Hoop, a quick glance (as usual) at your chart throws out an almost textbook bearish bat formation nearly completed. Gut instinct (only) suggests it's a sell around $3
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Hoop, a quick glance (as usual) at your chart throws out an almost textbook bearish bat formation nearly completed. Gut instinct (only) suggests it's a sell around $3
I don't think anyone can but the international energy agency reckons we're in a classic over-supply situation with an estimated 2m barrels a day looking for a home / storage facility.
Long term futures still tend to indicate that lower prices will be "sticky"
Sure its a cyclical stock but nobody seems able to reliably predict what part of the cycle we're at. Maybe we're only in the second year of what could be a seven year bull phase for growth ? The way I see it, central banks around the world have no choice but to initiate policies that perpetuate ultra low interest rates for the foreseeable future, perhaps for as long as a decade ?. Such an environment is usually good for a sustained period of growth and relatively high level's of consumers disposable income....for I dunno what ?, maybe travel :)
It looks like this:
Attachment 7061
funnily enough, this is a bearish bio-tech bat...
Attachment 7062
but the bearish bat formation belongs to the 'gartleys, butterflys, bats and crabs' family of chart formations on which there is masses of info on the net. I guess the bat formation is named such due to the height of the 'wings' on each side of the formation.
Fits well with cyclicals, which do tend to be strong trenders once a new trend develops. We are seeing this in AIR right now, it is strongly trending, and no imminent reason to buck the trend. I say the $3 area might be an interesting point to be wary, because of my batty outlook of charts
thanks xerof
I sort of guessed something like that
Couldn't see where cricket bats came into it
Operating stats and Hedging update are out:
Op stats: https://nzx.com/files/attachments/208174.pdf
Hedging update: https://nzx.com/files/attachments/208175.pdf
Here's there last fuel hedge disclosure in late October 2014
https://nzx.com/companies/AIR/announcements/256764
Although the current mark to market number looks a bit unfortunate this will be something AIR has in common with the vast majority of other airlines around the world and it needs to be viewed in context with:-
1. The current very low spot prices which nobody would have been game enough to predict six months ago
2. The fact that they haven't hedged much extra at all since October, just a little more for Q4 2015.
3. The company will accrue some benefit from unhedged fuel in the first half and significant benefits in the second half
4. Very little fuel hedging is in place for FY 2016
Operating stat's looks good to me. Solid demand and some yield growth. New route to Singapore demonstrates the airlines ability to materially grow capacity over time and marks a major departure from many years of very close to zero capacity growth i.e its now a growth stock:t_up:
Looking forward to next week's result and outlook upgrade.
Article in NZ Herald.....Aussie turbulence for Air New Zealand. Virgin's loss will hurt AIR NZ's bottom line.
http://www.nzherald.co.nz/business/n...ectid=11404817
This has been know for sometime and is well factored in..
Decent result from VAH, they are improving nicely. Bodes well for a contribution in 2016.
The big question I have on AIR for FY16 is the yield assumption. I was slightly disappointed at the yield decline in January. There is a mix shift towards lower yield long haul, which does create headwinds, but these could be offset by a weaker NZD and by stronger demand. Guidance as to how they see demand, and yields progressing will be key. It's a big swing factor.
They have raised their fuel consumption forecast (again...), does this mean more capacity is planned? Possible 767 retirement delay? I hope so.
I'm hoping all those silly shareholders reading this old news smack it down to $2.50 and then its hammer time.
Remeber me warning about the risk to Cullen Airlines from all the surplus and underutilised A320's in the near abroad?
http://www.ausbt.com.au/airasia-x-ey...ealand-flights
Boop boop de do
Marilyn
PS. John Key should sell Cullen Airlines to Etihad before the competition heats up any further.
AIR announce HY results next week on Wednesday 25th, looking forward to it. The Investor Briefing Webcast will be here at 10:30am http://www.airnewzealand.co.nz/lates...nterim-reports
The sp has range traded since mid Dec, after the breakout Nov 27, not quite making the TA target of $2.73 but getting close at $2.61 high on Jan 29 & 30, notably the price action includes a successful test of the 50day EMA on Feb 10 & 11. Another share poised waiting for the HY announcement.
