Roger how much of their aviation gas requirements do they hedge the price on and how far forward ?
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Air New Zealand holders may be interested in this.
https://www.anzsecurities.co.nz/Dire...spx?id=3763420
Cheers, RTM
Excuse me for barging in on Roger.
Cullen Airlines fuel hedging is disclosed on their web site;
http://www.airnewzealand.co.nz/fuel-...-announcements
Boop boop de do
Marilyn
Air NZ crew's boozy AB flight investigated
http://www.stuff.co.nz/travel/news/63683197/Air-NZ-crews-boozy-AB-flight-investigated
Lucky this time is not "drink and drive", but who knows next time will not be.
They say that alcohol is the root of all evil don't they master
Ban it on planes I say ...at least it would stop all this drinking and rooting by their staff, and some high flying celebs.
What happened to the Dreamliner that got hit by lightning ....out of action is it?
Seems like it arrived back in NZ and is being checked out by Air NZ engineering staff.
http://www.nzherald.co.nz/nz/news/ar...ectid=11366816
It's unclear from the article when it will be back flying again.
It's already back flying:
http://www.nzherald.co.nz/business/n...ectid=11367043
Oil rout continues at pace
http://www.cnbc.com/id/102225843
Qantas up another 5% last time I checked a few minutes ago. Those old kangaroo planes must be pretty thirsty or AIR SP reaction a bit under-done or some combination thereof.
Welcome to the forum unhuman and thanks for the status update on the affected plane. Good first post :)
Interesting and informative article about the 787 and how they are performing in actual airline service, three years after delivery. Generally airlines seem to be happy with them, apart from the early glitches. Depending what measures you use and what planes are being replaced airlines are getting up to 27% savings on fuel, however up to 20% cost saving seems to be about the average on a per passenger basis.
The article is about the 787-8 and from what I hear the results from the 787-9 are slightly better. The reliability issues seem to be mostly fixed so Air New Zealand should be happy with the 787-9.
AirNZ have 10 787s on order and 10 options. I'm picking that they will take up all those options to replace the 777-200 aircraft by 2020 - there was some AirNZ advice a while back that the 777-200 were still good until about 2020.
http://www.flightglobal.com/news/art...orming-405814/
They wouldn't replace 777-200's with 787s. The 777 fleet is used more in the North America market where their business and premium economy products are able to attract a higher margin when compared to Asia. Sources say they are either looking at 777X or airbus 350.
http://www.ausbt.com.au/air-new-zeal...vs-airbus-a350
Just a small question. Does anyone know when the interim results are due? Must be soon?
2014 Financial Year 27 February 2014 2014 Interim Results Announcement 27 August 2014 2014 Annual Results Announcement 30 September 2014 Annual Shareholders' Meeting
2015 ones will be in Feb
Thanks, made for a good read. I inferred the longer the sector the more the fuel saving relative to comparable type. Boeing has already gone on record saying AIR made a great customer for the 787-9 as they really push the operational limits of the aircraft and C.L. is on record saying fuel savings have slightly exceeded expectations.
Seems the third Dreamliner is already here or very close.
http://australianaviation.com.au/201...t-paine-field/
Anyone flown on one of these new birds and like to give some feedback ?
Well yes I would; on the issue of runaway events in 787 batteries.
The American National Transportation Safety Board has recently released its report on the battery fire in a 787 at Boston Airport.
http://www.ntsb.gov/doclib/reports/2014/AIR1401.pdf
They were unable to establish the cause of this event. While there have been no recent occurances there is no assurance that it will not happen again. Boeing have made changes to mitigate the effects of such an event should it reoccur, but I wouln't want to be in one of these planes over the South Australian Bight if it did.
Boop boop de do
Marilyn
The only North American destination for the 777-200 is Vancouver, all other routes are operated by the 777-300. the -200 is mostly used on Asian routes, which is what the 787-9 will be steadily taking over. The Vancouver market is growing and it would not surprise me to see the -300 eventualy used (the 747 was used until recently and that has a greater pax capacity than either the -200 or-300. It's hard to see the Airbus A350 being used, from a fleet commonality perspective the 777-XXX would make more sense.
