AIR - Air NZ.

[couta1]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
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Mr Market already knows this.

[Kelvin]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
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So if earnings drop to FY2015 levels ($474m) where SP was ~$2.40 - then add $0.35 of dividends = $2.75 SP today??

[Raz]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
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Not at all, will be interesting to see the SP performance in the next few days, based on $55 a barrel.

[winner69]

Excitement over

So NPBT was really $806m

F17 guidance $400m-$600m (26c to 38c eps)

Share price should be well over 250 today and could kick on from there

Need to look at future while oysters and chips for lunch

[boysy]

Will be interesting seeing brokerage houses reporting on this as this result looks to be the zenith of performance for AIR for the foreseeable future. Wait for the backlash from travelers re price gouging once this is splashed all over the media.

[bull....]

you will all still lose if the share price doesn't rally strongly today.

if you brought anywhere between the lows of 2.05 - 2.35 say you will still need to take into account the 35c dividend payout which will come of the price.

say it goes down today which is possible as it looks like they missed on some metrics? say it goes to 2.15 and stays there and then pays div 35c ten 2.15 - 35 = 1.80 you all lose unless one day it goes back above your entry price.

so guess you better hope it goes up today

[Poet]

I'm also a very happy holder today, well done AIR. If $400m to $600m NPBT is as bad as it gets over this cycle, then I'm happy holding for future dividends.

[Balance]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
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SP has been dropping and by 30% since high this year in anticipation of the downgrade.

It is indeed a major downgrade from F16 and certainly for analysts as well who have been waiting for numbers from AIR to downgrade their forecasts.

The 25 cps fully imputed dividend is however a big surprise to most of the analysts (one broking house forecast total dividend for F16 of 21 cps - so only 24 cps out!

So on yesterday's closing price of $2.24 less 35c dividend = $1.89 so stock is trading on a first cut forward PER of between 5.10 to 7.7 and dividend yield of 11.6% (net).

I think I can live with that.

[winner69]

you will all still lose if the share price doesn't rally strongly today.

if you brought anywhere between the lows of 2.05 - 2.35 say you will still need to take into account the 35c dividend payout which will come of the price.

say it goes down today which is possible as it looks like they missed on some metrics? say it goes to 2.15 and stays there and then pays div 35c ten 2.15 - 35 = 1.80 you all lose unless one day it goes back above your entry price.

so guess you better hope it goes up today

...it'll go up today bull

Some might even be buying to get the divie

Market loves surprises as you are aware

[Beagle]

Did some people miss the biggie at the bottom of the announcement with earnings potentially halving next year ?

Looking ahead, he acknowledges there is increased competition as other international airlines also add capacity in recognition of strong tourism demand for New Zealand.

“There’s no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas,” says Mr Luxon.

Given the uncertain impact of competition and based on the current market conditions, the airline expects earnings before taxation for the full year 2017 to be in the range of $400 million to $600 million.**
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Not at all. I have been saying for weeks now I expect FY17 earnings of $500 - $600m before tax so I'm only a little out. Mr market fully cognisant of the FY17 outlook already.

Excitement over

So NPBT was really $806m

F17 guidance $400m-$600m (26c to 38c eps)

Share price should be well over 250 today and could kick on from there

Need to look at future while oysters and chips for lunch

Based on the mid point of expected range $500m before tax, (in the white hot heat of extensive new competition) I get EPS of 32cps. The 10 year average PE for AIR is 11, (I think 12 is appropriate given we're enjoying the lowest interest rates ever) so 32 cps x 12 = intrinsic value of $3.84. Of course it won't get to that but I remain of the view that AIR's shares trading cum 35 cps in dividends are very good value at yesterday's closing price.

I'd be surprised if there wasn't a really good bounce today...I'll be buying if there's any opportunities that present themselves. Don't see any reason now why this can't be $2.50.