their determined efforts to get New Zealanders flying again, especially given the challenges of restarting an airline amid Covid.

“Today’s result reflects an important milestone in our recovery and places us in a strong position to deliver on our strategy,” says Dame Therese.

“When New Zealand’s borders reopened much earlier than expected, our people rose to the occasion, moving swiftly to return aircraft to service, relaunch 29 routes and onboard more than 3,000 employees to support the eight million customers we flew between July and December – the busiest period we’ve seen in over three years.

“Despite some turbulence, we’ve stayed focused on getting our customers where they needed to go while keeping our eyes on the future. This result means we can continue to invest in our fleet, our people and our decarbonisation goals, to deliver the customer experience Air New Zealand is world-renown for.

“But we must acknowledge these results are being announced in the wake of the devastation that the Auckland floods and Cyclone Gabrielle have left behind. Both of these catastrophic events have heavily impacted several regions we fly to, and our hearts go out to all those impacted. We’re committed to supporting those regions however we can.”

Air New Zealand Chief Executive Officer Greg Foran echoed Dame Therese’s comments and praised teams across the business who worked quickly to ensure the safety of our customers and our people.

On the financial performance for the half, Mr Foran noted the result was delivered against a backdrop of significant labour, supply chain and operational pressures that have challenged the airline, and the entire global aviation system.

“Our recovery is well underway and operating performance is improving steadily, but like most airlines globally, we continue to experience challenges that make it hard at times for our fantastic team to deliver the level of service we expect of ourselves, and our customers expect of us,” says Mr Foran.

“We know we have more work to do to tackle customer concerns like long wait times at our call centres, getting planes to depart and arrive on time, lost baggage and getting refunds back in a timely manner. We want to thank customers for bearing with us through these and other challenges since we restarted flying. We’re very aware that flying is not currently the pain-free experience it should be and getting back into shape is a key priority.

“On top of this, air fares are higher than they were pre-Covid. Like many businesses, we’re facing a high inflation environment with increased fuel, labour and other supplier costs at a time when more customers are wanting to travel, and that flows through to ticket prices.

“A key focus for the team has been bringing back much needed capacity to minimise the impact of higher prices on customers. With six Boeing 777-300ER widebody aircraft now returned into service, three new domestically configured A321neo aircraft delivered and a fully crewed leased aircraft to serve the Auckland-Perth route, we are adding capacity back at pace.”

Alongside this, the airline is also working to extend lease agreements, where appropriate, on existing aircraft and making tactical changes to the network to deliver an additional 2.7 million seats, or an extra 10,000 seats a day for the coming northern summer period, which runs from the end of March until the end of October.

“I’m incredibly proud of our people because, despite the challenges we’ve faced, we have fully reopened our international network, launched our flagship service to New York, and improved our onboard food service. We’ve also upgraded our mobile app, grown our Airpoints Store six-fold since 2019 and taken bold steps towards becoming a more sustainable airline. That is no small ask.

“We’re investing in our people, recruiting 2,000 employees in the last six months alone, increasing our lowest wages and supporting new parents by improving parental leave.”

Dame Therese highlighted the airline’s ability to take a long-term view despite the short-term operational challenges, by delivering digital enhancements, beginning construction on a new hangar at Auckland airport, and taking meaningful steps on its decarbonisation journey – all supported by the everyday efforts of a special team.

“We’ve short-listed four world-leading innovators, along with five long-term partners, to help us deliver on our mission to have our first zero-emissions demonstrator flight in the skies in 2026, and a new regional Q300 turboprop fleet from 2030.

“We’ve also welcomed our first shipment of imported Sustainable Aviation Fuel into Aotearoa, which was a huge milestone for us. We’re committed to finding a more sustainable way to connect with the world and know that the future of travel relies on low-carbon air transport.

“As we look ahead to the second half of this financial year, macroeconomic challenges are front of mind, including the financial impact of inflationary pressures and geopolitical uncertainty. At this moment, however, we are observing demand trends that are offsetting these macro headwinds. Air travel is still in the Covid recovery phase with high levels of demand, and the current capacity and supply chain constraints will limit supply at least in the short-term. The new hybrid work environment has also enabled greater freedom and flexibility for customers which we believe will continue to drive domestic leisure bookings.

“While we cannot predict the future, we know this new normal we find ourselves in requires great skill and dexterity to navigate. Having now spent the better part of three years dealing with constant change and flux, our people are the very best in the business to deal with anything that comes our way.”

Distributions

At the capital raise in May 2022, the Board outlined its intention to consider dividends to shareholders no earlier than the 2026 financial year, based on a number of factors including the expected trajectory of demand recovery and the airline’s financial performance.

Air New Zealand has experienced a stronger and faster recovery than initially expected, with borders reopening early, and strong and sustained levels of demand. On this basis, the Board will consider distributions to shareholders in August when the airline announces its 2023 annual financial results.

Outlook for 2023

Looking to the remainder of the financial year, we are optimistic about the levels of demand we continue to observe but acknowledge there is significant uncertainty regarding the overall economic outlook both domestically and internationally, with increasing inflationary pressures, tighter monetary policy and other macroeconomic factors. We also note that the second half of the financial year is typically weaker than the first half.

Against this backdrop and based on the assumption of an average jet fuel price of US$105 per barrel for the second half of the financial year, 2023 earnings before other significant items and taxation are expected to be in the range of $450 million to $530 million. This guidance includes a preliminary estimate of the impact of the Auckland floods and Cyclone Gabrielle.

[Rawz]

wow they hired 16-17 people per day for 6 months straight. That's in a tight labour market. Well done AIR

Foran going to make a killing on those millions he invested in the company. good on him

[workingdad]

Possibly dividends in august. Might boost SP or st least counter the lower end of guidance result and impacts from east coast.

[Sideshow Bob]

wow they hired 16-17 people per day for 6 months straight. That's in a tight labour market. Well done AIR

Foran going to make a killing on those millions he invested in the company. good on him

Well he doubled down, didn't he. Agreed, good on him.

Might make up a little for the paycut he took coming from Walmart.

[causecelebre]

[QUOTE=Rawz;993557]wow they hired 16-17 people per day for 6 months straight. /QUOTE]

Thats to cover the staggering amount of IP that walked out the door during covid.

[Daytr]

Although the result had been pretty much signaled, I am surprised the likely near term return to dividends hasn't had a more of a positive impact on the SP.
Ahh well I guess I'm in for the long haul 😉

[Sideshow Bob]

Air NZ could have made ‘even more profit’ – Foran (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=f07fca3159&e=3b6f9185d3)



Air New Zealand chief executive Greg Foran has defended the airline’s $299 million half-year profit, saying it could’ve made even more money if it wanted to.
After three years of losses, the airline has bounced back into the black. The company expects to report a before-tax profit of $450m to $530m in its full-year results in August.

Read on » (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=1dedbd8394&e=3b6f9185d3)





https://businessdesk.co.nz/article/markets/air-nz-could-have-made-even-more-profit-foran?utm_source=7am+Headlines+from+BusinessDesk&utm_campaign=074e558aa6-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-074e558aa6-402467359

[winner69]

Cam Wallace ex AIR and recently resigned from MediaWorks is heading to Qantas as CEO of Qantas International and Freight ......and maybe could even take over as CEO of the whole thing next year

Foran and Wallace don't get along too well so could be interesting

Cam should have taken over from Luxon as CEO …..shame on the Board

[Fortunecookie]

https://www.rnz.co.nz/news/business/485226/hopes-of-tourism-boost-pinned-on-increase-in-return-flights-from-china

It will be interesting to see if the demand on the domestic market materialises. Just mindful that infrastructure around the country has been hit hard(hope everyone recovers from this). Although the south island appears to left unscathed(touch wood). I am currently on holiday overseas. Something I noticed, when travelling with checked luggage through the domestic network. Checked luggage accounts for 1/3 of my airfare.

[Onemootpoint]

With both ferry services having to cancel so many crossings due to mechanical issues the only other way to get there is by air, albeit meant to be a temporary disruption. Then of course road disruptions all over the North Island.

[Ltw]

With both ferry services having to cancel so many crossings due to mechanical issues the only other way to get there is by air, albeit meant to be a temporary disruption. Then of course road disruptions all over the North Island.

Thats got to be good for AIR NZ doesn't it?

