We're on the same page with this one mate :cool:
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Virgin announced today it is passing on some fuel savings (on some routes) from tomorrow: http://www.nzherald.co.nz/business/n...ectid=11390278 - will be interesting to see how this plays out.
Operating stats for December are out - no real surprises there. The US airlines had a decent SP jump overnight off the back of some positive earnings news (different market but still reassuring). Weather forecast for long weekend looks nice.
All looking positive to me. :t_up:
Yep, looks good to me too. Yield improvement is nice against the backdrop of very low oil prices. Approx. one month to go to Feb Operating stat's, very strong half year profit announcement and a major FY15 earnings outlook upgrade which should all happen contemporaneously in late February. Last chance to board this airbus at a reasonable price :)
You'll be alright with this one mate. Expect major broker upgrades in late February after the first half announcement, (if not before). PAX and yield growth is solid and oil in the toilet = happy shareholders.
Not much of interest in the December stats i'm afraid. Results are going to be very dull, but the outlook will be super-bright. I am interested to see if they will delay retirement of the 767 fleet.
January operating stats will show a big jump as the Singapore route kicks off so more to see then.
Even full year won't be such big news this year, because of the hedging losses and VAH losses.
Next year is the big party though - EPS should step up to between 40c and 50c from 30c this year. The sell-side analysts still have consensus next year at 30c... wrong again. $4.00 18 month price target - 70%+ total return.
-mod
Thanks Mod, as always your thoughts are hugely appreciated.
VAH have indicated they're profitable in Q2...hard to see how they wouldn't be in Q3 and Q4 with oil where it is so although there's losses in Q1 that's only one quarter so I am more than a little surprised you're so sure the year overall will be a loss. Also we will see a lot of route and fleet rationalisation with the takeover of Tiger to be completed shortly. I guess there will be a fair amount of extraordinary items regarding rationalisation of plane leases and so on with Tiger and some in VAH itself so depending on whether people want to take this sort of thing above or below the net profit line...but as demonstrated with QAN the market is prepared to look past one off extraordinary items provided they can show quantifiable operational gains going forward.
Yes hedging losses...like 99% of the rest of the world's airlines but mitigated by some gains through exercise of put options and more specifically the fact that only circa 50% second half fuel is hedged and not all of first half either. One of the brokers are more optimistic than you with 31 cps this year which will undoubtedly be upgraded shortly. I agree with your EPS prognosis for the 2016 year..good we agree on something :) Also there was $45m in one-off's last year regarding heavy engineering redundancies and fleet rationalisation, (taken as an above the line charge), that won't repeat this year. Super low long term interest rates for the foreseeable future will also see many brokers re-working their DCF models. Oh yes indeed the outlook is super bright !!!!!, that's another thing we agree on :D
http://www.cnbc.com/id/102370540
http://australianaviation.com.au/201...erall-pricing/
Interesting move by Qantas. I tend to agree that airfares are very cheap, in fact extraordinarily cheap in real inflation adjusted terms to what they were five years ago, ten years ago, in fact choose whatever time frame of reference you like. Good on Qantas for sticking to their guns and putting a decent return on capital invested first and foremost, sets a good precedent for AIR.
A bubble forming in airline stocks I fear .....outrageous profits before another collapse
http://www.smh.com.au/business/aviat...28-12zr24.html
I disagree. I expect forward growth in travel demand in the foreseeable to be very strong driven off 1. The price for travel is incredibly cheap by any relative measure in the past. 2. The tsunami of baby boomers who have plenty of wealth to enjoy travel 3. Ultra low interest rates around the globe leaving substantial amounts of extra disposable income in people's pockets. 4. Continued real decreases in the price of travel as the efficiency of new generation aircraft is gradually passed on to customers. According to CNBC there's serious supply constraint with the average forward order time for new generation aircraft now out to eight years !!
AIR management some of the very best in the business. Profits for Qantas are not outrageous, especially in the context of them losing $2.8 billion last year :eek2:
Airline shareholders are sick of getting pummelled in bad times so have every right to make serious hay when the sun shines brightly :)
Disc I have a bigger stake in AIR, (my biggest position) than HNZ, second biggest.
"Air New Zealand is being investigated by the Commerce Commission over alleged "drip pricing" tactics that have got its Australian counterparts in hot water.
Customers who book with the airline using the web or a mobile phone are shown a headline airfare, then have other charges added as they click through the process.
One of these is a domestic travel insurance charge, typically $10 for a one-way domestic flight, which is added on an "opt-out" basis, meaning it will be added to the airfare unless customers choose otherwise.
