AIR - Air NZ.

[Raz]

I took my eye off the ball with this one.I havnt much margin-lending capital left to invest .
SP AIR is influenced by so many factors.
I only like too invest when I am confident sp is oversold and less chance of losing capital
Really wish I was in at this time.

It really depends on your position, I have money to burn as Trump is giving silly money from his company tax cuts..so this just as much a personal challenge of instincts for me, I expect good media traction and we will see...given the windfall above I can be more aggressive....

[see weed]

Fair enough Baa. Probably drunk on profits from A2 milk and gone back to my old stomping ground like a dog returning to its own vomit lol
Lets see how we go. Only dipped a paw in the water so can't get my fur burned too badly

That's a coincidence,I also jumped back in at 2.965c on Wednesday afternoon...Big div coming.

[Raz]

QAN and their old gas guzzlers and their ****e service outperformed AIR (financially if not operationally) by quite a margin in the last half year

• QAN earnings up 15% while AIR down or flat if that sounds better
• QAN RASK up 3.5% while AIR only up 2.0%
• QAN npbt Margin up 0.7% points to 12.3% while AIR margin down 1.1% points to 12.0%
• QAN management of fuel price increases FAR FAR better

No wonder QAN trades at higher multiples than AIR — deserves to on financial performance as well as the trans-Tasman ‘premium’ of being the main airline on the bigger ASX

compelling..not going to try to argue with that..

[Beagle]

QAN and their old gas guzzlers and their ****e service outperformed AIR (financially if not operationally) by quite a margin in the last half year

• QAN earnings up 15% while AIR down or flat if that sounds better AIR had quite a number of material challenges to deal with this half. The fuel supply mdisruption would undoubtedly have cost it many millions as fuel tankers had to deliver fuel around the clock to try and keep up with supply demands. The Rolls Royce issue would also have cost it probably tens of millions in direct and indirect costs, extra fuel for the leased in fuel guzzlers but one example
• QAN RASK up 3.5% while AIR only up 2.0% Accepted, RASK has underwhelmed me a bit
• QAN npbt Margin up 0.7% points to 12.3% while AIR margin down 1.1% points to 12.0% Fuel costs, RR engine disruption costs
• QAN management of fuel price increases FAR FAR better One swallow does not a summer make. You need to look at that issue over a number of years to draw that conclusion

No wonder QAN trades at higher multiples than AIR — deserves to on financial performance as well as the trans-Tasman ‘premium’ of being the main airline on the bigger ASX

QAN has always traded at a PE premium.
QAN were buying their own shares back for as much as $6.52, how is that in the best interests of shareholders ?
Compare their dividend yields mate and consider that we get to claim back full imputation credits.
Have a look at how little tax QAN are paying and you might find something quite interesting.

My position I took yesterday is a small one <3% of my portfolio. Its a calculated risk based on the very low PE of 8.5 the very good dividend yield of 10% gross, the potential for special dividends in the years ahead as well as this year and was taken because I am impressed with how well they've coped with a number of tough challenges to their business this year.
I think there's value at this level but each to their own.

[Raz]

That's a coincidence,I also jumped back in at 2.965c on Wednesday afternoon...Big div coming.

Can already collect that dividend...

[macduffy]

[QUOTEHave a look at how little tax QAN are paying and you might find something quite interesting.
][/QUOTE]

...... and, QAN gave notice recently that they will be paying "full" tax in the near future.

[Beagle]

[QUOTEHave a look at how little tax QAN are paying and you might find something quite interesting.
]

...... and, QAN gave notice recently that they will be paying "full" tax in the near future.[/QUOTE]

Bingo ! Almost every metric looks better when you're not paying tax because of a $2.8 Billion dollar loss in 2014 !
Tax losses as at 31/12/17 estimated by QAN to now be just $368m.
So now we finally have our answer to the difference in the PE ratio's between these two companies over recent years.
AIR has been paying full tax at 28%, QAN next to nothing.
All that changes when QAN starts paying tax again, assuming they don't incur another $2.8 Billion loss in the meantime.
Noodles you reading this ? Here's the answer to the question you asked me the other day.

[winner69]

...... and, QAN gave notice recently that they will be paying "full" tax in the near future.

Bingo ! Almost every metric looks better when you're not paying tax because of a $2.8 Billion dollar loss in 2014 !
Tax losses as at 31/12/17 estimated by QAN to now be just $368m.
So now we finally have our answer to the difference in the PE ratio's between these two companies over recent years.
AIR has been paying full tax at 28%, QAN next to nothing.
All that changes when QAN starts paying tax again, assuming they don't incur another $2.8 Billion loss in the meantime.
Noodles you reading this ? Here's the answer to the question you asked me the other day.[/QUOTE]

QAN PE will likely be higher when they start paying tax ...lower EPS and all that

And RASK doesn’t give a stuff if a company pays tax or not

Just saying mate

[Beagle]

And RASK doesn’t give a stuff if a company pays tax or not

For years we've wondered why QAN has traded on a higher PE, hard to believe neither you, I or anyone else picked up the fact that they haven't been paying much tax isn't it !
If you normalize their profit for the Aussie tax rate that solves that riddle and the PE's are ostensibly very similar.
We could debate minor variances in other metrics till the cows come home mate. Revenue per available seat kilometer will vary depending on FX changes, who's up gaging aircraft size or not, establishment of new routes or not e.t.c. For example AIR's RASK excl FX changes was 2.5% up last time I looked so a third of the difference is just in FX changes. Not a major variation between the two in RASK growth but I agree as noted above RASK did disappoint me a little for the first half.

My main point of buying back in is for the net yield of 7.3% and full imputation credits. AIR has vast quantities of imputation credits so all dividends including any specials in the years ahead will be fully imputed. The 10% gross yield is attractive to me + the distinct possibility of specials in the years ahead.
On the other hand QAN attaches no franking credits to its pretty miserable dividends and even if they did Kiwi's wouldn't be able to claim them back.

QAN were great buying, (for those with nerves of steel), at the deeply distressed level of $1 after their $2.8 Billion loss in 2014 but the horse has bolted and I for one won't be running after it. Quite apart for the tax headwind QAN now face, their 3 year wage freeze deal with the unions, (after the horrific loss) must have recently come to an end. You think there might be "just a little" pent up pressure building from Australian unions for their share of the success QAN has enjoyed in recent years ? Industrial trouble for QAN on the horizon ? QAN also have quite an old fleet by comparison so capex looms large as an issue going forward.

I might go for some more if I can nick them for under $3 cum the near term 11 cent divvy but its not going to be a big position for me, i.e. not a high conviction position like last time. SP seems about right at present all things considered...just a nice yield story and any specials will be the icing on the cake.

[Snow Leopard]

For years we've wondered why QAN has traded on a higher PE, hard to believe neither you, I or anyone else picked up the fact that they haven't been paying much tax isn't it !
If you normalize their profit for the Aussie tax rate that solves that riddle and the PE's are ostensibly very similar...

There are many reasons why Qantas and AIR trade on different PE's but the tax situation is not 'the one'

Accounts:
https://stocknessmonster.com/announc...asx-2A1066290/

read (at least) page 16

note the $250M tax expense

note the $607M statutory profit

check that the latter number is used in determining the EPS (and thus the PE).

Go read prior year's accounts and find same.


Best Wishes
Paper Tiger

Disc: I had a very nice lunch.