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Thread: AIR - Air NZ.

  1. #9661
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    Buffett can change the sentiment of air line industry.

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    Quote Originally Posted by couta1 View Post
    Must be time for a certain FA divvy seeking hound to buy back in also, some of us are missing the hounds enthusiasm around here.
    Funny you say that. The dog has been licking his "trump" wounds and wondering if he should join in the hunt again.
    Last edited by Beagle; 16-11-2016 at 10:20 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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    Quote Originally Posted by Roger View Post
    Funny you say that. The dog has been licking his "trump" wounds and wondering if he should join in the hunt again.
    Come on Roger, be a daredevil, jump back in. My new holding is up from the $1.70 days. Or you could buy some more HLG in the meantime for a few weeks and collect a nice big div first.
    Last edited by see weed; 16-11-2016 at 11:18 PM.

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    Quote Originally Posted by see weed View Post
    Come on Roger, be a daredevil, jump back in. My new holding is up from the $1.70 days. Or you could buy some more HLG in the meantime for a few weeks and collect a nice big div first.
    Well done mate you picked the bottom well. Less clear is whether after a reasonable recovery if there's any further short term gains to be made ?
    I think Paper Tiger makes a good point that the operating environment is somewhat different for AIR than for the heavily consolidated American airline industry.
    Tourism remains strong but increased competition to N.Z. appears to have stifled yields to the point where its having more of an effect on AIR than QAN is experiencing in its operating performance.
    Hounds don't like chasing their tails, quite an unnatural activity...for a dog.
    Last edited by Beagle; 17-11-2016 at 10:48 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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    Quote Originally Posted by Roger View Post
    Well done mate you picked the bottom well. Less clear is whether after a reasonable recovery if there's any further short term gains to be made ?
    I think Paper Tiger makes a good point that the operating environment is somewhat different for AIR than for the heavily consolidated American airline industry.
    Tourism remains strong but increased competition to N.Z. appears to have stifled yields to the point where its having more of an effect on AIR than QAN is experiencing in its operating performance.
    Hounds don't like chasing their tails, quite an unnatural activity...for a dog.
    The Trump rally may be losing a bit of steam in USA as investors start to digest--the next week may show whether is business as usual or a change in sentiment.--(his transition team is apparently in turmoil--but its early days)--He seems to have done a lousy job so far.--Your not the only one licking their wounds---(cant believe JK has already talked to Trump--guess it was unavoidable because of the earthquake....I was kind of hoping we would stay under the radar in that sense....makes me uncomfortable being ''noticed'' by Trump.
    Last edited by skid; 17-11-2016 at 11:48 AM.

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    Hi Skid,

    Yes I am very cautious of the trumped up rally on the U.S. markets. Its predicated on the assumption he can run a stable administration and get some traction through congress for his idea's of rebuilding America. Then there are issues of the affordability of any attempt to rebuild industry in the rust belt states. Already we have seen a massive increase U.S. 10 year treasuries.
    I'd prefer to see some evidence of stability...all we see so far is instability and assumptions of growth coming from expansionary theories, (many would argue are simply trumped up with little economic rationale) so the hound remains watchful and cautious, lest he gets thumped.
    Based on my observations this week, there's no such thing as an off season in Queenstown anymore and AIR's planes on that domestic route sure are full but the prices people are paying to get to N.Z. and the number of new competitors are the key issues for AIR. By way of example look at these prices for travel to Europe on quality airlines. http://www.houseoftravel.co.nz/hot-d...E-FLIGHTS-2017
    Last edited by Beagle; 17-11-2016 at 02:24 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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    No worries Roger, huge domestic demand coming up in 2017, no guarantees of stability in this unstable world mate and no security in money, no matter where you put it.

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    I was wondering whether the CH earthquake affected overall passenger numbers, given the recent North Canterbury quakes. Does seem to have had a minor short term effect but what also shows up is the solid growth, and improved performance, though some indicators topping out.

