AIR - Air NZ.

[Xerof]

Insto's that have made a decision to exit large positions need 'liquidity events' to assist with decent supportive volume. Today was such an event. On top of that, the bad news is always at the back of the announcement, so start on the back page - outlook.

discl: holding most of original purchases - partial selldown @ $2.29 some days ago

[couta1]

Volume today of 14,098,409 shares with a VWAP slightly under $2.21 !

AIR has not seen such as this since the government sell down in November 2013.

I see this has a grand battle between the short-term buyers who read the dividend bit and the those with longer time frames who read all the information.

Best Wishes
Paper Tiger

Disc: I will definitely be issuing a downgrade when I have the time.

Your post is tainted by your long held belief that one should fly with an airline not buy an airline and therefore should be taken with a pinch of catnip. PS-Many of us have read both the dividend bit and the whole report and have longer time frames. PPS-Instos be selling and Instos be buying.

[workingdad]

Insto's that have made a decision to exit large positions need 'liquidity events' to assist with decent supportive volume. Today was such an event. On top of that, the bad news is always at the back of the announcement, so start on the back page - outlook.

discl: holding most of original purchases - partial selldown @ $2.29 some days ago

At some stage they will run out.... should sit down and see how many shares have been traded versus total issued shares over the last few months.... If the govt holds 52 % odd be interesting to see how many times the remainder could have been traded but eventually those wanting leaving the room will be finished and those of us left can relax haha.

[Snow Leopard]

Your post is tainted by your long held belief that one should fly with an airline not buy an airline and therefore should be taken with a pinch of catnip. PS-Many of us have read both the dividend bit and the whole report and have longer time frames. PPS-Instos be selling and Instos be buying.

Yes my posts reflect my biases, both positive and negative, as do your posts reflect your biases and everybody elses posts reflect their biases.

In 2015 (it seems so long ago now) I set out to determine whether my bias about airline investment stood up to scrunity and through friends in the banking industry got to discuss the airline industry and analysis thereof with professionals. I came away with more knowledge and my basic opinion unchanged:

Airlines are not a good long term investment.

That is one of my biases and I am currently happy to stick with it.
Strangely I think subsequent events have proved me right, and the fact that AIRs own outlook is apparently even more negative than mine means I will have to change my valuation.

Other biases I hold include that averaging down is a poor strategy and having a significant percentage of ones investments in a deeply cyclical stock is an even poorer one.

Best Wishes
Paper Tiger

[Raz]

I think some guru analysts have been doing a bit of half year v half year analysis (especially seeing what's happened in H216) and reality checking some of AIRs numbers on their outlook slides.

Conclusion - F17 profitability is totally dependent on fuel costs, growing the top line might be a more difficult task

I think you have a point there winner69.

[percy]

Yes my posts reflect my biases, both positive and negative, as do your posts reflect your biases and everybody elses posts reflect their biases.

In 2015 (it seems so long ago now) I set out to determine whether my bias about airline investment stood up to scrunity and through friends in the banking industry got to discuss the airline industry and analysis thereof with professionals. I came away with more knowledge and my basic opinion unchanged:

Airlines are not a good long term investment.

That is one of my biases and I am currently happy to stick with it.
Strangely I think subsequent events have proved me right, and the fact that AIRs own outlook is apparently even more negative than mine means I will have to change my valuation.

Other biases I hold include that averaging down is a poor strategy and having a significant percentage of ones investments in a deeply cyclical stock is an even poorer one.

Best Wishes
Paper Tiger

Great post.
Thanks for the sage advice.

[fish]

Yes my posts reflect my biases, both positive and negative, as do your posts reflect your biases and everybody elses posts reflect their biases.

In 2015 (it seems so long ago now) I set out to determine whether my bias about airline investment stood up to scrunity and through friends in the banking industry got to discuss the airline industry and analysis thereof with professionals. I came away with more knowledge and my basic opinion unchanged:

Airlines are not a good long term investment.

That is one of my biases and I am currently happy to stick with it.
Strangely I think subsequent events have proved me right, and the fact that AIRs own outlook is apparently even more negative than mine means I will have to change my valuation.

Other biases I hold include that averaging down is a poor strategy and having a significant percentage of ones investments in a deeply cyclical stock is an even poorer one.

Best Wishes
Paper Tiger

Very wise.
But what about as part of a balanced portfolio.
For instance if one held air,nzo,gne,fph,and a retirement village stock,banking .
If oil goes down air goes up and nzo goes down.
We are all going to use electricity-probably more if the population grows and electric cars become mandatory-at least in cities.
We are all going to age and many will be obese and require FPH patented CPAP innovations.
Banks in Australasia make high profits and are low risk

[Beagle]

Volume today of 14,098,409 shares with a VWAP slightly under $2.21 !

AIR has not seen such as this since the government sell down in November 2013.

I see this has a grand battle between the short-term buyers who read the dividend bit and the those with longer time frames who read all the information.

Best Wishes
Paper Tiger

Disc: I will definitely be issuing a downgrade when I have the time.

