AIR - Air NZ.

[biker]

NZ Herald "Analysts bullish on partial sale of Air

PS. While I may seem to be down on Cullen Airlines..........

Oh really? You think? Something personal?

[Anonymous]

I noted with much interest that the PM in his Budget speech yesterday talked about increased funding for tourists from Latin America. I travel between NZ and Argentina every 6-8 weeks. The only travel option I have at present between NZ and Argentina is LAN via Santiago. Aerolineas Argentinas pulled out last year. So if you want to fly direct between Latin/South America and NZ, LAN in your only option. It is increasingly fully booked and increasingly expensive. So if the PM wants increased tourism between SA/NZ, which I agree with, we need more flights. Star Alliance is completely out of the loop between Australasia and South America.
Based on the above, I expect and wish for AIR to start flying from Auckland to Buenos Aires or Brasil. It would be a significant business for us and I reckon much more profitable route than the heavily competitive routes we are currently fighting on.

Sorry to say Iceman but I understand that Air NZ's Chief Strategy, Networks & Alliances Officer (Stephen Jones) spoke last month to a South American focused Business group. Apparently he spelt out that AIR is not looking at flying to South America anytime soon. The main 3 reasons being:

1) Destinations - Santiago is already well serviced by LAN & Qantas (ex Oz). BA is serviced by Aerolineas ex Oz (I agree it is a very liberal use of the term serviced) and there is high economic risk dealing with Argentina whilst it rapidly goes broke. Sao Paulo is too far to reach directly and they are against flying two stop destinations. Lima is a possibility but that has the least demand.

2) There is no decent Star Alliance partner to feed onto in South America.

3) They don't have the aircraft type suited to fly there (which is this 4 engine vs 2 engine debate) and so would have to fly a more northern route (to stay within so many hours of land or something) and this is less economically viable.

Apparently they are not completely against it and they are continuing to investigate BA but there is nothing happening in the near future.

[iceman]

Sorry to say Iceman but I understand that Air NZ's Chief Strategy, Networks & Alliances Officer (Stephen Jones) spoke last month to a South American focused Business group. Apparently he spelt out that AIR is not looking at flying to South America anytime soon. The main 3 reasons being:

1) Destinations - Santiago is already well serviced by LAN & Qantas (ex Oz). BA is serviced by Aerolineas ex Oz (I agree it is a very liberal use of the term serviced) and there is high economic risk dealing with Argentina whilst it rapidly goes broke. Sao Paulo is too far to reach directly and they are against flying two stop destinations. Lima is a possibility but that has the least demand.

2) There is no decent Star Alliance partner to feed onto in South America.

3) They don't have the aircraft type suited to fly there (which is this 4 engine vs 2 engine debate) and so would have to fly a more northern route (to stay within so many hours of land or something) and this is less economically viable.

Apparently they are not completely against it and they are continuing to investigate BA but there is nothing happening in the near future.

Thanks for that Anonymous. I had heard similar reasoning but it disappoints me, more for purely selfish reasons rather than as an AIR investor ! Aerolineas does not provide as service, they provide flights. They cut out Auckland last year and now fly only BA-Sydney as you correctly point out. I will not fly them between South America and Oceania anyway which leaves me with LAN via Santiago as the only option. The planes are nearly always full since Aerolineas pulled out of NZ. That's why I don't understand how the Government think increased tourism between NZ-SA can be increased if we don't have flights to cater for it !

Your point about Argentina's precarious economic situation is unfortunately very very valid and all to real

[CJ]

Terry Hall in Stuff Online seems to think the Air NZ sell-down might involve a rights issue to existing shareholder (2nd para)

http://www.stuff.co.nz/business/opin...n-a-poke-float

Not sure they could get the full 25% away with just a rights issue - It would require all shareholders to double their holdings.

I do think they will be looking to do something that doesn't require a full prospectus to so maybe a rights issue combined with an institutional book build?

Alternatively, they could do what the Ozzy government did with Telstra and 'sell' the shares to its future investment fund (NZ alternative would be super fund, but could split with ACC etc) who could manage an orderly sale over time.

[Zaphod]

Not a lot of new information in this article, but will post none-the-less.

http://www.nzherald.co.nz/business/n...ectid=10888007

"There has been analyst speculation that Singapore Airlines would be a possible partner to give Air New Zealand better connections into Southeast Asia and to Europe."

What additional level of co-operation would NZ be seeking with SQ over and above that which is already provided for, given that they are both members of the same alliance?

[slimwin]

Code sharing would give a direct route out of ChCh to Asia.

[Zaphod]

Code sharing would give a direct route out of ChCh to Asia.

Thanks - Looks like the game has changed since I last few into Asia via Singapore. Back then, NZ code-shared with SQ by default, however after making some dummy bookings I see that Etihad is the preferred code-share partner.

[iceman]

Thanks - Looks like the game has changed since I last few into Asia via Singapore. Back then, NZ code-shared with SQ by default, however after making some dummy bookings I see that Etihad is the preferred code-share partner.

I flew Christchurch-Paris return last week. Air NZ disappointingly had now decent or competitive Star Alliance options so I ended up booking SIA directly from their website. These code sharing arrangements like Air NZ has with Etidad or Cathay Pacific seem to be undermining the integrity and benefits of the Star Alliance in my view !

[biker]

AIR has had a good run over the last 12 months. Any reason why I shouldn't sell at these levels and if so inclined, buy back in when the Gummint sells down? What I am contemplating is whether there is more upside prior to the sell down and what the price and effect of the selldown will be. Any thoughts?

[noodles]

AIR has had a good run over the last 12 months. Any reason why I shouldn't sell at these levels and if so inclined, buy back in when the Gummint sells down? What I am contemplating is whether there is more upside prior to the sell down and what the price and effect of the selldown will be. Any thoughts?

The sell down may well be in 2014. It may also be a right issue or placement.

Analysts are forecasting earnings growth next year. This will put them on a pe < 10 (for fy13 and fy14). Recently analysts have been playing catch up. They have been consistently under-estimating earnings.

On a negative note, their last monthly report had a drop in RPK's.

I still hold. I am comforted by the resilience in the share price given the recent market correction.

I'm not giving advice. Up to you