Wellington lawyer Michael Wigley has criticised the insurance charge, which he has labelled as "drip pricing", where companies advertise a low initial price then add other fees later in the purchase process."
http://www.stuff.co.nz/business/indu...g-investigated
This could provide an opportunity to top up if the market reacts in an overly negative fashion to this.
I do however think that including the insurance as an opt-out process rather than opt-in was an unfortunate move. This is the same very annoying behaviour of many software app's that include toolbars etc. in an opt-out fashion.
You want to try opting out on Jetstar's site.!!
Near impossible.!!
Reading in this mornings Herald this thing looks like a tiny blip with AirNZ and the commission having already been in discussion over the insurance thing for the past year and that it is the only issue they are looking at and the commission was NOT treating it as drip pricing.
http://www.nzherald.co.nz/nz/news/ar...ectid=11393310
Yep, nothing to be concerned about here. Even the CEO of the travel agents association appears to accept the process is probably reasonable. Why don't the Com Com doing somethign constructive with their resouces like investigate why the retail price of milk hasn't changed despite a more than 50% drop in the price of milk powder ? Its not like families with young children can "opt out" of milk is it ?...that's assuming they can afford it in the first place !!
Hey Roger have you got your seatbelt firmly fastened?:eek2:
Yep, sure have mate and my G suit on too...this is what's going to happen to the SP next month. https://www.youtube.com/watch?v=FiX-x3A4ndc
BTW I used to have a F6 Ford Performance vehicle called the Typhoon...it went just like that :)
As I understand the issue, I don't expect any reaction from this.
I see prices changing on subsequent visits as a bigger issue (when they are unaffected by clearing cookies or running in private browsing mode) - having to untick a tickbox while not being a great customer experience (although I would expect AIR NZ have done their homework here) doesn't seem very different from what I see on a *lot* of e-commerce sites.
My five cents. :-)
Disc: very happy holder.
There's quite a few different causes for this, but a couple that spring to mind that are:
1. Many people make dummy bookings but hold it open in their browser with the booking eventually timing out and released back into the system.
2. Those holding fares such as travel agents, or those who choose to pay the $10/$25 hold fee.
3. The revenue team adding/removing fare buckets according to demand.
I agree that it looks bad, but there are legitimate explanations for that behaviour. AirNZ have categorically denied engaging in differential pricing.
My personal experience differs somewhat, but it could be explained by the above. I will do some more research on this at some point.
In related news, the market is slowly starting to wake up:
http://www.nzherald.co.nz/business/n...ectid=11393826
http://www.odt.co.nz/news/business/3...wn-good-timing
Looks like Roger was spot on about the upgrades coming through, just took a couple of days for analysts to figure out what the ops stats meant eh? ;)
I readily acknowledge the good fortunes of our national airline.......however ...being curious. How many folk on this forum would travel long haul would pick AIr NZ. As opposed to Emirates or Singapore. .....this could be interesting.cheers troy
We have traveled to Singapore on Singapore Airlines and several times to Brisbane on Air New Zealand. To me the big difference is the type of aeroplane, Boeing 777 vs Airbus what ever to Brisbane. I much prefer the Airbus. I think all the other bits of air travel are neither here nor there.
Admittedly it's a while ago for me, but I travelled (commuted really) from NZ to Asia via Sing, and all around SE Asia, sometimes into Nth Asia, to USA via SanFran, and over to the eastern seaboard, for four years on the trot, usually flying every second or third day or so when in the destination country. The company was paying, and they had a policy that flight over 9 hours entitled business class, nice eh :), but under that was cattle class. They also picked the airline. They picked Quaintass. On the occasions that they booked AirNZ, Sing, Emirates, China, Garouda, US Air, American Air .. etc, it was just so much more satisfying as a customer in every respect to be on Air NZ. Better service, better quality, better experience. There really wasn't a comparison, even back then, Air NZ was superior. Nowadays for our occasional overseas family holidays, it's Air NZ, no question. I want my kids to have a superior, and safe, experience in the air as well.
What is the consensus at this juncture on another special dividend (or large increase in normal dividend payment) being declared at FY? Based on the lower operational costs and continued improvement in yield and passenger numbers (especially if the older aircraft are retained and can be utilised to capacity), there should be a significant amount of surplus cash available. Or perhaps we'll see some additional aircraft orders placed?
Its their 75th anniversary this year so while on the face of it the chances would appear slim given they've just paid one and also taking into account they have another three new Dreamliners due later this year, you never know ? N.Z. Govt loves cash coming in, trying to balance their budget so therein lies your best chance but I for one would be happy with a 20-30% uplift in the regular dividend.