[Onemootpoint]

I don’t know whether the ferry disruptions are a comedy of errors or a series of unfortunate events. Either way; maybe AIR could jump on this. Domestic air fares are horrendous these days.

[nztx]

I don’t know whether the ferry disruptions are a comedy of errors or a series of unfortunate events. Either way; maybe AIR could jump on this. Domestic air fares are horrendous these days.


might run out of planes .. wouldn't want to work them too fast though - look what it's done to the ferries and if the Seaman happen to notice there could be more ***** thrown around than a cyclone puts out .. would mounting a Koru on a rowboat with 25 unionised horses do ? ;)

[Onemootpoint]

might run out of planes .. wouldn't want to work them too fast though - look what it's done to the ferries and if the Seaman happen to notice there could be more ***** thrown around than a cyclone puts out .. would mounting a Koru on a rowboat with 25 unionised horses do ? ;)

:t_up:
Seems they have already run out of planes, at least for the long haul routes. Not getting all those parked up B777’s back and wet leasing on the Akl-Perth flight. Received a few brand new A321neos recently though with more to come for the domestic market. Up to 50 odd more passengers per leg.

[Sideshow Bob]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/407957/390250.pdf

Dame Therese buying some more....

[Ltw]

AIR going to be Busy
Kaitaki ferry out for two weeks, Interislander disables Facebook comments - NZ Herald (https://www.nzherald.co.nz/nz/kaitaki-ferry-out-for-two-weeks-interislander-disables-facebook-comments/SQQEOS63ONF55KHYAJQBA3OB5U/?utm_medium=Social&utm_campaign=nzh_fb&utm_source=Facebook&fbclid=IwAR1OlaCPhSSkPV2yRAf6w4XZmKhHPkHsbMZoiaGsQ jxCBNghR9WMbrV_JcQ#Echobox=1678078960)

[nztx]

Another satisfied AIR Customer:

https://www.stuff.co.nz/travel/travel-troubles/300822527/i-actually-cried-air-nz-customer-unable-to-pay-bills-after-24k-deducted-from-account-for-failed-bookings#comments

It's a wonder that AIR didn't also charge for waiting time on the line ;)

[Daytr]

Surely the lower / stable oil price must assist profits

[Fortunecookie]

Surely the lower / stable oil price must assist profits

Should do. I think they based their estimates around $120 bbl USD. Greg Foran is ex-Walmart. I have faith in him he is focusing on margins.

[mikelee]

Should do. I think they based their estimates around $120 bbl USD. Greg Foran is ex-Walmart. I have faith in him he is focusing on margins.

I recently flew business return to Asia and was really shocked by the cost cutting. Just to name a few things..
- no newspaper or magazine
- very limited selection of new films
- very limited selections of juice and beer (orange & Steinlarger only on return to AKL)
- no cookie from the snack menu and muesli bar not even full size
- no cheese board or fruit basket on offer, in fact a lot of items on the menu will not be offered unless you ask for them I suspect, it's now on demand, like NetFlix LOL
- WiFi wasn't even working on return to AKL
- the appetizers were served on a tiny plate, meant to be two bite at the most
- no nuts on offered, used to get them with pre-flight drink I remember
- on return to AKL the crew did not even come around 2nd time to offer bread re-fill
- no ice cream for dessert, I remembered many years ago watching a video on youtube and really surprised that ANA even served Haggen-Dazs to their economy class passengers! At least business class passengers were offered premium Whittaker chocolates just before touch down, instead of hard candies.

The crews were wonderful but I'm sure customers in this price range will notice more than a few things missing, so might shop around next time. Business Premier is supposed to be a class between First and Business but felt more like a class between Business and Premium Economy to me. The lie-flat was a real disappointment too, it's so narrow that unless you're skinny and well under 170cm, you'll only feel comfortable lying on your side. My feet especially, felt so cramped when in the lie flat facing the ceiling position. Spoke to my fellow passengers and it's the first time some of them have sat in a non-front facing seat and didn't enjoy the experience at all. They said that they had no idea the seats were arranged this way as the online photos were shot at an angle that doesn't show the true business class lay out.

Anyway, I wonder how much longer Greg is going to be around for? He must be coming up to be the longest serving CEO since Jim McRea LOL. Such a bad idea by the board, to be paying dividend 2yrs earlier than forecasted too, just to please its majority share holder. Should have used the higher than expected revenue to top up the war chest or to reduce its debt.

[Fortunecookie]

I recently flew business return to Asia and was really shocked by the cost cutting. Just to name a few things..
- no newspaper or magazine
- very limited selection of new films
- very limited selections of juice and beer (orange & Steinlarger only on return to AKL)
- no cookie from the snack menu and muesli bar not even full size
- no cheese board or fruit basket on offer, in fact a lot of items on the menu will not be offered unless you ask for them I suspect, it's now on demand, like NetFlix LOL
- WiFi wasn't even working on return to AKL
- the appetizers were served on a tiny plate, meant to be two bite at the most
- no nuts on offered, used to get them with pre-flight drink I remember
- on return to AKL the crew did not even come around 2nd time to offer bread re-fill
- no ice cream for dessert, I remembered many years ago watching a video on youtube and really surprised that ANA even served Haggen-Dazs to their economy class passengers! At least business class passengers were offered premium Whittaker chocolates just before touch down, instead of hard candies.

The crews were wonderful but I'm sure customers in this price range will notice more than a few things missing, so might shop around next time. Business Premier is supposed to be a class between First and Business but felt more like a class between Business and Premium Economy to me. The lie-flat was a real disappointment too, it's so narrow that unless you're skinny and well under 170cm, you'll only feel comfortable lying on your side. My feet especially, felt so cramped when in the lie flat facing the ceiling position. Spoke to my fellow passengers and it's the first time some of them have sat in a non-front facing seat and didn't enjoy the experience at all. They said that they had no idea the seats were arranged this way as the online photos were shot at an angle that doesn't show the true business class lay out.

Anyway, I wonder how much longer Greg is going to be around for? He must be coming up to be the longest serving CEO since Jim McRea LOL. Such a bad idea by the board, to be paying dividend 2yrs earlier than forecasted too, just to please its majority share holder. Should have used the higher than expected revenue to top up the war chest or to reduce its debt.

I don't believe Air NZ are the only ones cost cutting. I had a similar experience on a different airline on longhaul. No hot tea or coffee, no newspaper etc. Entertainment offering was non existent- although this was probably due to a lack of recent movie releases. Airfares were 50% more compared to pre covid and we booked early. The difference was we were in cattle class.

[Balance]

I don't believe Air NZ are the only ones cost cutting. I had a similar experience on a different airline on longhaul. No hot tea or coffee, no newspaper etc. Entertainment offering was non existent- although this was probably due to a lack of recent movie releases. Airfares were 50% more compared to pre covid and we booked early. The difference was we were in cattle class.

Flew Cathay Pacific recently and the service was mechanical - few frills and you only get the basics.

Guess the airlines are all trying to recover some of the huge losses they all sustained in 2020 to 2022.

[dobby41]

We flew Qatar business to Europe over Xmas - stunning service in the Qsuite.
Everything you could ask for in terms of product and service - it was a shame that the flight wasn't longer :t_up:

[Ltw]

Marsden Point has 55m lites of fuel storage capacity, operator says (msn.com) (https://www.msn.com/en-nz/news/other/marsden-point-has-55m-lites-of-fuel-storage-capacity-operator-says/ar-AA19NvVu?ocid=entnewsntp&cvid=f7b377f0f2cf467c9cc963842b8f5192&ei=23)

Interesting comment:
"Buchanan said terminal and pipeline throughputs remained strong, with 810 million litres in the first three months of this year, up 10 million litres from the same time last year, with demand driven by aviation recovery."

[winner69]

No spare engines so two A320s grounded and thousands and thousands of passengers face disruption

Almost as bad as Cook Strait ferries

https://www.rnz.co.nz/news/business/488423/air-new-zealand-grounds-two-planes-almost-150-000-passengers-impacted

[Bobdn]

Comment deleted. I dont own it directly anymore. It's in an index somewhere. Not sure how anyone can own airlines directly. Every headline would make it a painful hold.

I'll stick to roaming around the Black Monday thread.

