AIR - Air NZ.

[williethewaiter]

Who's honestly buying this right now? You'd have to be mad

might be people reading recommendations like this - from Morningside on ASB . Updated last night.

Accumulate
Shares in Air New Zealand Fall Out of the Sky, but Rout Looks Overdone
We lower our fair value estimate for shares in no-moat Air New Zealand to NZD 2.30, from NZD 2.50 previously, as capacity restrictions cut deeper than expected across the airline's network. The impact of the coronavirus is weighing on air travel demand across the globe, and Air New Zealand is not immune. Indicative of the volatility of the situation, the firm has withdrawn guidance previously reconfirmed at its interim results on Feb. 27, 2020. We lower our fiscal 2020 profit before tax, or PBT, forecast to NZD 318 million, from our previous estimate of NZD 350 million, representing a 15% drop compared with fiscal 2019. But we don't expect this to persist longer term and anticipate air travel demand to start recovering from fiscal 2021.

The firm is restricting capacity across its network in line with stifled demand, particularly on Asian routes. Air New Zealand is now reducing capacity on its Asian routes by 26% through June 2020, more than the initial 17% cut flagged on Feb. 24, 2020. This is a marked reversal from strong capacity growth in the region of 17% over the first seven months of fiscal 2020. We now forecast fiscal 2020 capacity to decline 4% across the group on a full-year basis. While this weighs on near-term earnings, we don't expect the impact to be protracted. We anticipate a U-shaped impact on demand from the coronavirus, similar to the impact experienced during SARS in 2002, and forecast a return to capacity growth from fiscal 2021.

We anticipate Air New Zealand's labour costs, which constitute about 30% of operating costs, are principally fixed, weighing on near-term earnings. Nonetheless, there are some levers the firm can pull to reduce the impact: executive pay cuts and freezes (new CEO Greg Foran is taking a 15% pay cut), hiring freezes, and voluntary unpaid leave for employees. We also expect a reduction in the fuel bill--from lower consumption due to cuts in capacity and the lower jet fuel price--will offset some of the impact.

[allfromacell]

At NTA I'll start buying, the SP will definitely be higher in 12 months imo. The flights I've been on the past 10 days(LAX - > AKL, AKL - > Nelson, Nelson -> AKL) all had fairly normal capacity, anecdotal obviously but I don't see the sky falling, AIR will be around for a long time yet and pay plenty more dividends.

[Beagle]

Forsyth Barr very recently came out and called AIR as "outperform". It beggars belief where they find these so called "professional analysts" ?
Good luck buying at NTA (which FYI is $1.52 ex divvy). AIR could very easily be going to the Govt for a massive bailout later this year, quite possibly a lot earlier than some on here might imagine ! At what price would those new shares be issued ?, that's the $64,000 question...

The only clue we have is that the last big rights issue after the bailout in 2001 was at $1.30 if my memory serves me correctly. Could easily be a completely different figure this time to actually get the market's support for such an issue. $1.00 anyone ?

[BlackPeter]

Forsyth Barr very recently came out and called AIR as "outperform". It beggars belief where they find these so called "professional analysts" ?

"outperform" is obviously a relative measure. Maybe they know something about the future of the rest of the NZX we don't yet :

[Onion]

The last time I bought AIR they were $1.94 per share (back in 2016). The SP bounced back aggressively following that drop and gave a nice return on investment when sold above $3.

The drop this time is much much broader across the whole market. A current buying opportunity for the very brave!

[Beagle]

"outperform" is obviously a relative measure. Maybe they know something about the future of the rest of the NZX we don't yet :

I don't like their balance sheet "strength" at all. I've been a bean counter for nearly 40 years. I wonder how long Forsyth Barr's analyst has been assessing balance sheets seeing as they think it is strong. Their implied reported opinion was sort of along the lines of "The strength to withstand any financial conditions" Pretty sure I remember a notorious finance company that used that statement in their marketing

The startling thing about recommendations from Moaningside and Forsyth Barr is that many Kiwisaver providers use and rely on the recommendations of these "research houses" This possibly explains how the shares haven't really got smashed as they should have. (Some US carriers are down just short of 50% in 2020 already).

But these professionals are expert epidemiologists you see and know this will all blow over very shortly

[Beagle]

https://www.nzherald.co.nz/business/...ectid=12315377

There was talk yesterday in a behind the paywall article that AIR are struggling to think of places to park their planes up with their worse case contingency planning.
I guess they have to start thinking about Ohakea and Whenuapai air bases. Lean on the Govt to help them with use of military airbases for parking ?

[winner69]

Alan Joyce cutting pay to zilch for rest of year

Other execs / directors cutting pay by 30% ...and no bonuses this year

C’mon AIR ....follow suit ...some call you troughers anyway

https://www.nzherald.co.nz/business/...ectid=12315366

[peat]

Alan Joyce cutting pay to zilch for rest of year

poor dude only got 23.8mil last year.

[skid]

At NTA I'll start buying, the SP will definitely be higher in 12 months imo. The flights I've been on the past 10 days(LAX - > AKL, AKL - > Nelson, Nelson -> AKL) all had fairly normal capacity, anecdotal obviously but I don't see the sky falling, AIR will be around for a long time yet and pay plenty more dividends.

Im sure they will be around for a long time.....although they have been bailed once before...its just unfortunate that this virus situation effects airlines in a major way...so their value (SP) could still take a beating.....its not unreasonable to think there will be significant revaluation....Its an unusual situation...........This means it is more situation related than company fundamentals related.....................some have to fly and some choose to fly...the latter is taking a beating atm.....the juries still out on the former............................In just talked to an electrical technician who works for a relatively large firm.at the airport area(Im not sure if its actually in the airport)....they have sent them all home to work because of the risk.