Expect plenty of talk about investment in new aircraft and lounges to enhance the customer experience at the half year result this month, (that'll be AIR's way of trying to manage the demand's of the lefties for cheaper air fares). Also expect Chris Luxon to talk about the drop in the currency over the last six months as another way to manage customers price expectations. Plenty of aircraft orders already in the system to grow capacity at 5% per annum for the foreseeable future so no need for further orders at this stage. Expect a considerable strengthening in the balance sheet numbers and cash on hand at balance date.
I do as they fly directly to shanghai (they were the only direct carrier until China Eastern entered between AKL but they might be only doing this over the summer). If I was to fly to the states my only real options is again AIRNZ unless you want to go via Aus. UK - would consider emirates and singapore but it all comes down to price. However using a air-points credit card it has strong pulling power to continue using AIR when you accumulate around $1k of airpoints per year and get lounge passes.
I have a 12 hour flight on the dreamliner this coming Thursday - anyone here want to know feedback?
I know Chris Luxon use to work at Unilever but what type of guy is he? Is he good at breaking down the supply chain and squeezing costs? The only reason I'm asking is because recently AIR cut their contract with MOA and they have also shifted their wine for economy and prem economy to one supplier.
http://www.stuff.co.nz/business/indu...-wine-supplier
The airpoints program has been culled enough that frequently flyers are getting annoyed and now we have changes to the inflight products being offered - whats next?
He's running a tight ship and good on him. He strikes me as a very good CEO. Yep, I'm sure we'd all appreciate some feedback on the new Dreamliner.
I had a 2-way trip recently between Auckland and Shanghai during Christmas and New Year in econ class, the experience was great. I couldn't believe that it was such a good sleep I ever had in flight, the lights were blue/purple inside and really made people feel comfortable sleeping. They also got all the new entertainment system - semi-metro styled touch screen with a well developed OS, USB port, earphone port for your own earphones - really handy. And we don't need to turn off electronic devices during taking off and landing anymore this was superb. One only thing disappointed me was the food was not as good as before, no ice cream, Made in China yogurt... Generally speaking it was awesome, I'll definitely still choose AIR for the next trip.
I'd agree with that statement. There is a fine line between running a tight ship and making decisions that subsequently lose customers. There are some aspects of both the Koru Club and Airpoints scheme that I think have gone too far, or in completely the wrong direction, but overall things are operating extremely well.
Dwindling sp due to oil price climbs?
asb at the time I posted. Has changed/settled? I thought trades stopped at 1630?
Pre-close period starts at 4.45pm. It works just the same way that the pre-open period works. No trades occur from 4.45 until 5pm, at which point outstanding buyers and sellers are matched up. Market closes at 5pm.
This is why you might see buyers at $1.70 and sellers at $1.50 (for example) in the pre-close.
Read more about it here under pre-open/pre-close: https://www.anzsecurities.co.nz/dire...htutorial.aspx
Yep I topped up today so are even more overweight at around 18% of portfolio. I reckon you'd have to be mad to sell now with expected good results only 3 weeks away ( Depends what price you paid of course) this small blip won't stop the company driving growth and profits over the next year or two IMO, anyways whatever the share price in a few weeks I will be receiving one mother of a divvy:cool:
I would say the NZ Dollar losing ground the past few days is the main cause. I am not sure how much impact the spot oil prices have had as most is still hedged.
Another event which I do not think has had any impact yet is the plane crash in Taiwan: http://www.nzherald.co.nz/world/news...ectid=11396650
Virgin(Underarm Bowlers Division) have announced a quarterly profit.
The directors of Cullen Airlines can now put their Aussie subsidiary nav system on autopilot rather than tightly gripping the control column and nervously scanning the guages.
http://www.asx.com.au/asxpdf/2015020...yp47smt0j8.pdf
Boop boop de do
Marilyn
And before extraordinary items are in profit for the half year...looks like the analysts got this one wrong, surely I'm not the only one that can work out they'll make a profit in the 2015 financial year ?
Its hardly a subsidiary luv with 25.9% shareholding.
So according to Bloomberg and NBR, Branson companies have charged Virgin Australia A$ 103.1 million in licencing fees in the 10 years to 2013. Aggregated profits of Virgin Australia since IPO is A$90 million net of losses. The licencing agreement has been extended beyond the original term ending 2015 but details are confidential.
Not a bad business to be in this licencing game eh !
