Good on you, once this stock gets to this price level and above, trash city is never far away.
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Looking forward to 3 bucks again
Once that resistance broken it's all good. Resistance becomes support and all that stuff
This time it will be different - remember AIR on track for 2nd highest ever profit
The halo still shines bright - even enhanced with Johnny on board
Actually I was out before the last dividend solely for the reason of not wanting any more divvies in the last financial year, that's why I loaded up on Spark as their payment date was April. Nothing wrong with giving Traderx a bit of encouragement on his decision to take profits, nor painting a clear picture of the nature of this stock for those thinking of buying in at current prices (I reckon I know it's behaviour as well as anyone does) PS-If you read back through my posts over the last year, you will see I had $2.50 as a target price. PPS-The whole market in general has momentum at the moment, but that ain't going to last.
Couta me old mate SUM a certainty to get to 7 bucks sometime soon but AIR as some momentum at the moment so will get to 3 bucks really soon
At LHR waiting for delayed Icelandair flight ,,,,pretty boring
You never know you might get your 230 or less if the current excitement / exuberance pops suddenly
But the current hype is strong enough to keep if going
The god like aura of Chris and Johnny is worth heaps ...AIR seems to be winding the PR machine up to full speed
Now that their investment in Alitalia the Italian flag carrier has gone t*ts up will Etihad turn their attention to Cullen Airlines?
John Key can no longer sell them them the governments stake as he is not PM but as a director he can recommend shareholders big and small accept any offer from Etihad.
Boop boop de do
Marilyn
The calm before the storm?
So what do you want the people who contributed to this "deluge of negativism" you described to do? Put ash on their foreheads because the market didn't follow in the short term their view of AIR's value?
I was one of the people who said that they see AIR as a good but cyclical company rather at its peak than at its bottom and therefore midterm rather going down than up, and I am still doubtful about the midterm outlook of tourism and the travel industry. In my view just too many indicators point currently towards a cyclical peak scenario.
How likely is oil to keep staying as low as it currently is?
How likely that increasing competition does not further reduce margins for all players?
How likely that tourists keep ignoring the deteriorating NZ environment and the increasing NZ prices?
How likely that another big terror event like 9/11, a volcano eruption, a war in SEA or a growing war in the Middle East might impact on tourist streams?
However - this does not exclude the stock price to keep climbing (for some time to come). Remember - markets are in the short term like a voting machine in a popularity contest, only long term are they weighing value and correctly assess risks.
If we look at AIR at the current price with a predicted forward PE of 8.8 and a predicted forward CAGR of 3.6 (though backward CAGR only 1.2), than they still appear to be reasonably priced (though not cheap) if we assume that things will continue as nicely as they did over the last 7 years or so. Question is just ... how often in the past have we seen linear growth over long periods in this industry?
Right, i.e. if history is any guide, than a downturn is over the next couple of years much more likely than a continuation of this climb. So, I guess it is just balancing risks vs. opportunities. The optimist keeps focussing on the (diminishing, but still good looking) predicted returns, the realist accepts that the likelihood of a downturn is increasing by the day. Interesting to note that psychology knows about the "optimism bias", but I never heard about a "realism bias".
Anyway - all the best with your investment, but if I would still hold, I'd currently see this as a good time to sell ...
DYOR.
All I will say BlackPeter is good luck waiting for your 80 cents target buy price :lol:
I am very happy to hold for long term dividend income. I am expecting $1 in ordinary dividends in the next 5 years and about 50 cents in specials as they complete their fleet replacement program. $1.50 / $2.70 = 55.55% return net to me in five years or an average of approx. 11.11% net per annum. Grossing that up for imputation credits 11.11 / 0.72 = 15.43% average gross annual return. I am very happy to sit and collect that for the foreseeable future and look forward to John Key's contribution to continuing to grow AIR N.Z. To be honest whether the market prices AIR shares at $2.00, 3.00 or whatever, I don't really care as I am holding for superb dividend income and will use that to enhance my lifestyle with more travel and fun. Good luck waiting for your bargain buy-in at whatever price you see value at mate.
Confirmation bias, endowment effect or both ;)?
NB - 4-traders puts them on a consensus target of $2.23 (this is a drop) and call them a "hold". Sure -analysts are not always right, but in my experience they are as well subject to "optimism bias" and more often too optimistic than too pessimistic.
