Thanks - I am a long term holder so not overly concerned and just topped up recently as I thought it had dropped as far as it was going to. Given the quake, I am happy I have got off with just the loss I have.
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there has been a confluence of negative events which has really depressed the stockprice in the last 2 months. If you can hold on for the medium term I expect strong capital appreciation over the year.
This is clearly a situation where the sentiment for a stock has been affected although the earnings outlook hasn't. Oil price is a concern for all airlines but since the current spike is likely just a blip, the concern should have subsided over the course of the year.
Don't forget all the significant positives for AIR over the coming 2-3 years.
- RWC demand should see a bumper FY11 result
- A320 increasing capacity domestic and lower costs
- 777 lower costs and increased revenue opportunities
- New route potential - starting end of year, then more when 787 arrive
- Strong growth in tourism from Asia particularly China
- Solid double digit earnings growth profile out 5 years as world economy recovers
All this for a company on a PE of about 7 and paying a nice yield. Rest assured medium term uptrend will continue. BUY
hi modandm
agree with your conclusions but not how you get there. nothing personal of course, just want to spark some fundy debate...
Oil a blip? you may/may not have a crystal ball, my read is supply side will stay constrained and has the potential to get really fubarred up, while demand side should continue to grow, so signals are price goes up and staysup.
AIR fundys, well,
they make all, yes all, of their profits on short haul. long haul is the nice to have. and of course gets the punters here to make short hauls, but in truth most drive around,
so for short haul with the quake, that is nothing but good news for AIR.
and that pretty much gives my reason for not liking your fundy's, they are mainly based on long haul, all except RWC, good point well made.
on fundy's i'm a buyer. but i'm scared by the POO.
would a TA like to inform my decision making process?
disc - dont hold ... yet.
Hi Shawsie, good to hear another perspective.
Air NZ's long haul is profitable these days, its the Tasman that has always been marginal for them. How much the VBA alliance helps here is yet to be seen.
The super-normal profits that Air NZ could have made from the RWC have been limited somewhat by the quake even if Christchurch does end up holding RWC games. Whether it does or not is a key unknown at this point.
Was at a Flight Centre this week and the agent commented that during Sep-Oct domestic ticket prices were already pretty crazy. e.g. there was no cheapie flights (sub $100) available at all between Auckland-Wellington.
I am however less worried about the POO. Modandm is right that the middle east situation is a blip that Air NZ is well hedged against however the longer term increase in demand driven by an improving economy is actually good for Air NZ. Higher economic growth leads to a disproportionate rise in air travel and the willingness to pay more for that travel (up to a point).
Another key factor in play is the exchange rate which is dropping fast. This will positively impact tourists willingness to come to NZ but also negatively affect Air NZ's costs. How these balance out with our tourism industry reeling in Christchurch and already at full capacity later in the year is another unknown.
Lastly, National's plan to sell down the government's stake created an overhang that was weighing on the share price even before the oil and quake effects.
So that's 2 positive and 4 negative unknown new factors to consider. Uncertainty is always bad for airline share prices and thus I would expect further weakness.
Shawsie,
on hoop's chart above, I think most TAs would suggest a wait until the sp breaks up through the orange r&s line -- so, above ~138.
More conservative TAs would wait for a string of higher highs and higher lows as well.
Experienced TAs who don't mind a bit of risk AND are happy to hold for the medium term would point out the continuing 2-year uptrend and say that now is ok for buying.
It occurs to me that fundamentals AND world events are extremely important in timing AIR -- probably more so than TA.
Sorry to hedge my bets and not be more helpful....
Good on you for waiting, Shawsie. It is very easy to see that AIR is currently in a downtrend and has been pretty much all this year. Nobody knows how far this will run, so why buy when AIR is getting cheaper every day? There is no hurry - right?
Here are half a dozen suggestions that would help you time your AIR entry. All of the indicators featured here have given good entry signals in the past and there is no reason to suspect that they will not work well in the future.
You will note that the current trendline (that's the important one!) is exactly as drawn on Hoop's chart and Scamper's suggestion to wait for an uptrend is an excellent one. (That's when AIR makes a higher High after a higher Low).
http://i602.photobucket.com/albums/t...usPB/AIR34.gif
The technicals, Phaedrus and Scamper, are compelling. Superb stuff, thank you.
Fairly sombre profit update from AIR today:
Quote:
The financial impact of the Christchurch earthquake is more severe than expected then. Further, the recent tragic events in Japan will also impact revenue in that important market. Based on current fuel prices and demand trends the company does not expect to be profitable in the second half year and full year normalised earnings are expected to fall below $100m.
terrible announcement but read the annoncement closely. A few key takeaways
1. The use of the word trends. If trends continue we won't make a profit. If trends revert even slightly we may make a small profit. Hopefully for shareholders the price of oil will revert lower and demand from Japan recovers quickly. I have more faith in the oil price honestly. Japanese are very nervous people. I guess flight cancellations are inevitable on the NRT and KIX routes. Maybe the planes could be diverted to new routes.
2. "operating profit" - the airline will declare a net profit because it has 90% of fuel hedged. The hedge gains are considered no-op. If oil reverts back down then NZ could almost have never felt the impact of the short term spike.
I really am surprised the earthquakes are having such a significant impact... I guess the operating leverage of airlines is that great.
PS...Blackcap ..an example of TA before the event........... not in hindsight as you say we all do[/QUOTE]
Cheers Hoop.... will be watching and learning.. :)