Attachment 7112
Baa Baa for two days a couple of weeks ago the price hit $2.68 before closing down at $2.61-$2.62 I know I was watching but i must say im surprised it hasnt topped $2.70 in anticipation of the coming results obviously no leaky ship here. Perhaps the Herald with their negative old news has spooked some causing selling pressure.
Given the above, I assume these aircraft would remain on the PI and HNL routes. Competition on the latter could heat up further if HA increase flight schedules, so perhaps it is time for NZ to replace the 767 and use a 777-200ER on that route thereby increasing both capacity and offering far superior hard and soft products.
Poor AIR can't catch a bid :confused:. Oil fell Friday, American airlines SP's performed well on Friday, Qantas is up to $2.76, (I hate it when the red kangaroo's SP outperforms AIR), VAH is closing in at 49 cents on its five year high of 51 cents, the currency has moved north of 75.00 cents American and the half year announcement is out on Wednesday and yet the SP is stuck at $2.60 ?. Market seems very reluctant to take it past $2.60 on a sustained basis, go figure ???
Yep, I agree with you here mate, this is inline with what I have seen for the past few months as well. Oil goes up? AIR SP goes down. Oil goes down, Other Airlines go up, AIR? no change. Market seems a bit edgy I feel, and today it could be partly because of these articles:
http://www.nzherald.co.nz/business/n...ectid=11406390
http://www.nzherald.co.nz/business/n...ectid=11406106
Seems AIR has been getting a bit of a beat up in the press lately - hopefully the news on Wednesday changes its attitude? Either way I am still holding. :)
http://www.interest.co.nz/business/7...dging-strategy
Good article raising some discussion about fuel hedging for AIR
Editor of the N.Z. Herald gave AIR a real sustained pasting about the Hawaiian maintenance fiasco a while back that affected the SP, (the nature of the sustained negative publicity "attack" bordered on being actionable in my opinion so I warned him of that)...probably gave associated parties and his family interests a good opportunity to buy...and then suddenly a string of positive news and the SP went north...history repeating itself albeit more moderated and less sustained this time ?
There ya go Roger, AIR finished up. Still no where near your Aussie pals SP though! :)
Strong result.
44% increase in dividend payout.
Comes with possible earnings upgrade if the later half of the year that we all know. "The company stated in November that should the then current level of jet fuel price persist, there would be a significant additional improvement in earnings in the second half of the financial year. "
https://nzx.com/files/attachments/208674.pdf
Also I had the inflight service manager ask me for feedback on his team coming back from PVG saturday night. Seems like they might have high staff turnover on their Chinese teams? Regardless I felt it was positive in him asking direct for customer feedback.
Yep I am happy with that result. Normalised earnings excl VAH equity accounted losses are $230m up from $180m in the pcp (up 27.8%).
Company has quantified 2H net fuel gains at $82m at present prices.
Strong currency hedging in place for 2H 2015 and 1H 2016 at very attractive forward rates
Fuel gain of circa $250m in 2016 if fuel stays where it currently is
Analyst presentation https://nzx.com/companies/AIR/announcements/261096
Happy with the fully imputed dividend which is slightly higher than I expected
Company seems well pleased with the new Dreamliner performance
Air is very well positioned :)
current media release being live streamed via NZherald.
I wonder if this can be viewed later??
Initial thoughts:
better dividend then we thought!
Better cargo revenue and contract services revenue than I had (I was conservative)
They have spelled out the fuel benefit next year which is HUGE - $250m!!, this will get people excited.
And they have hedged FX very well
2H15 is 94% hedged at 0.8452 > 1H16 is 80% hedged at 0.8175
Obviously much better than 75c which is spot.
Expect the shares to be up today. Those brokers will be scrambling to upgrade their FY16 eps estimates... 31c... more likely 45c...
-Mod
For those interested - recording of today's results.
http://new.livestream.com/accounts/7...ideos/78221890
Yep I was especially pleased with the extent of and attractive rates on FX forward cover.
Potential fuel price gain next year is a real cracker.
Gearing is up with the acquisition of 3 new 787-9's in the period so I'm not expecting a special divvy this year but ordinary final divvy could be very good if we see fuel price gains materialise fully.