Anyway - I wish you all the best ...
Forecasting 5 years ahead in aviation is a big call.
If you want to focus on the current earnings, current dividend yield and PE discount to regional peers and ten year average PE that's perfectly understandable in this industry, I agree but one thing that's undeniable is that they're finishing up their major capex program in FY 19 and on the balance of probabilities the stock will generate tremendous amounts for free cash flow in FY20- FY22. What the industry conditions will be in those years as you quite rightly suggest is almost anyone's guess.
Well, it's been a long time coming. I have sat patiently waiting to exit since the lowest of lows last year. I had originally sold a substantial holding at $3.02 then caught the falling knife VERY early at $2.70. I had told myself I would get out of AIR as soon as I got back in the green/even. I've stuck to my gameplan which isn't always easy to do! I'm entirely out. Goodluck holders
Mr Fibonacci said about $2.70 was also 23.6% of the entire move up from 2012 and, it's also by chance(?) 61.8% retrace of the decline from the highs. Spooky Fibs.
What would Mr Fibbo know anyway eh? Wouldn't want a TA to spoil the party by sharing their analysis, in case it was perceived as a deluge of negativism. Despite the fact that a TA can make upside calls as easily as downside calls, and do, that's the whole point of TA. They just don't bother sharing them here. I wonder why?
Never mind, even the 100MA is a fair way below here (so is the rising trend line), so it's unlikely that the reformed FA's who discovered one single TA marker and integrated it into their trading strategy, will sell at their marker, because this is a long term hold for the Divis, despite the cyclical tendency to smash capital value.
The Elliotwavers (who?) might be looking at $270 as a B or (B) or [B] depending on their view of the cycle or super cycle. But that's just inviting criticism and ridicule, which usually accompanies prognostication and is followed by scorn. Isaac Asimov told us that.
Generally speaking TA's are in for the short haul and FA's are long haul. I'm out at what I'm thinking is the peak meantime. The winter months generate a lot of headaches for airlines, manpower sickness, weather delays regionally and associated engineering difficulties. Historically the share price goes soft over this period as the market capitulates. AIR has been good to me and I will be back in hopefully around Sept or Oct. Thanks for the all the differing thoughts guys n girls.
Does anyone think we will see further benefit to SP from 1st Sep' when JK actually joins the board?
Oil seems to have fallen back a bit recently, WTI is now back in at $USD45 down from the mid $USD 50s not so long ago.
I've seen a few posts about the fleet replacements being all done and dusted in a few years thus freeing up a whole bucketload of cash. What is the consensus on the 777-200s? As at 01/04 the 'Seat weighted Average age' for them is 11 years.
I can't help but notice that the A320 short hauls average age is 12.7 years and Air NZ is in the process of replacing them.
Is the expectation is that they will run them into the ground like the 767s or will they replace them once the current fit out reaches end of life, there are a lot of similarities in size and range with the 787-9?
I expect another ~ 9 years from the 777-200's.
Aircraft lifespan is largely determined by flight cycles rather than age. 777-200s perform fewer cycles operating long haul so will be around significantly longer than the A320s
They might want to replace the Q300s first, 777-200s still have plenty of life in them.
"I can't help but notice that the A320 short hauls average age is 12.7 years and Air NZ is in the process of replacing them"
sounds like NEO has engine problems, so this could be delayed
The recent decline in oil prices gives AIR an excellent opportunity to lock in forward cover on fuel prices for the first half of FY18 which together with the recent improvement in yield as per the March 2017 operating stat's and ongoing strong growth in tourism shows the fundamentals remain very sound. QAN been showing good SP growth lately so confidence in the sector in this part of the world seems to be continuing to recover nicely notwithstanding the much higher level's of competition.
My gut feel once this surges past the 2.70 mark this time, it'll track higher and stay higher for a while. Not quite sure it'll hit the magic $3 mark though yet until FY results are out. Unless there's some sort of trading upgrade from management.
Thanks for letting us know that. Interestingly I crunched the numbers on an after tax basis for QAN at the mid point of their forecast and AIR at $500m less full N.Z. tax and on today's closing prices they're on identical FY17 PE's of 8.33. I think there is a chance of an AIR upgrade and have thought for quite some time now their official guidance issued in February 17 was very conservative.