I'm concerned about the 17.2 inch width of the new Dreamliner seats. Boeing designed the aircraft as a 280 pax machine and more or less stipulated a minimum seat width of 18 inches. Air squeezed just over 300 seats in there by compromising seat width and by using a very slim density designed seat. these are some of the very narrowest seats in the industry. I am sure your average 68 kilo Chineese tourist won't mind but I have it on good authority that a certain large build accountant (built like a front row All Black) got his ruler out the other day and after converting 17.2 inches to cm's measured this out on his office chair, placed some sticky notes to signify the dimensions and wasn't impressed at all. Said accountant is now looking at a vigorous walking programme to reduce butt size or looking at flying with the pretty Singapore girl who has some of the widest seats in economy at 19 inches in their new A380's.
I predict there's going to be some very disgruntled customers who are anything more than 2 standard deviations bigger than average size pax. Nobody likes being cooped-up far tighter than even a battery hen :eek2: lots of info here. www.seatguru.com
PPPHHHHOOOAAAARRR Qantas SP on fire today up around 12% at A$2.36, nearly over-taken AIR's SP which is plainly ridiculous when you consider AIR's earnings record, more modern fleet and quite obviously better management. VAH starting to catch a bid too. American carriers on fire too on Friday last week. AIR SP's reaction to the massive oil price decline looking really under-done on a relative basis. Trading on a forward PE of about 8 even at $2.39. opportunity knocks for a big gain in 2015 ? Definitely one to hold for real as well as in the ST competition for 2015
Considering that Qantas announced today that they expect their "underlying profit" for H1 to be about $300 million, which would (very, very roughly) translate to a PE of about 8.6 for that half, is the price jump in Qantas really unwarranted? It's a bit of a recovery story (although maybe the share price is getting ahead of the real-world recovery).
On the other hand, with Air NZ being well run for a number of years, I would say they are unlikely to significantly increase their profit any time soon. Passenger numbers aren't even really going up in any meaningful way and there is only so much efficiency you can wring out of the same number of passengers.
Also, the airline industry is risky and low margin. The quality of Air NZ's management doesn't change that but it does help mitigate it.
I think Air NZ is pretty fairly priced right now and Qantas is coming out of distressed-pricing. I might've actually bought into QAN at $1.37 if I had thought the SP was going to recover this quickly.
Qantas, old fleet, high labour costs with ongoing union issues, facing massive capex to update their fleet, Australian economy overly dependent on minerals and a deteriorating manufacturing sector.
Qantas track record and AIR's...no comparison.
Not sure what hymm sheet your reading off regarding AIR being unlikely to increase profits anytime soon. Suggest you have a look at their most recent update.
Two more dreamliners on order. 9 version
https://nzx.com/companies/AIR/announcements/258634
Two different markets KW. Air aiming for full service, modern aircraft, Jetstar simply isn't in the same league. I believe AIR will eventually exercise all its remaining options on the Dreamliner and they'll have a fleet of 18 of these beautiful new fuel efficient aircraft. Once pax have experienced all the advantages of aircraft like these or the new A380's I believe a fairly significant percentage of customers will seek these type out in their future travel plans.
Like anything in life you get what you pay for and while its fair to say there will always be a certain number of pax who choose the cheapest, there's a good percentage who want a quality experience with their national airline and are prepared to pay a bit more for it.
Good to see all three new 787-9's scheduled for delivery this year are here and now earning their keep on the Japan and China routes.
The substantial extra cargo capacity will come in real handy for fresh commodity exports and they can carry a full payload of circa 15 tons of freight and full pax over 8,000 nm's my pilot friend tells me, (previously they had to juggle freight and cargo on some 767 routes depending on loading). There are grounds to believe VAH will now make a positive contribution to AIR's 2015 result.
I didn't say they weren't going to increase profit, I said they weren't going to significantly increase their profit. With falling fuel prices and more efficient aircraft, the profit is almost certainly going up.
However they're not growing their market. I looked at their latest market update and it told me "Revenue passenger kilometres (RPKs) were 0.8% higher" in October over the previous year. If I look back at 2009 vs 2014, revenue is up 1.2%. In 5 years. RPKs are also only up 3.5%. These are not significant increases.