Maybe 8 or 9 cents fully imputed. If we call it 8.5 cents final that's 15 cps fully imputed for the year or 15 / 0.72 = 20.83 cents gross / 260 = 8% gross dividend yield. This means we're being paid very handsomely as well as enjoying tremendous growth !!!!!!
From the call it seems management are pretty confident about demand and yields. More than expected. Pretty bullish!
I was also impressed that when asked about political/PR pressure to lower fares Rob was pretty resolute that fares were fair! Thumbs up!
All in all excellent results! A detailed model update will follow in a few days.
Brief notes:
Forward demand: Revenue in advance only up 2% vs significant increase in capacity?
Chris: Demand is strong, asia, we are confident
Rob: Asian forward sales Yen/AUD weaker, revenue from codeshare with Singapore airlines only arrives when flown hence forward revenue is understated somewhat.
Competitive environment: Jan stats showed a lowering of yield advancement – have you seen prices moving lower?
Rob: FY16 competitive threats may occur, as yet we are not seeing adjustment to capacity, also supply chain for aircraft puts a constraint on capacity. Everyone’s capacity increases together. NZ is not a big business class high yield, so not that attractive. Network decisions reflect economics. Don’t expect competition to toughen much.
Have you seen yield compression yet?
Rob: No, price is set by demand and supply. Some markets are struggles Asia etc, others such as US remain strong.
$249m improvement due to fuel brings political pressure to lower fares?
Rob: 10 years ago, oil was what it is now – ccy same. Average domestic fare is the same. In the interim a lot of costs have gone up airports etc.
Marcus: Underlying ccy yield declines would not be expected for the 2nd half?
Rob: Growth from LH – so mix shift negative. Other than that no.
Singapore – no material impact on LH yields?
Rob – good demand, starting into that route lower yield (certainly than US!)
Labour 80ppl added, more? Rates? One-offs? Upfront coming off? Pilots?
Chris: Training bubble is nearly through, resets (cabin crew),
Rob: Headcount – altitude 100 people left, actual operational increase was 200, c2% but filled 10% growth in January. Lots of training last 18 months. Pretty well through this now – few seat changes left.
End of year and balance sheet – how does the board look at specials again?
Rob: can’t comment. Looking back at previous capital management – was a reflection of where cash was. Don’t confuse equity and liquidity. One thing is we will borrow less with new a/c. 44% increase in dividends reflects where we see earnings are heading.
Is this bigger dividend indicate a higher sustainable pay out or reflecting stronger growth?
Rob: Reflects the stronger growth expected.
-regards mod
Cheers Mod, much appreciated. :)
Thanks Mod, appreciated.:t_up:
Yes,Thank you.
Excellent
I am pleased Buffetts 0800 airline investment hotline is blocked to AIR investors.
Well done, I am overloaded already on AIR otherwise probably would have topped up too. I came along a little late to the party, so my average buy at present is $2.46.
Very happy with the result today - the difference in the way Stuff / NZH reported the result is fascinating, this tweet sums it up nicely: https://twitter.com/darrinlim/status/570359160073687041
I've done some quick back of the envelope calculations on next year's EPS. By my reckoning $700m underlying profit before tax is on the cards, (about $500m after tax) and that's a whopping EPS of 45 cents per share !!!! I'd love to see this beautiful big bird hit $2.70 by close of trade today.
Thanks Kiwigekko. You're not late to the party mate, its just getting started. I'm right at the very top of my maximum self imposed allowable 20% portfolio allocation, if it weren't for that I'd buy even more.
1) Out of interest, what numbers are you using for your oil prices & drop in yield as they ramp up new services / increased capacity? I understand the increase in capacity is the main driver for increased profits, I'm curious as to how much discounting people think might be involved in the short term to fill that capacity up?
2) It seems to have broken through $2.68, which has been resistance in the past so *fingers crossed* -- spoke too soon it just hit $2.70.
Cheers.
Keep it quiet mate but I think talk of dropping regional fares is just window dressing to keep the public happy...they have to say something to make people feel happy because its still majority govt owned. That's why they made a meal of the $3billion they're investing in new aircraft in the next few years and $40m they're investing in lounge upgrades...to keep Joe public placated.
