AIR - Air NZ.

[Jaa]

I did very nicely out of AIR when they crashed and burned and looking for an opportunity to get back in. That will probably be when they start to cut the fat. They have domestic tied up but I'll be keeping an eye on international where there is more competition.

The key to watch for is not fat as you call it as I would argue it doesn't exist. Like modandm I have also spent a bit of time over the years working with people in Air NZ's head office and have been nothing but impressed. They compare very favourably with other NZ head offices.

The keys to Air NZ's future performance are in the monthly operating stats they put out. Look for increasing capacity with stable or increasing margins and stable load factor's (I would argue these are currently at unsustainably high levels).

All of which have been happening for the last 6 months and for the following reasons should continue:

• Virgin Blue's exit from NZ (increased margins/load factor)
• Air NZ's new A320 domestic fleet (increased capacity)
• Virgin Blue / Air NZ trans tasman alliance (increased capacity & load factor from increased Australian and to a less degree NZ demand)
• Air NZ's new long haul fleet and international products (increased capacity & load factor from increased demand)
• Rugby World Cup (Increased international & domestic demand)
• Recovering economy (Increased international & domestic demand)

[minimoke]

[QUOTE=percy;333666]

Well they' had around $20k of my cash over the last couple of months and thats just on internal flights so I know first hand there is good cash flowing in.

That is a lot of flying.!! Were the flights pretty well full or not ?

Main center flights are pretty much consistently full. AIR pricing strategy is good here for shareholders with only two price options and limited seats on the "cheap" seats. High margin high volume is a good recipe.

Regional centers are generally half or less full. High margin low volume probably works in a monopoly environment.

[Oiler]

[QUOTE=minimoke;333671]

Main center flights are pretty much consistently full. AIR pricing strategy is good here for shareholders with only two price options and limited seats on the "cheap" seats. High margin high volume is a good recipe.

Regional centers are generally half or less full. High margin low volume probably works in a monopoly environment.

New Plymouth (regional center) is definitely running on the higher side of half full.

As Jaa has said Air NZ is a very lean mean well run machine, innovative and creative. Profitable and punch way above there size.

Air NZ is (in my view as a very frequent flier) a company that NZers should be proud of.

NB. I dont own shares in Air NZ

[Snow Leopard]

Air New Zealand Acquires Substantial Shareholding in Virgin Blue (ASX announcement)

best wishes
Paper Tiger

[minimoke]

[QUOTE=Oiler;333686]

New Plymouth (regional center) is definitely running on the higher side of half full.

Thats probably consistent with my experience with that particular destination. Though I'm generally having to fly via wellington so even then they can only half fill a plane with Christchurch / wellington and other feeders into Wellington. I don't know if the oil companies have had or still have a deal with AIR to buy fixed seats regardless of whether anyone is actually filling those seats. Such a deal was done to get people from Ch to the Coast but I gather AIR pulled the plug on it.

[CJ]

Air New Zealand Acquires Substantial Shareholding in Virgin Blue (ASX announcement)

Wow - lets hope it goes better than Ansett.

They must have a lot of excess cash to be able to spare $100 - $150m. Pretty sure the government doesn't that much cash in the back pocket

[modandm]

i am pretty surprised by this. Not sure what AIR is thinking... I mean they had the strategic alliance on the tasman tied up and when virgin becomes star alliance then all will be codeshares... Not sure what this investment achieves for AIR... I know they have been talking about scale and the need to be relevant and I think this is true but what does buying 15% of VBA do... I would have understood if they had bought them out entirely and gone guns blazing at qantas.

Looking forward to hearing the strategic rationale in the 1/2 year update

Can't help but think the market was aware of this and it may have prompted the fall from 153 to 143 over the past week...

[CJ]

will be interesting to know how mucht they have already bought and at what price as it spiked 10% yesterday. I see ASB has it as a Reduce but the Reuters has most brokers picking it as a hold -> outperform with an average of buy.

Labour is going to have a feild day with this. NZ govt borrows $300m a week but one of their 'SOE' has the money to start buying overseas airlines.

You dont get synergies with 15% but maybe they will get a management contract which will boost AIR's profits??

[percy]

Aussie is a much larger market than NZ.AIR really need a big "feeder" to grow,which VB will provide.Cemeting this arrangement with a shareholding in VB will give AIR more influence.A board seat would be positive.Makes sense to me.

[minimoke]

I was talking to a tea lady and it seems AIR is awash with cash.

Well Jaa, looks like the tea lady was right. Enough cash (or AUD$145m) to go shopping for another airline