AIR - Air NZ.

[Zaphod]

Quite a clever move from the Star Alliance to make it harder for AA and One World to compete on NZ-USA routes.
Just a shame AIR's US partner is such woefully bad airline to travel with
http://www.nzherald.co.nz/business/n...ectid=11526074

Yes, an all-around great strategic move. That route definitely needs further capacity increases, and the partnership will allow NZ to provide this while still allowing them the flexibility to explore new routes and/or grow capacity on the existing routes such as EZE and IAH.

[winner69]

It's not surprising AIR profits going to double his year - it's a global industry thing and not just specific to AIR.

Probably AIR are doing things better than most (efficiency wise etc) so 'outperforming'

At least the industry seems to be showing some discipline in not cutting fares as capacity increases. Shareholders need the likes of AIR to screw punters to maximise profits eh

AIR at 3 bucks soon and then 4 bucks after Xmas

[Joshuatree]

I bought my initial and smallest parcel at $2.90 yep... still holding out for that to recover. But I also bought in when it was in $2.60's prior to the Jet star announcement and I also topped up at $2.40. Quite a spread but hold a decent amount now and am confident in recovering the $2.90 soon.

Hopefully you're not far away from being in the black Regi

[Beagle]

I was swayed by the accountants 64 cps for FY16.

Know he was getting a bit excited, the adrenalin from asking so many great questions was still in his veins.

So I discounted by 10% which gives 58 cents

As mo keeps reminding us the more AIR make the lower the PE (cyclical see).

Heeding that advice I reckon Rogers 10 or11 is far too high at this point in the cycle. Te way Roger is going it will be 12 tomorrow. Never mind, I reckon a PE of 7 would be about right at this point in the cycle when excessive profits are being made.

So 58 X 7 is $4.06 .......as the 58 cps is in the bank the share price should follow earnings as Percy keeps reminding us and reach that 4 bucks pretty soon. Even a PE of 6 gives close to $3.50. No risk here methinks

Yep, $2.60 odd to $4.00 in less than a year is pretty good eh. Amazing really

Praying no plane crash tonight

Must admit I rushed back to the office after a quick chat with Tony Carter, just one lovely salmon sandwich grabbed and consumed on the way out the door, (don't want to damage their hospitality budget too much...might impact that special divvy next year), and when I did the quick back of the envelope calculation I got to your 58 cps which in itself was startling so I started buying like crazy that afternoon.

Only the next morning did I realise the full implications of their bold prediction that they were on track to exceed $400m excl VAH and then crunched my numbers on the profit split theory between first / second half. I reckon $430m is pretty conservative in the circumstances incl the contribution from VAH, I was tempted to use $450m but didn't. Regarding second half there is definitely some seasonality to their business with more tourists in summer and early autumn and they have two new routes coming on stream this summer compared to one new one last summer so I reckon sticking with a 43% / 57% first half - second half profit split for this year and keeping it the same as last year is also reasonably conservative too, especially considering the less favourable fuel hedging they had in the first quarter of Fy16, likewise assuming the full company tax rate of 28%. As outrageous as it seems I am fairly comfortable with $1,000m before tax including VAH contribution giving the 64 cps after tax but if you want to use 58 cps that's fine but I reckon its a little too conservative.

Regarding future years and the PE I chose, there's no question they are deriving some material benefit from the current fuel price tailwind, my estimate $250m but by my reckoning only about half that translates onto the bottom line as yields are compressed by competitive pressures (my estimate 2-3% x $5b), so I think the net benefit is about 10 cps, (would make a nice special divvy next year wouldn't it), so when I used the PE of 11 its based on normalised profits excluding the fuel price tailwind so 54cps x 11 = $5.94 I ran with 50 cps as a sustainable earnings rate going forward because I expect more competition to come out of the woodwork.

Choose whatever PE you like but I think the company is misunderstood by analysts and is dirt cheap. If one uses a simple PE of 10 on a sustainable earnings rate of 50 cps then it's quite feasible this is a $5 stock once analysts realise they've completely underestimated this company and it proves up FY17 earnings and FY18 outlook.

My pick is the stock price will have a 5 as the first number after the FY 17 annual meeting, say by Xmas 2017 once their FY18 outlook is clear and Couta1 will recover all his losses and look like a legend

I don't want to put timelines on when I think it'll hit $3...just invest for the long term and know your investing in a very high quality well managed company trading on compelling fundamental's.
You can afford to be patient when you're being paid what will probably be in excess of an average 12% gross dividend yield over the next few years incl special(s).

[couta1]

Roger I love your fairytale ending and so I've taken licence to start dreaming already, after all dreams are free. Thanks for all the hard work you've put into the stock, going well beyond what you have or need to do.

[Balance]

It's not surprising AIR profits going to double his year - it's a global industry thing and not just specific to AIR.

Probably AIR are doing things better than most (efficiency wise etc) so 'outperforming'

At least the industry seems to be showing some discipline in not cutting fares as capacity increases. Shareholders need the likes of AIR to screw punters to maximise profits eh

AIR at 3 bucks soon and then 4 bucks after Xmas

I see Macquarie has a 12 month price target of $3.10. With them and other brokers pushing that, it should get within your $3 to $4 price range within a year. What I cannot figure out is that they have upgraded their profit forecast after the AGM but has kept price target the same from several months ago.

[winner69]

Looking good for AIR shareprice today

[couta1]

I see Macquarie has a 12 month price target of $3.10. With them and other brokers pushing that, it should get within your $3 to $4 price range within a year. What I cannot figure out is that they have upgraded their profit forecast after the AGM but has kept price target the same from several months ago.

Too conservative although the high target is $3.40 and no brokers are recommending a sell as they were a month ago.

[couta1]

Brokers are all insisting this is a cyclical stock and this is the peak of the economic cycle

Mate you have to admire their boldness revising the mean to $2.99 up from $2.92, very big of them don't you think, is it too early for a Tui?

[Beagle]

A little birdie tells me two of the best analysts are away on holiday, (school holidays). Expect more upgrades next week. T.C. is on to it. His concluding remark to me after the meeting implying that the early profit announcement was sort of in lieu of a share buy-back, was, it'll be interesting to see what happens to the share price in the next few weeks. He probably already knew those analysts were away on holiday.