Sure there will be more night rider fares and some more specials on grabaseat but I like AIR's attitude as reported by Mod in the conference call that airfares are the same as they were ten years ago when fuel was this price and our other costs have gone up. AIR appears to be geared up to defend its prices against any left wing pressure.
Oil's the wildcard... to get to $700m underlying profit I'm assuming it stays around the current level...where it actually goes, who knows but what if circa $80 a barrel for Singapore Jet is the new normal for many years !!!
$2.70....next stop $2.75 bring it on !!! Look at the record volume in the market today...tells you its going north and there will be significant analyst upgrades coming through from brokers in the next few days so people that rely on that will add considerable further impetuous to this upward momentum. $3.00 soon ???
No worries, its just between you, me & the internet. :p
Agree that they certainly seemed ready with information to defend any pressure from Joe public around air fares. I quite liked the emphasis placed on the amount of additional seats they're adding to the regional areas and that ultimately that will bring some lower costs per seat as a result. Will watch and see what happens with the SP - today has been a very good day for all AIR holder's - time to go have a beer I think. :t_up:
Many thanks Modandm, you're the man.
[QUOTE=percy;561229]I do,I do,I do [feel as though I am marrying AIR] !!! lol.
And yes you and Forest were right!!!!!![QUOTE]
You could call that a fringe benefit for spending time with us in Chch and helping us with transport to / from the ASM last year....(some of our infectious enthusiasm rubbed off on you).
Isn't karma a beautiful thing, you help others and it comes back to you :)
P.S. Wow !! Over 5 million shares volume now and up to $2.74.
maybe mr market is finally waking up to AIR's value
The beer is chilling off in the fridge waiting for market close :D
http://www.nzherald.co.nz/business/n...ectid=11407446
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
Thanks for the link mate, good bit of dry humour for the day. The militancy of Australian unions is legendary to say the least. What a bloody gall they have. The company posted a $2.8 billion dollar loss last year for goodness sake. One year's more loss like that and it would wipe out the entire equity of the company !!!! As soon as there's a modest profit they put their hand out. What part of being reasonable don't they understand ? It would appear they've learned nothing from their colleagues in way the AMWU have bankrupted Ford and Holden into imminently shutting down.
Interestingly as an aside I crunched the numbers a while back and found the average worker at AIR N.Z. makes $104,000...not too shabby is it !!...any wonder they're an employer of first choice for so many people :) Classic case of all stakeholders benefiting from this IMHO. Now all we have to fix is those 17.8 inch width seats on the new Dreamliners and all will be well in the AIR world...or is this a cunning plan to encourage larger people to lose weight thereby doing their best for people's wellbeing... it seems to be working for me lol
Good article from Brian Gaynor on Air NZ and the SOE gentailers. "Stellar outcome for Government-controlled firms a notable exception"
http://www.nzherald.co.nz/business/n...ectid=11409400
Market seems content to price AIR on the basis that the oil price tailwind will persist for current year and maybe some of next year and who knows for the 2017, 2018 and 2019 years ? Market seems to think you can't put a value on those potential oil price tailwinds for future years but what if oil prices around $70 are the new normal ?
Current futures price for oil Dec 2018 at $68, (mid point of AIR's 2019 financial year) are pricing in big tailwinds for the foreseeable future !!
Implications for the potential for SP upside appear to be very good but to be honest its anyone's guess how sticky these lower oil prices will be.
http://www2.barchart.com/charts/futures/CLZ18
There are some interesting comments in the article below about UA looking at establishing an SFO-AKL sector and AA looking at the LAX-AKL sector (as unlikely as either might be), along with some other interesting tidbits.
http://www.stuff.co.nz/business/indu...ic-competition
Yep sure is mate but no matter, (within reason) where oil goes Air are well positioned with a very young and fuel efficient fleet.
They are very pleased with all the operational aspects of the new generation Dreamliners and they're getting fantastic customer feedback on them so accordingly I'd expect they'll exercise all their remaining options in due course leading to a fleet of 18 of these fancy new aircraft !!
