AIR - Air NZ.

[mikelee]

Yeah, it's probably fine if you're retired and only interested in dividend. Would be hard for someone looking to pull out and invest in something else once the share is diluted and SP tank.

[BlackPeter]

Yet the SP still holds steady. Is it possible the belief that all will be back to normal again at some point in the future is enough to prevent the SP from falling much lower (to levels discussed earlier in this thread). Even with the massive accumulated debt and looming capital raise. Which will in turn dilute existing share holders as the Government would secure the majority of Cap raise shares at a discounted price. Then the funds from the Cap Raise Air NZ will need to use to pay back the government the $900M loan. Works out well for the government, not so well for existing share holders. Yet the SP continues to disregard these fundamentals.

OR the other way of looking at it is even if shareholders are technically diluted, does it really matter? It would only matter if Air NZ had a takeover or the business was sold. Only then would the fact shares had been diluted would become relevant as the shareholders would receive less per share of the takeover bid/ sale of the business. But what's the likelihood of that ever happening? As long as there is no takeover sale of Air New Zealand, then all shareholders really care about are dividend returns and the SP. Dividends won't be there for a long long way off. But at least if the belief in the company keeps the SP up then the argument that shareholders will be diluted would be irrelevant wouldn't it?

Not quite. Whatever dividend the company chooses to distribute - it will be diluted for existing holders.

This is a very real impact on any holders purse ...

Obviously - if you just hold for the enjoyment of the registry statement without being interested in earning dividends, than you right - in this case it would not matter to you unless you want to sell at some stage.

I suspect that at some stage the other shareholders will notice that their dividend yields will be terribly diluted and adjust the share price accordingly ;

[Arbroath]

Not quite. Whatever dividend the company chooses to distribute - it will be diluted for existing holders.

This is a very real impact on any holders purse ...

Obviously - if you just hold for the enjoyment of the registry statement without being interested in earning dividends, than you right - in this case it would not matter to you unless you want to sell at some stage.

I suspect that at some stage the other shareholders will notice that their dividend yields will be terribly diluted and adjust the share price accordingly ;

It reminds me of the road runner cartoon....keep running in thin air until you realise you're off the edge of the cliff

[Sideshow Bob]

Talk of dividends is several years premature.

Once get more widely to 90% double-jab and back flying with perhaps reintroduction of the TT bubble, or wider services, then might make the capital raise more palatable to those who continue to hold on hope.

[peat]

I personally think it was a good move to include a recent test in the requirements for travel and not just allow double vaxxed. Of course they want to keep as many potential clients as possible and gives everyone an option to travel. Only really extreme anti-vaxxers wont take a test if they want to travel I imagine so cuts out virtually no one.

Disc short but reduced and reluctant now tbh.

[Sideshow Bob]

I personally think it was a good move to include a recent test in the requirements for travel and not just allow double vaxxed. Of course they want to keep as many potential clients as possible and gives everyone an option to travel. Only really extreme anti-vaxxers wont take a test if they want to travel I imagine so cuts out virtually no one.

Disc short but reduced and reluctant now tbh.

Indeed.

But internationally will need to be double-vaxxed, to enter other countries if nothing else.

[Maxtrade]

Not quite. Whatever dividend the company chooses to distribute - it will be diluted for existing holders.

This is a very real impact on any holders purse ...

Obviously - if you just hold for the enjoyment of the registry statement without being interested in earning dividends, than you right - in this case it would not matter to you unless you want to sell at some stage.

I suspect that at some stage the other shareholders will notice that their dividend yields will be terribly diluted and adjust the share price accordingly ;

Understood. Just trying to make sense of why the SP has pushed back up to 1.7 which doesn't really make a lot of sense. The only real logic is that investors are not seeing Air NZ as a dividend paying investment but rather as an undervalued stock. Brushing aside the massive debt and looming shares dilution. Obviously those investors aren't concerned about receiving any dividends, nor fearful of any take-over or sale of Air NZ - and therefore their shares being diluted might be seen as 'irrelevant', as long as they expect the SP to push back up to the $2-$3 range in time when travel resumes in the next year or so. ie seeing it as an undervalued stock rather than a dividend investment. Shares being diluted would only come into play for dividends or sale of the company. It appears there are more investors that aren't concerned about either of these aspects, and are more focused on reopening of boarders and travel resuming, in turn providing support to a rallying SP?

I cant really understand the sense of it either, I would have expected to see the SP pushed below 1.5 and slowly decline. Trying to understand how it has and continues to hold so much support. It is common knowledge about the levels of debt and the only obvious way out being a Cap Raise to pay the loan back to the government. Yet even with this well known the SP holds support??

