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23-01-2020, 11:25 AM
#15161
Originally Posted by Blue Skies
Interesting question.
At the time of the SAARS outbreak, Statistics NZ figures showed visitor numbers from Asia fell by 26.8% & from the US & by 9.7% compared to the same month previous year. AIR had to reduce capacity on Asian routes for 6 months as load factors dropped by 5.7%.
The Ebola outbreaks occurred mostly in Democratic Republic of Congo & West African countries such as Liberia, Sierra Leone, Guinea & Nigeria none of which we have direct flights to or significant travel between.
With around 30 flights a week between NZ & China and over 400,000 international arrivals a year from China, am sure the govt & airline & tourism industry keeping a very close watch on this latest epidemic.
However, to keep some perspective, 17 deaths out of a population of 11.8 million in Wuhan so far.
I've always thought contagion & resulting panic is one of the biggest risks to airline industry & it's not if but a question of when.
Apart from the travellers, how would the company deal with a situation where pilots and cabin crew refused to expose themselves to the risk by flying to a destination. I don't believe the airline could impose that on anyone.
Cheers. And yes, as indicated earlier - if this turns into a full blown epidemics with significant impact on the traveling public, then there well might be buying opportunities for stocks like AIR. Just important to get the timing right.
On the bright side - if AIR needs to reduce flights, than the nightmare liner issues might be easier to mitigate for them ;
BTW - just found a relevant article in the guardian:
https://www.theguardian.com/money/20...oncerns-deepen
Last edited by BlackPeter; 23-01-2020 at 12:13 PM.
Reason: added Guardian link.
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"Prediction is very difficult, especially about the future" (Niels Bohr)
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25-01-2020, 08:59 AM
#15162
Interesting BlackPeter. Admit that I've just provided one of those "buying opportunities" - I sold out of AIR yesterday. Have held for ages, but I remember the impact of the SAARS, and thought it was better to be prepared for the downside. Suspect the cash will end up in the Finance sector...more specifically the HGH sector :-)!
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25-01-2020, 09:28 AM
#15163
Originally Posted by SylvesterCat
Interesting BlackPeter. Admit that I've just provided one of those "buying opportunities" - I sold out of AIR yesterday. Have held for ages, but I remember the impact of the SAARS, and thought it was better to be prepared for the downside. Suspect the cash will end up in the Finance sector...more specifically the HGH sector :-)!
I've done the same. Sold all my AIR shares a couple of days ago and very likely to end up in the same place as yours, despite HGH being 21.5% of my NZX portfolio already.
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25-01-2020, 02:26 PM
#15164
Here's to hoping AIR dips significantly so I can enter after this passes lol
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26-01-2020, 09:20 AM
#15165
All travel tours from China will be suspended starting monday, looks like a dip will be coming quite soon.
https://www.nytimes.com/2020/01/25/w...ronavirus.html
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26-01-2020, 10:33 AM
#15166
Yes this virus outbreak is starting to look ugly. Highly likely to affect nearly all tourism related businesses and potentially not limited to tourism. The spread/infection rate of this virus is terrifying
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26-01-2020, 11:13 AM
#15167
China makes up about 11.5% of NZ's total travel numbers (450k out of 3.8 million visitors), the impact could be quite large.
Not to mention the indirect impact of people travelling less in general out of fear for the virus.
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27-01-2020, 10:08 AM
#15168
Originally Posted by iceman
I've done the same. Sold all my AIR shares a couple of days ago and very likely to end up in the same place as yours, despite HGH being 21.5% of my NZX portfolio already.
I posted a couple of weeks back I saw AIR as primarily a yield stock with little prospect for capital gain. At that time if I remember correctly the price was in the mid - late 280's. I think in the late 290's now with recent developments some caution is warranted and I see some modest potential downside risk from here so as a capital preservation measure I also liquidated my small position today. It will be interesting to see how Greg Foran gets on with the unions given his reputation for cost cutting. I'll watch from the sidelines for a while.
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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27-01-2020, 04:48 PM
#15169
I feel we have done the correct thing in mitigating an obvious risk Beagle. This virus scare is already having a much higher impact than many realise and selling to avoid a potential loss of capital is neither scaremongering nor panic. In the fairly small company I work for, 10 Chinese workers were supposed to be flown back home next week and 12 flown from China to Argentina for work. Neither will now happen. That’s 66 airfares (3 legs each ) cancelled just from our small company and this time they were all meant to be with AIR. . There will be millions of planned airfares around the World being cancelled in similar circumstances. Remember it’s not just tourists that use airplanes.
Last edited by iceman; 27-01-2020 at 04:52 PM.
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27-01-2020, 05:55 PM
#15170
Yes, thanks for that reminder Iceman. I feel for you in your position. It must be a very nervous time for you given how closely you work with many people from that part of the world. Best wishes mate.
I had valuation concerns in the high 290's anyway irrespective of this thing. Yes, good pragmatic risk management is neither panic, illogical or scaremongering.
Latest date showed tourism starting to slow down before this scare anyway, (hasn't really been discussed on here before), so I am not so sure on the long term growth story any more. Back to being a pure cyclical and we're now on a down cycle ?
On a brighter note, if they have to shut down all flights to China that's an effective way to sure-up the supply of aircraft to ensure adequate supply on other routes while they continue to work their way at "glacial speed" through what feels like the never ending nightmareliner fiasco.
Last edited by Beagle; 27-01-2020 at 06:35 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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