AIR - Air NZ.

[Baddarcy]

Is it just me, or does the cost to upgrade the planes seem really expensive?

10 planes for a total of $100m. I know the seat configuration is changing but using current numbers with the 777-300 having 344 seats and 787 with 302 seats works out at a total of 3230 seats all up......3230 / $100m equals approx $31,000 per seat.

"Air New Zealand will spend $100 million upgrading its premium seat offering.

The national carrier said on Monday night that it would spend the money on increasing the number of premium seats on its Boeing 787-9 Dreamliners and refurbishing its Boeing 777-300 fleet in response to customer trends.

That investment meant the three Dreamliners scheduled to be delivered from October 2017 will already have the new cabin layout, boosting the number of business premier seats from 18 to 27 and premium economy seats from 21 to 33.

From February of next year, the carrier's entire Boeing 777-300 fleet will enter into the refurbishment programme which will include an inflight entertainment upgrade to match that available in the Dreamliners and an interior overhaul."

[Beagle]

Is it just me, or does the cost to upgrade the planes seem really expensive?


From February of next year, the carrier's entire Boeing 777-300 fleet will enter into the refurbishment programme which will include an inflight entertainment upgrade to match that available in the Dreamliners and an interior overhaul."

They will roll out the inflight entertainment upgrade and interior refurbishment throughout the planes not just in the premium section. Space seats take up to much errrr...space.

[couta1]

I will be very interested to watch and see where the SP gets to after the result and before going Ex, assuming a 20c total divvy, one would hope the price would climb to around the $2.40 ish mark. Anything much below that could mean a low $2 post Ex price IMO given the volatile and unpredictable nature of the stock. Disc-Adding more to my XOS holding this week to get my average down to $2.30 or below.

[mikeybycrikey]

After reading through some of the posts this morning about the changes to Prem Econ and Bus, and the removal of the space seat, I was looking at the AIR web site and reading about the Prem Econ offering.

The only time that I have flown Prem Econ it was in the SpaceSeat and it felt like something special. Even the pictures on the web make it look like something futuristic. The 787 and 777-200 Prem Econ seat just look like what everyone wants Economy to actually be. That is: seats with enough space.

I guess they know what they are doing.

[Beagle]

After reading through some of the posts this morning about the changes to Prem Econ and Bus, and the removal of the space seat, I was looking at the AIR web site and reading about the Prem Econ offering.

The only time that I have flown Prem Econ it was in the SpaceSeat and it felt like something special. Even the pictures on the web make it look like something futuristic. The 787 and 777-200 Prem Econ seat just look like what everyone wants Economy to actually be. That is: seats with enough space.

I guess they know what they are doing.

Agree with you although I wish I'd had the pleasure of using the spaceseat. At 18.5 inches width I wouldn't call AIR's "premium" economy anything premium if its in a regular configuration. Singapore airlines standard economy seat is 19 inches width. That's real premium economy although I would hasten to add they have a premium economy seat that's better again and really is premium economy....but like anything premium it comes at a price and you get what you pay for. Singapore airlines is never anywhere near the cheapest option.

[Raz]

After reading through some of the posts this morning about the changes to Prem Econ and Bus, and the removal of the space seat, I was looking at the AIR web site and reading about the Prem Econ offering.

The only time that I have flown Prem Econ it was in the SpaceSeat and it felt like something special. Even the pictures on the web make it look like something futuristic. The 787 and 777-200 Prem Econ seat just look like what everyone wants Economy to actually be. That is: seats with enough space.

I guess they know what they are doing.

The space seat in premium economy helped the brand gain the reputation for innovation and generated worldwide publicity however it was never economic as they mis-calculated the measurements for the capacity they had planned for...the result is back to the future for economic reasons...again customer comfort is not a consideration. It has been a continued theme for while now...the space seat is a nice seat..I liked it so much... that when on my dime I chose it over business class.

They also have a situation more people want prem. economy as a result of recognition upgrades available...

