AIR - Air NZ.

[RTM]

Disc: I don't mix debt and equity and an 18.4% yield gives me an extremely robust margin of safety compared to the 2.5%, (shortly to be 2.25% gross, and in early 2016 2.00%) I'm currently "enjoying" on my call account funds.

Presume you are aware that Heartland have a 3.6% call account. It all helps, even if it is still a bit miserable.

[Snow Leopard]

...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)

So 35cps based on what price for a barrel of Plane Juice and what NZ/US exchange rate?

You can currently fill up your Airbus for about half the US$ price of 18 months ago but the exchange rate has gone from 0.8 to 0.65.

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...

This I am going to get printed, framed and then I am going to hang it on my office wall.

Best Wishes
Paper Tiger

[WingingIt]

Good for profits - http://www.stuff.co.nz/business/7436...unedin-flights

[winner69]

Good for profits - http://www.stuff.co.nz/business/7436...unedin-flights

And AIR has axed Paraparaumu- Chch

If punters no want to fly planes won't fly

[Joshuatree]

JT - you a fan of U2

Great album that The Joshua Tree. Fav track is "I still haven't found what I'm looking for"

The tree featured on the album cover fell over and recently been vandalised much to the chagrin of dedicated U2 fans

We have discussed U2 a whiles back.To repeat i like the odd song but have never owned an album( or something like that). Joshua tree national monument in the south West USA is def a bucket list destination imo.
Do you trade both ways w69 or is it harder /not possible in NZ?.

[winner69]

skid - 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.

Yes, as planes go an awesome thing (and better than Dreamliners)

But 14 hours plus Singapore / London in one is still not a really enjoyable experience

[Beagle]

So 35cps based on what price for a barrel of Plane Juice and what NZ/US exchange rate?

You can currently fill up your Airbus for about half the US$ price of 18 months ago but the exchange rate has gone from 0.8 to 0.65.



This I am going to get printed, framed and then I am going to hang it on my office wall.

Best Wishes
Paper Tiger

Glad you hold my comment in such high esteem PT. Based on 20 year average Goldilocks level of 65 cents and a presumed new normal, (whatever and whenever that is) when the oil glut finishes of $80 barrel.

Anyway seeing as we had a decent correction today and I nabbed some more at $2.71 I thought I'd better update my spreadsheet to make sure I have a decent safety margin. Average cost is now $2.225.

Pretty sure I've found what I'm looking for with this stock

P.S. I reckon that Saab 340 will make a reasonable display addition at MOTAT in due course...actually speaking of museum pieces and display's I see AIR N.Z. has opened its 75th anniversary display at Auckland Museum, so get along and enjoy a great free exhibition.

[Snow Leopard]

Glad you hold my comment in such high esteem PT. Based on 20 year average Goldilocks level of 65 cents and a presumed new normal, (whatever and whenever that is) when the oil glut finishes of $80 barrel....

0.65 NZ/US and $80/bbl (for crude) and I have $0.358 eps for FY17.

Consensus forecasts are for a nice genteel rise in oil prices over the next ten years; and that the reality will be different.

Such are the uncertainties of life.

Best Wishes
Paper Tiger

DISC: No airline stocks held.

[Zaphod]

The situation with Russia v Turkey certainly won't help airline stocks at least in the short term. Russia have been very provocative as of late, but this time they appear to have been called on it.

Let's hope that diplomatic action results, rather than retaliatory action against Turkey who then requests NATO assistance.

[skid]

I dont know what the US is up to with their ''international travel warning'' but its obviously not great for the travel industry.
This ''terrorist attack imminent'' could have all sorts of reasons ,even just an excuse to beef up NSA type programs designed further erode our privacy and freedom.If thats the case,it would be a damn shame if travel becomes the collateral damage.
Hopefully its not a prelude to the real thing--I found it disturbing that JK opened his big mouth spouting off about the possibility of those being potential threats here--just renforces that we are part of the game being played with our new western ''mates''--even if there are some who pose a minutely possible threat why blurb it out on the news which only erodes what is a pretty good and tolerant society here in NZ with emotional stirring up.---Reminds me of the "your either with us or against us''by GW Bush