For anyone interested in Jet Fuel price this chart from the US Energy Information Administration is worth following. Current price about the same as 2006.
http://www.eia.gov/dnav/pet/hist/Lea...F4_RGC_DPG&f=D
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For anyone interested in Jet Fuel price this chart from the US Energy Information Administration is worth following. Current price about the same as 2006.
http://www.eia.gov/dnav/pet/hist/Lea...F4_RGC_DPG&f=D
Cheers Robomo - interesting, thanks for that.
Not sure if anyone else cares about this stuff, but as I am looking at it I will post it up here.
The latest EIA weekly report is in and its a biggy, with crude inventories jumping 2% in the US. Even with those rigs shutting down the volume is trucking along. According to Bloomberg crude inventory is now at an 80 year high.
Here's a nice graph showing how things are looking: http://www.bloomberg.com/news/articl...r-seventh-week
Also, who would be an Oil trader? After this report the price has actually gone up 3% today! Oh well I am confident it will sort itself out eventually as this Oil has to go somewhere however I must say the Oil Futures market beggars belief most of the time!
There may be a couple of reasons though... There is talk of an emergency Opec meeting: http://money.cnn.com/2015/02/24/inve...ing-oil-saudi/ however Saudi's aren't panicking, so likelihood of this happening who knows but a good sign for everyone is that demand from China is increasing: http://www.business-standard.com/art...2501450_1.html
It really is anyone's guess where it goes from here, but this oil does need to go somewhere.
Back to work for me, hopefully we see a strong AIR opening this morning.
Craigs just lifted their target price to $3.15 (from $2.68), reiterate BUY recommendation. They see underlying earnings before tax and VAH of $499m for 2015. Net earnings after tax of just over 32 cps this year.
The big cheese at Cullen Airlines has a grump about the profitability of Virgin(Under arm bowlers division).
http://www.smh.com.au/business/aviat...25-13ngvz.html
Boop boop de do
Marilyn
Morningstars auto valuation $2.80 HOLD
Decent turn around for Qantas reported today: http://www.smh.com.au/business/aviat...26-13oo45.html
Roger, I think you might be waiting a little longer before AIR SP is back on top of QAN, mate. ;)
Mate its a hard one to figure out. First let's look at their relative track record in recent years. No comparison really, QAN made a loss of $2.8 billion last year and this half it only made a tiny profit of just over $50m, (its first since the GFC) on its international operations. The vast majority of the profit came for domestic op's.
OTOH we have AIR's superb track record of growth in the last 2-3 years.
Next let's look at underlying earnings per share before tax for the half year
Qantas $367m / 2196m shares = 16.71 cps
AIR N.Z. $230m (excl VAH loss) / 1121m shares = 20.52 cps
Next let's look at statutory net profit after tax for the half year
Qantas $206m / 2196m shares = 9.4 cps
AIr N.Z. $133m / 1121m shares = 11.86 cps
Finally let's look at the outlook, dividends and growth
Qantas expects capacity to increase 1.5 - 2.0% this year but no dividend as they are rebuilding their balance sheet which one presumes implies its a bit stretched and no profit outlook which implies less confidence
AIR expects significant capacity growth, has increased the dividend by 44% and stated in the conference call that's because that's where they see growth in profitability for the year and obviously they seem very confident about their prospects for the foreseeable future.
Yet despite the above Mr market says Qantas SP deserves to trade at a premium to AIR's SP...go figure ??? A brave man would short QAN and double down on AIR :D
The other side of that is that Qantas made their recent underlying profit ($367m) on revenue of $8.1 billion. Air NZ got their profit of $230 on revenue of $2.4 billion. So net profit margin (or whatever you might call it) is 4.5% for Qantas and 9.6% for Air NZ.
Air NZ has better management which deserve those figures but there is only so high that the margin can be pushed.
Also, for sake of argument, assume that fuel cost drops by a third for H1 16 (which is really just assuming that it doesn't going back up again since H1 15 doesn't include much benefit from the current reduction in fuel price), profit for Qantas would be $721m higher and profit for Air NZ would $190m higher.
Based on the number of shares shown above, that would give:
Qantas $367m+$721m / 2196m shares = 49.5 cps
Air NZ $230m + 190m / 1121m shares = 37.4 cps
Obviously these are very rough figures and assume no other effects on profit between now and next year but they are just illustrating the point. The biggest opportunity for profit growth right now for both airlines is the falling oil price. And Qantas will benefit more from that than Air NZ.
I don't think it's unreasonable that Qantas should be priced as it is right now, although I won't be putting any money into them.
Good point. No question Qantas is a very highly leveraged company so there's more leverage to the upside if their recovery plan goes well.
Qantas Equity from their latest accounts is $2.73 billion. Net assets are $17.7 billion so equity ratio is only 15.4% :eek2:
Looks like all those years where they staunchly defended their market share at all costs have taken a toll. Only just had their credit rating outlook improved from negative to stable this month.
Plenty of possibility for things to go wrong with leverage like that as we saw last year with their loss of $2.8 billion. I'm not surprised you won't be putting any money into them, I wouldn't either with extreme leverage like that.
AIR by comparison look pretty conservative for an aviation business with approx. 50 - 50 debt / equity funding their assets.
Roger, interesting point about the equity ratio. That looks pretty bad for the red kangaroo. Certainly makes it a more risky bet.
Another one in the minus column for Qantas: it seems that the union thinks the airline is running as a charity. Now that there is a profit, the madness of job cuts must end! says the Transport Workers Union. Good luck with that.
http://www.theguardian.com/business/...-to-net-profit