AIR - Air NZ.

[iceman]

A good Shoeshine article on NBR today headlined "Cracks in Air NZ's image after Dreamliner debacle".

[Beagle]

I see Toyota N.Z. have overtaken them and are now the most trusted brand in N.Z. (AIR second). Seems like a fair enough assessment to me.

[iceman]

I see Toyota N.Z. have overtaken them and are now the most trusted brand in N.Z. (AIR second). Seems like a fair enough assessment to me.

But AIR is till the most trusted brand in Aussie according to Colmar Brunton :-)

[Beagle]

No question this is going to hurt the brand a little bit, (folks its well worth reading shoeshines article this morning for the full detail) and I have to concede I agree with what's been said in that report.

I think AIR have quite a problem with these engines going forward as the FAA have only said they will consider re-establishing 330 min ETOPS in due course if RR can sort this issue properly. I read this as RR have to really prove this engine is going to be safe and that proof will only be forthcoming with quite some volumes of air passing through those overhauled engines, (i.e. a fair passage of time with no further engine failures and no further cracking of compressor blades)
I suspect it will take quite some time for the FAA to grant re-approval if indeed it is forthcoming which is by no means a certainty.
As Benny suggested recently, this has the potential from an operational point of view to get a little ugly for AIR...

We all know how much customers hate having their schedules messed up. Whilst they might be forgiving once or perhaps even twice because people understand that engineering issues happen from time to time but if there's ongoing disruption over the months ahead AIR's reputation will take a collateral hit no question.

Its hard to figure that they will completely escape meaningful direct costs for something somewhere along the line in direct operational cost too.

Disc: I have reduced my stake this week as a portfolio risk management strategy. There are no dividends in the next few months and I see this stock as primarily a dividend yield investment at this sort of price. I think the potential for a SP correction is real.

The change in ETOPS rating and how these aircraft may have their wings clipped from an operational perspective is what concerns me the most going forward and oil being at its highest level in 4 years is an emerging possible headwind too. Headwinds starting to build ? You be the judge and DYOR.

[Filthy]

Disc: I have reduced my stake this week as a portfolio risk management strategy. There are no dividends in the next few months and I see this stock as primarily a dividend yield investment at this sort of price. I think the potential for a SP correction is real.

yep, ditto.

rising oil prices do not help either. all 'okay' for now (because everything is hedged short-term) but a bit of a future risk if it continues to head north prior to the next purchase period.

expecting SP to come under a bit of pressure, albeit it seems to be holding up pretty well this week! - maybe the market is not that bothered....

[winner69]

yep, ditto.

rising oil prices do not help either. all 'okay' for now (because everything is hedged short-term) but a bit of a future risk if it continues to head north prior to the next purchase period.

expecting SP to come under a bit of pressure, albeit it seems to be holding up pretty well this week! - maybe the market is not that bothered....

Filthy .....Yields and fuel prices are inextricably linked.

Number of ASKs and capacity the main drivers

[Benny1]

Think there are now at least 2 787's parked up.. With AIR scrambling to fit 'good' engines to which ever airframe they can to get something flying...
Reliability is a very big part of an airline's reputation ...that is something AIR needs to preserve as much as possible.
Oil price is an interesting proposition as far a I'm concerned.. Yes this can and probably will hit the bottom line quite hard, but it will also have an effect on every other airline flying to or within New Zealand.
New Zealand is seen as a 'long thin route' and as such can be an attractive place to fly to when your costs are relatively low, however as soon as your costs rise NZ can become quite unattractive quite quickly to alot of foreign airlines so thick could lead to a quite significant drop in services from these airlines.
Any reduced competition will of course benefit AIR.
AIR can only take advantage of this however if they actually have planes they can fly 😱
One thing though... Should make for some interesting questions at the Shareholders meeting.. Pity I'm not a shareholder... !

[777]

The only route that requires 330 mins ETOPs is Buenos Aires.

All the Asian routes can be done with 120 mins ETOPS.

That leaves the North American routes that can be done with 180 Mins. A reduction to 140 mins would be a restriction.

However not all the engines are affected so dedicated aircraft can be used for the Americas, North and South.

[Beagle]

Think there are now at least 2 787's parked up.. With AIR scrambling to fit 'good' engines to which ever airframe they can to get something flying...
Reliability is a very big part of an airline's reputation ...that is something AIR needs to preserve as much as possible.
Oil price is an interesting proposition as far a I'm concerned.. Yes this can and probably will hit the bottom line quite hard, but it will also have an effect on every other airline flying to or within New Zealand.
New Zealand is seen as a 'long thin route' and as such can be an attractive place to fly to when your costs are relatively low, however as soon as your costs rise NZ can become quite unattractive quite quickly to alot of foreign airlines so thick could lead to a quite significant drop in services from these airlines.
Any reduced competition will of course benefit AIR.
AIR can only take advantage of this however if they actually have planes they can fly ��
One thing though... Should make for some interesting questions at the Shareholders meeting.. Pity I'm not a shareholder... !

Thanks for the fleet update mate and you make some good points and I have always said that oil around $70 a barrel is probably the sweet spot for AIR as it discourages too many other airlines flying the long skinny routes here and at this price AIR get a good return on the capex of these 787's but a prerequisite to that was my assumption that these fancy new carbon fiber birds are reliable.

Thanks 777, they'll be using the new code 2 configuration (more premium economy and business class seating) 787's to North America which have the new ten variant Trent engine fitted so they should be okay, provided that variant proves to be durable, (only time will tell on that front). Hi Fly charter aircraft will be back, that's my prediction and with them more passenger discontent.

[Sideshow Bob]

I see Toyota N.Z. have overtaken them and are now the most trusted brand in N.Z. (AIR second). Seems like a fair enough assessment to me.

As an aside, Toyota are rapidly changing their 'model' which seems like they make a few more friends??

https://www.stuff.co.nz/business/102...rom-three-hubs