AIR - Air NZ.

[see weed]

I've been dating other airline stocks at the same time! And I didn't even use protection (crude oil price options).

LOL,hehe.

[Poet]

From WSJ

By Ross Kelly Airlines from Asia to the Middle East are building big stakes in Virgin Australia Holdings Ltd., making it one of the world’s most coveted airline investments and prompting expectations of a takeover bid.

click to enlarge

Virgin Australia, the No. 2 carrier behind Qantas Airways Ltd. in one of the world’s more robust aviation market, offers a rare acquisition target for foreign investors angling for a piece of the action in Australia, which restricts foreign ownership of domestic carriers with international flights to 49%. Virgin, however, is fair game because last year it spun off its small international flights unit to enable it to attract foreign investment.
Singapore Airlines and Air New Zealand in recent months have both raised their holdings in the Brisbane-based airline, while Abu Dhabi-based Etihad this month gained Australian regulators’ approval to raise its position from 10% to as much as 20%.
And with billionaire Richard Branson indicating his 13% interest is up for grabs, another wave of buying may follow.
“We could easily see a situation where either two of the three airline shareholders, or indeed all three, issue a takeover offer for the company,” said Russell Shaw, Macquarie Group’s Sydney-based aviation analyst.
Control of Virgin Australia would offer immediate strength in Australia, where sunshine and beautiful beaches helped attract more than 5.5 million visitors in the year ended in June 2012. Increasingly, tourists are arriving from fast-growing Asian economies such as China.
Virgin is a domestic carrier, but the influx of foreign arrivals is funneling passengers into its network as tourists hop from city to city.
To be sure, it hasn’t all been smooth sailing for Virgin. In May, the carrier downgraded its profit guidance as Australia’s resources boom fades and fragile consumer confidence crimps demand for local leisure travel.
At 43.5 Australian cents (40.3 U.S. cents) each, its shares have almost doubled in value in the past two years, but in the most recent year they have gained only 5%, underperforming a 19% rise in Australia’s benchmark S&P/ASX 200 index. The shares remain 80% below their 2007 peaks—cheap by historical standards.
Singapore Airlines invested around US$125 million in April to nearly double its stake to almost 20%, while Air New Zealand raised its stake last month by 3%, to 23%, and said it would like to raise it to 26%. Companies in Australia that own 20% or more of another company can raise their holding only by 3% every six months without having to make a takeover bid.
A spokesman for Etihad said the carrier “may purchase available shares to increase our shareholding where it is prudent to do so, and will provide notice in accordance with regulatory disclosure requirements.”
Speculation about a tussle for control of Virgin intensified this month after unusually large blocks of its shares were traded in Sydney. The identity of the buyer or buyers remains unclear.
Air New Zealand didn’t respond to requests for comment.
A Singapore Airline spokesman said, “At this point we have no plans to increase our stake beyond 19.9%.”
The presence of three rivals with significant stakes will make any takeover hard to pull off. But analysts at Macquarie say a joint bid is possible.
Shaw said Singapore Airlines and Air New Zealand are the most likely partners because they are both members of Star Alliance. And while they don’t now have a strong bilateral relationship, Air New Zealand’s search for alliance partners in Asia could bring them closer together, he said.
The most challenging relationship to forge, Shaw said, would be between Singapore Airlines and Etihad, because both carriers serve Europe from separate hubs and would compete for Virgin passengers heading there from Australia.
A Virgin Australia spokeswoman said the company doesn’t comment on speculation regarding its share register.
Simon Marias, managing director of fund manager Allan Gray Australia, also believes a takeover bid is possible but is quick to point out the obstacles. Allan Gray, which manages around 2.5 billion Australian dollars (US$2.3 billion) of client funds, doesn’t hold Virgin shares but it does own around 5% of Air New Zealand.
Marias said a joint bid would risk involving Australia’s competition regulator, which has already expressed concerns about the consolidation taking place among the nation’s carriers. Earlier this year, it allowed Virgin to acquire a controlling stake in budget carrier Tiger Australia only because the target was likely to disappear from the market altogether without an injection of fresh capital.
“One airline could take a much bigger stake [in Virgin] and make an offer to the other minority holders. But the size of their blocking stakes would make that hard to achieve,” Marias said.

