AIR - Air NZ.

**Okebw** · 27-08-2014, 09:53 AM

Originally Posted by grayman

I assume there is always a level of uncertainty, but with the special div and the fantastic overall result is the SP expected to go up quite a bit before dropping back down after the record date?

Also is the special div on top of the final one. Or is it instead of.

Thanks

- newbie here, this is the first (and only so far) stock I've bought.

The price has already risen quite a bit recently, especially with the stuff article earlier this week. So I'd say it's definitely going to go up but not as much as it otherwise would.

And the special divie is on top of the normal one

**Hoop** · 27-08-2014, 09:56 AM

Originally Posted by grayman

I assume there is always a level of uncertainty, but with the special div and the fantastic overall result is the SP expected to go up quite a bit before dropping back down after the record date?

Also is the special div on top of the final one. Or is it instead of.

Thanks

- newbie here, this is the first (and only so far) stock I've bought.

It seems Mr Market likes this result and the opening price could be around $2.20..up 4.5c..
The Spec Div is on top of..10cps + 5.5cps both fully imputed

**theace** · 27-08-2014, 10:00 AM

How is the DRP price determined? and is there any discount? What are the pros or cons of acquiring via DRP?

**Okebw** · 27-08-2014, 10:06 AM

Originally Posted by theace

How is the DRP price determined? and is there any discount? What are the pros or cons of acquiring via DRP?

Pros are no transaction costs, a discount to market value and potential taxation benefits.
Con is that the issue of drp shares dilutes others on market.

and its a 1.5%discount to the average trading price of the week leading up to the divie

http://www.airnewzealand.co.nz/asset...r-document.pdf

**modandm** · 27-08-2014, 10:08 AM

Revenue items were 25m ahead of my estimates due to stronger services and other revenue growth - really pleasing to see other revenue pick up (credit cards etc).

Costs were 6 million lower than my estimates, and with $45 million of transitional labour (one-offs) vs my estimate of 17m, this is a big beat! My cost forecast for next year is going down!

Ownership costs (depreciation + leases) were 15m above my estimate - I need to increase my assumptions here

On the bright side depreciation is non cash..

Finance costs (interest expense less interest income) was 9m lower than my conservative estimates.

As a result PBT, tax, NPAT and EPS were all slightly higher than my estimates. GREAT RESULT - UPGRADES TO NEXT YEAR WILL FOLLOW

As expected cash generation was outstanding - and with an under-leveraged balance sheet they have increased the div and added a 10c special. While I would have liked the full year normal to be 7.5c + a special I can't really complain can I? On my expectations of c.30c EPS next year, they will face the same problem of how much to increase the dividend, vs special next year (tho this big special buys them some time. Their concern must be that raising the normal so fast creates expectations, and a dividend level that would prove unsustainable in a downturn.

I still think they are under-rewarding shareholders given they are spending 2.2bn! on fleet - and to give context this large dividend is only 177m... about 20% of operating cash flow.. Heaps more to go!

To the guy who wants to go in the DRP there isn't one numpty, DRP is for co's that need more cash - AIR has the opposite problem!

I haven't reset my model - will increase my estimates in the next few weeks, but my current price target is $3.00 folks (10x 30c EPS). Lets hope VAH can be turned around soon, as even though I give 0 credit to valuation for the $100's of million poured in, if it detracts from earnings (through the new accounting method), how will the market judge that?

- looking forward to my divi check

-MOD!

**Beagle** · 27-08-2014, 10:20 AM

Thanks for your thoughts Mod. Major fleet investment in the years ahead leads to average age of the fleet coming down and substaintial fuel efficiency advantages.

Christopher Luxon's headline sums it up nicely. Exciting Times ahead

What to do with the nice big divvy and the other big divvy from PGW...nice problem to have

**Schrodinger** · 27-08-2014, 10:26 AM

Great result. One of the best performing airlines globally and it looks like their result will get even better next year. Dont recommend buying in at these levels as they are fully valued atm.

**Zaphod** · 27-08-2014, 10:41 AM

Originally Posted by modandm

YEAH BOY!! special div thank you very much! I called it first!

Yes, well done Modandm!

I had thought that if the special dividend was declared it might be a bit more conservative, judged on AirNZ's past behaviour but 10cps is fantastic! Albeit with a slightly lower final div.