[BlackPeter]

Understood. Just trying to make sense of why the SP has pushed back up to 1.7 which doesn't really make a lot of sense. The only real logic is that investors are not seeing Air NZ as a dividend paying investment but rather as an undervalued stock. Brushing aside the massive debt and looming shares dilution. Obviously those investors aren't concerned about receiving any dividends, nor fearful of any take-over or sale of Air NZ - and therefore their shares being diluted might be seen as 'irrelevant', as long as they expect the SP to push back up to the $2-$3 range in time when travel resumes in the next year or so. ie seeing it as an undervalued stock rather than a dividend investment. Shares being diluted would only come into play for dividends or sale of the company. It appears there are more investors that aren't concerned about either of these aspects, and are more focused on reopening of boarders and travel resuming, in turn providing support to a rallying SP?

I cant really understand the sense of it either, I would have expected to see the SP pushed below 1.5 and slowly decline. Trying to understand how it has and continues to hold so much support. It is common knowledge about the levels of debt and the only obvious way out being a Cap Raise to pay the loan back to the government. Yet even with this well known the SP holds support??

Just apply the usual formula: Share price = underlying value + hype.

Obviously - the underlying value will drop when the shares are diluted ... and no matter which historic measure you apply, (like e.g. NTA or current earnings capability) AIR's underlying value is already today (prior to dilution) ways below the share price.

If you look into the earnings potential, than you obviously need to predict the future earnings (which are unknown) and it depends on which future earnings you assume (anybody's best guess). However - one needs to be pretty optimistic to make the current share price look reasonable.

Leaves hype - Hype is driven by irrational but very strong human traits: fear and greed. Fear of missing out, the hope and expectation to always find a bigger fool and group think. Good examples for securities without any underlying value are cryptocurrencies - who would have thought that anybody pays $100000 for a mathematical construct with no underlying value and which can be replicated by others in unlimited numbers (Bitcoin)?

I'd put the current share price for AIR into the same category. Hard to understand, impossible to predict but hey - perception is reality. Great stuff for traders (particularly if they can predict hype ), but clearly no investment material.

[Sideshow Bob]

Understood. Just trying to make sense of why the SP has pushed back up to 1.7 which doesn't really make a lot of sense. The only real logic is that investors are not seeing Air NZ as a dividend paying investment but rather as an undervalued stock. Brushing aside the massive debt and looming shares dilution. Obviously those investors aren't concerned about receiving any dividends, nor fearful of any take-over or sale of Air NZ - and therefore their shares being diluted might be seen as 'irrelevant', as long as they expect the SP to push back up to the $2-$3 range in time when travel resumes in the next year or so. ie seeing it as an undervalued stock rather than a dividend investment. Shares being diluted would only come into play for dividends or sale of the company. It appears there are more investors that aren't concerned about either of these aspects, and are more focused on reopening of boarders and travel resuming, in turn providing support to a rallying SP?

I cant really understand the sense of it either, I would have expected to see the SP pushed below 1.5 and slowly decline. Trying to understand how it has and continues to hold so much support. It is common knowledge about the levels of debt and the only obvious way out being a Cap Raise to pay the loan back to the government. Yet even with this well known the SP holds support??

I suspect it could be as simple as investors/punters thinking that if it is at $1.60-$1.70 through recent lockdowns and heavy restrictions in/out of Auckland, then going to be higher once they start flying back with the domestic network, and then even higher again once get back internationally. Ignoring all those peripheral things like govt loans, capital raises, cash burning, writedowns, fuel costs, inflation, risk of further outbreaks etc etc.

Not like its the only investment around divorced from fundamentals, priced on some utopian vision decades away and defying logic.......

[Dassets]

Looks like my forecast for the lockdown was ok. I did think back then late Nov early Dec but didn't want to scare people so I can handle the 3 month top end of my forecast being 2 weeks short.

Surely that is it for AIRNZ now. The lockdown likely to go for 2-3 months. that is cash out at the peak of last year plus add on the new 787s arrivals. Why they rehired some staff last year was way to premature. Unfortunately, imo, the aircraft have been running on more than fuel. They have been running on blind hope. Never a reliable winning strategy. Try to save what will be needed ie basic domestic, trans tasman, some Pacific not all, and a little Asia. Everything else gone.

Also I know there were not too many believers here of the eradication strategy. So it is cold comfort seeing the EU open up and USA/Canada. But, hello, if it wasn't obvious last year then the recent delta outbreak in Aust, our second closest neighbour(depending if you count Lord Howe) to NC, doomed eradication as a viable course of action.