Not bad at all. All you have to do is come up with a cute name and you're in the money. American's most loved dog is a beagle so I reckon Beagle Airways would be a huge hit in America :)
Actually speaking of one of the most adorable dog breeds in the world and airlines, here's an airline that's really got their act together when it comes to customer service, maybe a good idea for AIr N.Z.
http://www.azcentral.com/videos/news...9/24/16163883/
Bored on the long weekend ? Check out the amazing technology and engineering expertise that's gone into building the Rolls Royce Trent 1000 engines that power AIR's new Dreamliner.
https://www.youtube.com/watch?v=VfomloUg2Gw
That would be nice but easier said than done mate. Reasonable priced companies with a highly credible track record, sound growth prospects and excellent management are pretty thin on the ground on the NZX...vast majority of the market is very fully priced IMHO. Time to look further afield...probably.
Yep I reckon Air is great buying at current prices but not expecting that to last for that much longer, I mean why pay $3.50 ish for Spark or $2.85 for Chorus an example of 2 overpriced stocks IMO(CNU because previously when it was this price it was paying a 25.5c divvy but none currently plus all the ComCom involvement) when you can buy Air for around $2.60 with heaps more upside over the next couple of years.
Here's the thing with AIR and PE multiple's. As long term interest rates have declined to historic lows most of the brokers have moved the risk free rate in their DCF models to lower and lower levels which has allowed considerable PE expansion. Well managed companies with excellent track records and sound growth prospects like AIA, FPH and RYM to name just three have ascended to very lofty multiples, (circa 30) on the back of such low interest rates.
Meanwhile over at AIR we have what appears to be an excellent management team, sound growth prospects and excellent track record yet despite historically low interest rates and significant PE expansion elsewhere in the market the market seems inclined towards holding AIR at its historic average PE of about 10 across the economic cycle ?
Why isn't it appropriate with such general market PE expansion on the back of ultra low interest rates that AIR who are about to put in place 5% capacity expansion for the next few years aren't accorded a higher across the economic cycle PE ratio ?...say 12-13 ?
Its simply not logical that they shouldn't be as PE ratio's are intrinsically inversely related to interest rates, (ultra low interest rates implies higher PE's are acceptable all other factors being equal).
Further I would argue travel is extremely cheap and getting cheaper every year in real terms and we have a younger generation who have all but given up the dream of home ownership so are more inclined to spend their disposable income and then there's the tsunami of baby boomers many of whom have high level's of disposable income and can travel regularly. Interest rates are very low and fuel prices also, adding fuel to customers disposable income So no problem on the demand side. On the supply side there's an approximate eight year wait list for new generation fuel efficient aircraft at Boeing and Airbus....so genuine issues around new supply.
AIR on a 2015 PE of about 8, (I'm at 32 cps EPS this year, 40+ next year if oil stays low) is a very very cheap stock on a fundamental basis...I would argue the cheapest out there which fits the other attributes I require. I'd rather laser focus on stocks I really think are going to go up....like this one and HNZ up 41% in the last 3 months :)
If the market is to take the position that AIR is theoretically only worth a PE of 10 across the economic cycle, then with interest rates where they are this implies the market is presently pricing the company like its a no growth company. In my view with supply / demand characteristics and stated capacity expansion over the next several years of circa 5% this stock is presently mispriced and has been for some time. Mispriced stocks intrigue me as the price inevitably heads towards fair intrinsic value over time. I see very good gains in AIR's SP in the next 12-24 months notwithstanding their excellent performance in the last 12 months.
Its clear the wild cards are the oil price and the exchange rate. My view is the market seems to be taking a view that oil prices won't be materially assistive for any meaningful length of time. Only time will tell.
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]
Attachment 6750
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/
Good on you mate, looking at the price drop over the last week shows you how dumb Mr&Mrs Market really are, we are going to see a good or excellent result in a couple of weeks so why on earth would you sell now unless you had to? Oh well winners and losers aye:cool:
Regarding Malaysia airlines--Lets see--let me get out my calculator and calculus book--ok -lets see...........I think Ill risk it--meanwhile talk at the travel agency is that the Malaysian Gov. is backing them 100%
No question, the dreamliner is clearly a good plane to fly in--so why would a co. like Air NZ go and ruin it by putting to many seats in them?-(other Airlines have dream liners as well)-If your going to charge a premium price-imo,you should be giving a premium product.
PS-if you dont see any posts from me after late June-you will know that I should have studied harder in Calculus class:)
No such thing as free money on the table...especially in the airline industry
Technically this could go either way ,the way Im seeing it--Its just fallen to the 50ma,but has a way to go to hit the 200ma(a definite sell)---It will be interesting to see if it bounces off the 50ma and starts a new leg up or falls below--
Regarding Malaysian airlines I'm not so sure its simply a matter of statistical probability of a theoretically random event happening three times in a row. Look at that crash of the ATR72 the other day, that airline has to retrain all its pilots because they seem incapable of knowing which engine to shut down when one has failed :eek2:...go figure.