We're "very well positioned"...do I need to pay Percy a royalty for using that expression :D
Mate I'm maxed out at my self imposed 20% portfolio allocation limit so won't be buying more but I am very happy to hold at full allocation level.
Shares are ex the 6.5 cent fully imputed divvy Wednesday next week and its paid shortly thereafter, (IIRC on the 20th March).
People are really paying $2.825 ex divvy buying today at $2.89.
I see fair / good value based on all known information at this time, (inclusive of VAH's prospects improving as evidenced by their SP appreciation to circa 50 cents) at $3.40 - $3.50.
Considerable upside exists from this value if oil settles somewhere around $70 on a protracted basis and VAH really gets cranking along....but can't put a value on those aspects at this stage.
P.S. Consensus EPS for 2016 now up to 40 cps, not sure if all brokers have upgraded yet, will check back next week.
http://www.4-traders.com/AIR-NEW-ZEA...407/revisions/
I haven't been in this forum long enough to see a lot of the highly recommended stocks turn to custard (I’m assuming on probabilities this has happens half the time (perhaps not in this bull market however) But the two biggest stocks I’ve seen championed over the last year (as far as I’ve noticed) have been Air New Zealand and Heartland and they’ve both been gold. I’ve never invested in Heartland because I’m worried about a NZ banking collapse (Ireland etc small chance I know) but I’ve invested significantly in Air New Zealand. In spite of Roger’s rando Ebola rant, I would just like to thank him for making a lot of us here a lot of money by championing those two stocks. I think the stock picking competition shows a lot of his influence.
You're most welcome mate. HNZ and AIR, my two biggest positions, still solid value at current prices (notwithstanding recent strong SP performance).
Not taking anything from Roger's contributions that are always insightful and well worth reading, but many of us who have made money out of AIR over the years owe a thanks to modandm for pointing out the underlying value years ago and for sharing his analysis with us.
I gotta say that roger and mod have made it very easy to make unbias decisions on air.nz. Just gotta say thanks again for all the input
Divvy ex date Wednesday 11 March, payment date Friday 20 March. Nice and quick with no mucking about that's what I like. You'd be forgiven for thinking the company has heaps of cash or the Govt like their money quickly, or both :)
Is this the end of the golden weather for Cullen Airlines?
Is the cloud of dust on the horizon and the sound of bugles the US Cavalry riding to rescue travelers who have circled the wagons against Cullen Airlines monopoly pricing on North American routes?
http://www.stuff.co.nz/business/indu...ic-competition
Boop boop de do
Marilyn
Already posted earlier, nothing new here. But no inclusion in your post that the airline should be sold to a competitor this time ?...I suppose you can't make your agenda blindingly obvious... Why am I not surprised that you seem to delight at every possible opportunity to post something that might be negative ?
Must be a delicate balance for AIR to price their fares high enough to be extremely profitable....but low enough to make it unattractive to competitors. Is that even possible ? Maybe yes if the extremely is removed. My budget conscious son recently returned to NZ for a wedding and extended his travel time significantly by going through Brisbane. So maybe the fares are a bit high ? I feel myself a bit conflicted as a traveller and a shareholder !
Competition is probably a good thing for everyone I suspect.
I recently flew to London on Etihad for $2850 at quite late notice leaving a week after I booked. Air NZ was $3800 for similar times. Both very good airlines so a no brainer as 200 airpoints dollars does not make up for an extra $950 on the fare.
Air definitely pushing it but it but they will be very profitable the next 2 years. Still holding for $3.30-3.50
And if anybody wants to challenge a route, 1.3 Bil cash and lowish gearing allows for quite a dogfight...
Oh well never mind...a little birdie tells me AIR had a HUGE February and bookings for March / April are REALLY STRONG. :t_up::t_up:
Correct - but the total trip duration was only about 3 hrs longer and they are both quality airlines so no big deal. After I booked I realized I could have gone Cathay (one stop in HK) for under $3000 also.
Don't get me wrong I'm a happy AIR holder from the mid-$1's and think they have done a great job - probably the best run airline in the world and with a unique domestic monopoly franchise that has been challenged and defended successfully several times over the past 20yrs. But I do think on some routes profiteering will hurt their brand. It s a little like Cadbury making small changes that over time are defendable but erode your brand strength. For an airline pricing seen as "fair" is a key aspect of brand whether you are a low-cost carrier, national icon, or full service premium brand.
