AIR - Air NZ.

[couta1]

Oh nice couta! Do you have a projected pirce? Seems to be off most of the Sharetrader members radar, but volume wise there seems to be some heavy Insto/Fund involvement.

I'm taking the conservative approach and thinking around the $2.40 mark based on possible volatility which can come from several areas in this type of business, my daughter worked for them as a hostess and their standards were very high and consistent.

[Beagle]

https://www.nzx.com/files/attachments/190114.pdf

Looks promising. Recent developments for the airline look positive. A320 with its winglets is very fuel efficient, launch customer for the stretched version of the Dreamliner (787-9), enabling exit of fuel heavy 747-400's next year which are difficult to achieve high load factors due to size, extra flights into Queenstown with Virgin, study giving approval for later flights in Queenstown should further expand the capability of this airport...lots of other positive factors...PE of only 10 is very reasonable.

I'm in. Besdies all that, I love planes and you're being paid to enjoy the ride with a reasonable fully imputed dividend yeild
http://www.reuters.com/finance/stock...?symbol=AIR.NZ
Analyst's consensus view is very positive too

[Schrodinger]

Sold out at $1.65 a few months back after buying for $1.12. Still kicking myself...

[couta1]

Sold out at $1.65 a few months back after buying for $1.12. Still kicking myself...

That's still a good profit but I know how you feel having sold my Turners car auctions at $1.90, we will probably make the same mistake again on another stock in the future, ain't hindsight a great thing

[Robomo]

https://www.nzx.com/files/attachments/190114.pdf

launch customer for the stretched version of the Dreamliner (787-9), enabling exit of fuel heavy 747-400's next year which are difficult to achieve high load factors due to size,

Not quite right Roger. Air NZ have 2 777-300 planes on order (lease arrangement I believe) that will be delivered later this year and they will replace the 747's. I was in Seattle last week and saw one of the 777's ready for painting (rudder already painted with Koru) followed by a couple of months or so of preparation and testing for handover. Both 747's should be gone by the end of this year. The 787-9's will be used on Perth-Auckland and Asian routes initially and will replace the 767 planes that are getting a bit old and fuel hungry. As more 787's are delivered then new routes may be developed but I expect that will not be until 2016.

AKL-SFO and LAX-AKL flights both completely full so profitable for Air NZ. Talked to a couple of Americans on board and they were both impressed with the Kiwi service and cabin crew, much better than the United and Delta flights they had flown to Los Angeles.

The next two years look very bright for AIR with all the fuel efficient planes arriving. I like the management style too of Christopher Luxon. Once Virgin Australia get going and turning a profit that will be a big bonus for Air NZ with its 26% (I think that's right) ownership of Virgin.

[Marilyn Munroe]

AKL-SFO and LAX-AKL flights both completely full so profitable for Air NZ. Talked to a couple of Americans on board and they were both impressed with the Kiwi service and cabin crew, much better than the United and Delta flights they had flown to Los Angeles.

Robomo, I have argued on this thread Cullen Airlines is vulnerable to passenger defections if a competitor flies A380's on these routes. I would be interested in your take on this.

Boop boop de do
Marilyn

Edit: Imagine this scenario. There is a purge of the boardroom and senior management at Queer and Nasty Airlines caused by its dire financial situation. They install a managerment that actually has a clue and looks around for lucrative routes which will bring in cash fast. They decide to abandon Kangaroo route flights ex Malbourne to the Camel Jockeys and redirect the metal to MEL --> AKL --> LAX

[Robomo]

If someone does fly A380's AKL to USA and beyond then their seat/mile cost would be slightly better than the current 777. However the only profitable route would be AKL-LAX. The A380 is designed as a hub to hub carrier and works well in that scenario - look at Dubai. The 777 and 787, being smaller and only marginally more costly on a seat/mile cost are better on point to point routes.
Airbus bet on airlines going hub to hub, Boeing on point to point. A380 sales have stalled whilst Boeing 777 and 787 sales have soared, as have Airbus's A330 and A350 2 engine planes. With 2 engine planes now able to fly just as far as the 4 engine planes there is no need to invest in the 4 engine A380 for long-distance trans-ocean flights.
Air NZ's philosophy is point to point. Thus to USA we have AKL to LAX, SFO and Vancouver. When more 787's arrive there is the possibility of direct flights to Dallas and Seattle and CHC-LAX, routes that would never support an A380 (AirNZ tried 747's on CHC-LAX a few years ago but could not fill the planes profitably).
Passengers prefer point to point rather than spending time in an enormous hub just to fly another hour or two to a smaller destination (as well as the greater possibility of delays and lost baggage).
Emirates and Singapore are the only realistic possibilities to fly A380 AKL-LAX (Qantas are in real trouble according to today's paper) but it would be risky, being away from their hubs. There would be considerable added costs in flight crews spending time away from their home town and to make it profitable they would have to offer just about daily flights. A huge investment and given the current popularity of AIRNZ with the travelling public I can't see it happening.
AirNZ have the right philosophy IMO. From a passenger's point of view I'm just as comfortable in a 777 as a 380 and they fly at the same speed anyway.