I use to have 44,000 shares during the Happy Times of insanely huge profits and dividends. Those dividends! One day I woke up to the possibility of a Christmas Air NZ strike and I think not long after the SKC convention center caught on fire, which was being built by Fletchers. I owned all three. Id had enough. Indexes and ETFs for me.

[Fortunecookie]

Comment deleted. I dont own it directly anymore. It's in an index somewhere. Not sure how anyone can own airlines directly. Every headline would make it a painful hold.

I'll stick to roaming around the Black Monday thread.

I use to have 44,000 shares during the Happy Times of insanely huge profits and dividends. Those dividends! One day I woke up to the possibility of a Christmas Air NZ strike and I think not long after the SKC convention center caught on fire, which was being built by Fletchers. I owned all three. Id had enough. Indexes and ETFs for me.

I had a quick look at the some stats.
I wouldn't be too overly concerned. I think I know what's happening.

But you are right, there is no point holding onto individual shares if there is too much stress.

[Daytr]

No spare engines so two A320s grounded and thousands and thousands of passengers face disruption

Almost as bad as Cook Strait ferries

https://www.rnz.co.nz/news/business/488423/air-new-zealand-grounds-two-planes-almost-150-000-passengers-impacted
Bugger I just booked flights to Sydney last week for June. I suppose I will find out if I am one of the lucky ones....or not

[Fortunecookie]

Bugger I just booked flights to Sydney last week for June. I suppose I will find out if I am one of the lucky ones....or not

I hope you got abit flexibility. Worst case it's a day either side.

"Most of the affected passengers will have their flights moved within 90 minutes of their original departure, although around 4000 people will have their flights moved "a day either side."

[mcdongle]

Bit more on the engine parts shortage..

https://fortune.com/2023/03/09/airplane-engine-part-supply-chain-shortage-summer-travel-season/

[Fortunecookie]

Bit more on the engine parts shortage..

https://fortune.com/2023/03/09/airplane-engine-part-supply-chain-shortage-summer-travel-season/

Thanks for the article. It's quite interesting.
I think it will help with load factors.

Using 2019 as the baseline and all of this is off the top of my head.
Total passenger numbers 17,700,000
Average load factor across all routes 85%

17,700,000/0.85% =20,823,529 total seat capacity
20,823,529- 17,700,000= 3,123,529 idle seat capacity

So what happens when you reduce flight numbers. Load factors go up on the remaining flights and eliminate cost on flights that have been withdrawn.
Of course this affects only certain routes and timeframe. But the principle is the same. As mentioned, "Most of the affected passengers will have their flights moved within 90 minutes of their original departure, although around 4000 people will have their flights moved "a day either side." Subsequent routes will be affected as mentioned.
Domestics make 66% of revenue and they control 80% of the market. 22% of revenue is from shorthaul (aus and PI). So the majority of the idle seats will accommodate this.
So seat supply has reduced, but I wouldn't be surprised if load factors go up on remaining routes.

I have used 2019 as the baseline as profit was at the bottom end of the downward cycle. They don't need to do anything extraordinary to achieve it.

[Sideshow Bob]

https://www.nzx.com/announcements/410480

Air New Zealand previously provided full year earnings guidance to the market at its 2023 interim results announced on 23 February 2023. Since this time, the airline has continued to experience strong levels of demand on both the domestic and international networks. US dollar jet fuel prices have also declined below those assumed in the earnings guidance provided in February 2023, although the New Zealand dollar has also weakened over this time, reducing the impact of these declines.

The improvements in revenue and jet fuel price are expected to be partially offset by softer cargo revenues due to increased competitive capacity, particularly in Asia, impacting yields and load factors.

The airline’s network capacity expectations for the second half of the financial year remain largely unchanged from the February guidance, with approximately 95 percent of domestic and 80 percent of international pre-Covid capacity levels across the network.

On the basis of the updates above, and assuming an average jet fuel price for the remainder of the 2023 financial year of US$95 per barrel, the airline now expects earnings before other significant items and taxation for the 2023 financial year to be in the range of $510 million to $560 million. This compares with the prior guidance range of $450 million to $530 million.

Ongoing fuel price volatility, global recessionary risks and inflationary pressures across the entire supply chain remain high and have the potential to impact the final result for the 2023 financial year.

Ends.

[Balance]

https://www.nzx.com/announcements/410480

Air New Zealand previously provided full year earnings guidance to the market at its 2023 interim results announced on 23 February 2023. Since this time, the airline has continued to experience strong levels of demand on both the domestic and international networks. US dollar jet fuel prices have also declined below those assumed in the earnings guidance provided in February 2023, although the New Zealand dollar has also weakened over this time, reducing the impact of these declines.

The improvements in revenue and jet fuel price are expected to be partially offset by softer cargo revenues due to increased competitive capacity, particularly in Asia, impacting yields and load factors.

The airline’s network capacity expectations for the second half of the financial year remain largely unchanged from the February guidance, with approximately 95 percent of domestic and 80 percent of international pre-Covid capacity levels across the network.

On the basis of the updates above, and assuming an average jet fuel price for the remainder of the 2023 financial year of US$95 per barrel, the airline now expects earnings before other significant items and taxation for the 2023 financial year to be in the range of $510 million to $560 million. This compares with the prior guidance range of $450 million to $530 million.

Ongoing fuel price volatility, global recessionary risks and inflationary pressures across the entire supply chain remain high and have the potential to impact the final result for the 2023 financial year.

Ends.

Against a current market cap of $2.6 billion, the mid point forecast of $535m NPBT (will be no tax for a few years given the losses sustained in the last 3 years of the pandemic) puts the stock on a PER of 4.85X or 6.75X after notional tax of 28%.

Looks cheap.

[Poet]

Against a current market cap of $2.6 billion, the mid point forecast of $535m NPBT (will be no tax for a few years given the losses sustained in the last 3 years of the pandemic) puts the stock on a PER of 4.85X or 6.75X after notional tax of 28%.

Looks cheap.

It does look cheap, but remember that they are still working through a huge pile of what they laughingly refer to as 'credits'

When they cancelled flights due to Covid, they held on to as much of customers' cash as they could which means that post pandemic they were able to boost the cost of fares significantly due to their customers being captive (due to not being able to spend the credits elsewhere)

A lot of resentment out there in customer-land so watch out for a backlash once credits are used up, both in loss of customer loyalty and in loss of pricing power

The credits are obviously not cash so watch cashflow as well.

Wealth effect of housing market no longer present - splurging on travel maybe a little less the next few years

RB engineered recession on the way.

Overall, I'd say be cautious

[Balance]

It does look cheap, but remember that they are still working through a huge pile of what they laughingly refer to as 'credits'

When they cancelled flights due to Covid, they held on to as much of customers' cash as they could which means that post pandemic they were able to boost the cost of fares significantly due to their customers being captive (due to not being able to spend the credits elsewhere)

A lot of resentment out there in customer-land so watch out for a backlash once credits are used up, both in loss of customer loyalty and in loss of pricing power

The credits are obviously not cash so watch cashflow as well.

Wealth effect of housing market no longer present - splurging on travel maybe a little less the next few years

RB engineered recession on the way.

Overall, I'd say be cautious

All good points and why Air NZ is trading on such cheap multiples.

[Rawz]

Against a current market cap of $2.6 billion, the mid point forecast of $535m NPBT (will be no tax for a few years given the losses sustained in the last 3 years of the pandemic) puts the stock on a PER of 4.85X or 6.75X after notional tax of 28%.

Looks cheap.


It does look cheap, but remember that they are still working through a huge pile of what they laughingly refer to as 'credits'

When they cancelled flights due to Covid, they held on to as much of customers' cash as they could which means that post pandemic they were able to boost the cost of fares significantly due to their customers being captive (due to not being able to spend the credits elsewhere)

A lot of resentment out there in customer-land so watch out for a backlash once credits are used up, both in loss of customer loyalty and in loss of pricing power

The credits are obviously not cash so watch cashflow as well.

Wealth effect of housing market no longer present - splurging on travel maybe a little less the next few years

RB engineered recession on the way.

Overall, I'd say be cautious


All good points and why Air NZ is trading on such cheap multiples.

agree agree agree

[silverblizzard888]

Well not to bad buying a stock thats already pricing the key risk factors, more upside if things don't end up as doom and gloom.

[Ltw]

How far away do you smart people think we are away from a Dividend?
Late this year? sometime next?

