AIR - Air NZ.

[troyvdh]

Not intending to be downer...I fly a bit...My preference for long haul...probably last choice of airline would be AIR...one reason albeit trivial..they serve tap water..chlorine....does anyone else agree ?..very humid in Washington.

[King1212]

Not intending to be downer...I fly a bit...My preference for long haul...probably last choice of airline would be AIR...one reason albeit trivial..they serve tap water..chlorine....does anyone else agree ?..very humid in Washington.

Does not matter tap water..i prefer to drink it so long they made profit and keep up with the juicy dividend

[brend]

10.84m shares - broker tells me local selling and offshore institutions (attracted by the unbelievable yield) hovering up the stock.

That's why the sp started going up when the overseas institutions started buying this morning.

well I was hovering up some at 2.17

[Beagle]

Airlines are high risk for sure BP. You bought during the worst effects of the GFC so well done to you but assuming there's another GFC coming and waiting till then presupposes you have a better home for your cash now.
I think a forward PE of 5.8 in this new competitive environment speaks for itself and more than compensates investors for the risk involved but each to their own and in this stretched market if you find better value then I think you'd be doing extremely well. The forward dividend yield of 14.6% gross is exceptional. I will do some work later on net capex for the foreseeable future, (remember net capex is only what they expend after normal depreciation).

Yes Balance, on a balanced view of risks and rewards I can certainly understand insto's switching from QAN to AIR. (Chinese carrier growth into Australia is 50% for FY17) so AIR by no means the only ones subject to increasing competition and QAN said as much in their outlook statement wherein they refused to give forward guidance.

[Balance]

Have a look at THL - got sold down when it reported. Now up nearly 10% from the closing price on day of announcement.

Point being that it is important not to let the sp determine your view but let your view determine if you are going to buy or sell (or hold) based upon the results and what the company is likely to deliver vs other stocks in the market.

I can live with AIR delivering 35c fully imputed dividend and an ex-dividend share price yielding in excess of 10%.

[Beagle]

Air management in the call emphasized that the next major round of capex isn't till at least mid next decade so lets call it 2025.

Looking at their scheduled capex as provided in the graph in their analysts presentation of a total of $2.1b in the next 5 years we see capex scheduled as follows:- (estimated based on graph representation),
2017 $660m Est Depn $500m Net Capex $160m
2018 $700m Est Depn $520m Net Capex $180m
2019 $570m Est Depn $540m Net Capex $30m
2020 $150m Est Depn $560m Net Capex $(410m)
2021 $30 m Est Depn $560m Net Capex $(530m)

2022 - 2024 based on what management said to analysts should be years of similar net negative capex as 2021.

Perhaps now people can see the tremendous free cash flow potential that the CFO Rob McDonald was talking about later in this decade and into the next.

[workingdad]

Air management in the call emphasized that the next major round of capex isn't till at least mid next decade so lets call it 2025.

Looking at their scheduled capex as provided in the graph in their analysts presentation of a total of $2.1b in the next 5 years we see capex scheduled as follows:- (estimated based on graph representation),
2017 $660m Est Depn $500m Net Capex $160m
2018 $700m Est Depn $520m Net Capex $180m
2019 $570m Est Depn $540m Net Capex $30m
2020 $150m Est Depn $560m Net Capex $(410m)
2021 $30 m Est Depn $560m Net Capex $(530m)

2022 - 2024 based on what management said to analysts should be years of similar net negative capex as 2021.

Perhaps now people can see the tremendous free cash flow potential that the CFO Rob McDonald was talking about later in this decade and into the next.

I also quite like the graph showing ownership versus leased planes and how ownership has been improving over the years. Some of this capex will be offset by reduced leases.

More I read the more I am content with the management of AIR. I think their forecast is in line with expectations and factors in considerable competition impact given the tailwinds of other areas.

Now a long term holder as well and comfortable parking them in the drawer and taking the divvies.

[Beagle]

Interesting difference in accounting treatment between QAN and AIR, (first of what will be many observations as and when I get time).
QAN announced a $75m bonus for employees for FY16, (those that had been subject to the 3 year wage freeze) but will take that as an extraordinary item outside normal operating costs in the FY17 year
AIR announced a $20.5m bonus for its employees, (most of whom have had regular 2% per annum inflation increases each year) and expensed that cost as a normal operating cost in FY16, (being paid next week)

Spot the company that's disingenuously reporting employee bonus payments.

[RupertBear]

10.84m shares - broker tells me local selling and offshore institutions (attracted by the unbelievable yield) hovering up the stock.

That's why the sp started going up when the overseas institutions started buying this morning.

But who is selling and why now?

[BlackPeter]

But who is selling and why now?

One reason for the sellers might be that the result was (despite being rather spectacular) below analyst expectations. Analyst consensus for EPS was 54,4 cts / share, but they delivered only 41 cts. Big gap. Revenue was as well somewhat lower than expected by analysts ... and the dark clouds for the future are now clearly on the horizon. Obviously - nobody knows whether this will be just a rainy day, or a tornado. Management seems to point to option 1.

I assume that some of the sellers are concerned that the ex dividend in early September might trigger a larger (than the 35 cents) drop. Are they correct? We will see.