AIR - Air NZ.

**Anna Naum** · 11-04-2009, 11:09 AM

Originally Posted by BRICKS

YOUR answer again is to broad we are talking about AIR not all the other airline companies
around it would be better to answer Mr Vitamin`s question direct about his EXPECTAIONS..

Why invest in a company that is in a sector that is under pressure or is that not clear in my previous emails. As to advising someone else to buy or sell, there is not upside in that, or is it smart. I would suggest stating the +ve and -ve points is a better way to allow someone to make an informed choice. After all what do we know about Vitamin's investment process or financial position. You would not be suggesting that he should invest based on what you or I say are you?

**BRICKS** · 11-04-2009, 11:29 AM

Originally Posted by Anna Naum

Why invest in a company that is in a sector that is under pressure or is that not clear in my previous emails. As to advising someone else to buy or sell, there is not upside in that, or is it smart. I would suggest stating the +ve and -ve points is a better way to allow someone to make an informed choice. After all what do we know about Vitamin's investment process or financial position. You would not be suggesting that he should invest based on what you or I say are you?

ARE you going to make this your life story as ALL companies are under pressure which
means nothing only that THE VITAMIN asked for suggestions not investment Decisions..

**Anna Naum** · 11-04-2009, 02:15 PM

No two companies are the same, they all differ. After all not all companies pay the CEO $3m.

**Vitamin** · 11-04-2009, 06:55 PM

What I like about AIR is it's massive operating leverage.

With a largely unlevered Balance Sheet and low capex requirements, bums on seats (not withstanding some discounting) should translate into relative outperformance.

Consenus broker valuations are already well north of $1.00 and once sentiment improves and the operating environment is a little more certain, I'm sure you will see broker valuations starting with the number two.

My original post was to try and understand why this stock is out of favour relative to other stocks on this site.

My bet is this stock breaks through $1.00 per share barrier in the near term.

**Steve** · 11-04-2009, 07:12 PM

How much of the fuel surcharge is AIR still charging? Has it been reduced as fuel prices have reduced?

**Anna Naum** · 12-04-2009, 06:46 AM

Originally Posted by Vitamin

What I like about AIR is it's massive operating leverage.

With a largely unlevered Balance Sheet and low capex requirements, bums on seats (not withstanding some discounting) should translate into relative outperformance.

Consenus broker valuations are already well north of $1.00 and once sentiment improves and the operating environment is a little more certain, I'm sure you will see broker valuations starting with the number two.

My original post was to try and understand why this stock is out of favour relative to other stocks on this site.

My bet is this stock breaks through $1.00 per share barrier in the near term.

One capex issue going forward is the replacement of its 737 fleet and from 2013 the arrival of its Dreamliner fleet

**BRICKS** · 12-04-2009, 09:09 AM

Originally Posted by Steve

How much of the fuel surcharge is AIR still charging? Has it been reduced as fuel prices have reduced?

WELL steve BUY a ticket and find out..

anna naum four years down the track is a long time ahead any thing mite happen so not to
worry that much, BUT AIR will be able to handle it EASY..

**Neo-Con** · 12-04-2009, 01:56 PM

I don't think there is any question AIR is a bargain at the moment. Sure, airlines overall are underperformers and generally I would not be expecting airlines (including AIR) to neccessarily earn an acceptable return on equity, but AIR is trading at such a heavy discount to its equity (equity 1.7b, market cap 1b) that when you look at the return available on the current share price it looks very good indeed:

Look at earnings:
2008: $218m (hardly in great conditions, oil up at $150 a barrel etc)
2009: $80m (likely result, $24m half year, mgmt expect second half NPAT to be multiples of half year result as per Rob Fyfe at results presentation)

As a go forward I think allowing for some volatility due to the nature of the industry it is reasonable (and conservative) to assume average profits around the $150m mark. Applying typical historical earnings multiples for NZX companies of around 15 (which should be restored once this recession washes over) that gives us a market cap of around $2.3b (compared to current of $1b).

I am not expecting this move overnight but I think $2.30 is a reasonable 12 - 18 month target price. Even if the price doesn't move this way, shareholder can sit comfortably on this stock given the strong dividend yield.

The talk about AIR capex coming up is just part of its business. There are always going to be some planes coming near the end of their life. AIR however has a very light capex profile this year. It will resume to normal once the new long haul fleet is introduced.

This is something of a non-issue for AIR given the $1.4b sitting on its balance sheet. And of course capex is all built into valuations based on earnings because of depreciation charge.

Disc: AIR

**Steve** · 12-04-2009, 08:34 PM

Originally Posted by BRICKS

WELL steve BUY a ticket and find out..

Bricks, good suggestion, however it would be easier for me if a frequent traveller such as yourself could look at their last ticket, or do you no longer fly with AIR?

**BRICKS** · 13-04-2009, 08:32 AM

Originally Posted by Steve

Bricks, good suggestion, however it would be easier for me if a frequent traveller such as yourself could look at their last ticket, or do you no longer fly with AIR?

What would be better for me is for you to direct your questions some where else or go direct
to the web site and LOOK..