Plenty of value in the small cap space, exporters, and across the ditch. Looking forward to some debate at "The Cav"
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AIR certainly has enjoyed a good run since Oct'14. The technical breakout target @ $2.73 is the same at xmas as it is now though. Currently range trading. Price resistance in the range $2.50-2.65 with a few attempts to push up. For some reason volume has withered since Dec and is tracking under the 21d MA. Money flow is still positive but has turned down during the same period. Some might call this consolidation, there may be an ascending flag/pennant formation (positive), but it's not clear yet.
[disc: own AIR, for the divi's, though not averse to nice capital gains]
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I flew the Dreamliner from Perth-Auckland recently. Definitely felt fresher than after flying on more highly pressurised flights earlier that week. It's a very nice plane. My only complaint/suggestion would be better headphones as the engines (row 50 cattle class) were noisy on the first 45min ascent, so much so you needed the volume on maximum to hear a movie over them. Other than that what a great plane.
Now as far as an investment I've been in since $1.68 and enjoyed the ride and dividends. My valuation model told me full value was around $2.50 but that was when oil was $100 a barrel. Nothing is ever static but if oil can stay in a $40-70 range over the next 2 years AIR are going to pump out so much cash and with more dream liners being delivered there fuel efficiency will keep improving. Lower oil might also discourage airlines with older fleets from upgrading as fast which will hurt them medium term IMHO. Am considering adding to AIR around these levels as you can relatively conservatively make a case AIR is worth $3.50 or more a share. Agree with Roger the PE currently is stupidly low and that view takes into account the industry risk. 12 across the cycle is still conservative when you remember how strong AIRs domestic franchise is. They've had that attacked several times in the last 15 years and won every battle.
Good to hear you enjoyed the Dreamliner experience. I'm comfortable with a PE of 12 across the cycle on the back of ultra low long term interest rates. The difficulty valuing AIR lies in trying to eliminate the current assistance they're getting from low oil prices and treat that as an extraordinary item and then to try and determine exactly where we are in the economic cycle. Brokers seem to be taking the view that 2016 will be the earnings peak which is probably right in as much as oil prices can't stay low forever but eliminating favourable oil from the profit who can reliably say exactly where we are in the economic cycle ?
Certainly with debt issues being problematic in many parts of the globe central banks have almost no choice but to maintain an easing bias for the foreseeable future which is generally assists towards building economic growth.
Could we be on the verge of a golden age for air travel ? New aircraft like the Dreamliner and A380 with much better quality air and significantly better effective cabin altitude pressure, (equal to 6,000 ft and 5,000 ft respectively), are making it far kinder on the body to travel which greatly assists older people especially. Are people going to be more inclined to travel with these new generation aircraft ?
It'll be very interesting to see what the next oil hedging statement says. I'm expecting it should be in the next couple of weeks
Hopefully AIR will have locked in some of the lower oil prices for the next few months, especially since the oil price has taken a bit of a turn upwards recently.
Yep-all the tumblers seem to have fallen into to place for this airline (and alot of others) While it may be a good value at present,its certainly a stock that will need constant attention(not a bottom drawer) Lets face it--its a pretty unusual situation out there atm--we have gone from major Ebola scare-to suddenly cheap oil and Ebola seems like a ''no worries''
im personally glad to see this as although Im not holding-Im loving the cheap airfares.
i still think the cheap skate seating on AIR is stupid for a premier? airline but time will tell if customers put up with it if times get tough
As a result of the previous ''scares'' Malaysian air has been out doing itself to get customers back (theres some sweet deals out there atm)--RT- Ak-Bkk for $1100 with full service 30K luggage--good schedule--you can choose seats ahead of time--prob not a dreamliner,but I grabbed it with both hands---(AIR didnt even come close) for that route
Having said that-you guys could probably fly business class with your profits:)
You're not wrong with your last point :D
Malaysian Airlines are a worry, that's one airline I would be extremely reluctant to fly with for the foreseeable future. Bad luck / stuff usually comes in three's, why tempt fate ?
Agree the seats width on AIR's new Dreamliner don't appear to be overly accommodative for XXL people but with all the other positive attributes of that aircraft I reckon they'll easily get away with it for the vast majority of pax. Vast majority of people are giving very positive feedback and the airline is extremely happy with the new type according to Chris Luxon at the ASM last year.
Hey Roger, always love your posts on the AIR thread, keep em up. In relation to your post at #2207, I agree with you entirely especially that the "Fair" PE on air is around 11-12. I think AIR hasn't started it's next leg up for a couple of reasons.
1) People could be waiting on the Annual report for confirmation of the years earnings. To be honest I reckon take advantage of the prices now. If we're all so confident of an 11-12 PE and increased earnings then buying at these prices is potentially free money on the table.
2) The technical signs aren't pointing up at the moment (This doesn't mean they're down!). I hate to be the guy who brings technical indicators into it but a quick look at KW's post on moving averages could point out that after the fairly quick hike up of price the market is waiting for some more ducks to line up before pumping more money into the stock.
Give this one time in my opinion, I think there's definitely more upside than downside it'll just take some time for Mr.Market to realize.
Thanks mate. I couldn't resist and topped up with some more today @ $2.52.5 :)
Not new news per se, but a reminder of the growth AIR have planned for the next 5 years and that AIR think the new Dreamliner is the best aircraft in the world.
http://australianaviation.com.au/201...more-aircraft/
Very recent news - Things looking up for Virgin
http://australianaviation.com.au/201...er-net-profit/