EBIT/Revenue has gone from 1.7% in 2009 to 8.6% in 2014. There is only so much profit even AIR can get out of static revenue.
So, I'm pretty happy with my analysis there.
On the other hand, AIR also says "there had been an encouraging start to the year with solid forward bookings into the high season." So, maybe that indicates there will be some revenue growth. And the company is in a much better long-term position now then it was five years ago.
Craigs have them on a 2015 Net profit before tax of $474m up 33% on 2014 and that was before Opec couldn't agree on output reductions and oil prices moved significantly lower.
That's pretty "significant" in my book for a company trading on such a modest multiple and is now probably quite conservative especially with VAH now in the black.
If a company is not growing but is generating huge profits then the dividends will flow to its shareholders. Isn't that what AIR does?
I don't think I would base my case on no revenue growth. The idea of any business is to generate profits and manage its assets well.
I'd suggest you mix mainly with younger people so its easy to form a slightly biased view of what "most people" want.
I am curious if you have flown Jetstar domestically ? When Forest and I, ("gulp", dare I admit this...flew Jetstar to the AIR ASM) mainly because scheduling suited better and gave more time for the dinner afterwards we were both distinctly unimpressed, I was shocked. Here's a typical review from seat guru from a lady that's only 5 ft 3 inches
My mum recently flew to Dunedin on Jetstar and she is about 5 ft 6, (I take after my Dad) and she found it really cramped too. Old planes crappy service and sardines in a can. Honestly I had some difficulty breathing on the flight back from Chch, whether that was the sardine tin super duper tight seat, the excess alcohol drunk before hand or my blood pressure getting up from both I'm not sure but my knees were crammed in so hard against the seat in front it was physically painful, (I'm 6 ft tall so God knows how anyone taller copes). Honestly....never again at any price. the service was almost non-existent and you had to pay for anything and I just decided to grin and bear it...I've had more comfortable and less painful experiences in a dentists chair. 29 inch pitch seats is an absolutely disgusting travesty on the concept of air travel.Quote:
AKL to Wellington - Worst flight ever like being squashed into a tiny coffin, i was almost hysterical with claustrophobia by the time we landed. I am only 5 foot 3 and my knees were jammed gainst the seat in front, with the back of it almost in my face, could not put my tray down at all. Had to sit sideways and stare out the window with loud music on headphones to try and keep calm. Total nightmare, go with Air NZ instead as their A320 planes have a pitch of 30-33 as opposed to the pathetic 29 on this awful plane.
I havn't flown Jetstar internationally and wouldn't. My good mate Peter is just back from a trip to Aussie and was flown Jetstar by the company he was hired by so perhaps you're suggestion that some Australian companies have a policy of cheapest is more pervasive in Australia ?
I'd be more than happy to fly Singapore Airlines or Emirates to London on their new A380's. Both top quality airlines with great planes and great service from what I hear.
Tell any kiwi you fly Jetstar and be prepared for the backlash.:eek2:
See, that's it in a nutshell. I simply won't put up with unbelievably awful anymore no matter what the price advantage. I can however see your perspective and acknowledge for a lot of people its simply about the cheapest flight and nothing else matters but that's not the market AIR is in. Whatever happened to the concept that international air travel was special, an experience to be savoured and enjoyed, a special luxury and reward for one's hard work...even the illusion of this is nice to hang onto IMO. Jetstar's creaky old cramped sardine - flying bus torment is grossly oppressive and repugnant and so diametrically opposed to at least the illusion that international air travel is special that it wounds the soul and destroys the first and last part of one's holiday IMHO. Why travel third class when you don't have too !!Quote:
Originally Posted by KW;
I used to fly often between Auckland and Wellington (student) and would always pay upto 30% extra if needed to fly AIR NZ partially due to the budget nature of Jetstar but also in my 30+ flights over a few years I had 0 delayed AIR NZ flights and 5 or so delayed Jetstar ones. Twice my Jetstar flight was delayed extensively due to 'weather conditions' (didnt seem at all bad) when I watched the AIR NZ flight around that time depart and regreted choosing Jetstar. I also noticed (3 or 4 instances) Jetstar would close its baggage off bang on 30 minutes before departure whereas AIR NZ seemed to squeeze that late baggage check in traveller in and still leave on time.