[Food4Thought]

Why the AIR drop?

[noodles]

Why the AIR drop?

I think it is likely the poor Ops stats for july.

See my previous post.
http://www.sharetrader.co.nz/showthr...l=1#post418567
The price was 1.47 at time of posting. I know this because i sold out.

[modandm]

I think it is likely the poor Ops stats for july.

See my previous post.
http://www.sharetrader.co.nz/showthr...l=1#post418567
The price was 1.47 at time of posting. I know this because i sold out.

Maybe. A note from MQ following a call with mgmt suggests poor weather resulting in a large number of cancellations and refunds during the period was a factor in the stats. Even so one month of poor stats doesn't change the investment case. A 1c move in the currency has more impact and the currency has fluctuated between 82c and 78c wildly over the past month or two.

I will go into more detail later this month, but I remain a buyer.

[Zaphod]

I wouldn't mid seeing some detail provided by AirNZ on the increase in revenue directly derived from their loyalty and Oneup schemes. There has been an immense amount of investment into these by the Airline, so one would hope that this is paying off.

[Blendy]

Yes that would be most useful to see how that is working out, and whether upgrading people allows more economy seats to be sold. I just used up all my airpoints and got a OneUp upgrade to Business Class for a trip this week, and when I went to choose my seat, there were only 4 other seats booked in Business Class. About half of economy was unfilled as well, so I'm not sure how much revenue is gained from this - it certainly has a lot of potential though to help fill seats at last minute. I got a great deal anyway! Maybe my flight was not very full anyway, but it will be interesting to see how many seats are taken when I board.

[QOH]

Modanim, glad to hear you are still a buyer, I bought back in recently, I valued your research.
Regardless of whether I make any money out of AIRNZ, I've decided they are a great NZ company
and an airline we can be proud of.

[Marilyn Munroe]

Food4Thought asked; "Why did AIR drop?"

Maybe this announcement from, their twenty something percentage holding in, Virgin.

http://www.asx.com.au/asx/statistics...idsId=01431214

Memo to State Owned Enterprises Minister Tony Ryall, sell Cullen Airlines to Ethiad now.

Boop boop de do

Marilyn

[modandm]

Food4Thought asked; "Why did AIR drop?"

Maybe this announcement from, their twenty something percentage holding in, Virgin.

http://www.asx.com.au/asx/statistics...idsId=01431214

Memo to State Owned Enterprises Minister Tony Ryall, sell Cullen Airlines to Ethiad now.

Boop boop de do

Marilyn

Again could be - but I doubt it. So far the valuation the market places on AIR has given absolutely no credit for the investment in Virgin, which is roughly 30c NZD per share at the current VAH valuation.

NZ management are clearly thinking long-term with the stake in VAH, which is frustrating for me in the short term! Post results I hope to get a 1-on-1 with the CEO or at least CFO to raise concerns that NZ is not doing enough to reward shareholders, why not further raise the dividend, why aren't they buying back shares?

On a medium term view - say 3-4 years I think there is a good chance NZ and VAH will merge. In the mean time the NZ govt should be pressuring management to get the share price up to a fair level, before offloading some of the govt stake. I see this offloading as a catalyst for more institutional investors to look at AIR, and likely a strong improvement in the share price. AIR trades at a substantial discount to other listed peers on most metrics, and has a better competitive position than others like Qantas, which faces not only a growing domestic competitor but a multitude of competitors on almost all international routes.

Regarding Etihad buying a stake in AIR - I don't think Etihad would want to. NZ can't provide good feed for their network when there are numerous 1 stop options to Europe via asia or the US. Actually I see Etihad quite worried that NZ VAH merge with SQ a significant stakeholder - sending Australian feed through Singapore. Etihad are a bit mad honestly, they are so late to the party on the kangaroo route, and why you would want that business anyway with the growing Chinese airlines looking ever threatening on it I have no idea. Etihad would do better to focus on the Europe/Eastern Europe/subcontinent/Central Asia/West Asia. Which is what it is doing with the likes of Jet and Jat airways (india and Serbia).