I'm not sure why they went with the seat width they chose but its certainly possible to configure those planes with more seats than AIR have. IIRC one of the other airlines has nearly 400 seats in theirs which gives an indication of exactly how much space AIR's premium economy and business class seats take up. Maybe they're hoping "fat cat" passengers will upgrade to premium economy or business ?
Thanks KW. Average analyst forecast at this stage according to Reuters is 27.82 cps for 2015 and 30.95 for 2016.
http://www.reuters.com/finance/stock...?symbol=AIR.NZ
I'm expecting significant analyst upgrades to valuations and forecasts when the half year results are released.
Valuations will also be enhanced by many of the analysts now using significantly lower long term risk free rates in their DCF models.
Im not making any forcasts--just pointing out that when it gets to the 50ma,its worth keeping an eye out--some chartists use this as a buying opportunity,but if it carries on down,then its worth watching closely and if it did get to 200ma then most chartists would probably sell.
Completely agree they would be uncomfortable for an xxl person but this is becoming the industry norm. This is regardless of the plane being a dreamliner or not.
I can't help but think it's almost a race to the bottom...more seats on planes, smaller sizes while the price of an airfare to most overseas countries has remained relatively the same or cheaper over the last 10-15 years.
Generally I think most people are price sensitive to airfares. Most would put up with a smaller seat on 12 hour flight and have extra money for a nicer hotel or even extend a holiday for an extra day.
Anyway my review of the dreamliner. Last Thursday evening I was on NZF ( 2nd Dreamliner) delivered.
Sure enough it still has that new car smell to it. We were seated in the bassinet row at the front as we were traveling with our infant. Being stuck on the Tarmac for an hour and half I played around with the IFE entertainment system which was very impressive. It was very responsive, the picture was crisp, and very easy to use like an iPad. I think for the first time ever I tried the games available.However the screen was dirty and the food and drink service features were unavailable the entire service.
The window dimmer was very cool and effective at blocking out light however until the pilot switches off the red flashing lights on the wings some poor bugger might find that annoying.
Got off the plane feeling fine with only a couple hours sleep. Baby had no problems with pressure (thank goodness)
I also added to my holding yesterday not much more and not at the price you got roger oh well up up and away we hope? When's their result due?
Im sure they are hoping that whatever the reason they configured like that will increase their bottom line--whether its the right strategy is yet to be seen--As a customer though ,Im not impressed--to pay a premium price,I would like to think Im getting premium service(like Singapore Air or Emirates---I generally go for sales,but if I do decide to pay more--I would like the goods for a long flight--short ones -who cares
Meanwhile -i dont get the connection between the pilot error on the prop plane and Malaysia air(or any other airline barring the one that the prop plane belonged to) Im not sure which airline it was but I dont remember it being Malaysian.
If you drop the superstition factor then the first incident was the only one that was not a matter of being in the wrong place at the wrong time IMO--Anyway -I can update when we fly on how it goes--(if its crap i will say so)just like I did on our AK-Vancouver with AIR.
Gotta admit ,it was awesome knowing that we have seats already allocated(we are in the 2 seats by the window up near the front of economy(only 2 seats there-window and aisle)
In terms of the wonky pilot on the initial MAL flight ,I suppose one could argue that they would now be super vigilant --perhaps even more than other airlines.
I look at it as a result of 2 events (mishaps and cheap oil)coinciding to create a bargain at this point--Quantas was also a pretty good deal but the schedule was a killer.
Thanks for your review mate. Touch screens being dirty a common problem. I agree with your seat comments. Fact is most people are price sensitive. XXL people travelling to Europe are probably going to seek out Singapore with their 19 inch width economy seats or Emirates with their excellent A380 service. AIR N.Z. probably know and accept that its still more profitable to simply let those customers go rather than try to be all things to all sized people. Last year was 27 February, posted a link for easy comparison purposes in due course. To the best of my knowledge they haven't announced a fixed date for the result announcement but I'd bet serious money the poor numbers crunchers at AIR are working a lot harder than I am at present :)
https://www.anzsecurities.co.nz/Dire...spx?id=3559374
Skid - I know a lot of airlines flew over that part of eastern Ukraine but a lot have a policy they don't fly over airspace where a country is at war. A lot take a active risk averse approach in the best interests of customer safety. CNN had a piece a while back claiming an alternate deviation route to avoid war zone airspace would only cost an extra $U.S.1,500 in fuel for the average aircraft. Not a lot extra is it to play it safe !!
Secondly I would have thought Malaysian airlines medical checks would have picked up the fact that the pilot in the other crash had major psychological problems ?
I posted the ATR incident (acknowledge its not directly related), but with all the incidents over the last year it seems to me some airlines are cutting little corners with training, medical checks and pax safety.