I would find that if I booked far enough in advance the two airlines would be similar in price but as time got closer the AIR NZ one got much more expensive and sold out faster.
I recently booked some flights to Rarotonga and to the Gold coast and found AIR NZ to be miles cheaper than the competition.
Jetstar pi$$ed me off once big time with delays for no particular reason, and no compensation. Their attitude was, we're cheap so you shouldn't expect anything and should be grateful for what you get. When travelling these days, I don't even check their prices - so my choice is Air NZ on this day and time, or Air NZ on that day and time. I don't think I'm unusual in that attitude, if you can't get the basics right it doesn't really matter (to me at least) how cheap you are.
Also. I've got to say that I haven't travelled on the 787 but have done quite a few trips on the A380, and my observation is that the new gen aircraft are great from an airline point of view and from a shareholder point of view, but as a passenger, well meh! same old same old and the A380, having a circular fuselage, doesn't offer as good a view out of the windows, at least not from the top floor, as the old 747 or 777.
Maybe the cabin pressurisation and larger windows will offer better experience on the 787, but as I say, I haven't done that, so can't comment
I think we have consensus here--Jetstar is awful--But AIR is trying hard to catch up with those 17''seats on its new already huge planes (even more seats than the maker recommends)--What were they thinking?
My 2 cents(on Jetstar)--who cares on the short flights--but avoid like the plague on the long haul
Oil down 4% overnight. Brent $66 and change, WTI $63 for the front month January 2015 contract. Yesterday I checked the futures price for December 2015 Brent and it was trading at $73, so probably around $70 today so airlines can lock in tremendous fuel savings for the 2016 FY year already, if they choose to do so.
Even I would have to concede that I think the accountants had too much say in that decision :) 302 seats in a 787-9 when the manufacturer designed the plane for 280 means that effectively AIR has traded off much of the benefit of the Dreamliner from a customers perspective for seat mile cost savings. This looks like a strategy to match some of the lower cost airlines especially when viewed in the context of seat choice, i.e. seat only, seat plus bag, the works e.t.c. Most people won't mind as the pitch is okay but large people looking for comfortable long haul economy travel are probably better off on Singapore Airlines with their 19 inch width seats on A380's. www.seatguru.com is definitely a good place to visit for anyone contemplating long haul travel.Quote:
But AIR is trying hard to catch up with those 17''seats on its new already huge planes (even more seats than the maker recommends)--What were they thinking?
Is Air's premium economy with 19 inch width seats with 42 inch pitch effectively the new business class ?
What's the consensus updated view of analysts ? Consensus view is Outperform
http://www.reuters.com/finance/stock...?symbol=AIR.NZ
Scroll down towards the bottom of the page and you'll see that in the last month the consensus view of analysts for 2015 earnings has increased significantly from 22.63 cps to 26.44 cps. Highest analysts view is 31 cps translates on 1.117b shares to a whopping $346m profit after tax:t_up:
Oil price to remain weak for three years
http://www.interest.co.nz/personal-f...tes-and-inflat
I got 29.70 - hedges so I'm happy with that.:)
New Air NZ route to North America to be announced on Friday?
http://www.stuff.co.nz/travel/news/6...n-new-US-route
At least they muddied the waters with multiple possible destinations this time! The public knew about the YVR route about a year before it was confirmed.
My confident prediction is it will be GRU - Sao Paulo Brazil staring 3x weekly in September 2015.
This route is viable now with the Singapore alliance, and with Avianca Brazil set to join Star mid 2015. The 787 is configured well for the leisure heavy traffic expected.
Future US routes are not needed urgently, but i do expect Houston to be announced sometime next year.
In other news the jet fuel price has moved down back to a $16 spread to Brent. It's now near $80 bbl... This puts my $100 USD bbl and 45-50c eps next year scenario into play, should things stay as they are. A couple of brokers have increased price targets after their economists decreased their oil price expectations. Several now have $2.80 targets, but they are still being too conservative on both revenue and fuel costs. Most are expecting brent to return to $80 by mid-late next year. I wouldn't even attempt to predict.