There won't be any further upgrade between now and the full year report. At the investor presentation the other day they narrowed their guidance range for the year to between 475-525 mill, remember former guidance range was between 400-600mil so they have just given the market an update hence the share price increase yesterday. They would have to be certain of topping 600 mill to issue any further guidance.
From interim announcement February 2017
"Based on the current market environment and expectations for the average jet fuel price in the second half of the year of US$65 per barrel, the airline is targeting 2017 earnings before taxation to be in the range of $475 to $525 million."
So the investor presentation doesn't represent an update, just restatemet of previous outlook. Maybe an update to come, maybe not...
$500m = 32 cps after tax. 10 year average PE is 11. I believe one could legitimately make a good case that the intense level of competition currently being experienced is amongst the very strongest they've seen in their 77 year history and yet the resilience of their business is such that they're still making a very healthy profit.
I will leave people to decide for themselves what PE they think is right for whatever part of the cycle they think the airline is at. I will only say that I am very comfortable with my current holding and the current price and am confident of the very strong dividend yield case that's supporting my investment decision.
I wouldn't be so sure mate. Management seemed very confident at the half year conference call that the outlook for yields in the current half and beyond was improving.
Typical airline behavior from new entrants establishing new routes like a lot did to N.Z. last year is to discount really hard at the outset to establish demand and build the route and if its not profitable within 12 -18 months, review it. I think we've already seen a very high "spring tide" on the competition and aggressive pricing from competitors front and new competitors building their route to N.Z. will want to see profitability in 2017 or otherwise... Comments from the CEO of Qatar last week suggested lil ol N.Z. is an extremely expensive route for them and they'd quit the route if they weren't happy with laptop restrictions...reading between the lines, I would add "if market demand isn't there for any other reason that would make the route unprofitable".
I reckon one or two people on here waiting for a GFC Mk2 and wanting to buy this company for a real bargain price would be well advised not to hold their breath :)
I think to invest in this company one has to work out what their investment case is. Short term its not cheap, long term I am as confident as you ever can be with any company in a volatile industry that the dividend yield case is very compelling indeed. For what its worth, I am looking to increase my stake at circa $2.50 if it gets back down there at some stage over the next few months.
Does anyone have any estimates on what the full year dividend, including any potential special dividend might be?
I not selling my long term holding..AIR has been so clever on its marketing this year and the competition has not gained a foothold in the AUK-LAX route. AA full relaunch in Oct however they lack the depth of service to compete. The advantage of the domestic network they have used well..sucks to pay the premium as a customer however to your advantage if your a shareholder. If you want to pay a fair price for air travel you naturally have to hedge by gaining the dividend to offset. I found some great deals this year however the industry has made me work hard for them..so much harder than in the past.
They do have to look at the logistics for Europe travel as they do not have the natural advantage....suspect that when load factors have been hit hard with the Chine cheapie options and Emirates and Singapore having the stronger branch network to Europe for the price point.
The social marketing and data management of AIR have stepped up this year as well...they have impressed and I'm all in.
About to board Air NZ Dreamliner for Buenos Aires and they announce an "unserviceable fault" with the plane. At least 2 hours wait for a different plane. Hopefully nothing very serious with the Dreamliner !!
10 cps and absolutely no chance of a special this year as gearing limit simply will not allow it and it wouldn't be prudent.
Agree 100%. Nice to hear that by and large you are impressed.
They have plenty of local engineering expertise on hand at Auckland. Unserviceable simply means cannot be fixed within the tight timeframe required for operation of that flight with that aircraft. Boats are very complicated machines as you know mate but planes are in another league altogether and things do need fixing on a very regular basis...30,000 individual parts just in each Rolls Royce Trent engine !
I struck a similar problem 3 weeks ago. What should have been an easy trip to Europe proved to be quite a mission:
I arrived at Queenstown Airport at 4:20 pm with plenty of time to spare, as I had till 5:25 to check in. But then the plane I was supposed to fly out on didn't arrive due to some medical emergency in Auckland and we were finally airborne at 9:00 pm. My Dreamliner flight to Shanghai was supposed to take off at 11:00 pm, and with a 1:50 flight to Auckland that was making things a bit tight. The Air hostess did say that as there were 5 of us boarding that flight they would hold it for 30 mins for us. After getting off that domestic flight we ran from the Domestic terminal to the international terminal. Got through immigration and security fairly quickly, only to find that the plane we were meant to be on had a fault and was being taken to the hanger for maintenance.
