AIR - Air NZ.

[couta1]

I think there's a far far too much volume in this sell off to attribute it to the sheeple, the flock cannot muster anywhere near enough shares (or cognisance) to account for the volume sold. This is big smart money aggressively taking profits, for whatever reasons, selling to the knife catchers, who one might argue are the sheeple.

BAA

Big money is not always smart money and how do you know how many of them are taking profits as opposed to losses?

[winner69]

Good charts by baa_baa et al on another thread

I reckon that if they redraw them in a few months time they will be asking what was all the fuss about bzck in April

[Bjauck]

This is just a human interest story--It has nothing to do with the running of the airline or its service Imo,esp. since it was coming from Singapore--i think this is more in the s--t happens category.

with the exception .i guess,of not keeping passengers more informed when delayed on the runway.

How you deal with the unexpected is important. The airline industry is in the service industry and how it interacts with its customers is important, so human interest stories are important and have an impact. How should you deal with a passenger, who may have been seen by some other passengers being ill prior to boarding the flight? For a start, other paying passengers would be seated close to this ill passenger. How do you deal with a medical situation, even if it originated elsewhere, on board the plane? How do you deal with a situation requiring assessment and treatment of multiple people on board your plane? How does the company deal with the media?

[Carpenterjoe]

How you deal with the unexpected is important. The airline industry is in the service industry and how it interacts with its customers is important, so human interest stories are important and have an impact. How should you deal with a passenger, who may have been seen by some other passengers being ill prior to boarding the flight? For a start, other paying passengers would be seated close to this ill passenger. How do you deal with a medical situation, even if it originated elsewhere, on board the plane? How do you deal with a situation requiring assessment and treatment of multiple people on board your plane? How does the company deal with the media?

Yip, Bjauck very right, AIR lost my business/shareholding a few years ago, this was due to their arrogance and poor and inconsistent service.
Service levels and showing real interest in your customers complaints is important.

[OldGuy]

Good charts by baa_baa et al on another thread

I reckon that if they redraw them in a few months time they will be asking what was all the fuss about bzck in April

exactly this. I made a similar mistake with this stock a year back. Got in at $1.96, sold out in semi-panic a month later at $1.85. Two months later it was $2.80ish...

[mikeybycrikey]

To put that yield impact in context - its $49m on $2,300m or just over 2% (lower prices). Hardly your 50% or 60% off discount sales at Briscoes or Kathmandu is it. Air NZ seem to managing 'pricing' very well.

The $499 one way fares to Buenos Aires that AIR are currently advertising has a yield of 4.8c. That's a 56% discount to their long-haul international yield of 10.8c from the interim report. Sure that's only one fare and it's offset by the limited numbers at that price, and other fares with much higher yield than 10.8c, like business class (where yield is more like 40c)

That was sort of my point though. Until last month their yield management had been superb. But March was a bit of an anomaly. Will be interesting to see what April is like. Is last month's pricing really an anomaly or is it the new normal? Only time will tell. If the April figures show a domestic YTD yield change of -1.7% then it's the new normal. If it's -1% then it was just a one-off anomaly.

I am a little surprised that long haul yield hasn't been hit yet. I'm getting many emails from AIR with news about various sales (today it was Ho Chi Minh, Singapore, Shanghai, Tokyo, HK and BA). And the US tickets are going to get cheaper with new competition.

I think that yield is on seats flown during the month rather than seats sold but I couldn't find a way to confirm that. That means that cheaper seats sold today won't have an effect on yield until a later date. (Can anyone confirm this?)

Remember that the H1 2016 result was a profit before tax of $457m on revenue of $2698m. That's a profit margin of 16.9%. If yield falls by 17% then they are making a loss. I'm not suggesting that will happen any time soon. Just saying that a -8% change in yield in one month is uncomfortably large, no matter how much they grow RPK. (edit: that's not quite right is it. passenger rev was $2308m. So yield would need to drop by 20%, with all other things remaining equal).

[OldGuy]

Mikey - you're aware that AIR has maintained double digit EBITDA% since 2007, so managed to stay profitable even during the worst economic climate since the 1930s??

I'd call that quite resilient.

[Jantar]

............. That's a profit margin of 16.9%. If yield falls by 17% then they are making a loss. ....

No, no, no. That is an error in understanding just what the yield is.

The yield is the amount of profit per seat, so a seat costing the airline $1000 and being sold for $1169 gives a yield of $169 or 16.9%. If the yield drops by 17% then it has dropped to $141 and still has a yield of 14.1%
A drop in yield accompanied by an increase in load factor would equate to an increase in profit,
Now, if the revenue dropped by 17% with a similar drop in costs then AIR would make a loss.

[Beagle]

Too much focus on yield and especially the change from Feb stat's to March stat's.
But before we move away from that let's pose the question of why the change for that month. March 2015 N.Z. and Aust hosted the Cricket World cup and loads were unusually high for that month at 87.5%because of that. Naturally with higher loadings and many pax needing to travel on defined dates they were able to extract premium pricing in March 2015.

Now lets zoom out a little and look at the first half, impact on yield compression as it compared to pax revenue growth.
YTD yields for the first half to 31 Dec 2015 were down 1.1%. Pax revenue growth was $281m less yield compression of $49m gives net pax revenue growth of $247m
This on RPK (revenue passanger kilometres) growth of 17%.

Now let's look at CASK.
CASK (Cost per available seat kilometre) was down from 10.87 cpk to 9.44 cpk down 11% on an average oil price of $60 barrel and average exchange rate of 65 cents U.S.
(Oil is materially lower than this now and the exchange rate materially better)

Now lets compare all this to the latest YTD data.
YTD yields were down 1.2%,, (compared to 1.1% in the first half, hardly changed, (in fact probably not changed at all given more growth in long haul v short haul over the summer season) so no great momentous falling off a cliff on a network wide basis at some have incorrectly said, in fact barely changed despite extremely low fuel prices, which are far lower than those prevailing even as recently as the first half of this financial year. RPK growth 14.3%. No doubt substaintial further reduction in CASK this half.

Now lets look at the numbers for last half in terms of operating efficiencies.
Other points worth noting from the most recent analyst presentation at the time of the half year results announcement in Feb 2016 :-
Reduction in CASK delivered $227m in value and efficiencies from growth, fleet simplification e.t.c delivered $106m in value

Conclusion.
While everyone is well and truly entitled to their own opinion I feel based on the big picture the market has misinterpreted the March operating stat's and misinterpreted the seriousness of QAN's very slight rejigging of capacity. Many people seem to be inferring a substaintial fall off in yields and passanger demand and the operating stat's simply don't back that up.

Helpful Suggestion
Some people need to spend more time reading annual reports and analyst presentations and increasing their knowledge of the company before leaping to misguided conclusions.

[skid]

The main reason for the price drop IMO is because of the Quantas drop off combined with the sheeple effect. Air is a much better business than Quantas in so many ways, in fact if it wasn't for the low oil prices they would still be deeply in the red, not to mention they pay no dividends and are not likely to. Expecting a good full year divvy from Air plus a special.

As human beings ,we are always going to look for a reason,and should.(dreaming about $4 SP may be good for the spirit,but...) so here goes ,to me there are several factors--It all started with the Virgin air problem,that ,to me is when the doubt started to creep in,then a few anomalies in the figures(still stellar?) -Quantas takes a dive(obviously not good as those things inevitably rub off(remember market sentiment does not follow the hard set rules of mathematics and accounting) Then came management selling and the disastrous timing.
They may be just cashing in on some deserved income ,but if the Virgin thing is a bit of a dark cloud,they can sell with no conflict of interest(unless something has been finalized and they know about it) If they dont like where thats going ,there is no reason they cant sell,but in terms of the company and shareholders they could have handled it better.
Sheeple?.......well lets just say that ironically, I think that a poster named Baa Baa has got the best handle on that whole scenario.

PS--United code shares so I can understand that statement. But American Airlines having no affect on the mix with their cheaper prices and nice planes--dont agree with that.