[Zaphod]

After reading through some of the posts this morning about the changes to Prem Econ and Bus, and the removal of the space seat, I was looking at the AIR web site and reading about the Prem Econ offering.

The only time that I have flown Prem Econ it was in the SpaceSeat and it felt like something special. Even the pictures on the web make it look like something futuristic. The 787 and 777-200 Prem Econ seat just look like what everyone wants Economy to actually be. That is: seats with enough space.

I guess they know what they are doing.

The new PE seat is a lot more comfortable than that which was offered pre-refit of the 772's. The Space Seat used on the 773’s has always been a polarising product, and with margins being negatively affected after additional seats were removed in order to resolve customer complaints about the product, so I'm not surprised it's being replaced. In terms of economics, the refit makes very good business sense.

The largest hard-product issue Air NZ face is the 3-4-3 Y configuration in the 772's and 773's. The configuration is extremely narrow both in terms of the seat and the aisle access and attracts many negative reviews. Many carriers are however adopting this configuration to maximise yields and reduce fares.

[Beagle]

The largest hard-product issue Air NZ face is the 3-4-3 Y configuration in the 772's and 773's. The configuration is extremely narrow both in terms of the seat and the aisle access and attracts many negative reviews. Many carriers are however adopting this configuration to maximise yields and reduce fares.

Trouble is Mr and Mrs Joe average and their kids want their dream trip to Disneyland for $999 return and then bleat like seals that their seating is not according to their dream and reality bites.

[Beagle]

So...after much hand wringing and head scratching about what to do with the funds I trimmed from CVT today I decided to increase my stake in AIR in the lead up to the result.

My instinct aligns with analyst expectations at this stage of net profit after tax of circa $400 for FY17 so EPS of approx. 36 cps and on a theoretical ex divvy price of $2.02, (2.22-0.20) looking through the forthcoming dividend, I'm basing my investment case on a forward PE of 5.6 times earnings. If they can achieve that when a range of new competitors are launching opening specials at our market then I think the company can build a base from here and I think I'm buying on a very realistic PE multiple. Management expect yield pressure to ease off in FY18, or so they said at the investor day briefing some months back. History suggests airlines discount heavily when they start new routes to build business and fill airplanes but launch specials from AIR's competitors don't usually last indefinitely.

From a straight out dividend hound perspective this was an absolute no brainer switch. For every CVT share I trimmed I have forgone a 2 cent final divvy and bought 4.5 shares in AIR x 20 cent expected divvy including the special = 90 cps. Just a "small" difference...45 times the amount of dividend ...(yes I realise this is a bit cheeky as one is not comparing annual dividends between the two companies excluding special).

[Raz]

So...after much hand wringing and head scratching about what to do with the funds I trimmed from CVT today I decided to increase my stake in AIR in the lead up to the result.

My instinct aligns with analyst expectations at this stage of net profit after tax of circa $400 for FY17 so EPS of approx. 36 cps and on a theoretical ex divvy price of $2.02, (2.22-0.20) looking through the forthcoming dividend, I'm basing my investment case on a forward PE of 5.6 times earnings. If they can achieve that when a range of new competitors are launching opening specials at our market then I think the company can build a base from here and I think I'm buying on a very realistic PE multiple. Management expect yield pressure to ease off in FY18, or so they said at the investor day briefing some months back. History suggests airlines discount heavily when they start new routes to build business and fill airplanes but launch specials from AIR's competitors don't usually last indefinitely.

From a straight out dividend hound perspective this was an absolute no brainer switch. For every CVT share I trimmed I have forgone a 2 cent final divvy and bought 4.5 shares in AIR x 20 cent expected divvy including the special = 90 cps. Just a "small" difference...45 times the amount of dividend ...(yes I realise this is a bit cheeky as one is not comparing annual dividends between the two companies excluding special).

Well its a question what do you call an openings special and how long they last, AUk-LAX currently is discounted by both through to the end of FY17...