You imply that many buyers are only interested in the forthcoming dividend and not looking at the longer term story. Nothing could be further from the truth. I think many people have considered the long term story and very few are persuaded by the large short term dividend, (as nice as that is). Sustainable dividend yield going forward of as much as 14.6% gross is something that might influence many people. I spent most of yesterday looking at the longer term story and gleaning information from the reports, financials and listening in to the conference call. You imply that you have some special insights into the industry that even Chris Luxon and Rob McDonald don't have...based on what ? from you studies since 2015...whatever...

I am 100% certain senior management know a lot more about the airline than you do and am more than comfortable with the long term outlook of this well managed company. A PE of 5.8 based on the mid point of the 2017 forecast more than compensates people for the risk. Many holders are sick of your long term bias against AIR, myself included.

Management are highly regarded in business circles with Rob McDonald for instance winning CFO of the year award at last year's Deloitte top 200 business awards. Tony Carter won Director of the year at the same awards. You don't find people of this calibre easily.

I think there's a place in a well diversified portfolio for AIR. The current management team have executed their strategy extremely well and have dug the company out of the deeply embedded fiasco that is Virgin Australia. They delivered on the promised guidance of over $800m before tax and extraordinary items, (without having to revise it first up and then down three times like for instance Skellerup) and in the same year extricated the company from potentially extremely damaging issues like the cargo cartel case as well as ostensibly extricating themselves from the legacy issue of what was an extremely troubled and in my view systemically flawed operation at Virgin.

Further, they have paid out the full proceeds of the Virgin sale, as I suggested months ago, so they have to run a disciplined growth strategy going forward which hopefully discourages any more fishing expeditions of overseas associate companies.

Nobody seems to have considered that next years earnings of $500m at the mid point of the forecast range is effectively from as asset base that's 20% smaller, ($1.76 NTA as at 30 June 2016 less 35 cps dividends to be paid) = $1.41 NTA so in effect generating that level of profitability from a reduced asset base is a pretty good outlook for the year ahead and as you would have observed if you'd bothered to listen into the conference call FY17 forecast profit if achieved will be the second or third highest profit in the companies 76 year history. Simply put, if people chose to reinvest their 35 cent dividend in the airline they'll be enjoying a much larger share of the $500m pie next year and beyond and that must be a relevant factor in any analysis of future returns.

In conclusion, well done to the team at AIR for a job done extremely well ! I am sure they will keep up the good work in 2017 and beyond. Any valuation you put on the company based on your "extensive analysis" since 2015 is of no interest to this hound who feels very confident in his own ability to sniff out a high quality, good value investment based on vastly more research than since 2015.

AIR is cheap relative to its international peers whatever metric you use and I for one think its at least as well managed, probably considerably better than most.

[percy]

The result was fantastic.
The business is very well run.
For any one looking to invest in AIR it a must read.[And a couple of rereads].
The outlook is sober.
Whether it makes a small part of one's portfolio is for each of us to decide.
However it appears to me that being overweight in AIR is very risky.

[Master98]

Latest Morningstar Recommendation $2.6 Accumulate:

2017 for Air New Zealand Will Be Well Down on 2016’s Peak Cycle Earnings, but It Will Still Be Solid
Air New Zealand reported net profit after tax for fiscal 2016 of NZD 463 million, up 42% on 2015. Underlying NPBT was NZD 806 million, up 70% on 2015. A final fully imputed dividend of NZD 0.10 per share was declared, to total NZD 0.20 for the year, with a surprise fully imputed special dividend of NZD 0.25.

Over the past four years, the firm has focused on improving the customer experience, from aircraft through to improving service and technologies, upgrading lounges, and enhancing its loyalty programme. Its seat capacity management is more flexible, optimising revenue, and every route is profitable. Fleet simplification, focusing on new fuel-efficient technologically advanced aircraft, has led to fuel, operational, and maintenance savings. The company focused on capital management, with pretax ROIC of 22% in 2016. Although 2016 will herald the peak in this cycle, we view the firm as well placed to manage a return to more competitive market conditions, with six new airlines having commenced services to Auckland in the past six months. By 2019, it will complete a six-year NZD 4.8 billion aircraft capital expenditure programme, leading to an average fleet age of less than seven years, with no major spend until the mid-2020s.

Management guided to underlying NPBT of NZD 400 million-NZD 600 million in 2017. We now forecast 2017 underlying NPBT of NZD 532 million, down 34% on 2016, and NZD 419 million in 2018. Gearing ended 2016 at 49%, well within the 45%-55% target. Although we forecast lower operating profits over the next few years, lower capital expenditure should enable the company to pay out a sustainable dividend of AUD 0.20 per year through the cycle. We revise our fair value estimate to NZD 2.60 per share (from NZD 2.80). At the current price of NZD 2.25, the shares are around 15% undervalued. We reaffirm our no-moat and high uncertainty ratings, reflecting the competitive cyclical nature of the airline industry and its sensitivity to external factors.