Air New Zealand did manage to find another plane, one that had just landed from Singapore, and at 2:00 am we were finally airborne and bound for Shanghai. But 3 hours late, and only 2 hours to change flights at Shanghai just didn't add up to a stress free trip. They announced that the flight to Vienna, and a coupe of others as well, were being held, and we wouldn't need to go through all the usual formalities, like arrival cards, but would just transfer direct to the departure gate.
Great news, but someone forgot to tell Chinese immigration and customs. Not only did I have to wait in line for immigration, but once I got there, I was directed back to fill in an immigration card. Finally through immigration, and customs and onto the departure area where I again had to go through immigration, and had to go back and get a departure card and fill that in. But on departure Chinese security were great. I pointed to the departure board and said my plane was already boarding and a security guard escorted me to the Diplomatic Passport queue and I went straight through. Once through there departure security wanted to search my carry on luggage because I had batteries for the camera. Don't people carry spare batteries anymore?
I ran to find my gate, and was the last one to board, but the Austrian cabin crew made me welcome and acted like we had all the time in the world. I took my seat, watched the safety video, and then found out we did have all the time in the world. The pilot announced that the Swiss aircraft beside us had been ready to depart for over an hour, and hadn't been given clearance to even start its engines yet, so it was likely we would be delayed as well.
For two and a half hours we sat in our seats and waited until finally we were on our way. Arrived in Vienna at 6:00 pm, and at my hotel by 7:00. In bed by 9:00 almost exactly 48 hours after I got out of bed on Wednesday morning.
Had a similar issue at Shanghai on the return trip, and will never again fly via China at all, even if it means not travellin on AIR NZ
Why do they serve chlorinated tap water on international flights.
Wow, someone took that big 2.70 wall down in a hurry....
Hopefully a certain poster on here who keeps repeating that AIR be sold to Etihad or some other sand state controlled airline will read your post and take the hint too !
I thought they made a very sound investment case with their institutional Australian investor briefing last week so I am not surprised to see it push higher on the back of that.
Qantas up 3.3% as we speak so being dragged up by that I reckon, too dear for me as I'm not interested in anything but an XXXOS holding for the next divvy. PS-I reckon the analysts have got some serious egg faces, as at 7/5/2017, their median target is still $2.23 with a high of $2.31.
Partly sold my trading stock today..a near dollar return plus the dividend leaving me with a sizable longer term parcel with an average buy in price of 1.83. Plenty of headroom there for any volatility. It all comes down to your buy in and what price that is.. you have to feel for those that held on after the last drop and sweated it ever since.
Wow, that's amazing buying Raz. My average buy price in comparison is 2.42 (averaged down from 2.62)! Bought a lot at 2.19 to get that giant dividend and then saw the price sink.
http://www.stuff.co.nz/business/9223...ctive-employer
Plenty of attractive pony tails to pull and the most attractive employer in the country... no wonder John wanted on board :D...meanwhile over at the infamous Jetstar I see they're now cramming even more of them in. 29 inch pitch seats on international flights for goodness sake, that is truly pathetic, honestly I wouldn't fly even if it was free, some things are simply too disgusting to endure. http://www.stuff.co.nz/travel/news/9...to-airbus-a320
Being a flight attendant on domestic and trans Tasman flights ain't too attractive. My daughter worked for Air a few years ago and her pay worked out at $8/hr when she included all her down time that she wasn't getting paid for. Good for International attendants, pilots and all those other mega paid staff though. PS-She pulled the pin after having a nose to tail and writing her car off, on the way home from the airport one wet night ,after working a 14 hr trans Tasman shift(Home to home time)
Sorry to hear that mate, must be pretty tough starting out. I thought they started on about $38K last time I heard and that included six weeks annual leave ?
Meanwhile... SP keeps gaining altitude...
