They've got deep pockets over there in Dubai
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They've got deep pockets over there in Dubai
100 billion of orders to Boeing this week
Emirates 150 odd 777s whatever they are
http://america.aljazeera.com/article...aiairshow.html
Yes, some of the 777-200ER's are looking quite tired but they are all scheduled to be refurbished beginning in early 2014. IMO this should be done immediately, but I guess AirNZ may have deferred this upgrade for cashflow or logistical reasons.
I do wonder whether the new white coloured BP seats in the 777-300ER's will weather well, compared to the brown coloured seats which tend to hide scuff-marks/damage much better. This might lower the lifespan of the product and hence raise costs. Time will tell.
That's a very good price via Singapore, more comparable to the BP specials on AirNZ. Well done! :) The Oneup upgrades usually take a few empty seats from BP as do recognition upgrades, but I do get the feeling that the revenue team purposefully hold back some Oneup upgrades that otherwise would have made it, just to ensure that the system isn't being gamed.
Thanks, but it was no great achievement. You could get the same fare of NZD8,522.58 next week if you like, vs AirNZ for NZD10,997.48. Incidentally, Emirates will get you there for NZD9,904 - will stop with the fares right there as I'm not WebJet :)
I'll also take this opportunity to stop going on about this - my observations are not the whole picture and I have no desire to attack our national airline (privatised or not). I had my concerns, exited happy and genuinely wish the best for remaining holders - just wanted to add something towards the 'other side' of the debate.
AIR sell down completed at 1.65.
http://www.nzherald.co.nz/business/n...ectid=11159607
IMO, This is quite bullish. Most sell-downs have a discount.
I cannot fathom that at all. How do the govt manage to do that. They got top price for MRP, near top for MELCA and now top price for AIR. Why would anyone want to buy at 1.65 in this placement when they were readily available on market at 1.65. Supply has now increased significantly and I cannot see them go up in the near future. Puzzling.
For many institutions AIR would have been unattractive prior to the sell down because:
1. Liquidity was poor
2. They knew a sell down was coming and just needed to wait. They probably thought they could get the shares at a discount.
These 2 factors are gone now. Also, the free float has nearly doubled. This means AIR will move up the indexes. Expect institutions to be buying in for this reason as well.
Most brokers think AIR is cheap at these levels. Consider this, AIR is trading at less than half the PE ratio of the power companies. At least AIR has potential for growth. Thus I don't think the government have got top price.
Come election time, I reckon AIR will be the only SOE float in the black.
So when are you going to sell up Belg :-))
FYI Just looked up the load factors on those SQ flights and there is plenty of availability on the ones returning $8.5K, while NZ are showing moderate to low availability for the same period. NZ do price their product higher but perhaps that is in the belief that theirs is superior? Anyway yes, anxious that this doesn't turn into a beat up too. Whatever NZ are doing is obviously working overall as things are looking good.
well, if it goes higher, that muppet (beaker, if I recall) and the guy in the seaweed suit who lead the opposition will probably drag out the 'firesale' comment again. I haven't heard if pumpkinhead Cosgrove has had anything to say - probably told to shut up by the muppet.
Why did the government only sell down to 53% and not to 51%?
Is a capital raising on the horizon?
1.65 is a great price, the overhang has been holding AIR back for a couple of years so good to see it gone at a high price. Expect to see the share price fly higher this week.
Sorry but that is incorrect - the Airline is buying shares for that purpose, but that has nothing to do with the Govt.
I wonder if Air NZ may announce that it will purchase 3 or 4% of its stock back from the govt (as I have been calling for), bringing the govt stake down to 51%. This would explain the lack of buy-back so far. There is no chance in hell of a capital raising. They have too much cash already!
Re the comments about SQ etc - the truth is Air doesn't want to fly you to Europe - its not profitable for them. Look at the financial performance of SQ... It's a tool for promoting Singapore.. Same for EK and Dubai.
No idea what the share price will do in the short term from here - but very happy this uncertainty has been removed. And very optimistic about how the company is going.
Oops - heard from a broker that some retail investors bid aggressively, going for 2 or 3 times what they wanted, expecting to be scaled back.
Instead, they received 95% of what they bid for.
Watch the institutions help these investors off their overbid shares at 5c to 8c discount from the $1.65.
My broker was ringing me again this morn trying to flog some; nada.
I guess i have to hold the stock until better days.
This one was manipulated for govt to get the maximum. SP might recover next yr, in the mean time riding lower.