[Sideshow Bob]

How far away do you smart people think we are away from a Dividend?
Late this year? sometime next?

Wouldn't expect this year. They still have $1.74 billion of interest-bearing liabilities.

I would say their major shareholder will want some of their money back they lent them through Covid.....I think they need it back.

However they might throw shareholders a bone......$0.01 divvy costs them $33.6m.

[kiora]

Flying soon?
"During the presentation, CATL said its working with partners on the development of electric passenger aircraft practicing aviation-level standards and testing in accordance with aviation-grade safety and quality requirements"
https://thedriven.io/2023/04/21/worlds-largest-battery-maker-announces-major-breakthrough-in-battery-density/

[nztx]

Wouldn't expect this year. They still have $1.74 billion of interest-bearing liabilities.

I would say their major shareholder will want some of their money back they lent them through Covid.....I think they need it back.

However they might throw shareholders a bone......$0.01 divvy costs them $33.6m.


be a pretty small sort of bone by the time it gets fractionalised :)

How about a consolidation up first instead ?

[Sideshow Bob]

be a pretty small sort of bone by the time it gets fractionalised :)

How about a consolidation up first instead ?

Nah nah nah, then you would get Sharesies punters complaining the Govt is stealing their shares!!

Enough hate out there for AIR currently without that!! :p

[nztx]

https://www.nzherald.co.nz/business/airline-anger-bad-batch-of-aviation-fuel-hits-flights-through-wellington/5TXYAKOGUNBGHBEA3BUZVEKLN4/

Airline anger: Bad batch of aviation fuel hits flights through Wellington



More Bad Oil - is the defacto President of Robertson Air still asleep or hiding under his desk ? ;)

[Rawz]

AIR nz probably not a bad 5 year investment right now. Just need to not look until year 5 maybe

[BlackPeter]

AIR nz probably not a bad 5 year investment right now. Just need to not look until year 5 maybe

probably, maybe? You sound like a convinced supporter ...

[Rawz]

probably, maybe? You sound like a convinced supporter ...

sorry that post was more thinking out loud :)

ill show myself out

[BlackPeter]

sorry that post was more thinking out loud :)

ill show myself out

No problem ... I guess you hit the right tune :);

It might be a good investment - or it might not be - I agree with that.

The problem I see is that most of the success criteria are not under AIR's control ...
- how will international tourism develop, and how will NZ be effected?
- how hard will NZ work on detracting international visitors (visitor taxes and tourist bashing)?
- how will fuel prices develop?
- how will people in Europe, US and Asia modify their urge to holiday so far away (flight shaming)?

Obviously - some parameters do have AIR under control:
- they are currently selling a substandard product (compared to best in class competition) for premium prices.
- while they offer code shared flights with better carriers (e.g. Singapore Airlines),
they charge a higher price for them (happened to me - guess, which carrier I took).
- they retired too many planes and seem to have even problems to maintain the little they have left -
flight cancellations and similar are the result.
- many clients still feel agrieved about the substandard treatment they gave them during the Covid time
(fight for refunds)

So, yes - you are right - it might be a good investment, but I think the old saying still goes: don't invest in anything which floats or flies ... particularly if its so much worse than the competition :) ;

I probably will resist.

[Onemootpoint]

Hello China: Air NZ restarts daily flights to Shanghai, Air China restarts Beijing route


https://www.interest.co.nz/business/121034/hello-china-air-nz-restarts-daily-flights-shanghai-air-china-restarts-beijing-route

[stoploss]

How far away do you smart people think we are away from a Dividend?
Late this year? sometime next?
Probably not much room with this amount of spending planned.
https://www.stuff.co.nz/business/131998153/air-nz-to-invest-35b-in-new-aircraft-and-retrofitting-fleet

[Daytr]

I had a small position which I only held for a few weeks. I rethought my position a little while ago & quit it for a small loss due to the amount of money being sucked out of the economy due to higher interest rates & not just here but globally. A mortgage broker I spoke to recently said that less than half his mortgage book had rolled onto the higher rate regime. I think discretionary spending on things like flights will be reigned in.

[Daytr]

I had a small position which I only held for a few weeks. I rethought my position a little while ago & quit it for a small loss due to the amount of money being sucked out of the economy due to higher interest rates & not just here but globally. A mortgage broker I spoke to recently said that less than half his mortgage book had rolled onto the higher rate regime. I think discretionary spending on things like flights will be reigned in.

[silverblizzard888]

Probably not much room with this amount of spending planned.
https://www.stuff.co.nz/business/131998153/air-nz-to-invest-35b-in-new-aircraft-and-retrofitting-fleet

Their spending is already accounted for in their financials. They have depreciation expenses in the region of $600-$700million a year which if you spread the announced $3.5 billion spending over 5 years it also magically equals $700 million which is their depreciation expense. So the impact is technically already accounted for.

[Valuegrowth]

https://mcgillbusinessreview.com/articles/the-future-of-airlines-and-jet-fuel-a-carbon-conundrum

https://www.bain.com/insights/air-travel-forecast-interactive/

[mikelee]

No problem ... I guess you hit the right tune :);

It might be a good investment - or it might not be - I agree with that.

The problem I see is that most of the success criteria are not under AIR's control ...
- how will international tourism develop, and how will NZ be effected?
- how hard will NZ work on detracting international visitors (visitor taxes and tourist bashing)?
- how will fuel prices develop?
- how will people in Europe, US and Asia modify their urge to holiday so far away (flight shaming)?

Obviously - some parameters do have AIR under control:
- they are currently selling a substandard product (compared to best in class competition) for premium prices.
- while they offer code shared flights with better carriers (e.g. Singapore Airlines),
they charge a higher price for them (happened to me - guess, which carrier I took).
- they retired too many planes and seem to have even problems to maintain the little they have left -
flight cancellations and similar are the result.
- many clients still feel agrieved about the substandard treatment they gave them during the Covid time
(fight for refunds)

So, yes - you are right - it might be a good investment, but I think the old saying still goes: don't invest in anything which floats or flies ... particularly if its so much worse than the competition :) ;

I probably will resist.

Substandard product indeed, I can't believe how the crew regularly got my snack order wrong too. I flew in business class, with only about 20 people to look after, and the order was placed online so they have it in front of their screen in writing! Don't get me started on the lack of selections.

[nztx]

Their spending is already accounted for in their financials. They have depreciation expenses in the region of $600-$700million a year which if you spread the announced $3.5 billion spending over 5 years it also magically equals $700 million which is their depreciation expense. So the impact is technically already accounted for.


That $600-700m is provision for write off of existing assets periodically against income

Dont expect it to remain at the same levels when new assets to the tune of a further $3.5 B come on board or further capital spending occurs

[silverblizzard888]

That $600-700m is provision for write off of existing assets periodically against income

Dont expect it to remain at the same levels when new assets to the tune of a further $3.5 B come on board or further capital spending occurs

They have written off existing assets and used the deduction on existing income. The deducted income is then available to be used to purchase more asset, which is why I say their $3.5 billion spending is technically accounted for in their financials as they won't be needing to find too much extra capital for the spending.

Based off profits and their depreciation deduction of $600-700 million they can afford to spend $3.5 billion over 5 years with no problem. Thats true their depreciation level will increase a lot more with their extra spending and allow extra deductions, which they can put towards more assets or debt repayment.

[nztx]

They have written off existing assets and used the deduction on existing income. The deducted income is then available to be used to purchase more asset, which is why I say their $3.5 billion spending is technically accounted for in their financials as they won't be needing to find too much extra capital for the spending.

Based off profits and their depreciation deduction of $600-700 million they can afford to spend $3.5 billion over 5 years with no problem. Thats true their depreciation level will increase a lot more with their extra spending and allow extra deductions, which they can put towards more assets or debt repayment.


Where's the $3.5 billion now ?

Red Ink & Accumulated Losses ?