Somewhat teasingly Qantas has rallied hugely, on improving yields in Australia. This bodes well for VAH to return to profit and contribute to Air NZ's profits (could even do so this year!)
The stock is looking very compelling right now, so fingers crossed fuel stays down and positive trends continue.
mod
Chicago is the most logical choice IMHO
Good post. Brent crude futures for Dec 2015, (half way point of Air's 2016 year now under $70)
https://www.tradingfloor.com/futures/lcoz5
Perhaps you could input that into your model for 2016 and update us. I agree and see deep value in AIR notwithstanding its recent strong run.
Cheers.
Yes KW and what did I tell ya ? ExtractQuote:
The airlines will still be making more money. They forecast record net profit of $25 billion (NZ$32.43) next year - well above the $19.9 billion this year, the US$10.6 billion in 2013 and US$6.1 billion in 2012.
Monthly operating stat's give a breakdown of the various regions for the month and YTD with comparisons to previous year if you want to do some research.
To answer KW's valid point.
1. Given the weakness in NZD USD, even if prices are flat in USD, yield will be up in NZD. To china tickets can't get much cheaper anyway
2. Air faces limited competition and doesn't need to lower prices. This is why its one of the best in the world. You can bet Qantas won't be dropping prices, and jetstar NZ is only at breakeven today so why would they. What routes have competition, next to zero. Of course they will say that they are, and even if they did 1-2% would be of no consequence given the fall in costs.
3. If price falls quantity demand rises - therefore a yield decline is likely to be more than offset by a volume increase taking total revenue higher.
4. If supernormal profits are being made (as I expect to be) then yes competition will be attracted, but for the small market of NZ that will take years to eventuate. On the highly competive routes like New-York London that might take weeks or months...
Your concern is well grounded, but its not an issue to worry about yet.
P:S - something like 80% of trans tasman traffic is Kiwi, and prob even higher on Air NZ flights... I don't worry about the ozzie consumer.
Morningstar rating 11/12 HOLD valuation $2.50
Oh come on $3 at least Morningstar...... must be automated or something.
......or KW had an imput.:)
AirNZ holding a media conference at their head office this morning.
NZHerald speculating it's the USA route being announced with longer term strategy to get into South America (well apparently it's been updated as I typed tipping South America), Stuff reporting it's a new South America route.
http://www.stuff.co.nz/travel/news/6...American-route
http://www.nzherald.co.nz/business/n...ectid=11372894
http://www.nzherald.co.nz/business/n...ectid=11372895
Buenos Aires confirmed .... http://www.stuff.co.nz/travel/news/6...o-Buenos-Aires
Looks like a good expansion to me. Code sharing and avoiding going head to head with LAN on the Santiago route. All good sensible stuff.
I reckon some people underrate AIR's management ability and Kiwi's propensity to fly their own national airline. Its a Kiwi thing.
According to the article LAN Chile are going to replace their A340's on this route with 787's. The normal routing for Australasian flights to South America is to dive deep into the Southern Ocean. This is made possible by the four engine A340 complying with ETOPS rules. These rules specify how far in time any aircraft can fly beyond an airfield in case of an emergency. An A340 or 747 because it has four engines has a greater ETOPS range than a two engined aircraft like the 777 or 787.
I am curious how LAN Chile and Cullen Airlines will handle this issue.
Boop boop de do
Marilyn
PS. A340's while excellent aircraft are getting long in the tooth and in the words of one commentator are thirstier than an Irishman at a wake. Still given plumeting fuel prices Cullen Airlines could have leased some from their mates at Etihad to prove up the route
This site has a great circle route mapping tool to illustrate this concept;
http://www.gcmap.com/mapui?P=akl-eze
For a wow! view enter the Sydney - Buenos Aires route into the search box. SYD-EZE
Boop boop de do
Marilyn
Good question luv. I believe ETOPS rules have been extended, must have been as Air are using a twin engined 777-200ER on the new route which I couldn't help notice on that site forms the shape of a very happy smile...a very positive sign for great things to come for AIR shareholders or a coincidence, you decide :)
Anyone else notice QAN SP's has overtaken AIR's :confused:...we live in a strange world.