For the newbies, IMO stay clearer until SP settles.
"Demand is likely to be boosted toward January, when index weightings on the NZX are next reviewed. Air New Zealand's weighting will increase to between 1.4 percent and 1.5 percent from 0.8 percent currently, he said."
A month of anxious waiting ahead?
Mugs, mugs.
Buffetology (the authoritative book on Warren Buffett) gives a table of industry sectors NOT to invest in. Airlines features prominently. No barriers to entry, heaps of competition, at the mercy of petroleum rises, sudden unexpected passenger fall-offs, government intervention. And look at Air NZs history. I used to own some before I read Buffetology and I'm very pleased I got rid of them then.
Besides, would you buy ANYTHING from an NZ Govt? They've all been poisoned chalices so far, Telecom, Chorus, Mighty River, Meridian...
And in the unlikely event that Air NZ was quite successful then ComCom would step in and hit it for six!
Those institutions and private investors who have bought Air NZ are NUTS! Quite NUTS!
Good one FH - well in... :)
Air NZ sale a 'bloody debacle'
A fall in Air New Zealand's share price has provoked anger and dismay among some market players as another government sale left investors nursing short-term losses
However, not everyone shared the concern. Matt Goodson, of Salt Funds Management, who acquired some stock in the offer, said he did not see a problem.
"If you bid $1.65 for some shares, and you got them, what's your problem?"
It has always struck me with these Govt sales that you are dealing (trading) with someone (Key) who was very successful at this game. High chance of being shafted - exactly as would appear to have occurred with this sale. Well done selling 200 million at the high for the day (so far) on behalf of NZ taxpayers John.
Attachment 5046
The winning Trifecta for taxpayers has come in. Yeap, investors have been duped three times in a row !!
Anyone up for a fourth belting next year with Genisis ?
When you look at the PE Ratio's the power companies were flaoted on in a no growth industry I struggle to understand how experienced investors could allow themselves to be so silly :mellow:
I posted my negative opinion many times in each respective power company thread. But this Air N.Z. one surprised me, I thought it would be onward and upward from $1.65. Fortunatly I have a policy of not investing in Airlines.
Like I wrote earlier.. the govt on behalf of the tax payer have done very well. Well done JK and Bill. Anyone paying 1.65 for Air NZ should be happy enough because that is what they obviously wanted. No need to complain after the event. Everyone was well informed same goes with the power companies. Had some Meridian but sold out day 2 or 3.
http://www.stuff.co.nz/business/indu...-post-selldown
Seriously, welcome to shares, sometimes you feel sick, other times you feel great, surely brokers know as well as others this is reality of open markets! You shouldnt buy for the short term, maybe it will teach them a lesson! NO point letting your day turn to crap and being angry for a few % here and there. Anyway why buy into such a high cost, competative industry anyway when there is shares like SUM. Muppets.
Have a look across the board today. Mostly down following last night offshore markets. Why should AIR be exempt from that.
Muppets indeed....this is the highest SP its been in five years...why would anyone with half a brain buy at the top of the top of the market. Good on the Govt for maximizing the return for the shares however. Should be some soul searching going on in brokerage and instos that bought in. Its not a highly liquid stock in the first place and what were they thinking would happen when 20% gets dumped on the market.
Very true, Zaphod.
Anyone going for the AIR placement would/should be well aware of the risks around the stock. Not too many new mums and dads - detestable term! - in this one!
giday to continue ballers thread ...and call me old fashioned...but I heard yonks ago that every airline (other than those govt owned i.e. emirates,singapore,areoflot et al) go broke.
push up and sell..., good strategy the govt haha
Makes perfect sense to me STC
Thank you for posting
Thanks Sparky - Not that I have followed the Freelancer IPO but I noticed that they appeared to select the institutions that would get shares and gave the other institutions nothing. Not necessarily a 'fair' way to do it but the Govt/Treasury should have had an indication from the previous 2 floats which instos were supporting the floats and which were just stagging it.
It does seem that they were focused on just getting the highest price, wheras they probably could have been a bit more tricky and still got the same result.
Thanks Sparky - Not that I have followed the Freelancer IPO but I noticed that they appeared to select the institutions that would get shares and gave the other institutions nothing. Not necessarily a 'fair' way to do it but the Govt/Treasury should have had an indication from the previous 2 floats which instos were supporting the floats and which were just stagging it.
It does seem that they were focused on just getting the highest price, wheras they probably could have been a bit more tricky and still got the same result.