I'm not superstitious but I don't tempt fate either...there's a good reason Malaysian airlines are offering dirt cheap airfares all around the world, nobody would fly with them if they weren't !!
Malaysian Govt had to take 100% control of the airline as if they hadn't it would have gone broke for sure.
Ill let you know how the flight goes(not till late June) anyway im not suggesting to go out and invest in MAL but as a customer ,it made sense to me--Thai would have been my first choice ,but to expensive since they cut down to only 3 flights a week (dang!)
There wern't many airlines flying around the Ukrane area(there were a number of reputable airlines just within minutes of the MAL flight(Singapore air was one)
Now if it was Aerofloat Id be thinking twice(one time I was on an Aerofloat flight and I asked the stewardess if I could have a coffee,she turned to me and said,''NO''(and that was that..)----I guess if I am tempting fate,I hope at least others have taken heed and maybe Ill get a whole row of seats:)
Model update
Assumptions: $70 Brent, 74c NZD/USD, 5.5% pax revenue growth this year and next.
Output: 43c EPS (excluding VAH)
Estimated contribution from VAH next year is 3c to earnings.
Total EPS: 46c
Pick your multiple. I continue to see >50% upside over 18 months.
-mod
So I took a rough average of the EPS figures floating around and settled on 33cps for 15, with 12.5% growth after.
Based on that:
8/02/15 analysis gf 12.5% SP 2.500 SOI 1121 14 a
15 16 18 19 20 21 22 npat ul 1)
239.04 369.93 416.2 468.2 526.7 592.6 666.6 750.0 eps ul 0.213 0.330 0.371 0.418 0.470 0.529 0.595 0.669 po % 65% 65% 65% 65% 65% 65% 65% 65% gdps 0.138889 0.215 0.241 0.271 0.305 0.344 0.387 0.435 gy% 5.6% 8.6% 9.7% 10.9% 12.2% 13.7% 15.5% 17.4% Valuations Graham 15 7.14 Div flow 4.32
An airline possibly deserves some sort of discount.
Finally took my head out of the sand and bought some more today.
Up 4.4% this arvo, lovely finish. Stoked I topped up yesterday
Agree it's high, especially for an airline.
Originally my thinking was '30% gain likely in 2015, less after, average 12.5%"
Then I plugged in an estimate of the 2015 profit but didn't revise the TR down. Thought about it!
9% TR would bring the value down from 4.32 to 4.23 - note this model 'only' looks 10 years ahead - you might use the term TR differently.
AIR's profit went up a lot last year and looks like another big gain this year. So perhaps 12.5% pa can be attained on average over the subsequent 8 years. More likely not.
Discount rate - current long term bank rate 5%.
It has dipped just below the 50ma(just to shake out the novices and hit some stops)and then bounced so I would assume the chartists would be happy--dyor-some of the more experienced chartists could maybe add more insight
It's nothing to do with any moving average. The share price had dipped as oil rose. Oil fell and the shares bounced back. Normal short term market volatility.
My estimates on the previous page are after tax earnings. Yes they would be comparable to 'normalised earnings' as I have not incorporated any gain or loss on hedging future periods.
No offence but DCF's are generally not a great valuation method, and even less appropriate for volatile industries such as this. Common methods would be using peer group multiples such as EV/EBIT, EV/EBITDAR, P/E, and P/B vs ROE. Fundamentally AIR is cheap vs peers, which I believe is unwarranted given the lack of competition it faces, strong management, fleet age, and so forth.
I have commented in the past about how an appropriate multiple should reflect where in the cycle the company is. In FY16 I see AIR at mid cycle, with macro tailwinds through lower oil. As such I expect the stock to trade on about 9x historic earnings and a 6% yield. Fortunately on my estimate of 46cps EPS FY16 that still gives us a lot of upside (to $4.14) and we will be paid well to wait with dividends.
After FY16 earnings momentum will slow considerably - about 10%-15%p.a based on constant FX and fuel (which obviously aren't constant). However the company will be generating tremendous free cash flow. This means BIG special dividends and good valuation support.
I'm glad to see others are on-board so to speak - but don't be impatient with this one. I expect the journey north to be gradual, and with some turbulence. Just relax to a nice movie, and keep a close eye on the external factors...
- Mod
Good post. Its fraught with enormous variables trying to reliably estimate earnings in this company which makes projections beyond 2016 notoriously difficult.
Another way to look at this stock...just an idea.
1. Eliminate the tailwind from the oil price to assess underlying earnings net of fuel price... I see 25 cps for 2015 and about 26.5 cps for 2016 based on their 5 % capacity growth and some very modest net yield growth. This year's fuel price tailwind is estimated at around 6-7 cps after tax, about $75m after tax which is broadly consistent with how the brokers are estimating this, BUT this could be dramatically underestimating this extraordinary gain. I think all the risk is to the upside.