I'll keep it clean...Letting you bun down into a pony tail and not complaining when its pulled perhaps...has John Key got his pilots licence LOL
Is it just 55 year old men that have some peculiar thing with pulling pony tails LOL. My daughter has a large black pussycat with a very, very thick, long and furry tail...almost as much fun...thing is though, the cat doesn't much like it either :D
Well QAN keeps surging ahead full steam, upto 4.80. My pick is AIR might break 2.75 mark today.
QAN reaches 52 week high after CEO gets a pie pushed into his face
Our man Chris needs to get more politically 'active'
New routes doing very well. Good news http://www.nzherald.co.nz/business/n...ectid=11853158
New Zealand is in a very unique position. Do you have to use Auckland as a transit connection to anywhere apart from " The Islands " ??
Nah !!..
Therefore Air is in a unique position.. More so when share holding is perused..
Great news indeed Roger. The AKL-EZE BC seats are almost always sold out when I am travelling and PE normally pretty full too. Particularly in summer when Aussies and Kiwis are going over to South Argentina for cruises to Antarctica. Increasing to 5 flights pw and increasing seat numbers in BC by 50% with the new layout when that happens will do well for yields on this route
Good to hear those high value seats are in strong demand, thanks for sharing.
Govt investing $178m in tourism infrastructure, partnering with councils to help keep N.Z. clean and green. https://www.nbr.co.nz/article/govern...ast%252520Call
Interesting article from Bloomberg on the profitability of the frequent flyer business - for Qantas!
https://www.bloomberg.com/news/artic...rplane-tickets
Airpoints is undoubtedly a huge money spinner for AirNZ and although not necessarily advocating a sale, any private divestment of the loyalty programme could land the company with a huge windfall of cash.
Air Canada's return on the sale of 12.5% of Aeroplan was C$250M in 2005. AC subsequently sold their remaining stake to Loyalty Management group, and have recently started their own loytal programme once again called Altitude, which will be their primary rewards system by 2020.
One pending negative for Airpoints is the likely changes (perhaps via government regulation) to interchange fees, which will gut the credit-card rewards component upon which much of the system is based.
Air NZ's Airpoints program is without a doubt one of the best in the World. Good earnings rates for frequent flyers, simple to monitor/use and the most easy access to use the points of any of the many frequent flyer programs I have belonged to. Very valuable for AIR.
Have a skim read of the full content of the RBNZ announcement this week, I posted a link in the GNE thread. They see as far out at late 2019 the OCR still being only 1.75% and not moving up to 2% till mid 2020. Very supportive environment for high dividend yield stocks. I see ~ $1.50 in fully imputed dividends over the next 5 years including two specials of ~ 25 cps in the FY20-FY22 years after their capex program is finished. $2.08 inclusive of imputation credits to be paid to shareholders over the next 5 years. (I acknowledge forecasting dividends that far out in the aviation industry is subject to significant potential variation).
Any wonder dividend hounds are chasing it ? Disc: I added even more yesterday at $2.76 as I believe on a dividend yield basis the investment case is very sound indeed.
Whilst Air has a great divvy yield, excluding specials it's on a par with a few others at current prices. I focus on the immediate upcoming divvy which just happens to be IFT right now ,which should announce a 10c divvy the same as the upcoming Air one. Of course I plan on coming back for the Air divvy but will choose another option if the SP is at or higher than currently, when it is buy time.
Fair enough Couta1 but from a long term perspective here's mod's most recent thoughts of special dividends over the next five years and as I am not a trader as I mentioned to you when I was down in Wellington I am increasingly taking at least a five year view of stocks. I'm forecasting 2 x 25 cps special divvies in the FY20-FY22 years when there's a major gap in their capex but as you can see above Mod is modeling a lot more. A key factor in understanding this company is understanding their enormous cash flow when not expending it on capex which can be around ~ 80 cps per annum.Quote:
Been a tough year obviously. I think most of us underestimated the impact to yields that the lower oil price/competition would bring. It's a global phenomenon. Certainly my FY17 earnings estimates have fallen from 40-45c down to 30-35c. That said the share price move down has been dramatic, leaving the company (imho) significantly undervalued, as has been the case for about the last 5 years (has it been that long...).
