AIR - Air NZ.

[brend]

Good solid numbers.

demand up but yields down - could you clarify for me please?

[stoploss]

demand up but yields down - could you clarify for me please?

Competition , they sold more tickets at a reduced price most likely.

[Beagle]

demand up but yields down - could you clarify for me please?

Certainly mate. Yield is the net price received per RPK (revenue passenger kilometre) flown. When you buy an attractively priced ticket to China for circa $600 each way they're making less per kilometre flown than if they sell one at the regular price.

As oil prices have fallen we've seen some decline in $N.Z yields received for the YTD of about 1.5%. On a currency adjusted basis (if the $Kiwi hadn't fallen), net yields received are down 4.5% YTD compared to last year so the lower Kiwi dollar has mitigated the effects of yield reduction because about 45% of air tickets are sold in foreign currency.

Internationally we've seen many airlines suffering greater yield reductions, (Airlines passing on the benefits of lower fuel prices and boosting demand by doing so), and AIR's yields have held up well in the face of competition in my opinion. This is supportive of the argument I made earlier this morning. If and / or when oil goes back up airlines will look to increase yields to recover their increasing fuel prices.

Worth noting that RPK's on a group wide basis are up over 13% YTD, so the top line even after a 1.5% net yield reduction is growing at circa 11.5%. I can't ever remember the airline growing at that rate before. With the top line growing at that rate and a stable operating cost basis the economies of scale quickly grow and that's why the airline is so confident of doubling last year's record profit in the current period. Confident of exceeding $400m in the current period v just over $200m last year.

[mikeybycrikey]

Thanks for that detailed description Roger. Just one question. When you say "Net price received per RPK", what do you mean by "net"? Net of what?

Seems like a simple question that I should know the answer to. But I don't.

[Beagle]

You're most welcome mate. Costs include commission paid to travel agents although I understand this is often passed on to customers and internet sales are becoming increasingly popular and the taxes incorporated within airline ticket prices, (departure taxes). e.g. Australian departure tax if I remember correctly is now $55 and the Australian Govt make airlines include it with their ticket prices.

[winner69]

Even the Qantas and AA guys admire Air NZ

http://www.stuff.co.nz/travel/news/7...n-latest-video

[Beagle]

http://www.nzherald.co.nz/entertainm...ectid=11550367

And Taylor Swift flies AIR N.Z. (Hope they got her to do a new music video for AIR).

[stoploss]

This is not good news for the worldwide travel industry. ...

http://www.stuff.co.nz/travel/news/7...r-threat-grows

[Beagle]

This is not good news for the worldwide travel industry. ...

http://www.stuff.co.nz/travel/news/7...r-threat-grows

No but its all relative to other forms of transportation...chances of getting killed in a car accident per kilometre travelled are many many times higher. (Off for a healthy lunch now, note chances of dying by heart disease
All figures below are for U.S. residents.

Cause of Death Lifetime Odds

Heart Disease

1-in-5

Cancer 1-in-7
Stroke 1-in-23
Accidental Injury 1-in-36
Motor Vehicle Accident*1-in-100
Intentional Self-harm (suicide) 1-in-121
Falling Down 1-in-246
Assault by Firearm 1-in-325
Fire or Smoke 1-in-1,116
Natural Forces (heat, cold, storms, quakes, etc.) 1-in-3,357
Electrocution* 1-in-5,000
Drowning 1-in-8,942
Air Travel Accident* 1-in-20,000
Flood* (included also in Natural Forces above) 1-in-30,000
Legal Execution 1-in-58,618
Tornado* (included also in Natural Forces above) 1-in-60,000
Lightning Strike (included also in Natural Forces above) 1-in-83,930
Snake, Bee or other Venomous Bite or Sting* 1-in-100,000
Earthquake (included also in Natural Forces above) 1-in-131,890
Dog Attack 1-in-147,717
Asteroid Impact* 1-in-200,000**
Tsunami* 1-in-500,000
Fireworks Discharge 1-in-615,488

[stoploss]

No but its all relative to other forms of transportation...chances of getting killed in a car accident per kilometre travelled are many many times higher. (Off for a healthy lunch now, note chances of dying by heart disease
All figures below are for U.S. residents.

Cause of Death Lifetime Odds

Heart Disease

1-in-5

Cancer 1-in-7
Stroke 1-in-23
Accidental Injury 1-in-36
Motor Vehicle Accident*1-in-100
Intentional Self-harm (suicide) 1-in-121
Falling Down 1-in-246
Assault by Firearm 1-in-325
Fire or Smoke 1-in-1,116
Natural Forces (heat, cold, storms, quakes, etc.) 1-in-3,357
Electrocution* 1-in-5,000
Drowning 1-in-8,942
Air Travel Accident* 1-in-20,000
Flood* (included also in Natural Forces above) 1-in-30,000
Legal Execution 1-in-58,618
Tornado* (included also in Natural Forces above) 1-in-60,000
Lightning Strike (included also in Natural Forces above) 1-in-83,930
Snake, Bee or other Venomous Bite or Sting* 1-in-100,000
Earthquake (included also in Natural Forces above) 1-in-131,890
Dog Attack 1-in-147,717
Asteroid Impact* 1-in-200,000**
Tsunami* 1-in-500,000
Fireworks Discharge 1-in-615,488

Is there someone a little more mathematically inclined that could explain these "odds" in my lifetime I know a great number of people have died due to Tsunami, you hear of many deaths in China from fireworks factories exploding ( not sure if that counts ) . However I can't recall a single person hit by an asteroid .
I think you have your fill @ 2.75 now Roger .