AIR - Air NZ.

[Raz]

The Govt's real dividend is they are partners in the debauchery with all the overpaid staff in that they collect PAYE from all their grossly excessive salaries before they even get them so actually the lead and by far the biggest pig at the trough is the Govt itself ! I estimate they would be collecting over $300m in PAYE every year so this is the real reason they won't let the airline fail, lets not pretend its any other reason. Then there's the tax from the company itself and of course the GST from all domestic travel and last, and actually least of all is their dividends....the airline is an absolute goldmine for the Govt !

Yes James108, I believe they will needs to raise capital within the next 12-18 months.

History suggests after the GFC the company only made an average of 5.9 cps for the next 4 years so I expect an L shaped recovery and AIR not being capable of paying the level of dividends previously paid for ~ 5 years and then on perhaps double the number of shares currently on issue after the capital raise so a reasonable expectation for decent dividend paying might be low single digits for a few years and then ramping up to perhaps 10 cps after that...until inevitably as the cycle rolls around again, they hit their next crisis and shareholders cough up another billion or two to keep the staff in the luxury and comfort they've come to expect.

Well said, in my mind that requires a very long investment outlook...in a volatile world not very realistic to me. Trading this share may be the only option left in my work life!

[Blue Skies]

Some positive news for a change & some balance.

In Fridays bounce in US, airline stocks rising, Delta up 9%, Southwest up 7%.

Big increases & obviously market saying oversold & long term outlook for travel positive, which of course it is once effective anti viral Covad-19 medication or vaccine produced.

AIR down a whopping 47% since I sold out most of holding at 3.03 in January.

Prior to Covad-19, projected increase in air travel was huge with biggest increase coming in the Asia Pacific region.

Time to get back in?

[Beagle]

Time to get back in ? Have a read of this very interesting article that Winner69 kindly sent me. https://www.linkedin.com/pulse/world...tin-lindstrom/
ands this https://www.msn.com/en-nz/news/world...cid=spartanntp

As I have mentioned previously, the recovery in travel patterns after the GFC and 9/11 was very slow. I expect that to repeat and believe we are a long way off from a vaccine.

AIR pays unusually large dividends for this industry so to normalise their fall, 11 cents of it is because it just gone ex divvy so $3.03 down to $1.65 ($1.54 + 11 cents divvy) = 45% fall. How does AIR's fall, peak to trough in 2020, of 45% compare to a random selection of other airlines I looked at this morning, (including the bounce on the US markets overnight) ?
Delta 39%
American Airlines 53%
United airlines 54%
Alaska Air Group 45%
And finally and arguably the most relevant comparative in this part of the world, Qantas 56%
Average fall of peer group 49.4%

Conclusion, AIR's fall is somewhat lower than its peer group and consistent with a fundamental shift in the attractiveness of flying. I expect heightened fear to be an enduring response and I think the share price falls are reflecting that.

AIR's balance sheet is not strong and I am not impressed with management's very modest response to the virus to date. Continuation of a salary freeze for senior executives that only started last year...when they are already on such bloated salaries is totally underwhelming. The only one doing the right thing so far is Greg Foran with his 15% salary cut but I note many other CEO's of other airlines are talking much deeper cuts or forgoing salary altogether !

I might add to my short position if it bounces hard on Monday.

Safe travels back here Raz. I look forward to you having more time to comment on this forum.

[allfromacell]

I suspect Mr Foran and co will be preparing the layoff plan as we speak. Hopefully he aims high at all the bloated high salary earners first.

I'm confident air travel will start bouncing back in around 6 months which is why I feel comfortable buying here at around NTA.

[BlackPeter]

Lufthansa indicated today that they consider to apply for government money in order to survive. Thinking as well about shutting down flights completely until the worst is over. Just saying, maybe the worst for the airline industry is not over yet.

Didn't found an Anglo Saxon link, but if you understand the original - here we are:

https://www.airliners.de/lufthansa-staatshilfen/54207

[boysy]

Latest news has to be the worst possible news for air nz can’t see any tourists wanting to come to NZ to self isolate for 14 days .....

[IAK]

Latest news has to be the worst possible news for air nz can’t see any tourists wanting to come to NZ to self isolate for 14 days .....

And Auckland Airport.

[Blue Skies]

Yes but the silver lining is domestic travel will increase. Already friends who normally take overseas holidays are talking about flying to South Island destinations for holidays & expect there will be a lot of great domestic deals & holiday packages.

[Grimy]

If only they had more seating in the domestic terminal...….

[Beagle]

Jacinda has done the right thing for the health of five million Kiwi's and I am very pleased for all Kiwi's that this is likely to significantly slow down the spread of the virus here such that hopefully our healthcare system can cope.

Unfortunately there will be dramatic effects on the economy as 20% of overseas earnings come from Tourism and almost no tourist will be prepared to come here and self isolate for 14 days before beginning their holiday.

This will place enormous pressure on tourism operators right across the country including listed operators AIA, AIR, THL, SKC and Skyline enterprises as well as thousands of privately owned companies. The downstream effect of this will almost certainly throw the N.Z. economy into a very deep recession but the main thing is it greatly enhances the chances of vulnerable people to get through this and that has to be the Govt's first consideration and I for one am very grateful the Govt have done the right thing by all Kiwi's.

Some serious bailouts will be required down the track. Fortunately the Govt books are in very good shape and their debt to GDP is one of the lowest in the developed world.

Financial Year to date according to the latest available statistics for the 7 months to the end of January 2020 AIR flew a total of 23.493m revenue passenger kilometres. Of this 3,393m or 14.4% were for domestic passenger services. (Source January 2020 year to date Operating statistics) Some pacific island services will remain. AIR do not provide separate operating statistics for the pacific islands but under the heading Tasman / Pacific YTD RPK's were 6,756m. I would think its likely the vast majority of those are on the Tasman given the relative population there compared to the pacific islands. I would think at a best guess they might have something like 3393 domestic + 25% of 6756 Tasman Pacific + perhaps 15% of other capacity remaining = 7083 / 23,493 = about 30% of their business left in terms of RPK's. We know domestic RPK's generate a lot of revenue but are also higher cost and I for one think domestic travel is going to also take a massive hit with almost no tourists, many business's banning non essential business travel and a lot of Kiwi's figuring its safer to travel in their own car.

Jacinda has done the right thing by all New Zealanders but I am sorry that this is simply not (in my opinion anyway), a survivable event for AIR in its current form without massive Government support. What form that support takes is anyone's guess but if its a no interest loan to see them through then if the loan is big enough that's fine but all operational losses for the foreseeable future will sheet home to shareholders. Covid 19 is only going to spread much further overseas as the world-wide pandemic runs its course until a vaccine is finally widely available, (sometime in 2021 ?), so the chances of these restrictions being lifted anytime soon seem extremely remote. Greg Foran has got the job of his life to right size the airline to get through this as best as they can. I can see them walking away from many of their future aircraft orders, (don't see any choice) and losing the progress payments and deposits.

https://www.stuff.co.nz/national/hea...ions-ramped-up