Certainly not Cash to go forward & hand a bundle over for new Capital Assets
otherwise there would have been no need for bail outs ;)

So do they do a Lease to use for these instead - more higher overhead cost going out the door .. :)

And quite a few plane loads of extra tickets issued needed to be issued to achieve break even

Past depreciation & write off is no indication of ability to go from 0 to 3.5 Billion without
some pretty good sort of trading to carry the lot, provide for notional tax, then on anything
left over maybe stakeholders expect a small fraction too .. the price of painting a rosier picture :)

If it were that easy & straightforward, then maybe we should organise a syndicate from here
to pick up a few parked up jets from a desert park that no-one wants and start up in competition
but with a lower Capital Assets basis ? Might even beat AIR to making a profit too :)

[Snow Leopard]

Airlines are capital intensive businesses and AIR have probably averaged $600M+ per annum on new assets in normal time.
The $3B5 figure is not particularly surprising, most of the purchases were flagged years ago.
With airframes being depreciated over 18 years, engines upto 15 years and old assets disappearing from the register the corresponding rise in D&A will be 'minor'. :mellow:

[silverblizzard888]

Where's the $3.5 billion now ?

Red Ink & Accumulated Losses ?

Certainly not Cash to go forward & hand a bundle over for new Capital Assets
otherwise there would have been no need for bail outs ;)

So do they do a Lease to use for these instead - more higher overhead cost going out the door .. :)

And quite a few plane loads of extra tickets issued needed to be issued to achieve break even

Past depreciation & write off is no indication of ability to go from 0 to 3.5 Billion without
some pretty good sort of trading to carry the lot, provide for notional tax, then on anything
left over maybe stakeholders expect a small fraction too .. the price of painting a rosier picture :)

If it were that easy & straightforward, then maybe we should organise a syndicate from here
to pick up a few parked up jets from a desert park that no-one wants and start up in competition
but with a lower Capital Assets basis ? Might even beat AIR to making a profit too :)

$3.5 billion is future spending which comes from future cashflows. For example last interim report came in with $299 million before tax, yet operating cashflow came in at $972 million, $317 million went to assets and will continue like that for future spending, leaving $655 million free cashflow. Unfortunately theres a lot of debt and lease liabilities in the company so $288 million has gone to financing activities, leaving $367 million boost for their cash balance, which is still decent for 6 months.

Well good old Richard Branson started his airline in a similar way, with some good reputation and financing. We could sure start something if we had some odd millions lying around to lease aircraft and working capital. How about a sharetraders airline with exclusive miles for high volume posters, each post earns you airpoints.

[silverblizzard888]

A recent observation on jet fuel price is that jet fuel is about $90 or less, which is a bonus on their recent forecast:

"On the basis of the updates above, and assuming an average jet fuel price for the remainder of the 2023 financial year of US$95 per barrel, the airline now expects earnings before other significant items and taxation for the 2023 financial year to be in the range of $510 million to $560 million. This compares with the prior guidance range of $450 million to $530 million."

[Onemootpoint]

The competition is heating up on the traditionally strong, dominant AIR trans Tasman routes:

Qantas announces major boost to New Zealand services

https://www.stuff.co.nz/travel/news/132089934/qantas-announces-major-boost-to-new-zealand-services

[Sideshow Bob]

As good as it gets for Qantas?

https://www.theage.com.au/business/companies/is-this-as-good-as-it-gets-for-qantas-20230523-p5daks.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+2 4+May+2023

Same for Air NZ??

[Onemootpoint]

More competition coming soon on an exclusive AIR route - Perth. As it is the current route is served by a wet lease (I believe) and not up to the usual standard of AIR. Until October apparently.


Malaysian airline Batik Air to take on Air NZ

https://www.stuff.co.nz/travel/news/300886405/malaysian-airline-batik-air-to-take-on-air-nz

[Valuegrowth]

https://www.nzherald.co.nz/travel/best-airlines-in-the-world-named-in-2023-awards/KJFEVXKQ4RDFNDRWNGJFQRKZ3A/

[Sideshow Bob]

https://www.nzx.com/announcements/412718

Air New Zealand last provided earnings guidance for the 2023 financial year to the market on 27 April 2023, and is today providing an update to that guidance.

Since the previous update, the airline has experienced stronger ongoing demand than usually observed at this time of the year, which is typically considered the airline’s off-peak period.

In addition to this, US dollar jet fuel prices have declined even further and have been consistently below those assumed in the earnings guidance provided in April.

On the basis of the updates above, and assuming an average jet fuel price for June of US $89 per barrel, the airline now expects earnings before other significant items and taxation for the 2023 financial year to be no less than $580 million. This compares with the prior guidance range given in April of $510 million to $560 million.

Air New Zealand continues to invest in our people, our customers and our digital capabilities. As indicated at the interim results in February 2023, over the next five years the airline is investing approximately $3.5 billion in aircraft and retrofitting alone.

Looking ahead to the 2024 financial year, the airline remains mindful of the uncertain economic environment it is facing into. With more capacity entering the market in the coming months, fares are expected to moderate from the current peaks.
Ends.

[winner69]

Auckland to Auckland seems a popular international flight these days

https://www.rnz.co.nz/news/national/492545/air-nz-flight-to-chicago-returns-to-auckland-due-to-fuel-issue

[SailorRob]

Airlines are capital intensive businesses and AIR have probably averaged $600M+ per annum on new assets in normal time.
The $3B5 figure is not particularly surprising, most of the purchases were flagged years ago.
With airframes being depreciated over 18 years, engines upto 15 years and old assets disappearing from the register the corresponding rise in D&A will be 'minor'. :mellow:


How is this any different from my post highlighting that you need to understand returns on capital, for which you called me pretentious?

You show you do actually have some understanding of what I'm talking about, so why attack?

[Sideshow Bob]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/413663/397150.pdf

Op stats for May. Interesting comparison to FY19 in the stats. Generally, close but slightly behind pre-Covid levels.

Passenger load factor lagging a bit though.

[winner69]

A320’s got dodgy engines …most need to be inspected

Hopefully wont disrupt AIRplanes

[Balance]

A320’s got dodgy engines …most need to be inspected

Hopefully wont disrupt AIRplanes

Old news, w69.

Was back in April and 150,000 passengers were affected - so rebooking etc etc.

[winner69]

Old news, w69.

Was back in April and 150,000 passengers were affected - so rebooking etc etc.

You are right again

Saw RTX was down heaps cos engines going to be costly to fix and forgot that AIR had already mentioned this problem

[Rawz]

https://www.nzx.com/announcements/416946

Special dividend of 6 cents. thats cool

2023 Summary
·Earnings before other significant items and taxation of $585 million
·Statutory earnings before taxation of $574 million
·Operating revenue of $6.3 billion
·Domestic capacity at 94% of pre-Covid levels and International capacity at 71%
·Fully imputed special dividend of 6.0 cents per share declared for the 2023 financial year
·2023 Sustainability Report released

Demand for air travel that exceeded expectations has led to a rapid recovery for Air New Zealand, which today announced a profit that will help fund aircraft, digital investments and facilities, building a stronger airline for New Zealand.
The financial year began as borders were still reopening and aircraft were stored in the desert, and ended with the airline at 94 percent of pre-Covid domestic capacity. Having restored its international network, the airline carried out the biggest recruitment drive in its history and returned all aircraft to the skies.

In line with market guidance provided in June 2023, Air New Zealand’s earnings before other significant items and taxation were $585 million for the 2023 financial year. Statutory earnings before taxation were $574 million, compared with a previous year loss of $810 million.
In addition to introducing new aircraft, making digital enhancements for customers and staff, increasing wages for front line staff and starting work on a new engineering hangar, the airline will provide shareholders with a one-off, fully imputed special dividend of 6.0 cents per share2. The special nature of this dividend reflects the extraordinary 2023 operating environment, with strong pent-up levels of demand combined with industry-wide capacity constraints.

The Board has also reviewed the airline’s capital management settings and has today announced a revised capital management framework, effective from the 2024 financial year.
Air New Zealand Chair Dame Therese Walsh says the result is an important one given the critical role the airline plays in New Zealand both socially and economically.

“We are proud of the result Air New Zealand has delivered this financial year, and of the value we have created for our shareholders.
“This result would not have been possible without our remarkable team of Air New Zealanders. Their grit, determination and commitment to deliver exceptional service for our customers is second to none.”
Chief Executive Officer Greg Foran said the result follows a year in which the airline balanced customer, staff, community, and shareholder needs, while making investments for the years ahead.

“A strong Air New Zealand is good for New Zealand. We have rehired and trained in a tight labour market, lifted the starting wage for the airport teams to $30 an hour and improved the way we work with digital systems on the ground and in the air.
“Restoring services to 500 flights a day is not only good for Kiwis who’ve been able to take that long planned holiday, but it has also brought tourist dollars back to the regions and supports exporters who rely on regular air freight.