ETOPs rules apply equally to 4 engine ops and 2 engine ops due to do with cargo hold fire suppression times.
ETOPs 240 would be used requiring a more northerly route as shown on http://www.gcmap.com/mapui?P=akl-eze&MS=wls&DU=mi&E=240
ETOPS for Boeing 787-9 and 777-200ER is 330 minutes (i.e. 5.5 hours). I can't think of any scheduled flight that would be more than 330 minutes away from an alternative airport.
FAA certification December 2011 (777-200) and 16 June 2014 (787)
Front month oil contracts for January 2015 delivery still under huge pressure to the downside and importantly for airlines hedging programs Brent oil for delivery in December 15 is now only $67 and change !!
https://www.tradingfloor.com/futures/lcoz5 Time for Air management to lock in some of the substantial fall ?
Russia is making some noises about imposing suitably vague countermeasures should the USA impose additional sanctions, which could have a material affect on oil prices. Hopefully things are starting to cool down thought.
I also note that the NZ Herald is reporting another off-duty staffing incident. These all appear to be well handled by the company once things are brought to their attention, so I'm not concerned.
They don't need any more sanctions. The conspiracy theory that the Saudi's and Americans cooperated on the oil production front to really stick it to the Russians may have credibility. The rouble and Russian economy is in huge trouble with $60 oil. I wonder how they'll get on when it hits $50 ? Putin must be Pukin :) Principle's of natural justice are playing out very nicely.
https://nzx.com/companies/AIR/announcements/258964
November Operating stat's are out. Solid demand and growth in demand RPK's and yield. Meanwhile oil prices continue their steep decline. Its all looking very positive :t_up:
P.S. Oil looks broken. December 2016 Brent futures now trading under $70. December 2015 just over $65
Even December 2017 futures only just over $72 http://www.barchart.com/quotes/futures/CBZ17
Cheap avaiation fuel looks like its here to stay for years :D
"Group-wide yields for the financial year to date were up 2.2% on the same period last year. Short Haul yields were up 2.2%, while Long Haul yields were up 1.2%. Removing the impact of foreign exchange, Group-wide yields were up 4.3%."
Would someone be able to help me by explaining the definition of yield
Is it revenue per passenger per kilometre?
TIA
Oil price stages a couple hours of rallying then gets slammed again in the NYMEX.
Enjoy sub-$50 AIR holders :)
Yep that's it. Yields going up while fuel price is getting slammed. That's the sort of Christmas recipe I find tasty :)
BFG Sure will. Real front month supply glut. Many parts of America and Canada already in the mid - late $40's per bbl. Nowhere to store the black stuff. I'd imagine the American's strategic petroleum reserve is already brimming right to the top.
Will need to have a good night out in Melbourne before returning home to Wellington .... departure 12.45am arriving 6am just in time to get to work ... nice
This didn't sound right to me so I did some investigating and the Wellington - Sydney and Wellington - Cairns routes are both via Melbourne! So only one new route then.
Fiji Airways did announce a new Wellington - Nadi route the other day so I'll give you two.
In terms of capacity I am surprised that Air NZ now have 40 wide body services a week across the trans tasman. The Auckland as the hub of the south pacific strategy seems to be working well.
Yep, super nice... goes with the rest of their five star experience :lol: :lol: Hint to KW, just spend a bit more time working the market so you can afford a proper airline ticket, honestly those scummy old planes with their truly shocking 29 inch pitch sardine can seats, cranky old battle-axe hostesses that would rather be working for a proper airline, almost non existent service and the hours of the flight almost perfectly encapsulate the true essence of third class travel. Why lower yourself to that when you don't have too just to save a few measly bucks ?
Fair enough KW. When I was younger I was into finding the cheapest as frankly I had too. I think its part of the natural course of life that you gradually become more discerning. The fact that you still remember the Air flight fondly speaks for itself.
Tim Clark president and CEO of Emirates opines on the future price of oil and where he sees fair value
http://www.cnbc.com/id/102275654
On the up ...
