AIR - Air NZ.

[winner69]

Yes its a real relief that we are not held hostage to potentially several weeks of Winston Peter's holding the whole country to hostage.
AIR got beaten down to $1.91 at the close on what looks like a day when many stocks were subject to index rebalancing in the final 15 minute match process. They traded most of the day at $1.94.
I expect in the unlikely event of an enquiry into regional fares AIR will easily be able to show that increases are justified based on higher airways and landing fees charges.
I'm expecting a good day on Monday and if for some reason it initially languishes at Friday's close then it's HAMMER time

That was September last year (2015) Roger - before the AGM remember

Good buying sub $2 then wasn't it- even then I remember a few saying you being too enthusiastic saying $2 was on the horizon - just like those who think you are too enthusiastic now

Great gains over the last year I reckon -- probably I be posting much the same this time in 2016 when share price is approaching $4

[Biscuit]

That was September last year (2015) Roger - before the AGM remember

Good buying sub $2 then wasn't it- even then I remember a few saying you being too enthusiastic saying $2 was on the horizon - just like those who think you are too enthusiastic now

Great gains over the last year I reckon -- probably I be posting much the same this time in 2016 when share price is approaching $4

You mean 2014? There is no logic in arguing that because someone was wrong in challenging your valuation a year ago, someone else must be wrong in challenging your (higher) valuation now.

[skid]

21% portfolio value now mate. Should really leave it at that but the value is so compelling...its very similar to being at a very good smorgasbord for dinner and thinking...maybe I can squeeze in a little bit more

21% sounds reasonable--you dont want to put on to much weight

[Joshuatree]

And have bottle of Losec pills handy

[Beagle]

That was September last year (2015) Roger - before the AGM remember

Good buying sub $2 then wasn't it- even then I remember a few saying you being too enthusiastic saying $2 was on the horizon - just like those who think you are too enthusiastic now

Great gains over the last year I reckon -- probably I be posting much the same this time in 2016 when share price is approaching $4

Yes mate AIR was fantastic buying in the $1.90's just over a year ago and especially on a risk adjusted basis as by then it was reasonably clear that Ebola was under control.

You mean 2014? There is no logic in arguing that because someone was wrong in challenging your valuation a year ago, someone else must be wrong in challenging your (higher) valuation now.

Its all about earnings. There are many different theories doing the rounds about how oil will do this or that and its effect on AIR. For mine, its about drawing a line in the sand and saying what EPS is AIR capable of earning on a sustained normalised basis without the tailwind of lower oil and I keep coming back to a minimum of 35 cps and an average 10 year PE of 10.5. This is what I see as a minimum and you could easily make arguments for far more and a higher PE seeing as PE's are implicitly interest rate sensitive, (lowest interest rates in 50 years implies a PE of at least 1 more is easily justified)

I've run the ruler over its peer across the Tasman. No matter which way you slice and dice it EPS, growth outlook, Price to book, balance sheet strength AIR looks very cheap relative to its closest peer.
QAN will be subject to ostensibly not dissimilar macro economic influences as AIR so as mentioned previously its completely illogical that analysts covering QAN are ostensibly saying its immune in its future earnings projections to a potential rebound in oil prices whereas N.Z. analysts are saying AIR's earnings get belted. AIR probably the most misunderstood stock on the NZX...you can't imagine that current airfare specials will be as good if oil prices go back up so effectively if yields rise back up by 3-4% over time much of the effect of any increase in oil prices is mitigated.

Has anyone noticed that the cash register is ringing like crazy in soft economic conditions ? Barring a major exogenous shock, in my opinion oil only goes back up when decent world-wide growth is re-established...what ever year that might be, who knows ? and even when it does demand goes up with world-wide growth and so does yield IMO.

[dobby41]

AIR has proven that they are better at managing their costs that QAN.
Also, who's to say what a 'normal' oil price will be for the next 3-5 years.