Good to hear from you, STC.
Reaffirms everything about Treasury which I have had experience with and heard about.
Really, Treasury are a bunch of pimpled faced kids let loose with the country's economic destiny and applying an efficient free market 'tried and failed' philosophy on everything.
I still remember one of the top NZ companies locating one of its plants (employing over 200 people) in Australia after Treasury advised the government that NZ government should not match the miserable $15m R&D funding promised by the Queensland government. Instead the idiots in there were busy recommending cutting back on government services and we saw one of the consequences with the Pike River tragedy.
One of the overseas bankers I met some years ago said she was horrified to meet the sort of staff at Treasury who are 'wet behind the ears' making policy decisions.
Arrogant and ignorant - that's how she summed them up.
Dangerous combination!
Same goes for auckland council mate...law into themselves.
I have heard the opposite criticism of the power company floats. We allocate to overseas instos at the expense of NZ instos. Then the overseas instos stag to the NZ instos. But in the Air NZ case, how could the government possibly deliver on the "keep the shares in local hands", if they placed a lot with overseas instos?
What amazes me is that they could unload that many shares so close to the prevailing market price - especially given the track record of the other 2 sales. You have to say it's Gummit 3 Investors 0 so far! If JK has been looking after his mates - they aren't us lot!
Point that STC and Gaynor are making is that they should give the 30m odd shares allocated to overseas investors to just one or two, like Capital Group. Then it's worth their while to build up their stake to say, 5%. Otherwise, they just sell out the 1 or 2m shares allocated to them as Treasury spread the shares too wide.
Agree, STC - no perspective whatsoever of what a dog of an investment Air NZ was for Brierley, SIA and the minority shareholders who lost billions. Pick a time period and most investments can be made to look really good or really bad.
As for comparing Forsyth Barr's investment recommendation track record, three words - Feltex, Credit Sails.
AIR only lost such a huge amount in 2001/2002 year because of Brierley's decision to have AIR invest in Ansett. To say AIR was a dog of an investment for Brierley's when they were in control is total rubbish from you.
You are right there that BIL supported Air NZ in buying Ansett and Air NZ made a dog's breakfast out of Ansett.
But it was still a dog of an investment for them.
If it looks like a dog, bark like a dog and walk like a dog (irrespective of what you feed it), it is a dog!
Brierley did not support AIR in buying Ansett, Brierley's were controlling AIR at the time and had they alone did not do "due diligence" and bought a dog.
History may repeat for Cullen Airlines expeditions into the Australian market.
The domestic air-fare war between Virgin and Queer and Nasty and friends is far from settled.
Best outcome for John Key and us taxpayers, flog the lot to Etihad.
Boop boop de do
Marilyn
from a Rod Oram piece on Stuff
Not exactly 100% true is it?Quote:
But all is not lost. You can make a far better investment in Air NZ than its shares. If you were smart enough to buy its 2016 bonds when they were issued, you're enjoying a 6.90 per cent coupon. Even if you bought them this week, they still return 5 per cent and your capital is secure
Best Wishes
Paper Tiger
No, it's an outrageous thing to say. Your capital is 'secure' ??? Ask Babcock and Brown bond holders and many others who have lost all their capital or a huge percentage of it.
And he says this!
"Should Air NZ hit the skids again as it did in 2001 when the government was forced to bail it out, - heaven forbid, but that's a real risk in airlines - bond-holders would likely get all or at least a large chunk of their capital back.
And should the airline go bust, as a shareholder you will rank far behind bondholders in the division of the meagre value left in the company"
Which is just crap! In AIR NZ hits the skids as in 2001 or "goes bust" the bond holders will lose their money just like the shareholders. You can rank anywhere you like, but if there is nothing left, where you rank is meaningless.
Some times Rod Oram needs to stop talking from his back side.
A commentator in his position should know better.
I don't know that I'd agree with your pessimism there. The Govt still own 51%. this should give you some measure of comfort I would think. I own the bonds and at 6.9% not the best yield but was better than the shares were paying at the time. Risk everwhere as we all know..I think these bonds are very low risk but that's just me.