2. Remember that as they push for new routes load factors may come under a bit of downwards pressure overall.
3. Estimate 7 year average growth rate based on known underlying factors excl fuel price tailwind. This is incredibly difficult. We know they're growing capacity at 5% per annum for the next half decade and that's all the forward guidance we have to go on so if we use 5% as the average underlying growth rate in EPS this seems most logical to me.
Using Ben Graham's formula V= last years EPS x (8.5 + 2g) where g is the only guide we have from the company at 5% and last year's EPS was 22 cps we get 22 x 18.5 = $4.07
Using my tight arsed accountant's approach to buying growth on the cheap V = forward earnings, (exclusive of fuel price tailwind) x (8.5 + 1g) I get this stock as being great value up to 25 x 13.5 = $3.38.
I prefer my valuation method and am happy to hold my maximum 20% portfolio allocation as it gradually climbs up towards the mid $3 range. If it tips a bit over 20% of my portfolio as it climbs up to $3.50 I'm all good with that :-)
1. You can't ignore a lower fuel price, and then penalise them on yield.
2. This is an operationally and financially leveraged business. If they grow revenue at 5%, earnings grows much faster than that.
I'm halfway through the intelligent investor, but I haven't seen Ben's method. It doesn't make much sense to me - at least not for this stock.
The brokers are as wrong on this as they were 2 years ago. They are smart people constrained to be conservative and not take career risk. They get paid on trading commissions not on the accuracy of their predictions. The sooner you make your own assumptions and estimates the better you will do as an investor.
Here's a post i made over 2 years ago. (#743 page 50)
I was estimating 26c FY14 and 32c FY15. FY14 turned out 24c and FY15 is going to be about 28c. NZD has gone down since then but so has fuel.
The brokers had something like 15c and 16c....
It's that difference, and the confidence I had, (because I did my own analysis), that gave me the opportunity to become very rich. I believe that opportunity still exists today.
And golden city asked me in the next post 'does this forecast come with credential?' gotta say I have the credentials now!
Edit: take a look at point 2 in bold - what bloody foresight!
Doesn't really matter which valuation methodology one uses, all the signposts point north, that's what really matters :)
Interesting example for TAists...and for the major others that TA discipline should be used to indicate when a situation changes..........
TA does not predict the future. However many TAists especially Chartists do work on the probability of a happening...
The AIR chart situation is interesting as the Bollinger Bands had tightened and ready to expand again ...we know BB indicates a trend behavioural change and often with a weakening stock our human behavioural instinct warns us to be careful thereby creating a negative bias emotion which makes us vunerable to got caught up in fake outs..
The TA methodology is to watch carefully
A fake out occurs when a stock price and its TA indicators weakens to a point when one (or two) indicators are close to or just trigger sell signals The TAist sees this situation and prematurely sells out to beat the seller rush preempting a possible downward break happening...then the opposite happens the stock bounces off its supports and rallys.. the TAist is faked out by mistiming their sell and selling out at the bottom...
The old story goes.."don't rely on one indicator alone"...use at least 4..
the above advice sounds nice and textbooky.and another old story is never sell close to a support..but...That does not suggest AIR is going to go up..At the moment it could go 3 ways, up, down, or sideways.. we have to wait for confirmations from other TA and chart indicators..which by then AIR's price trend action will be known...and TA discipline would have shown when it happened..e,g see blue dotted vertical line..(this is the point when buying risk is greatly reduced)
The green line is the price of Brent oil...note the poor correlation...
EDIT:...AIR has been in a primary uptrend since July 2012 and AIR's shareprice has so far risen +300%.....For the oil/air pundits...the opposite occurred during July 2012, AIR uptrend commencement coincided with the start of an oil price uptrend.
Re-EDIT.....forgot to add the negative divergence line to the RSI indicator...this is important factor to my argument in the post..
http://i458.photobucket.com/albums/q...11022015_1.png
Great post Hoop - Thanks!
25th February is the day for the half yearly result announcement
https://nzx.com/companies/AIR/announcements/260584
Using my very secret and very special supplementary valuation tool, :ohmy: (the red kangaroo stock is now priced higher), AIR must be very cheap.
I think you are right mate, but I guess we will see what the market thinks eh - it might think it can get even cheaper? ;-)
Some light reading for your Saturday afternoon: Oil is creeping back up taking out $60 for the first time this year (OK it's only February): http://www.reuters.com/article/2015/...0LH08120150213
Like Reuters Bloomberg also think this is a false flag: http://www.bloomberg.com/news/articl...matter-anymore I haven't researched this yet (will try to later on) - but there may be a bit more turbulence next week?
