AIR - Air NZ.

[Hoop]

Reasonable day today

Is it still going to plan Hoops?

So far so good...

Amongst the gloom morning of the 18th Jan, accumulating more on the bounce (302.5) off the 7c throwback to 302 support worked a treat...

There's a lot of black clouds around though..eh Winner?.. Have to keep a close eye on things
Jeez!!!.. Asia taking a bath at the moment.....ugly

[Joshuatree]

Pretty messy day coming up unfort. A bit quixotic but AIR is starting to look like a defensive stock!!.Tin hats on.

[Beagle]

On a beautiful still evening on Wednesday last week my wife and I flew back from Queenstown and enjoyed the very friendly company of a Canadian tourist beside us in 1C. The flight service manager and attendant were very friendly and professional and the day was made all the more perfect by the 6.5 cent SP rise to finally crack $3 in reasonably convincing fashion.
Renee was happy to serve us another wine on the Koru hour flight, (who knew what was left after the initial passenger service was tipped down the drain ?), and all seemed extremely well with the world.

So I got to thinking...why has the SP been so strong against such a backdrop of thunderclouds wherever you look and what is it about AIR that's so special ? Initial thoughts.
1. We live in a really beautiful country. Really the clarity and purity of Lake Wakitipu is just as superb as I remember it 40 years ago as a kid, (same for Lake Taupo)
2. Queenstown is really going off in a huge way
3. The staff you meet on AIR flights seem to be happy with their jobs and are very friendly and professional, (lets be honest all airlines use similar hardware so its the people and attitude that make a difference
4. I enjoy flying on an airline where I have a meaningful stake and I am sure other Kiwi's enjoy flying their national airline
5. Clearly the market is anticipating a ripper half year result
6. I suspect a lot of baby boomer's have extra time and money on their hands now the kids have left home and are well and truly cognisant of the fact that due to the phenomenon of hedonic adaption, stuff per se doesn't make you happy but varied and interesting travel experiences with family and friends does.
7. With cheaper fuel airfares are coming down and I think people are travelling more.

With so much pollution, crowding, security and other issues elsewhere in the world I think N.Z. tourism has a very bright future especially now our $Kiwi is at a more attractive level.
Anyway that's FWIW my further musings last week...obviously as previously posted I hold the management team in the highest regard and the balance sheet and cash flow are extremely robust. I'm looking forward to the half year result and flying again with AIR soon.

[Balance]

My thoughts on another thread re market action:

Case in point - oil price drop will pump US$250 billion of savings and/or increased consumer spending power in China and India alone. Expect more China and Indian tourists as an example. Airlines, tourism sector and the hospitality industries catering to the middle class are going to boom this year.

On the downside, companies servicing the oil sector and the previously spend like crazy oil wealth countries of the Middle East are going to have a very very tough year indeed.

[Beagle]

Yes an excellent point Balance. Lowest interest rates here in 60 years and lower fuel prices are leaving a LOT of extra money in Kiwi's pockets too.

[GuessX]

You might be right on the Indian tourists, but I can't help but think that with the Chinese working hard to control their capital outflow we might see a reduction in the Chinese tourists. Especially as their travel gets more expensive because of their currency devaluation.

[Balance]

You might be right on the Indian tourists, but I can't help but think that with the Chinese working hard to control their capital outflow we might see a reduction in the Chinese tourists. Especially as their travel gets more expensive because of their currency devaluation.

Not at all. The capital outflows are very specific to the billions of dollars illegally transferred out of China. The average Chinese is allowed US$50k a year to transfer or spend overseas. In fact, there's no control on credit card spending.

Currency wise, RMB is higher still against almost all currencies save the US$. NZ$ is its weakest against RMB since 2009.

Anyway, not trying to sway anyone - just giving my view that there are sectors which are going to continue to do very well with the massive changes in economic settings out there. All comments and debates most helpful.

[skid]

I think Guessx is referring to the bulk of Chinese tourists which are not the ones illegally trying to move money out of China,in any big way--time will tell but we could just as easily see a drop in Chinese middle class tourists.
Its a great country to visit (NZ)with a great reputation ,granted,but it is far away and if people start to watch their savings due to a downturn in the economy we could see a change----everyone wants to go everywhere atm and oil is cheap, so steady as she goes.
(THL has leveled off which should be part of the mix for that theory in terms of increasing SP)

[sb9]

$3.10 now on back of decent volume, looks like market pricing in oil drop and also upcoming results next month.

[Beagle]

I see low oil prices as sprinkling fish food into a stream..The big fish get the most benefit, the remainder floats around and attracts more fish that weren't there to begin with...I think AIR is not classed as a big fish.

Airlines V Oil correlation is not good...Recessions kills both Cyclical Airlines and Oil prices which upsets any (false) "logical" conclusions that correlation exists ....If we think this time the Oil price is not a reaction to negative Global economic growth...then perhaps there "could" be a hint of correlation.

The chart below illustrates AIR's relationship with Oil..Its a pity there is no very long term freely available chart data to validate accurately the relationship.
...also...
AIR is testing the psychological $3.00 Resistance
The $3.00 resistance theory (chart) v Practical (Depth)...the depth shows the charted resistance line is quite strong..
The cyclical resistance is not far away...

If AIR is not a true cyclical* (Averaging positive Organic growth within its market environment over decades) then the cyclic resistance could be under threat*...True Cyclical companies grow strongly during good economic times and shrink strongly during bad economic times...net result over time = no
overall growth (flat line, no trend)

Looks like cyclical resistance is indeed under serious threat. Another couple of closes above $3.10 and I might have to buy more and crack open that good bottle of scotch
http://a.msn.com/r/2/BBouZeJ?a=0&m=en-nz