AIR - Air NZ.

[cyclist]

Thanks. This is my first rodeo in terms of a big market dip (I was still at high school in '08) so a lot of learning to do. Trying to cover my bases from all aspects ... would hate to lose out on using them for something useful.

Just one person's view, so keep your eyes and ears open 😀. P.s. much more important is that this is probably the best buying opportunity (still unfolding however) that you have perhaps seen since you started investing. A great time to look at financial independence blogs, the quick summary of which is to save a good chunk of what you earn and invest it.

[ordop]

2 points.... Samjaynz - if airpoints means that much USE them now and get what you can from them. Loyalty schemes are unsecured and whilst there would be public backlash if they were binned it wouldn't be outside the realms of possibility.

As the NZ Govt are already a 52% shareholder in AIR one would have to think that a rights issue would be the way forward here sometime when the dust starts to settle. So all you holders out there catching falling knives at the moment....leave a bit of spare change in your pockets for those rights issues that will inevitably get announced.

[blackcap]

2 points.... Samjaynz - if airpoints means that much USE them now and get what you can from them. Loyalty schemes are unsecured and whilst there would be public backlash if they were binned it wouldn't be outside the realms of possibility. .

Good point. I have 5,500 + points collected and am seriously thinking of going to Mitre 10 now that you mention it. Ironically that will just hasten the AIR demise as I am half certain that Mitre10 will demanding cash from AIR in return?

[Beagle]

1:5 consolidation (23 August 2004)
1:6 Ren Rights @ NZ$1.30 (8 Nov 2004)

Thanks, that's how I recall it and agree, that's not far off the current price. Doesn't mean it can't go under $1 his time though. or maybe it goes to 25 cents again and they do another bailout and another share consolidation and right issue !

[samjaynz]

2 points.... Samjaynz - if airpoints means that much USE them now and get what you can from them. Loyalty schemes are unsecured and whilst there would be public backlash if they were binned it wouldn't be outside the realms of possibility.

As the NZ Govt are already a 52% shareholder in AIR one would have to think that a rights issue would be the way forward here sometime when the dust starts to settle. So all you holders out there catching falling knives at the moment....leave a bit of spare change in your pockets for those rights issues that will inevitably get announced.

Good advice. It suddenly dawned on me this afternoon that I should probably look into using them for something ... even making a future holiday booking is probably better than leaving them sitting there.

[BlackPeter]

This is a bit of a "dumb question" from someone who was primary school age when Air NZ got bailed out last time (and it's also a terribly "entitled millennial" question).

Let's say Air NZ does require bailing out again. What would likely happen to one's balance of Airpoint dollars? Owing to a lot of work-related travel over the last few years - all on ice now! - I've amassed a decent sum. Not going to be using it for any bookings any time soon, so trying to decide if it's worth ripping down to Mitre 10 to use them there for some new tools, garden furniture etc ... I presume they may be reduced to worthlessness if a bailout is required?

I don't think anybody can answer the question what happens with loyality schemes if AIR goes kaputt.

However - if it is just a capital rise (no matter whether everybody contributes or only the government) then I would not see any impact on Airpoints or similar loyalty schemes.

Take your pick. Actually - the finance minister might have the answer :

[Beagle]

Dug back into history on MSN money and what I found is concerning. The chart there is adjusted right back in time for the 1:5 share consolidation.
I will adjust there prices before the share consolidation and then readjust back to make another interesting point to conclude this post.

Sorry I would love to cut and paste a chart but don't know how too from that site, maybe someone else can oblige ?

So adjusted back to pre-share consolidation prices AIR's share price hit a peak of $2.47 on 31/05/1999 before rapidly descending to 79 cents on 31/08/2001 just before 9/11 whereupon things really went bad and it fell to under 25 cents, happy to accept some may have traded it as low as 19 cents. The point is the shares fell to only 10% of what they were before the Govt stepped in. Just because there's been a subsequent share price consolidation is no guarantee whatsoever that the Govt won't wait until they have no other choice but to bail out the airline again so it could easily go back to 25 cents again ! History never repeats, right ?...or does it ?

Adjusting the above prices for the subsequent share consolidation reveals an alarming fact about the amount of shareholder value AIR has destroyed in the last 20 years.
On 31/05/1999 the price adjusted for the 1:5 subsequent share consolidation was $12.34 so in the last 21 years with the share price at $1.76 now, AIR has destroyed more than 85% of shareholder value. It has been suggested to me there are FAR TOO MANY FAT AND GREEDY PIGS at this airline and its basically un-investable. Its clear over all this time the real winners at AIR have been those fat pigs with first dibs on scoffing at the trough...how many hundred are paid more than quarter of a million ? More worrying is there a huge number of people paid more than $400K !

Effectively the facts support the truly alarming contention (as outrageous as this might sound), that effectively AIR as a company is not unlike a charitable organisation wherein shareholders very gradually donate 85% of their money to overpaid staff ! Now that folks, is a very alarming thought !!

I think this gives a useful insight into the long term perils of airline investment. You simply HAVE to work the cycles to be a successful investor in AIR.

[peat]

AIR LT.JPG

Is that what you wanted Beagle?

I have now closed my second AIR short from $2 mark.
I am still watching my small portfolio fall hard though so these gains are only mitigating things to some extent.

[Beagle]

AIR LT.JPG

Is that what you wanted Beagle?

I have now closed my second AIR short from $2 mark.
I am still watching my small portfolio fall hard though so these gains are only mitigating things to some extent.

Thanks Peat. Over the long haul look at the percentage of value destroyed in the 27 years since 1993 ! AIR is a systemic destroyer of shareholder capital.

[winner69]

government sold down in 2013 at $1.65