Yep, I think modandm must be out doing his Christmas shopping otherwise he's quietly knocking back a few favourite bevvies. Outlook for 2015 looks very bright :t_up:
P.S. Air New Zealand will celebrate the first trans-Tasman flight from Auckland to Sydney tonight with the launch of a special exhibition at Te Papa Museum in Wellington.
http://tvnz.co.nz/national-news/air-...bition-6208887
Hm. For every good story theres a bad. I was at a BBQ over xmas where a group of Irish travellers had flown business to NZ on AIR. They were disappointed with the service and will go back to Emirates/Singapore for their next trips.
http://www.nzherald.co.nz/business/n...ectid=11381823
AIR gears up for growth. (Note the revenue sharing deal to Singapore). Doesn't matter if shareholders want to try out Singapore's A380 service to sample that plane type, AIR still get half the revenue irrespective of which airline they fly.
Hi mate,
It would be good if you'd unpack what the other factors are to help all our understanding. I note in the article for example that the mix of seats is also a factor (economy vs other classes).
Chris Luxon said at the ASM last year that AIR was completely agnostic about which airline people chose to fly to Singapore as it didn't affect AIR's revenue share one way or the other.
That's true, it's agnostic in that it doesn't matter what metal the passenger flies on, revenue is collected regardless of whether a passenger on an NZ ticketed flight actually flies on an Air NZ aircraft (versus an alliance/codeshare partner's flight). The actual revenue share formula is commercially sensitive, as I'm sure you can appreciate.
Meanwhile the Qantas SP continues to crank along already up around 8% this year and now with a higher SP than AIR.
Their market cap has been a lot bigger than AIR for some time, I suspect the overnight crude decline will be positive for AIR in tomorrows trading session when institutional buyers come back
Lets hope you're right mate. :-)
In other news Qantas rated as safest Airline for 2015, Air NZ made the top 10. Article is here: http://www.airlineratings.com/news/4...lines-for-2015
I understand the yield each airline generates through its sales are one of the factors. The minutiae of the deal are not material but I agree it would be interesting.
In any case glad to see the route kicking off.
I have heard gossip that the 767's may stick around longer than expected. They were supposed to be retired one-for-one with arriving 787's this year. It will be interesting to hear about this at the half year results. No doubt the lower oil price makes them more attractive, and management more confident about increasing capacity. If this were to come to fruition it would mean higher revenue growth, and with that operating leverage and profits. Thinking about it another way, these aircraft should be able to generate $10-15m each in incremental profit I would guess (somewhat out of thin air), which on aircraft worth only $10m each is pretty good going.
Oil price decline continues at pace. Almost beggars belief that its more than halved in the last six months. Who would have predicted that six months ago ? Strange that the VAH SP hasn't really caught any real updraft ? I would have thought they'd be major beneficiaries of this decline given their predominantly older and less efficient fleet. Buying opportunity ?
Probably rather play it through AIR. Firstly at 40c VAH has been expensive due to other airlines buying in and expectations of improvement, which have been slow arriving due to FX headwinds, overcapacity and weaker demand. They do have considerable financial leverage too, so this oil price fall is acting more as a saving grace for them. The upside to VAH earnings should start to come in 2016, provided the 2 players start to behave a bit more rationally.
Qantas upside has come in part from a low valuation, part from oil (and Qantas do burn alot of fuel on long-haul 747s), part from improving domestic, and part from achieving cost savings well. As I have said in the past you can't shrink an airline successfully for long, and QAN's prospects for sustainable profit on international routes still look poor.
Lastly the VAH fleet is good, probably as or more efficient than AIR's (only 3 dreamliners so far..) 737's are mostly leased and gone after 8 years, compared to NZ who will own domestic A320's for 15-20 years (most of useful life).
I've given the VAH situation some thought and I'd rather play it through AIR too.
http://www.reuters.com/finance/stock...?symbol=AIR.NZ
Average analyst forecast for 2015 year has risen from 22.63 cps 2 months ago to 27.1 cps now.
This implies a $54m consensus increase in net earnings after tax from the oil price decline or $75m before tax.
I think we'll see continued earnings upgrades from the analysts as oil stays low.
Consensus 2016 EPS has grown from 25.66 cps two months ago to 30.35 cps now.