    (m’s) Available seat Km’s Revenue passenger Kms
    YE PAX (m's) ASKs (m’s) Load Factor RPKs (m’s) Yield cents/RPK
    Jun-06 11.9 34,055 75% $0.121
    Jun-07 12.5 35,113 76.50% $0.130
    Jun-08 13.2 36,991 79.30% $0.130
    Jun-09 12.4 34,316 79% $27,112 $0.138
    Jun-10 12.3 31,578 81.80% $25,829 $0.128
    Jun-11 13.1 32,353 83.40% $26,996 $0.131
    Jun-12 13.1 32,618 82.80% $27,013 $0.135
    Jun-13 13.4 33,167 83.60% $27,733 $0.136
    Jun-14 13.7 33,396 84.10% $28,078 $0.137
    Jun-15 14.3 35,601 84.10% $29,934 $0.137
    Jun-16 15.2 39,684 83.70% $33,223 $0.135

    Attachment 8456Attachment 8455Attachment 8454

  9. #9669
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    Quote Originally Posted by Roger View Post
    Hi Skid,

    Yes I am very cautious of the trumped up rally on the U.S. markets. Its predicated on the assumption he can run a stable administration and get some traction through congress for his idea's of rebuilding America. Then there are issues of the affordability of any attempt to rebuild industry in the rust belt states. Already we have seen a massive increase U.S. 10 year treasuries.
    I'd prefer to see some evidence of stability...all we see so far is instability and assumptions of growth coming from expansionary theories, (many would argue are simply trumped up with little economic rationale) so the hound remains watchful and cautious, lest he gets thumped.
    Based on my observations this week, there's no such thing as an off season in Queenstown anymore and AIR's planes on that domestic route sure are full but the prices people are paying to get to N.Z. and the number of new competitors are the key issues for AIR. By way of example look at these prices for travel to Europe on quality airlines. http://www.houseoftravel.co.nz/hot-d...E-FLIGHTS-2017
    RT to Bangkok for $1000 with Thai air.June -Sept..Hmmm..tempting..bit early though

    I see Trump is already reneging on his ''drain the swamp'' and choose major lobbyists (major establishment) to choose his ministers according to what suits their business interests --same ole, same ole, american politics of conflict of interest---that will pale in comparison to what Trump will do to fleece the system--This will be the biggest con in history--already he's trying to get ''security clearance''so his kids get in on all the juicey info to take advantage of--Man ,it reeks over there.--I wish JK would just keep his mouth shut rather than get Trumps attention---God knows what he would do here.

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    Quote Originally Posted by couta1 View Post
    No worries Roger, huge domestic demand coming up in 2017, no guarantees of stability in this unstable world mate and no security in money, no matter where you put it.
    Hi mate, Yes I've been pondering that latter point which is well said. To get any kind of return on your money there is risk and even with Government stock there is some risk. At the current generation low interest rates cash in the bank is merely an option to buy something cheaper at a later date, while unless there's an Armageddon type event generally preserving one's capital base.

    So where too for AIR's SP in the short term ???

    AIR's main rival in this part of the world does seem to be doing quite well. http://www.asx.com.au/asxpdf/2016103...wx313twbyv.pdf
    In this market update which I don't think ? has been discussed in this thread before they're looking at $800-$850m underlying operating profit before tax on the reduced number of shares due to the buy-back of 1,874b. Looks like about $580m after tax or A31 cents per share in earnings for the first half.

    On the other hand AIR are forecasting at their mid-point $500m before tax for the full year which gives about $360m after tax and on 1,123m shares = N.Z.32 cps.

    Keep in mind these two companies did about the same EPS for the full year last year so we are now seeing quite a significant divergence in their earnings. It would appear that QAN's current strategy of cost control, running older tech planes in a low oil price environment and carrying more leverage in a ultra low interest rate environment as well as doing a significant share buy-back is really starting to work in terms of earnings per share. With QAN's relative outperformance they're slowly becoming a more formidable competitor and their business model is working extremely well given the heightened competition all carriers face.

    Based on 4 traders average estimates AIR trade on a 2018 forward PE of 6.73 times whereas QAN trade on only 6.02 times.
    2018 PE's for Delta are 8.2, United 9.8 and American Airlines 9.3.

    On a forward dividend yield basis AIR has the comparison shot to bits. No reason that I can see why they can't pay 20 cps fully imputed for the foreseeable future. 20 / 0.72 = 27.78 cps gross which on today's closing price of $1.98 = gross yield of 14%.

    The American carriers have had quite a rally in the last few months and both QAN and AIR have underperformed by comparison. How each would perform if there's some sort of market reality check, (which I think is fairly likely) is anyone's guess.
    Last edited by Beagle; 17-11-2016 at 05:29 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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