“We know increased costs and high demand have made flying more expensive. In the past year we put more aircraft and seats in the air, so there are more choices for customers which helps alleviate the cost of flying. At the same time, our own costs continue to rise and the reality is that airfares are unlikely to return to pre-pandemic levels.

“After several volatile years it’s great to be back in the black and standing on our own two feet especially given we have more than $3.5 billion in aircraft investment coming over the next five years.
“Today we also announced an order for two new ATR turboprop aircraft for regional routes, as well as two new Airbus A321neos for our international short-haul network. That’s in addition to the existing domestic Airbus A321neo orders, and the eight new Boeing 787 Dreamliners we have coming into the fleet as we retire our Boeing 777-300s over time. And we’re retrofitting our 14 787’s with the new Business Premier LuxeTM and refreshed cabin product.

“We’re making progress on the things that matter to customers. Contact centre wait times have, on average, reduced by 75 percent since December, we’ve introduced an enhanced app, and we’ve had a step change in on time performance and more importantly, a reduction in cancellations. This June we were one of the best airlines in the Asia Pacific region at arriving on time, so we have momentum.

“We want all our customers to have a great experience and we know that over the past year we haven’t got that right every time. We were tested during the Auckland floods and Cyclone Gabrielle, but pleased to be able to help the Napier and Gisborne communities with direct flights when roads linking the cities were washed away.

“Air New Zealand has also released its annual Sustainability Report today, which highlights how important and challenging the work we’re doing in this area is. This is a key focus for the business, with work underway to select a flight route for the airline’s first next generation aircraft and the announcement of a sustainable aviation fuel feasibility study alongside the New Zealand Government.

“Our entire whānau would like to thank our customers who have been patient and loyal while we emerged from the global pandemic. We’ve made significant progress in the past year, emerging as a strong Air New Zealand, which is good for the country.”
Revised capital management framework

The Board has also reviewed the airline’s capital management settings, with a particular focus on the appropriate liquidity and leverage targets that would enable the airline to maintain investment grade credit rating metrics, as well as consideration of future shareholder distribution parameters. The revised capital management framework is effective from the 2024 financial year and further information can be found here.

Outlook
The airline notes that the 2023 financial year was particularly unique with significant customer demand, constrained market capacity and lower fuel prices in the second half, and as such, we believe the 2024 financial year will be more reflective of future financial performance.

Looking ahead to the first half of the 2024 financial year, customer demand remains strong across our markets. We are mindful of the uncertain economic environment however and acknowledge a number of factors that may impact future customer demand and profitability. These factors include increased international competition, volatile fuel prices, a weaker New Zealand dollar, ongoing wage inflation and increased airport charges.
Given the uncertainty and volatility of some of these macroeconomic factors, the airline will not be providing guidance at this time.

Ends

[Balance]

https://www.nzx.com/announcements/416946

Special dividend of 6 cents. thats cool



Market consensus was 4 cps - nice surprise for shareholders.

And fully imputed!

[workingdad]

At 76c a share buy in. Not bad at all. I had a nibble recently and thought I’d come to regret it but pretty happy with the special dividend. Domestic has historically always been the money maker. Not overly impressed with the international though given competition really just ramping up along with fuel prices.

[X-men]

3billlions share....6c dividend is around $200m ...😄😄

Would be better do a share buyback

[Fortunecookie]

3billlions share....6c dividend is around $200m ...😄😄

Would be better do a share buyback

I think they are the optimal cap structure so doubt they will do a buyback. Qantas are at about 70/30 so assume the reason they went down this path.

[777]

3billlions share....6c dividend is around $200m ...����

Would be better do a share buyback

The government needed the dividend.

[Charlie]

Finally seeing some SP movement after announcement. Might get to 90 c .... Remember the $3 days ?

[Sideshow Bob]

Finally seeing some SP movement after announcement. Might get to 90 c .... Remember the $3 days ?

Remember they have 3x the number of shares on issue than those $3 days......

[Snow Leopard]

Don't tell anyone, but I bough some when they announced the result and currently I am very happy with the price since.

Last day tomorrow to buy for that 6c divvy and then hope that it does not do a 'Heartland' and drop 9c on paying 6c. :scared:


But I remain firmly of the belief that you should never invest in airlines.

[percy]

Don't tell anyone, but I bough some when they announced the result and currently I am very happy with the price since.

Last day tomorrow to buy for that 6c divvy and then hope that it does not do a 'Heartland' and drop 9c on paying 6c. :scared:


But I remain firmly of the belief that you should never invest in airlines.

You were not alone.I bought a few for the wife after hearing Greg Foran talk on ZB radio.At 78 cents the 6 cps imputed divie gives a 7.69% yield in under a month.
This is the 3rd airline share I have owned .Did well with Airwork in NZ, and AQZ Alliance in Oz.
Surprised Heartland fell so much after the 6cps divie.I thought it would drop about 4 cps,but 9cps?

[BlackPeter]

Don't tell anyone, but I bough some when they announced the result and currently I am very happy with the price since.

Last day tomorrow to buy for that 6c divvy and then hope that it does not do a 'Heartland' and drop 9c on paying 6c. :scared:


But I remain firmly of the belief that you should never invest in airlines.

You sound like Warren Buffett ... ;) ;

[ValueNZ]

Don't tell anyone, but I bough some when they announced the result and currently I am very happy with the price since.

Last day tomorrow to buy for that 6c divvy and then hope that it does not do a 'Heartland' and drop 9c on paying 6c. :scared:


But I remain firmly of the belief that you should never invest in airlines.
6c dividend and 9c price drop if you reinvest the dividend makes the intrinsic value of your shareholding go up. You should be praying for price to fall more than the dividend payment.

[nztx]

6c dividend and 9c price drop if you reinvest the dividend makes the intrinsic value of your shareholding go up. You should be praying for price to fall more than the dividend payment.


Remember .. probably no Imputation credits going forward from now on the large cupboard full of tax losses, so full 33% DWT for some time going forwards, if they pay Divs & not do buy backs etc

[winner69]

H123 pbt was $299m …….H124 between $180m to $230m they say this morning

Included in that guidance is approximately $45 million of Covid related credits that are highly unlikely to be redeemed by the extended expiry date.

So a windfall? I’m assuming released to profit…. Correct me if I’m wrong

So it looks like Peak Profits are over …..first half pbt could be only half of last years

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/419825/404961.pdf

[Balance]

Market consensus is for PBT to drop from $574m in F23 to $424m in F24 - 26% fall.

Going to be interesting to see how the market adjusts the forecast with today's announcement.

[Grimy]

[QUOTE=winner69;1025486]H123 pbt was $299m …….H124 between $180m to $230m they say this morning
Included in that guidance is approximately $45 million of Covid related credits that are highly unlikely to be redeemed by the extended expiry date. QUOTE]

If you have a credit from a cancellation early in the pandemic, you have until 31/126 to rebook a flight with travel to be taken by 31/12/26. And with all the extensions already given I wouldn't be surprised if they eventually make the date completely open-ended like some other airlines. So still a long time for credits to be redeemed. We are using ours this month.
I'm sure there will be a reasonable number of credits never used-just don't know the value.

[winner69]

Market consensus is for PBT to drop from $574m in F23 to $424m in F24 - 26% fall.

Going to be interesting to see how the market adjusts the forecast with today's announcement.

They might adjust forecasts but ‘ The airline cautions against extrapolating first half FY24 earnings guidance to the full year’

[winner69]

Share price down to 67.5 …..the love for AIR seems to be waning

Was a pretty dreadful profit guidance the other day so no wonder share price heading south

[BlackPeter]

Share price down to 67.5 …..the love for AIR seems to be waning

Was a pretty dreadful profit guidance the other day so no wonder share price heading south

I wonder who will bring all the tourists into the country which THL seems to be expecting ;) .... but then - THL share as well in the red.

[bull....]

poor people who brought the stock for the 6c dividend , lost way more now

[Patrick11]

If the tourism is going to drop next year thank God for the farmers.

[bull....]