Some of those numbers show how 'risk' doesn't seem to be an issue these days
Gvt Bonds 2027/2019 quoted at around 4% - lets call that the country risk premium
The Air NZ bonds at 5% implies investors putting a 1% company risk premium on Air NZ
Take it a bit further and dividend yield is 5% - implies a equity risk premium of 0% - so are shareholders saying no added risk in holding shares at 160? Punters no doubt playing the capital gain trick
Seems like most think Air NZ pretty risk free anyway
The only thing of value in Orams little piece is that he reckons AIR has destroyed heaps of value ....Air NZ is no exception. From 2003 to 2012, its profits exceeded its cost of capital in only four of the 10 years, according to data it supplied for this column. The last time was 2005. Its total cumulative destruction of shareholder value was $179m.
If that the case AIR isn't worth any more than its book price of 164 anyway ... so improved performance built into the price (ie consistently making more than its cost of capital)
A lot of garbage in the herald and by posters here - almost entirely backward looking. Past performance is no way to judge an investment. Since 2001 the oil price has gone from 30 USD to over 100 USD a barrel. A more than 300% increase. In 10 years time oil prices will not be 400USD per barrel (if it is we are all screwed).
The fact that Air NZ has been profitable throughout this is testament to its strong competitive position and thoughtful conservative management. As far as airlines go Air NZ is nearly as good as the best of them - which have been very successful investments. These are Copa, Ryanair, Easyjet, and a few others. In some ways I see Air NZ as facing less competitive pressure than Ryanair and Easyjet, which means it should deliver more stable returns.
Buffets comments apply to US airlines - a huge market, highly competitive, and one with low barriers to entry. NZ is a small market where AIR has significant incumbent advantages. We have seen the departure of Virgin NZ and Jetstar struggling - it is unlikely there will be any new competitor. Internationally NZ will continue to face competition - but only from Asia. Air NZ has a significant cost advantage over US and Canadian airlines, as well as small pacific airlines.
In asia NZ will compete with efficient aircraft, and do okay bringing tourists to the country (which will likely fly domestically as well). They will increase their focus on outbound destinations such as Bali where they have a competitive advantage - NZers will pay more to fly NZ, Chinese ones may not.
The current outlook for Air NZ is very good, the company is on track to grow earnings 20-25% pa over the next 4 years, and dividends at an even faster pace. Whatever metric you use the stock is cheap and not reflecting the quality of the business (its strong competitive position), the growth, or the value of its virgin stake.
And fyi AIR has significantly lagged US airlines this year. They are the best performing stocks in the market - a lot have doubled. As a long term investor I would rather own Air NZ which I think can do consistently well, rather than US airlines which have bounced hard from rock-bottom valuations, but remain structurally challenged.
This is bizarre analysis and it is totally incorrect to apply a dividend yield vs bond yield comparison as a measure of equity risk premium. What would you say about the many stocks with low or no dividend yield.
Not sure what came over you to post such thinking - based on your next point you seem an intelligent guy.
Makes some sense - but book value is rising quickly, and I would argue the company can sustainably generate returns above cost of capital - P/B of Copa Ryanair and Easyjet is over 2x! Air NZ currently 0.8-0.9x.
Modandm - isn't one of the key inputs into ERP an expected returns number. Lots of academia using bond and dividend yields to assess implied ERP. I admit such studies are generally at a market level but the rationale does apply at a company level
Just says old fashioned thinking in that investing in the government (govt bonds) is the least risky investment. Investing in company (bond) is more risky and the yield be higher. Investing in a company by having shares is even more riskier and so the dividend yield should be even higher. (Suppose the logic does assume that the most of free cash flow is paid out in dividends)
In AIR case I should have used a dividend yield of 6.944% (nxz gross figure quoted) . So country risk is 4%, company risk 1% and implied equity risk is 2% (not the 0% I said earlier)
Current situation but that is state of play these days in a world of inflated asset prices .....risk premiums are pretty low on a historical basis. Accepting this AIR is probably well priced at the moment.
You mention low dividend companies ......one needs to ask why low dividend. What is being done with any free cash flow? In these companies one could use the FCF and assume it paid as a dividend to apply the sums above. Reminds me of what an old timer told me a while ago in that maybe the generation that follows the baby boomers will be demanding of companies and make them pay out surpluses every year instead if hoarding them. A generational thing eh
Yeah can be used at the market level, but it must be used along with the markets expected earnings growth to imply a cost of equity. Its not very good at the stock level - but if you try you need to plug in a growth rate - that is the difference between fixed interest and dividends - dividends grow over time.
The formula is Value of stock = Dividends next year / (Cost of equity - growth rate)
For Air NZ say 1.60 = 0.12 / (x - 5%)
solve for x = around 13%
So 13% would be your return per year forever if Air NZ grows its dividend from 12c next year by 5% pa to infinity.
