AIR - Air NZ.

[Beagle]

AIR they say is cyclical, I posted a monthly chart recently to try to illustrate. Didn't get much feedback on it, perhaps because the up/down of pre-2012 had a predictability about it (20 month cycle), whereas after that the SP just chewed up three cycle period upwards ending at $3.61 (very close to the third cycle period end - spooky).

Since then the next 20-month cycle down period, has been followed by the current period, also down. So maybe there is a new super-cycle 5-years period. If so, I have technical supports at $1.82 (the .618 fib), $1.72 the recent low, $1.32 (horizontal support and .786 fib), below that is the 2012 low $0.72.

Who knows what all the factors are the make a sector cyclical (and company), TA doesn't help with the 'why' question, but one thing is for sure, this cycle is down, ending October 2020. If it really is now 5-year cycle (currently down), the sub $1 SP is in play.

Hard to believe I bought into AIR in 2012 with great expectations, sold a few years later for a very nice profit then rued not holding as it went to well over $3. Nowadays I couldn't stomach getting back into a gut churning flight on AIR unless it plumbed the depths and presented an opportunity too good to ignore.

Appreciate your chart, thanks. With you on this. It will have to be compelling value for me to get in again. Compelling value for me is not NTA of $1.52 (ex divvy). I would want a substantial discount to NTA and some TA sign that it had built a base to reenter. The chance of this going under $1 is very real in my opinion, perhaps 72 cents which is about half the ex divvy NTA is also a chance. A capital raise this year is a very high probability in my view and if this coincided with some signs of a vaccine for this virus being close to release that might present as an opportunity. To me this still presents as the standout short opportunity on the NZX so I'm keeping my position on.

[Raz]

Appreciate your chart, thanks. With you on this. It will have to be compelling value for me to get in again. Compelling value for me is not NTA of $1.52 (ex divvy). I would want a substantial discount to NTA and some TA sign that it had built a base to reenter. The chance of this going under $1 is very real in my opinion, perhaps 72 cents which is about half the ex divvy NTA is also a chance. A capital raise this year is a very high probability in my view and if this coincided with some signs of a vaccine for this virus being close to release that might present as an opportunity. To me this still presents as the standout short opportunity on the NZX so I'm keeping my position on.

https://www.stuff.co.nz/business/120...risis-playbook

common held view perhaps and why share price as not reacted more todate?

[winner69]

https://www.stuff.co.nz/business/120...risis-playbook

common held view perhaps and why share price as not reacted more todate?

He a good guy that Benje ...does some good work

[Beagle]

https://www.stuff.co.nz/business/120...risis-playbook

common held view perhaps and why share price as not reacted more todate?

QAN down a very similar percentage amount since the risk was obvious in early 2020. (AIR down to 206 from 305 = 32.5%, QAN down to 466 from 720 = 35.3%) Possibly at this stage investors are somewhat hopeful the virus doesn't become a world-wide pandemic.
I am working on the assumption it does and a vaccine isn't available until sometime in 2021.

The scenario I envisage is that as the death rate starts to build up in N.Z. the majority of people will be too afraid to fly. No amount of reassurance about their cleaning regime or air filtering system will be enough. The fear of possible death will put people off flying and AIR will see demand destruction unlike anything they've seen before, (if they're not getting it already). Well respected aviation commentator Grant Bradley in the Herald the other day said new booking demand had already fallen off a cliff.
Under that scenario AIR will be burning cash at a phenomenal rate and will have no other alternative later this year but to approach the Govt for another bailout.

The key difference between this risk and 9/11, (which required a bailout despite assurances almost immediately beforehand that they had $1b in cash, deja-vu anyone ?) is that 9/11 had a short and very sharp impact on demand and in the months that followed as it became clear that planes weren't going to be flown into tall buildings on a regular basis and new much stronger doors were installed on aircraft to protect the pilots, this time no short term solution is readily apparent. Also the risk is everywhere this time and cannot be seen, not limited to a bunch of nut case extremists like last time.

