AIR - Air NZ.

[Poet]

The question for Poet would be:
Using the same approach to calculating fuel costs what should it have cost AIR last year and my how much does his result differ from the figure in the accounts.

Best Wishes
Paper Tiger

Thanks PT, short answer is IDK, long answer is I don't know.

At this time last year they were anticipating fuel at $US60 and had forex hedged at 0.777 (coincidence?, I think not). I no longer have access to their projected consumption as it was at that time. I'd be interested to know the figures if you have them (and if your question was rhetorical).

Cheers
P

[winner69]

So a close at 193.5

Low of the day - not a good sign

Tomorrow be better day?

[Beagle]

Back in June an unnamed analyst in a NBR story about AIR “I don’t think this management team or any airline management have a strong ability to forecast the future,”

About says it all

Actually I think that's the pot calling the kettle black. Analysts have no more visibility that what the company gives them. The company with its $800m profit before tax and extraordinary items forecast for FY16 was much closer to the mark than any analyst and in regard to FY17 projections analysts were far too optimistic, (something I commented on several times) leading up to the updated guidance that was issued at the time of the Fy16 results.

Coincidence that the average analyst forecast before tax for FY17 is now $503m or is it that they're simply following AIR's management lead and picking the mid point of $400-600m ? I'd suggest they're simply following management's lead.

[Valuegrowth]

It may go down further. For me it is a long term play. Value investors will wait patiently to grab part of their business in the coming years. When compare with other Airlines, it is one of the safest airlines in the world. It is time to do some home work on their long term prospects.

[Snow Leopard]

Thanks PT, short answer is IDK, long answer is I don't know.

At this time last year they were anticipating fuel at $US60 and had forex hedged at 0.777 (coincidence?, I think not). I no longer have access to their projected consumption as it was at that time. I'd be interested to know the figures if you have them (and if your question was rhetorical).

Cheers
P

There you go: https://www.airnewzealand.co.nz/fuel...-announcements

Best Wishes
Paper Tiger

[Valuegrowth]

Thank you for the link. It looks like they have prudent hedging strategy.

There you go: https://www.airnewzealand.co.nz/fuel...-announcements

Best Wishes
Paper Tiger

[winner69]

Last year MOPS whatever that is $54 /bbl - this year $55 used in forecast

Going to fly further - more fuel

So i reckon this year fuel cost to be greater than last years $846m - say $900m plus

But then what do I know - not much probably when it comes to AIR

[Poet]

There you go: https://www.airnewzealand.co.nz/fuel...-announcements

Best Wishes
Paper Tiger

Thanks PT,
So in Aug 2015, AIR had an estimated consumption of 8170k barrels at an estimated price of $US60 and forex at .777. So if I had carried out my back of the proverbial calculation at that time I would have projected fuel costs at $NZ630m. Actual fuel costs were $846m. Hmmm, so what do you think is wrong here?

I don't think consumption was hugely greater than they were expecting, nor price, (maybe exchange rate was somewhat lower). Am I missing something here?

[Snow Leopard]

Thanks PT,
So in Aug 2015, AIR had an estimated consumption of 8170k barrels at an estimated price of $US60 and forex at .777. So if I had carried out my back of the proverbial calculation at that time I would have projected fuel costs at $NZ630m. Actual fuel costs were $846m. Hmmm, so what do you think is wrong here?

I don't think consumption was hugely greater than they were expecting, nor price, (maybe exchange rate was somewhat lower). Am I missing something here?

Well, of course, it is complicated and, even to me , somewhat mysterious.

Obviously a quick start of the year calculation assuming constant conditions is going to differ from actual values because Brent price , Jet Fuel price and Exchange Rates vary over the year.

You obviously left off the hedging losses from your calculation but even when you have done all that you will still find a significant difference between your result and that $846M.

So there are significant other costs covered by the fuel line on the statement. As I say I missed the second half year fuel bill by $33M last year.

I have not refined () my model yet so, whatever I said before is a rough estimate but I hope I am in the right ballpark.

Best Wishes
Paper Tiger

[Vaygor1]

Back in June an unnamed analyst in a NBR story about AIR “I don’t think this management team or any airline management have a strong ability to forecast the future,”

About says it all

The late Adam Thomson (1926–2000), chairman of Caledonian Airways from 1961 to 1970 and managing director and chairman of British Caledonian Airways from 1970 to 1987, said in 1984, “A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you’ve lost your trousers — you’re in the airline business.”