In the case of Air NZ dividend growth is likely to be faster than that - but then growth will slow. You can use a multi period formula and plug in your own dividends for the next few years then use a terminal growth rate.
I don't accept you argument that Air NZ is fairly priced at all - or that the worlds stocks are... There are some assets that are expensive - but its not widespread. Of course stocks feel expensive because they have been very cheap for the last 4 years...
Meanwhile in the land of the underarm bowler Federal Treasurer Joe Hockey has hinted that the Aussie Taxpayer may put money into Queer and Nasty Airlines.
Maurice Williamson had better dash down the corridor to the Minister of Transports office and tell him to unplug the fax machine right now. We wouldn't want the Aussie Government to queer the pitch in favour of their nationalised national airline like last time
Boop boop de do
Marilyn
Its a good point MM. I don't think the Aussies can do much to 'queer the pitch' as you say for Air NZ, but a stronger Qantas would be a negative for VAH.
I don't think its in VAH's best interest to keep the pressure on Qantas as it has been doing for too much longer. Maybe another 6 months - putting Qantas under pressure means Qantas can't invest as aggressively as VAH in new a/c and improving the customer experience - which all plays to VAH's strategy of taking market share.
If they carry on too long and put Qantas under too much pressure political action may result - so its a fine balance.
In the medium term, once the bloodbath is over both carriers are likely to start hiking prices, and reducing capcity growth in unison. This bodes well for improving profitability for both. I think both carriers will be making tidy profits in 3-5 years time.
Uh ooh! The fasten seat belts sign has just come on in the Cullen Airlines shareholders flight.
Standard and Poors has just downgraded Queer and Nasty Airlines to junk status.
Boop boop de do
Marilyn
Moodys has followed Standard and Poor's downgrading Queer and Nasty Airlines debt to junk status.
Will this create wake turbulence for Cullen Airlines?
Boop boop de do
Marilyn
I'm seeing 5 mill shares on the sell side from 4 sellers today - volume seems a little excessive?
The response by Virgin(Underarm Bowlers Division) to an ASX price movement query makes for stimulating reading.
http://www.asx.com.au/asx/statistics...idsId=01489284
I hope the Virgin ground proximity warning radar device in the Cullen Airlines boardroom is active: "WHOOP WHOOP, Pull Up, WHOOP WHOOP, Terrain, WHOOP WHOOP, Pull UP WHOOP......"
Of course I could be worrying for no good reason, after all a kiwi Airline loosing its shirt in Aussie has happened before so I'm sure the Cullen Airlines board are watching carefully.
Memo to John Key and long suffering Kiwi taxpayers; sell the lot to Etihad.
Boop boop de do
Marilyn
The airflow providing lift for Cullen Airlines ambitions in Aussie could become a lot more turbulent
Federal treasurer for the underarm bowlers Joe Hockey is talking about Aussie taxpayers guaranteeing Queer and Nasty Airlines debt.
http://www.smh.com.au/federal-politi...213-32jxc.html
Could this mean Cullen and Queer and Nasty airlines will become entangled in a dog fight over the Tasman Sea with the ammunition paid for by the taxpayers of either country?
Memo to John Key; sell the lot to Etihad.
Boop boop de do
Marilyn
so AIR reports half year today. Should be little surprise as they gave guidance of 20% increase in PBT in December.
What will be interesting is the dividend. I am hoping a special will be announced. They are in a very strong position and have saved up some imputation credits that could easily be utilised.
They should be on track to deliver just over 20c eps this year, with a 60% payout ratio that means 12c in divs or about 7% yield. To get there they need to hike the first half div to 5c I think.
Continue to hold tightly, I see the stock trading on about 2.35 in a years time, which is 9x my FY15 eps estimate of 25c. Should get some healthy dividends too so c.40% return potentially.
Lots of new aircraft and capacity increases in FY15 to get excited about.
Cheers
29% increase in earnings. 4.5% div.
Great result. Can they maintain the good performance? If you look at history this industry tends to boom bust regularly. What is interesting is that will the new fuel efficient planes change the boom bust cycle?
I tend to follow other more knowledgable people in this sector (Buffett) who says airlines make a poor investment. However his observation in generally based on the hard and fast rules of the industry that people, planes and fuel are the major expenses and travel is a luxury good. If fuel efficient planes take out a major cost can legacy industry dynamics change and make this a consistent earner?