[biker]

Robomo, I have argued on this thread Cullen Airlines is vulnerable to passenger defections if a competitor flies A380's on these routes.


Edit:
They install a managerment that actually has a clue and looks around for lucrative routes which will bring in cash fast. They decide to abandon Kangaroo route flights ex Malbourne to the Camel Jockeys and redirect the metal to MEL --> AKL --> LAX

The AKL-LAX route is lucrative for AIR but by simply putting metal on it doesn't mean QAN will make it likewise. It would be costly initially and at the moment they are in no financial position to take even short term increased losses.
QAN need a management change that will ditch the current idea that a 65% market share must be maintained at ALL costs.
VAH now have some shareholder muscle behind them and with Christopher Luxon going onto the board in the next few months I would expect some positive AIR influence and airline acumen playing a part in the improvement of the VAH product as VAH continue the relentless pursuit of the QAN market. Eventually there has to be substantial domestic profit for both carriers but it will need a change of strategy at QAN bought about firstly by axing Alan Joyce. The slash and burn cost cutting will only take their profitability so far. A much more comprehensive business plan is needed and a pig headed determination to maintain market share regardless is not it.

I realise I'm a bit off track on the AIR thread, but with VAH now a big part of AIR's business model the workout going on in the Aust market is very important to them.

[Beagle]

If someone does fly A380's AKL to USA and beyond then their seat/mile cost would be slightly better than the current 777. However the only profitable route would be AKL-LAX. The A380 is designed as a hub to hub carrier and works well in that scenario - look at Dubai. The 777 and 787, being smaller and only marginally more costly on a seat/mile cost are better on point to point routes.
Airbus bet on airlines going hub to hub, Boeing on point to point. A380 sales have stalled whilst Boeing 777 and 787 sales have soared, as have Airbus's A330 and A350 2 engine planes. With 2 engine planes now able to fly just as far as the 4 engine planes there is no need to invest in the 4 engine A380 for long-distance trans-ocean flights.
Air NZ's philosophy is point to point. Thus to USA we have AKL to LAX, SFO and Vancouver. When more 787's arrive there is the possibility of direct flights to Dallas and Seattle and CHC-LAX, routes that would never support an A380 (AirNZ tried 747's on CHC-LAX a few years ago but could not fill the planes profitably).
Passengers prefer point to point rather than spending time in an enormous hub just to fly another hour or two to a smaller destination (as well as the greater possibility of delays and lost baggage).
Emirates and Singapore are the only realistic possibilities to fly A380 AKL-LAX (Qantas are in real trouble according to today's paper) but it would be risky, being away from their hubs. There would be considerable added costs in flight crews spending time away from their home town and to make it profitable they would have to offer just about daily flights. A huge investment and given the current popularity of AIRNZ with the travelling public I can't see it happening.
AirNZ have the right philosophy IMO. From a passenger's point of view I'm just as comfortable in a 777 as a 380 and they fly at the same speed anyway.

I agree that twin engine aircraft are where its at for AIR as a small regional player. The 777-300's are still a very efficient aircraft as you've noted and a favourite with airline accountants all over the world. The more comfortable cabin pressure of an A380 makes it an attractive proposition for long haul travel but I'm not sure how many people realise that the new Dreamliners have a similar comfortable cabin pressure, (equilivent to 6,000 ft altitude not 8,000 ft like a regular aircraft) so with appropriate marketing they'll be a real draw-card for AIR in this part of the world. I like how AIR were also the launch customer for the retro-fitted winglets on the A320 aircraft, saving 4% fuel on this already very efficient aircraft and adding 500 kg's to the payload. Exiting of the fuel hungry remaining 737's shortly is also a good thing. Domestically it would appear that AIR will be hitting it out of the park with good growth in the local economy so the outlook looks very promising. I'll be doing some more reasearch on how a current year PE of only 10 compares to other airlines around the world shortly. Whilst I would be the first to acknowledge that this is a cylical industry, a PE of only 10 seems cheap for this part of the cycle.

[ace5715]

Up until 2 or so years ago Qantas did fly MEL-AKL-LAX, we use to use it for work flights to LAX because we were aligned with Qantas. I believe it was ditched due to it not being profitable enough. From a passenger stand point it was a terrible flight to be on, I only did the AKL-LAX leg of it but it seemed Qantas used their oldest planes able to fly the distance, it was never on time leaving Melbourne and the staff always seemed like being put on this flight was punishment for past sins.

I'm glad Qantas ditched it so we could start using Air New Zealand where AKL-LAX is one of their flagship routes.