A leading transport analyst expects domestic air tickets to continue to be discounted over the coming months as Air New Zealand grapples with falling demand.

https://www.1news.co.nz/2023/11/21/air-nz-tipped-to-keep-discounting-fares-as-demand-stays-down/

down 19% since the one off div :scared:

[winner69]

Interesting chart …..US

Some bright spark says the gap could well be the excess deaths reported lately

[Valuegrowth]

https://www.bcdtravel.com/blog/bcd-releases-2024-travel-industry-predictions-in-new-report/

Air travel isn’t recovering consistently around the world. In some cases, demand or capacity haven’t returned to pre-pandemic levels; in others, the initial rebound may have ended, allowing more normal market conditions to resurface. As a result, the factors driving changes to airfares in 2024 will vary by market.

“Over the past two years, airfares have increased significantly,” said Jorge Cruz, executive vice president of Global Sales & Marketing at BCD. “As a result, using savings as a performance measure has been almost impossible for travel buyers. We advise companies to review their travel policies and their travelers’ booking behaviors to lower the overall cost of their travel programs.”

[winner69]

Still looking a bit tough for AIR …..H1 earnings about $200m v $399 last year

Includes that $45m of unclaimed refunds so really only about $150m …..assuming I interpret what they mean by include correctly

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/423376/409429.pdf

[Gerald]

Hmm, not price sensitive because we had a nice wide range :t_up:

[Jaa]

Still looking a bit tough for AIR …..H1 earnings about $200m v $399 last year

Includes that $45m of unclaimed refunds so really only about $150m …..assuming I interpret what they mean by include correctly

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIR/423376/409429.pdf

And don't dare extrapolate to the 2H which is looking "increasingly challenging". Is Air NZ a leading signal for the NZ economy?

Wonder if these unlikely to be used COVID credit things and going to be like a run off book in insurance. The gift that keeps on giving.

Should still be able to pay a dividend I guess.

[SailorRob]

poor people who brought the stock for the 6c dividend , lost way more now

Where did they bring it from?

[Bobdn]

Good to see more travel options on offer. Was Slim Pickens last year.

https://www.msn.com/en-nz/travel/news/singapore-airlines-latest-route-offers-kiwis-new-europe-travel-options/ar-AA1lHQLi?ocid=msedgntp&pc=EDGEDB&cvid=5479a0b7e8574b8e918beda95eb3917e&ei=9

[dobby41]

Good to see more travel options on offer. Was Slim Pickens last year.

https://www.msn.com/en-nz/travel/news/singapore-airlines-latest-route-offers-kiwis-new-europe-travel-options/ar-AA1lHQLi?ocid=msedgntp&pc=EDGEDB&cvid=5479a0b7e8574b8e918beda95eb3917e&ei=9

Unfortunately, AsiaX dropped out again.

[Filthy]

Still looking a bit tough for AIR …..H1 earnings about $200m v $399 last year

continuing its drift down; maybe towards the $0.53 rights offer....

[Marilyn Munroe]

"Airports on both sides of the Tasman have given the thumbs down to a proposed code share agreement between Air New Zealand and Virgin Australia for trans-Tasman flights." Source businessdesk.co.nz

Willis Airlines and Virgin(underarm bowlers division) are up to their old tricks again.

Single isle jets are like hens teeth at the moment with Boeing having doors blow out and Willis Airlines Airbusses needing engine re bores. Typical of airline executives to not let this crisis go to waste by manipulating competition across the ditch.

Boop boop de do
Marilyn

[Sideshow Bob]

https://www.nzx.com/announcements/426371

On 13 December 2023, Air New Zealand updated its first half guidance and cautioned against extrapolating that guidance to the second half. The airline expected the second half of the financial year to be increasingly challenging given the ongoing impact of engine maintenance requirements, economic and inflation risks, and early signs of softness in domestic demand.
The upcoming Interim financial result for the six months ended 31 December 2023 will be consistent with that 13 December 2023 guidance.

[winner69]

https://www.nzx.com/announcements/426371

On 13 December 2023, Air New Zealand updated its first half guidance and cautioned against extrapolating that guidance to the second half. The airline expected the second half of the financial year to be increasingly challenging given the ongoing impact of engine maintenance requirements, economic and inflation risks, and early signs of softness in domestic demand.
The upcoming Interim financial result for the six months ended 31 December 2023 will be consistent with that 13 December 2023 guidance.

…and 2nd half of F24 will be about break even

Times are getting tough

[Sideshow Bob]

https://www.nzx.com/announcements/426613

Key points

• Earnings before taxation of $185 million
• Passenger revenue of $3.1 billion driven by a significant ramp-up in capacity across the international network
• Airline is currently reviewing pricing and capacity to reflect ongoing inflation pressures
• Unimputed ordinary interim dividend of 2.0 cents per share declared
• Significant improvement in onboard experience, reliability and customer response times
• Tougher forward trading environment. Earnings before taxation for the 2024 financial year now expected to be in the range of $200 million to $240 million, including $20 million of currently assumed additional Covid-related credit breakage

Air New Zealand has today announced earnings before taxation of $185 million for the first half of the 2024 financial year. Net profit after taxation was $129 million. This is an expected reduction on the comparable period last year when the airline recorded one of its highest-ever results following the rapid return of air travel as New Zealand’s borders reopened.

Based on the airline’s balance sheet strength and the result announced today, Air New Zealand shareholders will receive an unimputed interim dividend of 2.0 cents per share. The dividend will be paid on 21 March, to shareholders on record as at 8 March. This equates to a payout ratio of 41 percent.

Passenger revenue of $3.1 billion was up 21 percent, driven by a significant ramp-up in capacity across the international network. Demand was stable in most markets, but signs of softness in domestic corporate and Government demand was experienced from September. Overall capacity was up 29 percent on the comparative six-month period. Operating costs, including fuel, increased 21 percent due to a substantial increase in long-haul flying this year.

Inflationary pressures also continue to be felt. Non-fuel operating costs have increased around 5 percent or $100 million due to price inflation, which is on top of an increase totalling 15 to 20 percent across the last four years. The cumulative effect of these increases is having a significant impact on the cost of providing air services, including on the domestic network, and the airline is currently reviewing fares and capacity to better reflect ongoing cost pressure.

Chair Dame Therese Walsh says the half year result represents the hard mahi of the Air New Zealand whānau, who rallied together in the face of unavoidable challenges.

“We knew this year would be tougher than the last, when pent up levels of demand and industry-wide capacity constraints drove one of the strongest financial results in our history.

“And while we have reported a solid first half result, it is against the backdrop of significant ongoing supply chain issues, particularly the additional Pratt & Whitney engine maintenance requirements on our A321neo fleet, which will see up to five of our newest and most efficient aircraft out of service at any one time across the next 18 months at least.

“On top of these operational challenges, we are now leaning into the reality of a worsening revenue and cost environment, which is expected to have a significant adverse impact on performance in the second half.

“Earlier this week the airline provided a full year profit outlook, noting among other things, a deterioration in the forward bookings profile. Intense international competition features heavily in the current environment, particularly for North America where our US competitors have not yet returned to China at scale, and for now have directed some of that additional capacity to the New Zealand market, putting pressure on yields.

“The business is pulling multiple levers to mitigate the impact of these headwinds, and this is a key focus for the team.
“Despite these short-term challenges, the airline is in a fundamentally strong position. Our balance sheet is robust, and the Board is committed to the airline’s Capital Management Framework as announced last August, including its ordinary dividend policy. Accordingly, the Board was pleased to announce a dividend of 2.0 cents per share for the first half.”

Chief Executive Officer Greg Foran says doing the basics brilliantly without ever compromising on safety has positioned the airline well to compete.

“Our on-time performance and contact centre wait times have improved. Food and beverage offerings have been enhanced. Inflight entertainment options and Wi-Fi have also been improved. An additional 400,000 people have joined our loyalty programme over the past year, lifting membership to 4.4 million. All these things, along with the manaaki shown by staff – taking care further than any other airline – have seen our customer satisfaction score return to pre-pandemic levels.

“The engine maintenance requirements for both Pratt & Whitney and Rolls Royce have seen our aircraft spend more time on the ground. While this is beyond our control, we are managing these issues with changes to our schedule and additional leased aircraft.

“Boeing has now confirmed that the first of the new 787 Dreamliners is unlikely to arrive until at least mid-2025, which will delay delivery of our innovative new Skynest. The interior retrofit of our current 787 fleet remains on track.

