AIR - Air NZ.

[dobby41]

The aircraft need to either be flown or stored somewhere bone dry otherwise they become expensive jungle gyms quite quickly.

Alice Springs store a few.
I don't think there is a requirement for a 7 hr flight though - usually they take them up so the pilots can keep rated.

[Cyclical]

I used to be into model planes as a kid. Nothing that flash but I feel that guys pain.
Potender for shareholders pain in the near future ?

Speaking of aircraft models...crikey they have come a long way from the basic balsa wood ones I used to fly ! https://www.youtube.com/watch?v=pmEL...re=emb_rel_end

My story goes something like this, hard-working and saving kid who ploughed all his hard-earned dough into the sharemarket. Lost most of it in the 87 crash. Got the bug for radio controlled planes, crashed all that money into the ground (much like the stock market). Then got into motorbikes followed closely by cars...fortunately not crashed too many of either. Only in recent years have i got back into saving/investing properly. If only I'd stuck to the stocks and didn't have that model planes / bikes / cars / bit in the middle, I'd be a wealthy man!

[Beagle]

My story goes something like this, hard-working and saving kid who ploughed all his hard-earned dough into the sharemarket. Lost most of it in the 87 crash. Got the bug for radio controlled planes, crashed all that money into the ground (much like the stock market). Then got into motorbikes followed closely by cars...fortunately not crashed too many of either. Only in recent years have i got back into saving/investing properly. If only I'd stuck to the stocks and didn't have that model planes / bikes / cars / bit in the middle, I'd be a wealthy man!

Got to say that Airbus A400 model is absolutely incredible but 6 years to build it
Plan for tomorrow but enjoy each day as it comes, I reckon. A bloke needs at least one good hobby

[Jaa]

Air have started to draw down on the loan. They don’t have to officially announce when. It is reasonably common knowledge.

Thanks for this biker, I checked and you are correct. They started to draw down the loan in early September.

[Waltzing]

"New world these days ...financial models mean squat all "

they call it the fool at the table.

No ref to winner (n).

I am very grateful for the many who are not doing models. We wont trade a black holes but the many are welcome too.

[Beagle]

You don't need a model to understand that the company at its stated mid point of cash burn ($75m a month) and already drawing down on the Govt loan of $900m has about 12 months ($12 x $75m = $900m) of fuel in the tank and then it'll crash. I doubt they will let the fuel tank run too close to empty so a major capital raise is coming some time in the next 12 months, probably well before the 12 months is up.

I expect a tsunami of positive press releases about how domestic is recovering well and freight e.t.c. and whatever other positive spin the company can come up with to make things look as good as possible leading up to the capital raise, (probably before late February 2021 so investors won't realise how much money they're losing at present).

The important thing to focus on however is they cannot make money until they can undertake widespread international passenger services and there is the demand for them so the question is when will a safe and effective vaccine be widely available on a global basis ? Until that time they will burn a LOT of cash every month in my opinion.

[winner69]

You don't need a model to understand that the company at its stated mid point of cash burn ($75m a month) and already drawing down on the Govt loan of $900m has about 12 months ($12 x $75m = $900m) of fuel in the tank and then it'll crash. I doubt they will let the fuel tank run too close to empty so a major capital raise is coming some time in the next 12 months, probably well before the 12 months is up.

Great post beagle ...proof that it really is the story drives / evaluates value

Without a story any numbers in a spreadsheet / model are meaningless

[Heimand]

Thanks for your views guys (Beagle & winner69). Do you hold any AIR shares? From your posts, looks like you don't have any and don't like to enter until everyone in the planet received vaccine.

[BlackPeter]

Thanks for your views guys (Beagle & winner69). Do you hold any AIR shares? From your posts, looks like you don't have any and don't like to enter until everyone in the planet received vaccine.

Well, from my perspective there would not be the need to wait until everybody received a vaccine (because this won't happen anyway). It would be absolutely sufficient if AIR would have a secured (i.e. funded) plan to survive the ongoing baisse - and obviously if the market cap is a realistic representation of the money the company will be able to make over the next decade or so.

At this stage their survival is in my view dependant on a significant capital raise (i.e. terrible dilution of existing S/H) within the next 6 months or so and the future earning potential of the Airline is unclear, making it difficult to put a value on it.

When will they be back to pre-Covid business - in three years? in five years? never?
How will their future revenues look in a populist landscape (my country first ... no need to travel to foreign shores)?
How will their future revenues look in times of climate change and flight shame?
How will their margins look in times where used planes are cheap as chips and desperate (redundant) pilots prepared to fly for a handful of peanuts?

If & when you have answers to above questions and the numbers stack up, then it is a great time to invest into AIR ...


BTW - yesterday in the German news ... Lufthansa plans more pilot redundancies for 2021 but their financial bleeding continues. Sounds familiar?

[Hoop]

Thanks for your views guys (Beagle & winner69). Do you hold any AIR shares? From your posts, looks like you don't have any and don't like to enter until everyone in the planet received vaccine.

Air NZ like all cyclical stocks are greatly affected by economic change both up or down so for the investor they can be your best friend or your worst nightmare..A question Heimand..why would you spend lots of money just to experience a really bad nightmare..eh?

Also something else which may or may not be relevant this time around, recessions in the past have occurred when people were very healthy.. recessions result when financial or asset systemic stresses become apparent after an "end-game" trigger event has occurred...Long before Covid many "experts" predicted the "end-game" was due or overdue but had been delayed due to monetary and Fiscal policy manipulation..and like a broken record they maintained that sooner or later "the chickens would come home to roost"
So...its possible these Covid destructive events may only be the catalyst which will eventually put stress on the underlying Global or National financial system's weaknesses causing them to reach breaking-point.

I've just mentioned one scenario... obviously there are many other outcome scenarios which could play out both positively or negatively...It all depends on how the "brains trust" tackle the present and near future problems...There are a lot of variables in play...but as Beagles great post points out it is very easy to see AIR is not in a very good space at the moment and its near future isn't looking that much better either.... Cyclical stocks have a grow/shrink growth cycle they can shrink very fast during bad times but need time to regrow and history shows the economic early recovery phase is not a great time for cyclical company's share prices (e.g AIR during the long post GFC economic recovery stage [2010-2012])...Vaccine or no vaccine it bums on seats that counts and when the effects of the recession start to bite many of the bums may feel healthier but a lot poorer and postpone their travel plans...again lots of variables in play creating many alternate scenario's..

One big positive is..if these cyclical stocks (AIR being one) manage to survive and bottom out during the late recession/early recovery phase, the economic late recovery phase they became excellent stocks for the investors with "steel balls" to "back up the truck" and buy into...

But this is not yet the time...too early..the world is in the recession phase and the recessionary effects are yet to be felt by the consumer...those effects arrive during late recession/early recovery phase
My opinion only...DYOR.