AIR - Air NZ.

[Beagle]

I think the beauty of these joint venture deals and in particular with respect to United airlines and their marketing clout is (based on my understanding of them as explained by Chris Luxon at the 2014 annual meeting) that effectively it doesn't matter which metal the customer flies on AIR still gets the same profit / revenue from the customer's experience. As bizarre as this sounds it simply doesn't matter how the customer differentiates between the two airlines their choice is completely revenue neutral to AIR N.Z. I think this is attractive for N.Z. customers / shareholders in two respects. Firstly this is the first Dreamliner experience to the U.S. which directly benefits AIR as a company and secondly looking at the seat capacity of the aircraft prima facie it would appear they are offering a quality seating configuration. The real nexus of this deal though is that this enables AIR to vertically integrate their marketing and promotional efforts to American customers and allows AIR to effectively take advantage of a seamless marketing initiatives aimed directly at United's substantial customer database.

[sb9]

Strong bids currently at 209-211 range...may be some funds trying to accumulate now that FY 16 is done and dusted.

[Beagle]

Strong bids currently at 209-211 range...may be some funds trying to accumulate now that FY 16 is done and dusted.

Ya all know I'm still annoyed at management regarding share sales just before the so called investor day but putting that aside you'd have to say on the face of it AIR's management team have done a good solid job this last year.
Firstly they're still on track to deliver an all time record profit, only some of which can be attributed to low fuel prices because clearly yields have been affected as other airlines have discounted.
Secondly they've cleaned up some ugly messes brought about by previous management / directors. Most importantly they've ostensibly extricated themselves from a woefully underperforming Virgin and perhaps almost as importantly have made the move towards eliminating a legal risk that has it roots over ten years ago with the cargo cartel case in America. Importantly despite a softer economy in the second half they've maintained aircraft loads very well at close to all time record level's and grown the airline strongly while doing so. The SP reaction given the facts of what's been achieved this last financial year looks like a pretty big over-reaction to me.

Of course the big question is how competition affects profitability in FY17 and beyond. Clearly the market is taking a dim view of this but I remain of the view that the overall size of the pie, (inbound and outbound travel is growing strongly) and the cheaper cost of travel with lower oil prices and more efficient planes provides a broadly supportive environment to fill the extra capacity announced to date by both AIR and other airlines coming here. I'm not expecting a bloodbath effect on profitability for FY17 from the extra competition and the company isn't either.

I think effectivly trading cum a very strong fully imputed final and special dividend the shares are a good hold at the current price.

P.S. Another achievement for FY16 was getting agreement regarding the repayment of the unsecured shareholder loan they had to advance VAH in March 2016, $A131m. By supporting the forthcoming cash issue, which admittedly will involve a $21.3m investment in VAH in regard to their remaining 2.5% stake, (I assume they still have the 2.5% stake but its anyone's guess as the SP of VAH has come in for a savage correction lately so maybe AIR have been selling part of that residual stake on market ?), they have put in place the process whereby they will be repaid that unsecured loan, so a net $A109.7m will be forthcoming once the VAH 1:1 cash issue is settled. I would venture to speculate that if they hadn't of supported VAH with that unsecured loan in March their chances of achieving a reasonable outcome in respect of the sale of their shares in VAH would have been materially compromised. Good solid work all round in my opinion. Check out the SP's of Delta, American airlines and QAN, AIR not the only one to cop a real beating in recent months !

AIR Directors / management could do better (hence my 7/10 score), by:-
1. Reviewing their restricted persons share trading policy in a manner I suggested earlier in this thread
2. Allowing all interested shareholders to attend future investor days so its actually an investor day not an institutional and analyst briefing day.
3. Considering a shareholder travel privilege card in much the same light as Comvita who give 20% discount on products through selected retail stores. It is well known that directors, management and staff all enjoy considerable travel perks even after they have left the employ of AIR, why not shareholders who are after all the owners of the company ? (This is an issue I will raise at the next annual meeting).

[stoploss]

RE POINT 3 ,
yes please Roger , agitate on my behalf , need some proxies ???
Cheers

S/L

[Kiwi]

Stir them up for me as well please.
We should have been getting a better deal on flights as shareholders long ago.

[Gizzajob I can do that]

Every man and his dog would run out and buy a 100 shares to get a 20% discount, not good for my divys

[macduffy]

Good luck with that, guys. But aren't shareholder perks considered a bit old hat these days?

(Remembering, fondly, the goodies handed out at BIL AGM's. Still have some nice INL wine glasses, umbrella from another year hasn't lasted the distance!).

[Beagle]

I think from a practical perspective it would work okay if there was a meaningful shareholding. What's meaningful ? I'd suggest at the risk of upsetting smaller shareholders that a stake of 10,000 shares or more would limit the freeloaders owning for no other reason that getting the discount. In terms of it being old hat, I'm not so sure about that.

[Balance]

Talked to a dealer at one of the broking houses over lunch - he said that there was a lot of tax loss selling from Australia leading to 30 June this year.

He himself now expects the sp to recover as the tax selling is now out of the way and as several posters have pointed out, Air NZ trades at an undemanding multiple (whatever the heck that means), provides an excellent dividend yield at the current level with the potential for a special dividend - few stocks around like that.

[sb9]

Talked to a dealer at one of the broking houses over lunch - he said that there was a lot of tax loss selling from Australia leading to 30 June this year.

He himself now expects the sp to recover as the tax selling is now out of the way and as several posters have pointed out, Air NZ trades at an undemanding multiple (whatever the heck that means), provides an excellent dividend yield at the current level with the potential for a special dividend - few stocks around like that.

Thanks for that input Balance. It looks as though the current price level has found good support by the looks, but who knows it might all change pretty quickly. One thing sure though yield looks pretty attractive at current price level!!!