AIR - Air NZ.

[Preston]

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.

My broker is showing buy orders at $1.50 of around 400k+ shares. That could be fuel for your bounce and I do believe this ski slope needs a breather and a pie before continuing this powder run. But as you say, there is zero positive news here for AirNZ for a while yet. No growth, surely no dividends for a long while and an already “skinny-ish” model thanks to CL. I just hope all of those people have jobs to come back to at some stage.

[bull....]

41% of air business is international travel , so they will survive without this in a leaner form. share price wont look pretty though for a long time

[winner69]

41% of air business is international travel , so they will survive without this in a leaner form. share price wont look pretty though for a long time

and international apparently a percentage much lower than 41% of their profits

[Blue Skies]

and international apparently a percentage much lower than 41% of their profits

Yes, & anyone know exactly what NAPT figures are for Domestic V International split are?

[winner69]

Yes, & anyone know exactly what NAPT figures are for Domestic V International split are?

Top secret I think

Loss making London leg gone.

[bull....]

Yes, & anyone know exactly what NAPT figures are for Domestic V International split are?

good point need to take that % of revenue and profits out as well. worst case senario now is if the virus got really bad in NZ they might stop domestic travel as well at some point that would be bail out material unfortunately.

[Lola]

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

Not sure why the Pacific Islands are exempt from these measures....unless of course we are going to teach them all to ski. Now thats a thought.

[Benny1]

So the international fleet will undoubtedly to suspended from operating reasonably quickly I would imagine, they will run out of pilots and crew to operate the aircraft quite quickly if they all have to self isolate for two weeks after every flight! while a scaled back domestic operation should continue for the time being...
Can AIR announce a trading halt for it's shares on the NZX and ASX while these decisions are made and implemented and announced to the market, and if so how long could this halt possibly last?

[Poet]

Number 1 order of business should be to cancel the upcoming dividend. If they don't do this pronto then they wont have a show of getting political (or public) support for government help.

[Blue Skies]

Number 1 order of business should be to cancel the upcoming dividend. If they don't do this pronto then they wont have a show of getting political (or public) support for government help.

Yep, these are extraordinary times, & call for extraordinary measures.