In terms of the GFC, being profitable during a lengthy financial crisis where people are worried about their finances is one thing, trying to remain profitable during a lengthy world-wide pandemic where people are afraid of dying, is quite another thing on a completely different scale in my opinion.

Paying out the full 11 cps dividend amounts to gross recklessness on the boards part in my opinion. What logic can there possibly be in pretending everything is okay and paying out the same dividend as last year in the current circumstances ?

[winner69]

QAN down a very similar percentage amount since the risk was obvious in early 2020. (AIR down to 206 from 305 = 32.5%, QAN down to 466 from 720 = 35.3%) Possibly at this stage investors are somewhat hopeful the virus doesn't become a world-wide pandemic.
I am working on the assumption it does and a vaccine isn't available until sometime in 2021.

The scenario I envisage is that as the death rate starts to build up in N.Z. the majority of people will be too afraid to fly. No amount of reassurance about their cleaning regime or air filtering system will be enough. The fear of possible death will put people off flying and AIR will see demand destruction unlike anything they've seen before, (if they're not getting it already). Well respected aviation commentator Grant Bradley in the Herald the other day said new booking demand had already fallen off a cliff.
Under that scenario AIR will be burning cash at a phenomenal rate and will have no other alternative later this year but to approach the Govt for another bailout.

The key difference between this risk and 9/11, (which required a bailout despite assurances almost immediately beforehand that they had $1b in cash, deja-vu anyone ?) is that 9/11 had a short and very sharp impact on demand and in the months that followed as it became clear that planes weren't going to be flown into tall buildings on a regular basis and new much stronger doors were installed on aircraft to protect the pilots, this time no short term solution is readily apparent. Also the risk is everywhere this time and cannot be seen, not limited to a bunch of nut case extremists like last time.

In terms of the GFC, being profitable during a lengthy financial crisis where people are worried about their finances is one thing, trying to remain profitable during a lengthy world-wide pandemic where people are afraid of dying, is quite another thing on a completely different scale in my opinion.

Paying out the full 11 cps dividend amounts to gross recklessness on the boards part in my opinion. What logic can there possibly be in pretending everything is okay and paying out the same dividend as last year in the current circumstances ?

Sounds like even cheap good quality beef cuts in the freezer won't be any use -- we'll all be dead

Nontheless when AIR profits were last down at where the heading the share price was below $1 for a long time ...low was around 60 cents by the look of it …..so you will probably be getting your cheap AIRshares one day ….assuming the virus aint got you first

[Beagle]

Yes, there's going to be some outstanding opportunities in cyclical shares and others for those that survive with their health and finances intact.
Many experts saying we already have a world-wide pandemic even if the WHO are not calling it that just yet. https://www.nzherald.co.nz/world/new...ectid=12314809

[winner69]

AIR was bailed out mainly because they had bought Ansett and had placed them in administration on 12/9/01 …. took the government a month or so to work out how much was needed to keep them flying

911 didn't help but if they hadn't gone the Ansett way they may have survived 911 OK

[Beagle]

AIR was bailed out mainly because they had bought Ansett and had placed them in administration on 12/9/01 …. took the government a month or so to work out how much was needed to keep them flying

911 didn't help but if they hadn't gone the Ansett way they may have survived 911 OK

If I remember correctly Ansett outlay was about $450m ? The Govt bailout was close to double that,. despite assurances immediately beforehand they had $1b in cash, just like they did the other day.
Their dividend due to be paid this month is ~ $124m so they'll have only about $879m in cash this time, + profits since 1 January, less any capex on new aircraft since then.

By May 2020 things will start to get desperate for AIR, you mark my words.

[macduffy]

By May 2020 things will start to get desperate for AIR, you mark my words.

Another "Cassandra" prediction? Better to remember not to invest in airlines!

[BlackPeter]

Another "Cassandra" prediction? Better to remember not to invest in airlines!

Nothing wrong with investing in airlines. Just remember not not invest into them during a downtrend , but this is probably true for all industries: