AIR - Air NZ.

[modandm]

Looks like it might be on the way up ..SP at 1.11, 1.12 and 1.13. Yee ha.

A strong move upwards in the SP over the past week - the shareprice has risen from lows around 1.06 to last trade at 1.16 today.

The May operating stats are due and I expect better than expected figures after Sydney and Melbourne had bumper months of May.

Key data I am looking for:
- Domestic Demand (RSK) to reverse a trend and post yoy growth over 8% (last 7.0%)
- Tas/Pac Demand (RSK) yoy growth to return to pre-quake levels (around 13%) from last 9.8%

Most importantly
- Asia Japan RSK growth yoy to -6%. Was -15% in March and -10.8% in April

And yield-wise - Group yields need to rise to 2%. Last was 1.2% vs 2.4% Dec-Feb
- Shorthaul needs to stabilise as -2%
- Longhaul needs to get back above 5% last 4.3%

[modandm]

Looking at NZ's strategy it is becoming increasingly aggressive towards competitors (particularly Trans-Tasman).

The movement to seats to suit is stealing market share from Emirates and Jetstar who have traditionally picked up the lower yielding pax. With the Alliance coming into force and greater frequency and even new TT routes (AKL-HBA/CBR most likely) AIR is well placed.

I believe it is Jetstar that will most be affected as Emirates is a quality long haul full service product and should be able to maintain pricing levels even with Air NZ priced slightly lower. Loads though are likely to be affected somewhat. Jetstar on the other hand needs to price at least 25% below Air NZ and will really struggle with both loads and basement yields as perception of the carrier worsens.

[BIRMANBOY]

Thanks for your posts modandm..good to get some inside info from someone who obviously does some research..as opposed to lazy buggers like me!

Looking at NZ's strategy it is becoming increasingly aggressive towards competitors (particularly Trans-Tasman).

The movement to seats to suit is stealing market share from Emirates and Jetstar who have traditionally picked up the lower yielding pax. With the Alliance coming into force and greater frequency and even new TT routes (AKL-HBA/CBR most likely) AIR is well placed.

I believe it is Jetstar that will most be affected as Emirates is a quality long haul full service product and should be able to maintain pricing levels even with Air NZ priced slightly lower. Loads though are likely to be affected somewhat. Jetstar on the other hand needs to price at least 25% below Air NZ and will really struggle with both loads and basement yields as perception of the carrier worsens.

[modandm]

The May operating stats are due and I expect better than expected figures after Sydney and Melbourne had bumper months of May.

http://www.smh.com.au/business/airpo...620-1gam6.html

fair use copy: from June 20

In figures released today, Melbourne airport reported an 18.5 per cent increase on May last year in the number of international passengers to 490,306, while Sydney Airport posted a 7.8 per cent gain on the same month last year to 853,000.

According to Melbourne Airport...traditional markets also continued to grow with New Zealand increasing by 15.8 per cent

[modandm]

May has the lowest number of international visitors per month in the year. With less than 150k arrivals to NZ and 892k pax on AIR. November to Feb sees over 200-300k arrivals and 1-1.3mill pax on AIR.
As such figures for May are probably less important than other months and load factors are lower than usual as capacity remains at base levels.

Review of stats: 1st figure actual, 2nd figure expectations
(all figures are growth and my expectations are based on prior months)

Total pax - 1% vs 4-5% BAD
SH pax - 2.5% vs 6% BAD

Domestic - 3.4% vs 7% POOR
Tasman/Pacific - 4.4% vs 8% BAD

LH pax - -9.5% vs -4% POOR
UK/North America - (4%) vs 3% POOR

Asia ex Japan - 4.5% vs 4% OK
Asia inc Japan - (13.3) vs (13%) POOR

Group yields - 1.4% vs 1.2% GOOD
SH yields - (2.6%) vs (3%) GOOD
LH yields - 4.3% vs 4.3% OK

Commentary:
Overall 3.5/10 quite disappointing. My forecast for May was too optimistic on nearly every measure. Below average growth domestic and SH (though still growth). Poor performance on UK/North America - the first negative growth month in over a year and well short of expectations. Asian demand is looking good (ex Japan). Japan's improvement is still clearly quite slow - looks to be steady from April (though this is an informed guess). Load factors to Asia were unacceptably low in May.

Yields were ok though - so NZ may not have been discounting enough IMHO. Groupwide yield was up 1.4% which is an improvement and short haul yields are firming at -2.5% (were as bad as -3.2%) - these reflecting seats to suit.

Singjet was $126 and WTI was $98 for May (approx)

Bring on the World Cup I say.

[Anonymous]

Just a thought but AIR must have done very well out of Qantas not flying lately. I have had to move both freight and pax onto NZ at a considerable cost premium. (My travel agent said he issued me the most expensive one way fare in his career on Friday). I cant be the only one in this boat. Now I have to start the fight with the insurance coy to get this back...

[modandm]

Just a thought but AIR must have done very well out of Qantas not flying lately. I have had to move both freight and pax onto NZ at a considerable cost premium. (My travel agent said he issued me the most expensive one way fare in his career on Friday). I cant be the only one in this boat. Now I have to start the fight with the insurance coy to get this back...

Exactly right here. AIR will have had a very nice June. Lots of full transtasman flights and many paying upwards of $500 one way. Some even $1000+ one way. Thats about 3-5x the normal fare. NZ ran a 747 over the weekend to sydney aswell due to demand.

Even with the extra fuel costs - the ash cloud will likely have a financial and reputation benifits for air nz

Sadly some can't afford the premium and weddings are being missed etc so its not something to trumpet to much.

[Anonymous]

Even with the extra fuel costs - the ash cloud will likely have a financial and reputation benifits for air nz

Certainly agree on the reputation benefits. As a platinum qantas FF I haven't had much chance to use Air NZ but I was massively impressed with the way AIR handled out situation and I am bitterly upset with Qantas's attitude with this ash cloud to the point that I am considering foregoing my oneworld benefits and switching to star alliance.

[iceman]

Consider yourself lucky that you have options Anonymous. I've been stuck with 46 staff to fly domestically in Argentina with Aerolineas Argentinas for 4 days. No info communicated and no alternative options. Absolute chaos. Also have a Kiwi flying home who has ben stuck in Buenos Aires for 3 days. Looks like they (LAN) may get him on a plane on 28th, via Santiago, Easter Island, Tahiti, Sydney and then onto Auckland, instead of the normal Santiago-Auckland route. Can't wait for Air NZ to start flying to South America !

Certainly agree on the reputation benefits. As a platinum qantas FF I haven't had much chance to use Air NZ but I was massively impressed with the way AIR handled out situation and I am bitterly upset with Qantas's attitude with this ash cloud to the point that I am considering foregoing my oneworld benefits and switching to star alliance.

[Anonymous]

Its because of South America that I have stuck with oneworld as star alliance have very little market share there. I've had people stuck trying to go both ways between here and Chile over the last weeks. LAN scheduled to resume normal service on the SCL-AKL leg on 3rd July, ash permitting, (which means first return flight on 5th). AR are a joke of an airline and who knows what they are up to. Had someone stuck in Papeete for a few days trying to jump on the alternative route you mentioned. Got a pile of freight racking up... Is definitely chaos.