I tend to look at this from a long term perspective. I am sitting on the "wait and see" before passing judgement.
Has the good profit result announced by Cullen Airlines given Marilyn a pie in the face? A vol-au-vent maybe.
Cullen Airlines has been lucky. Their biggest competitor Queer and Nasty Airlines is run by a bunch of clueless idiots, and there has been no customer push-back from their roll out of the thrombosis class cabin layout.
Their are continuing concerns. The use of Airbus A380's by competitors on North American routes would see customers deserting Cullen Airlines. Jetstars Asia strategy is stuttering leaving them with a fleet of seriously underutilised A320's. These aircraft could be redeployed in Aoteroa domestically or criss crossing the ditch. Whether Boeing 787's are the right aircraft is still unknown, and of most concern Cullen Airlines are bankrolling the ruinous capacity war between Virgin(Under Arm Bowlers Division) and Queer and Nasty Airlines across the ditch
Queer and Nasty Airlines are due to to announce their profit result later today. It is widely expected to be a shocker. If it forces change on this airline it may not be to Cullen Airlines advantage.
Memo to John Key, sell the lot to Etihad, after today the taxpayers will get a better price.
Boop boop de do
Marilyn
:) thanks, to answer your question I would say yes things are going to get even better. I expect strong earnings growth to continue as the company expands. Airlines have high operational leverage, therefore when economies improve and revenue growth is strong, profitability rises at a rapid rate. In AIR's case by about 25%pa over the next few years. Combining that with the company's very low valuation vs peers, relatively strong competitive position, and high yield you can see why I like the stock so much.
Here are some more quick thoughts post conf call:
Very much as expected, maybe a touch better in some areas. A very credible result considering low revenue growth this year and the significant one off labour costs (redundancies, and retraining). Otherwise very little new or of surprise,
Key positives for me are:
- comments that domestic yield environment is improving
- outlining 8% FY15 capacity growth (previously they have used 7-8%),
- FX hedging for next year is building up nicely at 82c+ NZD/USD
A touch disappointed on the dividend, but looks like they want to do 4.5+7.5 = 12, to make it 50% even increase for the year. Maybe a special occurs at full year - but don't count on it. Unfortunately there is a bit of management conservatism in this regard.
FY 15 is going to be super! I can pick a FX and jet fuel cost, the difficulty is what will the 8% capacity growth translate to revenue? If you assume constant load factor and yield the answer is 8%, which would deliver c.30c EPS! If you say load factor and yield detract about 2% then using 6% revenue growth you get then about 25c EPS.
I then value the company at 9x forward PE or $2.35. I would say this is conservative. You could use a higher multiple or higher earnings number and get $3.00 easily.
Also this valuation ascribes zero value to VAH - worth c.25c NZD per share (unlikely to see a return on that in the next few years though...)
Happy holder.
http://www.watoday.com.au/business/a...227-33j48.html
Lol QQ Australia...
I'll sumarise the loss announcement of Queer and Nasty Airlines CEO Allan Joyce so you don't have to.
We are in more poo than an outback dunny, other than treating those who work for the airline as annoying blowflies I don't know what to do.
But I deserve to keep my job.
Boop boop de do
Marilyn
Cullen Airlines Aussie step child, Virgin(Underarm Bowlers Division), has just announced it has flushed $A83.7 million down the dunny.
http://www.asx.com.au/asx/statistics...idsId=01496443
Boop boop de do
Marilyn
In such a forward looking market, why is the stock price not higher right now?
Surely the prospect of 300 million profits for the year would cause the price to be much higher than it is now. The P/E is quite low right now, for such a forward looking market, would that possibility not be accounted for. At $1.80 that is still a very cheap price when comparing the P/E to other stocks.
Well that normalised $300M+ before tax will be $210M+ after tax so it is already on a P/E of 9.42 or better.
Take the SP to $2.10 and the P/E is 11.0
Then where does it go?
Airline profits tend to be all over the place and the further forward you try and predict the greater the possible variations, but you start factoring in a major downturn.
So they trade on nice low multiples to counter the higher risk (than more boring stocks).
Best Wishes
Paper Tiger
Not to spike any false excitement but generally the second half has been at least 80% of the 1st half (as shown on previous two years), so if we take that the 1st half of 140 million profit, we get 112 million for the 2nd half, which would give a nice estimate of 252 million full year profit.
Based on a P/E of 10 we'd get $2.27 or $2.497 on a P/E of 11.