Agree with all of that Arbroath. Air NZ is a great airline and my preferred choice to travel with. But too often in the last 2-3 years do I find their long haul fares unjustifiably high against comparable full service competitors.
The NBR today suggesting AIR monopoly on direct routes between NZ-US may well come under pressure soon from AA.
I did a random search the other day on webjet and was quite surprised that AIR actually came up as one of the cheaper airlines to fly to London in May. (Was thinking about flying to London to organise a cheap supercharged F Type Jaguar but that's another story). Fares circa $2k return were on offer.
Anyway on another subject I had a quick look through the half year's financial report which arrived today and who knew under general disclosures 2(d) the company has renewed its on market buyback authority for a programme for up to 3% of the company's stock, up to 33m shares or $66m whichever is the lower in the year to 29 Sep 2015, (none done in the half year period and none to date otherwise it would have been announced to the market). When I get more time I'll have a thorough read and see what other little golden nuggets of information are contained therein.
That reminds me ; i remember fares to London in 1983 being re $23-$2400!! 32 years later its cheaper.:ohmy:
My leaving-out of the usual appeal for John Key to sell AirNZ to Etihad was an oversight on my part. Though you regard it as an irritating troll it is my genuine conviction.
As an investment savvy person you will be aware of the Greenspan Put. A belief the US Central Bank will not allow the "to big to fail" banks to go under. If they come under pressure the Central Bank will flood the market with liquidity allowing the tbtf banks to escape their folly.
The New Zealand taxpayer is in the gun under a similar arrangement, the Cullen Put. Tax payer’s money will be used to keep AirNZ’s head above water if it gets into serious trouble. This has happened before which is why I call it the Cullen Put.
Airlines are a tough game with frequent financial reverses. Aviation history is littered with the corpses of failed airlines. Anyone remember ANSETT? What if Virgin in the recent capacity war and cash burn had faced an opponent led by someone that actually knew what they are doing?
Taxpayers should not have the risk of paying large amounts of cash unexpectedly. What say we could off load-this burden to someone else. Who is already a partner with AirNZ in Virgin? Who is buying up airlines all over the place, even plunking down cash for that old has-been Alitalia?. Who is headquarted is a sand state with petro-dollars to throw around in uncertain ventures?
Memo to John Key: Sell AirNZ to Etihad.
Boop boop de do
Marilyn
Okay I'll take the bait and debate the political and national interest aspects of this.
1. I haven't got the time to review the 2001 recapitalisation in great detail but from a brief look there was a $885m package involved of which $300m was preference shares, since repaid. With the benifet of hindsight after repayment of preference shares their net investment was $585m.
2. For most of the last 14 years healthy level's of dividends have been paid to the government, e.g. last years final dividend, (just one of manyover the years, including the special translated into a $92m payment to the Govt) as well as the company paying full taxation to the N.Z. government every year.
3. The company presently employs approx. 10,500 Kiwi's and I worked out the average salary is $104,000, that's nearly $1.1 billion dollars in wages and the vast majority of those employees are N.Z. residents and liable for N.Z. taxation at an average rate of somewhere around 30 cents on the dollar that's $330m in PAYE remitted to the N.Z. Govt each and every year !!
4. Lets have a look at how the airline has performed over the years. According to Craigs the average return inclusive of dividends for the last 10 years has been 12% per annum compounding. Very, very few other stocks have double digit average 10 year returns. There's a little gold nugget of information I'll bet very few people realised, especially you. Despite being a cyclical industry and the last 10 year period encompassing arguably one of the most difficult periods in the companies 75 year history, (the global financial crisis), long term holders have enjoyed compound returns of 12% per annum !!
5. Notwithstanding the Government selling some of its stake down in November 2013 and getting most of its original investment back ($365m), the present value of the Govt's remaining 53% stake is a whopping $1.75 billion dollars !!!!!
6. Kiwi's enjoying domestic airfares that are ostensibly unchanged from what they were a decade ago i.e. in real inflation adjusted terms they're actually about 30% cheaper. God knows what domestic airfares would be if Etihad or some other foreign carrier dominated the market but you can bet you last dollar they wouldn't be as reasonable as they are now.