I certainly knew that FY16 was peak, and perhaps naively thought the dividend / cash-flow story would support the stock. Clearly the negative momentum and uncertainty on yields has mean't a tough devaluation, and risk being priced into the stock.
Where to from here then?
For the ST investor: Yield comparisons get easier in January, so should the operating stats firm up I would expect a re-rating towards 2.50, which values the stock on a reasonable 8x PE.
For the LT investor: Personally i'm not too concerned whether AIR make 28 or 32c in FY17 EPS. The question is sustainability and ideally growth in profit from there. If sustained (along with cash flow) there is a bonanza in FY19-20. I did a few figures and have spoken to the CFO, basically over the next 4 years (if things stay stable), AIR could pay $1.80 in dividends. That's based on a 50c special in FY19, and a 60c special in 2020 plus recurring twenty something ordinary. Over 5 years, you basically get your entire capital back, so if the stock is still at $2, you double your money (15% p.a). Any growth is cream on top.
Pleased with the recent result and expecting the yield improvement to roll in from here. What is clear is that sentiment has switched from cautious to neutral and happily seen the stock advance. The cost performance and fleet simplification benefits are starting to show up, and I expect analysts to continue to be surprised positively by these over the coming 18m.
Still see the capital return bonanza in a few years time, this is now being recognised in analyst models, though most see this as outside the 'investment horizon', and therefore it gets little credit in the valuations (which cluster at 2.30 - funny that..).
The short term question for us now is what would you pay for 20c p.a dividend, I think it could settle at 2.60 pre div, 2.50 after - providing 8% forward yield.
For the longer term investor a return to yield growth in FY18 will bring EPS upgrades, which should support the stock towards $3.00. In FY19 we will need to watch out for announcements about capex, but as management have explained pre-payments for deliveries 2023-on (777-200 replacement) are likely to begin in 2021.
I maintain that the improvements this company has made through the last few years (fleet, IT, lounges, processes, new routes, network alliances) set it up for a sustainably higher level of returns than in the past, and that short term earnings focused analysts don't properly account for this in either their estimates or the multiples they use to value AIR. With the NZX50 trading at a high multiple, and the outlook for NZ better than ever, AIR should gradually re-rate upwards from here.
Best, Mod
Its therefore quite possible all factors being equal in a normal operating environment that my five year horizon could see not only 5 years of ~ 20 cps ordinary dividends but potentially more than the 2 x 25 cps special dividends I am modelling. Mod quite correctly called the operating environment as supportive of the SP climbing towards $3 many months ago. He's been far more accurate than the so called professional broker analysts. A lot of people ignored managements statement in their February 2017 conference call that they were confident looking out that we'd passed the high tide mark of yield pressure. I think its worth more than $2.50, how much more who can really say ?... but the long term investment case as far as dividends and specials, (all fully imputed), is concerned is compelling in my view.
$3 beckons by month end - even more if thr profit upgrade comes
I see Simply Wall Street reckon it was overvalued at $2.50, when they reviewed the stock in April. Also seems strange why 4 traders as of yesterday have not budged on their $2.23 target price. Not sure who is right on this one except it's certainly no longer a value buy at current levels, and even less so at $3.
N.Z. analysts have a VERY poor record with AIR. As we saw with the recent investor day presentation most of the non Govt controlled stock is owned by overseas institutions.
They clearly think its worth far more than N.Z. analysts possibly because they're basing their valuation on international metrics. AIR is line ball fair value with QAN on a PE basis and that's after QAN have upgraded guidance whereas AIR haven't. As we saw this week there's very solid demand on the two new routes AIR opened up last year to South America and Houston. They're now running 9 Dreamliners with 4 more to come incl another leased one and six more options after that. Real bean counters aircraft they are, churn out heaps of cash. Discounted cash flow valuations are only as good as a whole bunch of guesses and assumptions that underpin their calculations.
http://www.stuff.co.nz/business/9251...ay+13+May+2017
Air China scales back....AIR N.Z. expands...Jetstar confirms no plans to expand routes...last week Qatar threatened to throw their toys out of the cot if laptop's were banned.
Looks like management were bang on the money when they recently said we're passed the high tide of competition intensity and its impact on yield
https://www.nbr.co.nz/article/carry-...%252520edition
If they can make over half a billion, (second highest ever) in the year in which intensity is at its most severe...