AIR - Air NZ.

[stoploss]

Sounds good Roger , I'm in , thanks for the detailed analysis.

[skid]

Dang Roger,you have increased the SP by 2.5% with your buying

[mikeybycrikey]

Okay some preliminary calculations. Key point is the company has stated they are on track to EXCEED $400m before tax in the first half and that's BEFORE the positive contribution expected from Virgin.
I have assumed $430m inclusive of the Virgin contribution which is up ~ 100% on last year's $216m.

I was amazed that they were making a prediction of $400M+ in profit for the first half, with still almost 3 months in the quarter left to run. It's a high bar but they are well positioned to reach it.

With forward bookings and hedging, I guess that much of the revenue and expenses are known in advance, but it still seems a confident move to be predicting that far ahead. Shows to me that they should be expecting $400M as a minimum and potentially a fair bit more.

Roger, thanks for your write-up of the shareholder meeting and other analysis. Keep it up.

I think your profit analysis might be a little on the high side for two reasons.

Firstly, Air NZ having a high profit doesn't play well in the NZ media. When there are headlines of a $800m FY profit, there will be questions asked about high pricing etc. Air NZ management did well to cut that off at FY by talking about lower prices to come but that can't happen indefinitely. Unfortunately, New Zealanders don't like profitable companies, especially when they are paying.

Secondly, low fuel prices lead to increased competition. Air NZ might be able to handle competition in the longer term but it will cut into the profit in the medium term. I expect to see more competition within the next 12 months. Maybe it won't eventuate though. Here's hoping.

[Beagle]

I was amazed that they were making a prediction of $400M+ in profit for the first half, with still almost 3 months in the quarter left to run. It's a high bar but they are well positioned to reach it.

With forward bookings and hedging, I guess that much of the revenue and expenses are known in advance, but it still seems a confident move to be predicting that far ahead. Shows to me that they should be expecting $400M as a minimum and potentially a fair bit more.

Roger, thanks for your write-up of the shareholder meeting and other analysis. Keep it up.

Yes I must say I was very surprised and totally unprepared for this bold and early call on profit for the first half and my read on this is the same as yours, they must see $400m as an absolute minimum with the potential for a fair bit more (excl VAH) so I feel $430 incl VAH for the first half is a fairly conservative call on my part. You also need to recall they only had one new route last year in the summer season which translated to 57% of full year profit in the second half, this year they have two new routes and they are extremely confident about bookings so while $1,000m net profit before tax is my best guess I certainly acknowledge the other points you've made and competition is an ever present factor.

They're well skilled at deflecting the politics of increasing profits and have all year to work on their next politically correct speak so they'll have all the usual angles of reinvesting in new aircraft for pax benefit, new lounges, staff training and enhancement, green initiatives and probably some new angles on it as well. Also as C.L. eluded too at the meeting they are very confident that we have some of the most competitive domestic fares of anywhere in the world.

The other two questions I asked during general business were.
1. Addressed to Tony Carter. Given the compelling metrics that the stock was trading on and the fact that you have been buying them yourself has the board considered utilising its ability, (up to 3% of issued shares or $60m whichever is the lesser) to buy back its own shares ?
Answer, that's a tricky one. He quipped, You must have been at the board meeting this morning. As you will know we have had the ability to buy back but we haven't used this ability for quite some time. We've been investing heavily in new planes and that's been our focus in recent times but its something that's under consideration for the future.
I spoke with Tony after the meeting and suggested to him there's no more profound signal to send to the market than the company buying its own shares back. He recalled the time they did that some years ago and the stock price doubled in a short period of time afterwards. I left him with that thought to think about. He explained in a round about way that at this stage their call was to put it right out there exactly where they see the profitability of the company which he said was a bold and informative move, or words to that effect and I agreed.

2. I asked Chris Luxon during general business whether he gets frustrated with analysts insistence that AIR is a cyclical stock ? (Some good probing questions...I am not sure which one Tony Carter liked the most).
C.L. explained that after many years of working for Unilever and other U.S. corporations he didn't feel making excuses about currency or fuel prices or other extraneous cost influences really cuts the mustard for shareholders. They expect us to manage those things and we do. We're running a business not an airline and we need to get on and manage that business in the most prudent manner for our shareholders. (I'm paraphrasing as best as I can recall)
He went on, naturally we're not immune to any major exogenous shock regarding one of our major input costs but where here to manage that and mitigate its effects, be flexible and adaptable and we back ourselves to be the most adaptable airline in the world.

I must say that I think he's doing a first class job at the helm of what is a very good company. I have a very high level of confidence in the management and directors.

I think my friend Couta1's very bold XXXXXL sixed position will pay huge dividends in the years ahead. For mine, I will continue to add more on any future weakness as funds allow.
That's basically a wrap on yesterday's proceedings as best as I can recall them.

How's the technical's looking Hoop ? I note today we busted through the 100 day MA to the upside on much higher volume than normal

[Biscuit]

Roger, you didn't ask him about the effect on profits of the burst in the Auckland property market bubble?

[winner69]

Got quite a few today ..... got sucked in my the hype and exuberance on this thread. And an accountant can't be wrong, can he

OMG Winner, what have you done? You said you would never tempt fate with an arline

I will be beside myself if one of their planes now fall out of the sky and hundreds die .... it'll all be my fault

[Beagle]

Got quite a few today ..... got sucked in my the hype and exuberance on this thread. And an accountant can't be wrong, can he

OMG Winner, what have you done? You said you would never tempt fate with an arline

I will be beside myself if one of their planes now fall out of the sky and hundreds die .... it'll all be my fault

OMG I can't believe it...I have finally talked you into investing in the best value company on the NZX. Its time for me to get out LOL.
We'll be all good mate. Strap yourself in and enjoy the ride. I've gone XXXL with my holding and want more.

[winner69]

Are the questions included in the webcast
http://edge.media-server.com/m/p/hcz5otfo

Doesn't seem to be a fast forward button and I hate listening to chairmen and CEOs rave on how good they are - usually self indulgent bull**** to appease the audience

[Beagle]

Are the questions included in the webcast
http://edge.media-server.com/m/p/hcz5otfo

Doesn't seem to be a fast forward button and I hate listening to chairmen and CEOs rave on how good they are - usually self indulgent bull**** to appease the audience

I would say by the length of the podcast the questions definitely would be included. For anyone keen enough to listen to the whole thing that'll probably make a mockery of my recollection of the event and the way I've paraphrased their response LOL. Worth listening too for people who have the time.

By the way Winner let me be the first to welcome you aboard as an Air New Zealander. Part of your indoctrination into the company as a shareholder is listening to the whole webcast including my clumsy questioning, enjoy

[Baa_Baa]

AIR sent out the buy signals this week on my weekly chart -log scale, SP now above the EMA's (LT and ST) which all converged, and nicely up off the rising trend line from about 3.5 years, all indicators positive and particularly money flow moving into the positive. I would normally wait another week for confirmation, of a new high and a low/close above this weeks close. Good luck all holders/buyers, I can't join you on this flight but wish you well.

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