Interesting post hoop but won't any stock be going up,Down or sideways?
Not worried about the short term mate. Nobody can reliably get a handle on how long the oil price will remain a tailwind. As per post #2240 my assessment of fair intrinsic value for the stock, net of any fuel price tailwind is $3.38.
Add to that whatever gains they might make to earnings from oil under $100 for however long it stays there. I think about 7 cps this year and about 15 cps next year if it stays around the current level.
In a perverse way oil rebounding up to about $70-80 might really help AIR with their positioning in terms of a relatively new fuel efficient fleet.
Not worried about the short term mate. Nobody can reliably get a handle on how long the oil price will remain a tailwind. As per post #2240 my assessment of fair intrinsic value for the stock, net of any fuel price tailwind is $3.38.
Add to that whatever gains they might make to earnings from oil under $100 for however long it stays there. I think about 7 cps this year and about 15 cps next year if it stays around the current level.
In a perverse way oil rebounding up to about $70-80 might really help AIR with their positioning in terms of a relatively new fuel efficient fleet.
Any correction to circa $2.50 will see me buying more :)
Roger - can't these chart pros predict oil price?
The chart pros can confidently predict that the price will go up, down or sideways. The amateurs simply wonder in amazement at how powerful supply manipulation is. IMHO, the charts are little or no help in predicting price in a controlled market, except perhaps timing confirmed entry or exits.
http://research.stlouisfed.org/fred2...s/WCOILBRENTEU
Speaking of price charts, I hadn't actually stepped back to look at AIR [disc: hold a modest %]. This is a monthly line chart with the 200 day EMA. The rising trend lines are high/low price (which is why they don't touch the closing price line). What a schizophrenic share, it's all over the place! I remember the collapse and govt bailout, but even after that it's just crazy volatile. The last three years have been good for AIR. Assuming the good times continue, I'm accumulating any weakness, however a breakdown through the 200MA would be sayonara baby.
Attachment 7054
Hi Baa Baa
No, No, No, not a schizophrenic all over the place stock ..your chart shows AIR as great example of a cyclical stock :)...
note the 2001/03 recession, 2006/07 boom, 2008/09 recession, 2011/12 global hiccup, 2014 boom
Now for the hard part; you just need to predict when that time will be!
Based on the current market situation and on the financial analysis presented in this forum, FY 16 will be another bumper year for AirNZ and (as Modandm stated) while growth most probably slows subsequent to that, the company will generate large free cash flows. These are likely to be distributed these as dividends which should push the SP up further as investors late to the party clamor for the dividends.
Baring a massive sudden increase in Brent, a world-wide geopolitical event, recession or a calamity, at this point I can't see the SP declining significantly within the next few years.
We just need to keep a firm eye on the key variables.
Best of luck Zaphod with your methodology..I think you'll need it
Cyclical stocks are notorious beasts..they can make you a fortune but they are also portfolio destroyers..One should never use long term buy and hold investment strategies with Cyclical Stocks..the risk is too great
During economic down periods the financial section of the newpapers are littered with examples of shareholder destruction and Government bailouts...OK..they may seem great in a bull market but the risk is often too great and most people would know at least one person in the investment world who chooses to keep well away from cyclical stocks and invest their lifetime hard earned savings within a much safer low growth high dividend more stable environment...People tend to be more optimistic with their forward fundamentals when they surrounded within an upbeat economic environment...so the failure to time the exit can be the killer..
Thinking and analysing using forward fundamentals??...forget it... See chart below and say to yourself would you have got out using the TA cyclic reversal sell trigger when:;..
1..I don't believe in TA longer term future the share price is only in a correction..
2.. I believe in brokers forecasting rather than squiggy lines
3....the Olympic games are coming down under and NZ has formed alliances to take full advantage of that..it's one time boom waiting to happen..
Imagine selling out at $2.00 in April 2000 after a +54% increase in interim profit, the brokers forecasting a +25% profit next year and the Sydney Olympics due to start in 6 months...would you????..TAer might but a med/long term FAer? I don't think so....6 months later the share price is $1.70 and Olympic games begin...do you sell now????
Cyclical stocks are much more sensitive to variables than the non-cyclical stocks and sudden happenings occur which some are destructive...You will find some Investors having a portfolio management strategy..by investing in the exciting up trends of cyclicals during economic recoveries then shifting to the boring more slow rising non-cyclicals as a type of portfolio defense when (s)he feels the economic boom is at or past its peak...
http://i458.photobucket.com/albums/q...0forecasts.png