“To mitigate these challenges, we introduced a dry lease 777-300ER in November. A second dry lease 777-300ER will enter the fleet mid-year and we are well advanced on negotiations for a third.

“While the global aviation ecosystem remains under immense pressure, Air New Zealand is committed to providing the best experience possible to our loyal customers while we navigate these issues.”

2H 2024 Trading update

As noted in the airline’s market update on 19 February 2024, a number of continuing economic and operational conditions have deteriorated and are now expected to have a significant adverse impact on performance in the second half. These include the impact of additional competition on forward revenue performance, ongoing weakness in domestic corporate and government demand, temporary cost headwinds of $35 million in the second half to alleviate customer impacts and operational pressures, as well as ongoing cost inflation.

Outlook

In light of these conditions, the airline considers that performance for the second half of the 2024 financial year will be markedly lower than the first half.

In this context, and assuming an average jet fuel price of USD$105/bbl for the second half, the airline currently expects earnings before taxation for the 2024 financial year to be in the range of $200 million to $240 million. This range includes $20 million of currently assumed additional Covid-related credit breakage over the second half. Future redemptions of Covid-related credits remain uncertain and subject to further actions.

This announcement is authorised for release on the NZX and ASX by Jennifer Page, General Counsel & Company Secretary.

[Bobdn]

Is there anybody still here that bought AIR for around $7 in 2000 and has been holding for the last 24 years?

Interestingly, and this is a little known fact, buy and hold never fails to work with a big index like the S&P500. However, buy and hold is not guaranteed to work in two instances: 1) individual shares 2) commodities.

I can't say where this particular share will be in the future, of course. But the chart over the last 24 years for Air NZ made me want to post the above. I'd feel bad if I didn't pass on the information - it might be useful for a newer investor who has heard that holding single stocks for "the long term" will ensure good returns. Patience is not necessarily a virtue when it comes to owning just a handful of companies.

Monster Beverage and Philip Morris type shares, which have performed well for decades, are like needles in a galaxy sized hay stack. They're incredibly hard to find.

[Rawz]

Is there anybody still here that bought AIR for around $7 in 2000 and has been holding for the last 24 years?

Interestingly, and this is a little known fact, buy and hold never fails to work with a big index like the S&P500. However, buy and hold is not guaranteed to work in two instances: 1) individual shares 2) commodities.

I can't say where this particular share will be in the future, of course. But the chart over the last 24 years for Air NZ made me want to post the above. I'd feel bad if I didn't pass on the information - it might be useful for a newer investor who has heard that holding single stocks for "the long term" will ensure good returns. Patience is not necessarily a virtue when it comes to owning just a handful of companies.

Monster Beverage and Philip Morris type shares, which have performed well for decades, are like needles in a galaxy sized hay stack. They're incredibly hard to find.

Why choose an airline for your post? Why not FPH or MFT or IFT etc

[Valuegrowth]

Is there anybody still here that bought AIR for around $7 in 2000 and has been holding for the last 24 years?

Interestingly, and this is a little known fact, buy and hold never fails to work with a big index like the S&P500. However, buy and hold is not guaranteed to work in two instances: 1) individual shares 2) commodities.

I can't say where this particular share will be in the future, of course. But the chart over the last 24 years for Air NZ made me want to post the above. I'd feel bad if I didn't pass on the information - it might be useful for a newer investor who has heard that holding single stocks for "the long term" will ensure good returns. Patience is not necessarily a virtue when it comes to owning just a handful of companies.

Monster Beverage and Philip Morris type shares, which have performed well for decades, are like needles in a galaxy sized hay stack. They're incredibly hard to find.Buy and hold is working for wonderful companies or commodities provided buy them at wonderful prices. I agree buy and hold strategy cannot apply for weak stocks and commodities with more volatility. In a positive environment AIR could do well. High cost of doing business has eroded profit margins in many companies and industries.

[mike2020]

Remember all the bonus payments staff used to get, basically because they had the money. I bet that could have been spent on the airline itself, providing better job security and maybe even making the company more competitive.

[causecelebre]

Remember all the bonus payments staff used to get, basically because they had the money. I bet that could have been spent on the airline itself, providing better job security and maybe even making the company more competitive.

you need to remember that it’s part of an overall package. Air NZ pay less than market rate for most positions. The benefits (staff travel, insurance discounts, etc) and the (now non-existent bonis) makes up a good percentage. In real terms most staff are actually underpaid

[mike2020]

Everyone thinks they are underpaid. You left out staff accommodation.

[mikelee]

No money left either for the long talked about uniform update I guess, what a horrible sight each time I board an Air NZ flight. Did someone mentioned enhanced food and beverage in the post earlier? What a joke! I'm a very organised person and I struggle not to spill my food or drop my utensils when I dine in economy. Cardboard is great for holding hot food but the tray is small and the cardboard plate is tiny. I seriously don't know how the person that came up with this brilliant idea to expect most people to eat without making a mess. Really dumb when you think about it. Not only will it take cleaners more time to tidy up the plane and whatever the cleaners missed will give the next passenger that sits in the same seat a very bad impression. More testing required before changes are rolled out please Mr CEO. Up at the front in business class was no better last year when I flew to Asia. So much cost cutting and it now cost an extra $1,000! Is Air NZ's new business model "pay more for less"?

[winner69]

Hope Air NZ don’t have these problems with their chat function

Air Canada must honor refund policy invented by airline’s chatbot

https://arstechnica.com/tech-policy/2024/02/air-canada-must-honor-refund-policy-invented-by-airlines-chatbot/

[Sideshow Bob]

https://www.nzx.com/announcements/429878

Air New Zealand reduces full year guidance

In February 2024, Air New Zealand issued guidance for the 2024 financial year, announcing expected earnings before taxation in the range of $200 million to $240 million. This range included the benefit of $65 million in Covid-related credit breakage for the year, with $45 million recognised in the first half, and $20 million of assumed credit breakage in the second half.

At that time, the airline reiterated a number of deteriorating economic and operational conditions which informed this earnings guidance (see summary provided below).
Since providing that guidance, Air New Zealand has continued to see softening in revenue conditions over the fourth quarter both domestically and on the North American market.

Domestic performance has seen ongoing softening, with challenging economic conditions and ongoing cost-of-living pressures. Government and corporate demand remains subdued.

North American performance continues to be impacted by very competitive pricing pressures, as the market adjusts to the significant capacity added into the New Zealand market by US carriers.

These softer revenue conditions are expected to result in lower underlying profitability for the 2024 financial year of approximately $40 million to $50 million.
Separately, following a significant decline in the rate of redemption of Covid-related credits in recent months, the airline has increased the assumed level of additional Covid-related credit breakage for the second half from $20 million to $50 million. Customers who have a Covid-related credit have until 31 January 2026 to book travel for completion by 31 December 2026.

2024 Outlook guidance

In light of the above and assuming an average jet fuel price of USD$105/bbl for the second half, the airline expects earnings before taxation for the 2024 financial year to be in the range of $190 million to $230 million. This range includes the $40 million to $50 million impact of deteriorating market conditions noted earlier, as well as a total of $95 million in Covid-related credit breakage for the 2024 financial year. Future redemptions of Covid-related credits remain uncertain.

The airline will continue to monitor the impact of market conditions as they evolve in the coming months.

Summary of conditions noted in February 2024 market releases:

• Increased capacity and pricing pressure from US carriers driving a weaker revenue performance on North American routes.
• The cumulative impact of significant inflation on the cost base.
• Ongoing weakness in domestic corporate and government demand.
• Temporary cost headwinds to alleviate impacts from the Pratt & Whitney global engine maintenance requirements totalling approximately $35 million for the second half of the financial year.

Ends

[winner69]

Hey Bob ..full year $200m say but really only about $100m

Just as well they kept $95m of credits not used …fares paid and travel not taken for things out of punters control


I’d call it theft …criminal …and if a shareholder ashamed of my company

[Sideshow Bob]

Hey Bob ..full year $200m say but really only about $100m

Just as well they kept $95m of credits not used …fares paid and travel not taken for things out of punters control


I’d call it theft …criminal …and if a shareholder ashamed of my company

While they had a horror run through Covid, must be nice to have that sort of funds helping to fund your company!

[winner69]

While they had a horror run through Covid, must be nice to have that sort of funds helping to fund your company!

Operationally basically running breakeven or loss 2nd half ot year

No wonder fares going up tomorrow