AIR - Air NZ.

[Beagle]

The incredible thing imo is that this is all written in the history of AIR, after the Ansett debacle in 2001 which in current times will be the Covid debacle. It's even published on NZX, the story of Covid for AIR will read very similarly to the second paragraph of the history. I recall the SP falling to $0.21 (from I think over $11 a year earlier) and existing holders were severely screwed and diluted to oblivion.

Your recollection is sound. Fact is there's a whole new generation of jersey cows to be milked dry and that's exactly what's going to happen as sure as night follows day.

[Waltzing]

Its going to be a long day by the looks of it before the night.

nightday.JPG

[Beagle]

Like flying Auckland to Perth...the day never seems to end.

[Scrunch]

The incredible thing imo is that this is all written in the history of AIR, after the Ansett debacle in 2001 which in current times will be the Covid debacle. It's even published on NZX, the story of Covid for AIR will read very similarly to the second paragraph of the history. I recall the SP falling to $0.21 (from I think over $11 a year earlier) and existing holders were severely screwed and diluted to oblivion.

The historical prices that places like Yahoo finance quote for the year 2000 are adjusted figures, not the actual share prices from the day. The price was in the $2 to $4 range for the later 1990's before Air's collapse and bailout. It then did fall down to circa 20c, and my recollection was a low of 13c. They then had the government bailout in the circa 20-25c range that hugely increased shares on issue. Soon after this they had a 5:1 consolidation that returned the price to above $1. This 5:1 consolidation however caused all these earlier $2 prices to start being reported as $10 prices. It also cause a lot of general punters that didn't follow closely to see $2 prices before the collapse and $2 prices sometime after the collapse and not realize the full wealth destruction that had occurred.

There was the 90%+ fall, but not quite $11 to 21c.

[winner69]

The historical prices that places like Yahoo finance quote for the year 2000 are adjusted figures, not the actual share prices from the day. The price was in the $2 to $4 range for the later 1990's before Air's collapse and bailout. It then did fall down to circa 20c, and my recollection was a low of 13c. They then had the government bailout in the circa 20-25c range that hugely increased shares on issue. Soon after this they had a 5:1 consolidation that returned the price to above $1. This 5:1 consolidation however caused all these earlier $2 prices to start being reported as $10 prices. It also cause a lot of general punters that didn't follow closely to see $2 prices before the collapse and $2 prices sometime after the collapse and not realize the full wealth destruction that had occurred.

There was the 90%+ fall, but not quite $11 to 21c.

That’s very much how I recollect it as well

Bottom line that’s relevant today is that shareholders who held through thick and thin took a real haircut when the government bailed them out (through dilution) ….and those shareholders included Brierley and Singapore Airlines.

I’d say dollars to donuts history will repeat itself

[mikelee]

This Delta variant could really throw AIR's recovery plan for 2022 into disarray. I for one will not be keen to travel overseas until it's safe to fly without the hassle of testing before departure and after arrival.

[porkandpuha]

I for one will not be keen to travel overseas until it's safe to fly without the hassle of testing before departure and after arrival.

Can't have it both ways... Yes, a pre departure test may be hassle, but it's also one of the things that will ensure it's "safe to fly"

[peat]

still short and continuing to build the position.

one of the things I'm done to mitgate risk on this trade is to buy AIA and have so far acquired at 7.10

[Dassets]

Can't recall if I posted this but intended to after result and can't seem to search my post on my phone so sorry if I have. Also doing this from memory so nos won't be accurate to nearest 1m

In the accounts are pre paid fares. I estimate up to $300m may have been added since balance date due to aussi closing then nz closing. In total add that to short and long term prepay about $1.5bil. Revenue for year was $1b ex govt freight subsidy. Routes are pared back. Now look at non covid year rev for some guidance

Rules for prepaid are to be spent within 12 months and flight within 24 months from original post partum.

Looking forward at the schedule, work in seats and miles flown etc etc I cannot see any chance of these pre paid being able to convert anywhere near all. This is assuming no other flights are booked by other travellers in a year and maybe in 2 years. That is no room for other pax.

So this brings on another problem. AIR has been selling tickets that if a freeze came on they could not possibly honour the offer of a credit as the option for non flight Problem for an airline that has special provisions under commerce legislation ie utilities etc have special protection for consumers.

Insolvency. With the govt saying situation not stable enough to support cap raise plus this pre pay issue let alone possible ComCom action why are these directors pushing on? Have they been given any representations of immunity from enforcement action by govt?? That is my only guess cause I cannot understand why they are continuing.

See those credits really have to be covered for 2 reasons. 1 massive amount of voters. 2. Massive customer base to avoid screwing.

Problem is I cannot see how they can deliver for years. They need cash paying customers to pay the costs to run future flights as people flying on credits have had their cash to pay costs yesterday.

Btw cash holdings are low cf normal balance sheet. The ratio of pre pay to rev is a record by a huge margin. Also when you look at international comps for those ratios you see AIR is an absolute outlier. This is bad news for those directors because it is a clear sign the business is operating way outside norm. Then we get into reckless trading triggers........ hasn't that horse run around the track a few times already??

[Poet]

Can't recall if I posted this but intended to after result and can't seem to search my post on my phone so sorry if I have. Also doing this from memory so nos won't be accurate to nearest 1m

In the accounts are pre paid fares. I estimate up to $300m may have been added since balance date due to aussi closing then nz closing. In total add that to short and long term prepay about $1.5bil. Revenue for year was $1b ex govt freight subsidy. Routes are pared back. Now look at non covid year rev for some guidance

Rules for prepaid are to be spent within 12 months and flight within 24 months from original post partum.

Looking forward at the schedule, work in seats and miles flown etc etc I cannot see any chance of these pre paid being able to convert anywhere near all. This is assuming no other flights are booked by other travellers in a year and maybe in 2 years. That is no room for other pax.

So this brings on another problem. AIR has been selling tickets that if a freeze came on they could not possibly honour the offer of a credit as the option for non flight Problem for an airline that has special provisions under commerce legislation ie utilities etc have special protection for consumers.

Insolvency. With the govt saying situation not stable enough to support cap raise plus this pre pay issue let alone possible ComCom action why are these directors pushing on? Have they been given any representations of immunity from enforcement action by govt?? That is my only guess cause I cannot understand why they are continuing.

See those credits really have to be covered for 2 reasons. 1 massive amount of voters. 2. Massive customer base to avoid screwing.

Problem is I cannot see how they can deliver for years. They need cash paying customers to pay the costs to run future flights as people flying on credits have had their cash to pay costs yesterday.

Btw cash holdings are low cf normal balance sheet. The ratio of pre pay to rev is a record by a huge margin. Also when you look at international comps for those ratios you see AIR is an absolute outlier. This is bad news for those directors because it is a clear sign the business is operating way outside norm. Then we get into reckless trading triggers........ hasn't that horse run around the track a few times already??

All good points.
Also, I think AIR are doing enormous damage to their goodwill with the way they are treating their customers. I had experience recently where I booked a flight for family NZ to Australia for end of October and get an email a few days ago saying that 'due to unavoidable operational issues' our flight had been moved forward a whole day - ie one day of our holiday has just been 'disappeared' - no mention about the fact that we had pre-paid accommodation for the night that we will no longer be able to use. So I cancelled the reservation, and get this - I can only get a credit, not a refund. When the whole problem is that AIR is failing (so that they can max their profits) to provide the contracted service- it is disgraceful and won't be easily forgotten by me at least.
As to all of those credits, an easy solution for a near monopoly, just double the price of the tickets and effectively make people with credits pay again for their trips