AIR - Air NZ.

[Beagle]

Well i'm fully loaded now after topping up big time at $2.53( Fell a few cents more but that's life) My average is now $2.57 for over 180k shares (I won't say what percentage of my portfolio that is as it may frighten some even Roger) IMHO the current price is completely irrational and has come about through a mix of things like plain fear/the shepple effect/stop losses being hit etc etc ,will become oversold soon ( If not already) so expecting a bounce and of course there's that nice fully imputed divvy which is on a par with the Spark divvy. Anyway I reckon there's a lot of upside in this share, that's my story and I'm sticking to it.

Crikey you've got a pair I'll give you that. In terms of me backing my truck up, I haven't used my truck for quite a while but I changed the oil today and made sure the reverse gear works, (so too speak).
I take a lot of comfort from the aircraft loadings throughout FY15 staying strong at 84.1% even though for much of FY15 the economy wasn't nearly as strong as in FY14, (recall Dairy was over $8 in FY14 !). Further, demand actually grew in FY15 a materially less assistive economic environment in line with AIR putting on 6 % extra capacity ! You folks want evidence that AIR's marketing team can fill extra capacity ?, look no further than last year as a prime example.

As Christopher Luxon tried to explain to the doubting Thomas analysts during the call, inbound tourism is up 7% and tourists are staying for longer, travelling around here more and spending more while they're here. C.L. is very confident the new Houston and South America routes will be profitable from day 1. There's 30 million Americans in the southwest that gives a large catchment area and most of them think that flying here is a forty hour journey. Further, Houston is United airlines, (Star Alliance partner) equal #1 hub so hassle free connections onwards throughout southern and eastern states are easy and convenient. Five flight s a week from day 1 and good forward demand is being experienced.

I also take comfort from forward sales at balance date FY15 comfortably exceeding those at the same time last year.

I do believe that analysts are human beings, (as a professional myself I acknowledge its hard to stay truly objective in times of extreme pressure, almost duress) and they can't help but be impacted by this weeks dramatic events in the international markets. The timing of the result was most unfortunate as was the environment in which those analysts reworked their numbers. Interestingly some have quietly made significant upgrades to FY17 estimates on what were very pessimistic estimates before that. I reiterate that you can take analysts FY17 and FY18 estimates with a grain of salt...they have very little clarity on what conditions will be like in those years this far out. Just listen to what the company is telling you about FY16.

[couta1]

Maybe those analysts fail to take into account that tourism is humming and is set to overtake dairy as an earner within a couple of years, well positioned comes to mind. (Perhaps those analysts should spend a week in Q/town right about now to blow the cobwebs from their thinking)

[Beagle]

Maybe those analysts fail to take into account that tourism is humming and is set to overtake dairy as an earner within a couple of years, well positioned comes to mind. (Perhaps those analysts should spend a week in Q/town right about now to blow the cobwebs from their thinking)

Couldn't agree more mate. We could give them a guided tour for a small charge Mate you've set the bar pretty high with that shareholding stake of yours !
Just keep your seat belt firmly fastened for the next 2 or 3 weeks. Hopefully there should be smoother flying conditions after that.

[couta1]

Couldn't agree more mate. We could give them a guided tour for a small charge Mate you've set the bar pretty high with that shareholding stake of yours !

Yeah I'm all or nothing if I like something and feel proud of this well run NZ owned business( Why give money to Australia?) I like to be transparent about my holdings also, happy for others to know where I stand whether they agree or not.

[Beagle]

Yeah I'm all or nothing if I like something and feel proud of this well run NZ owned business( Why give money to Australia?) I like to be transparent about my holdings also, happy for others to know where I stand whether they agree or not.

Good on you mate.

[blockhead]

Left an order in @ $2.51 for the last few days, didn't have a chance to check through the day and was surprised to see the order was filled, lets hope that's the bottom and we get back to discussions about when $3 will be breached again !
Div is too good to leave on the table I figure.

[Robomo]

Well, the overwhelming opinion, including mine, about AirNZ on this forum is that everything is looking extremely good and that this correlates with the majority of airlines worldwide who are reporting record profits. However that hasn't stopped lots of people willing to sell AirNZ for an ever decreasing price, presumably on the threat of 5 old Qantas Q300's and more international competition from assorted airlines.

What I would like to know is....what is the mindset of those who are selling?

[winner69]

What I would like to know is....what is the mindset of those who are selling?

Probably see it as fully valued, even taking into account the bright prospects ahead

Rogers long term average PE of 10 is a bit misleading. When AIR goes through tough times h PE is high teens when when making plenty the PE drops to 7 and sonetimes below. The market sees earnings cyclical so value it on a sort of mid cycle basis - that's where it s now.

Interestingly AIRs PE ratio is generally 50% to 60% of the market PE

Until the market changes it views I fear that's how it is going to be I reckon.

[couta1]

Robomo I reckon it's mainly the Shepple effect and analysts making haphazard guesses about 2-3 years from now is just crystal ball gazing but many of the sheep give these analysts a lot of kudos (I Don't) Things can change for any company over a year let alone further out than that but Air has to be in the best position currently it has ever been in and the ducks are all lined up. Competition from Jetstar is just a side issue and of little significance to AIR IMO, anyway looks near to or already oversold going by some basic indicators like RSI and W%R and with the divvy going Ex in just over a week should be bounce time soon.

[Beagle]

Probably see it as fully valued, even taking into account the bright prospects ahead

Rogers long term average PE of 10 is a bit misleading. When AIR goes through tough times h PE is high teens when when making plenty the PE drops to 7 and sonetimes below. The market sees earnings cyclical so value it on a sort of mid cycle basis - that's where it s now.

Interestingly AIRs PE ratio is generally 50% to 60% of the market PE

Until the market changes it views I fear that's how it is going to be I reckon.

That's fair comment mate. Couple of things though.
Firstly PE expansion. Interest rates are heading to 50 year lows so that's supportive of some general market PE expansion, certainly the market generally has expanded its PE, so as I've mentioned before you could easily argue that the average PE should move to 11 or perhaps 12.

Secondly, while I accept the general thrust of what you're saying if you take into account the stock trades cum a 9.5 cent fully imputed divvy due in five minutes time, (so too speak) and look through that, in effect it closed on Friday at $2.40 on an ex div basis. Consensus analyst forecast is now 44cps so the consensus FY16 PE is only 5.45, or more correctly would be that if the stock trades at $2.40 when it goes ex in early Sept. I don't think AIR's PE has ever been that low.

Robomo - In addition to the matters you outlined the only way I can figure this is it must be general gloom and doom over the N.Z. economic outlook and world economic growth concerns...that's the only thing that would explain the current SP...and yet for much of FY15 the economy was far from robust yet they still filled the extra 6% seat capacity. Go figure ?