7. There's also the national interest to think about. Why would you put some other foreign governments national interests ahead of our own by selling to some other foreign owned airline who would run the airline purely in their own national interests ? Governments owning some / all of their national airline is not a new concept by any means and many governments understand the importance of protecting their own national interest...why is this concept so difficult for you to understand ?
Even leaving aside the national interest debate I believe I've shown most emphatically that the N.Z. Govt has done exceptionally well out of its investment in AIR as have other shareholders and employees who are generally very well paid. I'd call that a win all round for all Kiwi's.
add in the fact AIR promotes New Zealand as destination that helps fuel tourism, hospitality etc.
A foreign airline wouldn't do the same level of promotion AIR does.
I see AIR as a worldwide ambassador for NZ.inc in some ways. The journey starts and finishes with them for most tourists.
Well said mate.
http://www.nzherald.co.nz/business/n...ectid=11412780 Fair enough in my opinion. The vast majority of customers opted out anyway. Rumour has it there aren't that many lawyers who didn't realise you needed to opt out :) (Recall that the complainant was a lawyer who made multiple bookings and incurred costs without realising he needed to opt out...this from a professional who's in the business of dotting I's and crossing T's...go figure? )
Almost sold AIR today, it's had a great run, needed the cash. Sold WYN and TME instead, but even at these lofty levels I think AIR has upside potential for FA reasons, but the pace of gains will slow down before the cycle reverses. If it was just TA, then it would be gone .. declining volume on a rising sp is a great signal for consolidation (exit) and at least a retest of 2.68 in due course.
jmho, BAA
I sold WYN shares to buy AIR NZ shares just before Christmas. And slightly off topic...most of my finance reading recently has been about defensive stocks- I piled into defensive stocks in the middle of last year (I know AIR isn't one of them) before I actually researched the evidence of 'defensive stocks'. It seems at the height of bull runs (perhaps like we are now?) skeptical investors pile into defensive, dividend paying stocks artificially inflating there prices, so when the crash happens they get hammered worse than growth stocks in many cases (like so called consumer staples companies like Johnson and Johnston). Anyway, I sold WYN because I was worried that out of all NZX shares they would get hit the hardest- I still think this is the case but be wary of selling them for 'defensive stocks' (I'm basing this on the S&P financial crises research I've read). Anyway, I think selling WYN instead of AIR is a fantastic move, I hope it works out for you like it did for me. I've done too many trades to exit my defensive stocks this financial year- I hope I don't get burned for it.
On the contrary from what I've observed with the recent strong run volumes have been very good on average. I'm no TA expert but one or two day of volume slightly below the average wouldn't be enough for me to call it as declining volume. Buying late in the afternoon has consistently been strong lately which could indicate solid overseas interest coming out of Asia. I think you sold the right shares :)
Point taken, the volume is above its MA. I was referring to the rising share price divergence against the reducing daily volume.
Attachment 7192
Not a big deal in itself, though most TA indicators are also stretched or overbought. Still own AIR though, prerogative to ignore my own analysis LOL.
BAA
Im personally ok if the price goes down a bit. It ran up pretty quick after the announcement so I'd expect some selling off before another run. Possibly a bounce of a 50 EMA?
I'm a very happy holder. I've been reflecting on the fact that AIR has generated long term compound returns of 12% per annum for the last decade, (Source Craigs) notwithstanding the really traumatic years of the GFC. Makes a bit of a mockery of the old adage of not becoming attached to an airline stock doesn't it !!! I'm ready to marry AIR :D
AIR trades on only a fraction over 7 times consensus 2016 earnings of 40 cps.
Notwithstanding Qantas' very highly leveraged balance sheet, (read extra risk), it also trades on just over 7 times consensus 2016 earnings which by coincidence are also 40 cps and the consensus analyst price target is $3.61 and that's with almost no capacity growth !! http://www.4-traders.com/QANTAS-AIRW...449/consensus/
AIR is growing capacity at 5% per annum for the next half decade...maybe we need some of those Aussie analysts to value AIR....$4.00 anyone ?