[Biscuit]

Its all about earnings. There are many different theories doing the rounds about how oil will do this or that and its effect on AIR. For mine, its about drawing a line in the sand and saying what EPS is AIR capable of earning on a sustained normalised basis without the tailwind of lower oil and I keep coming back to a minimum of 35 cps and an average 10 year PE of 10.5. This is what I see as a minimum and you could easily make arguments for far more and a higher PE seeing as PE's are implicitly interest rate sensitive, (lowest interest rates in 50 years implies a PE of at least 1 more is easily justified)

I've run the ruler over its peer across the Tasman. No matter which way you slice and dice it EPS, growth outlook, Price to book, balance sheet strength AIR looks very cheap relative to its closest peer.
QAN will be subject to ostensibly not dissimilar macro economic influences as AIR so as mentioned previously its completely illogical that analysts covering QAN are ostensibly saying its immune in its future earnings projections to a potential rebound in oil prices whereas N.Z. analysts are saying AIR's earnings get belted. AIR probably the most misunderstood stock on the NZX...you can't imagine that current airfare specials will be as good if oil prices go back up so effectively if yields rise back up by 3-4% over time much of the effect of any increase in oil prices is mitigated.

Has anyone noticed that the cash register is ringing like crazy in soft economic conditions ? Barring a major exogenous shock, in my opinion oil only goes back up when decent world-wide growth is re-established...what ever year that might be, who knows ? and even when it does demand goes up with world-wide growth and so does yield IMO.

Now that is a logical argument! - although oil price is as much about supply (manipulated) as demand.

[skid]

Yes re $2.40 is my margin but each to their own. Despite so many good announcements the s/p hasn't responded ;its gone down and crabbing around atm, why is this, competition increasing,Terrorism ,compression, getting too close to(most) brokers values or?. Im still holding just and hope it really does get some legs ,but there is not enough in it currently for me to take the risk of adding.Until the s/p makes a convincing break up on vol I'm just not sure where it will go, so being careful here. Plus the T/A is not healthy atp

I think we can safely assume from recent behavior that a healthy balance sheet ,although important and encouraging,is but one of the factors driving share price.
Obviously from an accountants point of view it is by far the most important--a chartist ,or behavioral psychologist would look at things differently,etc. etc.

So although I wouldnt seriously consider banning anything--it think we could safely pack away our ''glass half empty or full'' ''sad sacks''
''over zealous'' etc. etc. as leading us away from objective observations and conclusions especially if you believe that what we toss up for consideration most likely does not have a huge impact on the SP of a company the size and volume of AIR.
Sometimes (and Im guilty as charged)we throw potential situations out there to debate as it may contribute to our education in terms of how it is debated or answered--(marketing people do this all the time in terms of staying ahead of their competitors--ie thinking ahead of potential problems so they can be dealt with IF they actually arise--so labeling it half empty or sad sack is not really constructive--(but good reasons why its a rubbish thought is fair game)

The ''Ebola'' mention was not meant as scaremongering and it is minor ATM but it was really disappointing to see it spring back up after basically being eradicated.Its certainly something to keep an eye on (without worrying at this stage) as it does have the potential to drastically affect air travel. Last time around it didnt(and even caused some to sell for what turned out to be nothing)but its relevant to point out that Ebola itself did not progress like we feared(whew!)so it wasnt really put to the test--lets hope nothing come of this new development but in this world of mutations it seemed worth mentioning--Not to worry atm.

I have a friend who just arrived on one of the big airbuses and said it was really comfortable (Emirates)--not sure how this stacks up with the dream liners and what the seating arrangement is, compared with them, and AIR but it was interesting to hear.

It will be interesting see what the fares are to Viet Nam (thanx Brend) I may give them a go if they can compete with MAL if their seating stacks up (one thing I liked about MAL was that they let me choose my seat months ahead of time (got right up front of economy with window and aisle for the two of us) and lots of room +and generous baggage allowance)--they also have a pretty good cancellation arrangement (Its manageable instead of losing the ticket like some bargain priced tickets)---so theres a few things to compare to.--If AIR can get away with less and still fill their planes then great for the accountants but maybe not for me--Im your feedback from a customer point of view ,rather than a Shareholder (at this stage)

[allfromacell]

https://www.nzx.com/companies/AIR/announcements/273941

[Beagle]

https://www.nzx.com/companies/AIR/announcements/273941

Good solid numbers.