Bit late on the buy button, never mind got mine filled at $2.45....
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Bit late on the buy button, never mind got mine filled at $2.45....
I just had to top up as well - even though that leaves me way past a sensible proportion of investments.
Seems that Jetstar has been attempting to disrupt AIR since 2009 - hasn't hurt AIR shareprice so far, quite the opposite in fact. Why would this be any different? As others say, it should just increase the overall number of travellers
This blip will be forgotten getting closer to Air NZ next big profit announcement and Jetstar will commence flying 5 sardine cans to yet to be confirmed final destinations, Big Deal, meantime the NZ Herald anti Air NZ dept will be cranking into overdrive by dragging up any article they can(Mainly historic like one they published today on a wayward seabird) coupled with a good dose of typical sensationalism so they have more time to buy up cheap shares:t_down:
There's some very irrational hatred on this thread (how unusual, some would say, about most threads)
Jetstar has gained a material foothold in the domestic market, whether you like them or not. I don't use them that often, but when I have, I have enjoyed arriving at my destination on time, usually early. I know they got off to a terrible start, but they are MUCH better now, than then. AIR, in my infrequent flying experience lately, has usually been late. I have also flown Trans-Tasman recently on each airline, and found AIR very cramped, with all the fancy equipment jammed in my face, and absolutely no chance of getting out of the seat. On JQ, I could walk past the passenger in the way, no problem. Perhaps I had a slightly better seat than most? I don't know, but I did not pay more for it.
Discl: I have a pilot in the family, yes, JQ captain
Anywoo - I am basically elastic when it comes to airline choice - you should try that, you might like it.
Jetstar has helped transform our market, to the benefit of the flying public, and also to the benefit of AIR. They have been forced to get their act together, ramp up capacity, and lower prices. Airlines are about getting bums on seats, and having planes in the air more often than sitting at the gate. (nice theory, hard to do in NZ)
AIR needs a huge kick in the guts on these regional routes, and is about to get it. GOOD, we the public will benefit massively from cheaper regional fares, AIR will eventually benefit from more arses on seats, and it's a great fillip for regional tourism. I just hope AIR don't get silly with price wars, for shareholders' sakes, as JQ is now a worthy opponent, and have shown there is room for more capacity. We don't need to get silly and petulant here do we.........
So, what to do.....the AIR price will need to close above the 200EMA today, and close this mornings price gap at some point soon, otherwise she's off to the downside. The reef-fish are swimming right now, can see nothing wrong, and are underestimating a now established and proven competitor
I personally like $2.25 as a buy in level, (old resistance, now support) but then I'm just completely batty
That's strange. I thought I read that Jetstar will use Bombardier Q300's - the same aircraft type as AIR uses on most regional routes?Quote:
Jetstar will commence flying 5 sardine cans
Xerof, Last time I flew Jethole I couldn't walk afterwards because of the pain in my knee joints after having my knees rammed against the seats in front so hard...that's the real world for you mate for anyone 6ft flying in their old crappy A320's with coffin like 29 inch seat pitch. That and their Chinese pilot had to do a go around because he couldn't land at first attempt at Chch 's long international airstrip on a fine perfectly still day. You pay peanuts and you get monkeys. He blamed ATC but I reckon he simply ****ed it up.
You couldn't pay me to fly on one of their planes and land at Queenstown on a cloudy day :eek2:
Did you really expect to see love for Jetcrap on this thread ?
Plane Talking
‘Propstar’ confirmed: Five Jetstar Q300s for NZ regional flights
Australian Aviation
Jetstar plans shakeup of regional NZ aviation
I recently flew CHC->AKL on Jetstar and then back on Air NZ. I'm 6' 1" and there was no difference in comfort. Flown with Jetstar quite a lot, and probably prefer them on shorter flights as they leave on time and usually arrive early.
Also never had a problem with Chinese pilots.
Have always found Jetstar's staff to be perfectly friendly as well.
Translation is clear. They couldn't sell these crappy old run down planes so seeing as they have no residual value lets hire some cheap Chinese pilots and cabin crew desperate to start in the industry on really low wages and run them on AIR's domestic route with zero service and miniscule seats...those Kiwi's are so dumb they'll never notice the difference in standard....or will they ?
I think in a months time all this will take backseat when results are due to be out and real valuations come out. In the meantime, it'll be bit bumpy just like the unpredictable weather, so buckle up and stay tight....
Jeez, price down 21% from a recent high. That's a crash, and I didn't even buy.
Good news though, getting back to 302 gives a 26% gain .....plus a divie? .....good eh
I guess the textbook will come out again..flick to Market Defence Strategies against new Competitors and up pops the successfully used strategy...Create a low cost airline company(s) using the existing equipment (synergy advantage) to aggressively compete head on and underprice with the intention to drive out the invaders .....Once the invaders are gone the usually lost making airline is mothballed or ceases to exist and the business reverts to its high margin parent operations
The big threat last time was Kiwi Airlines and in 1995 Air NZ created the low cost airline company called Freedom Air and eventually bankrupted the opposition.. FreedomAir creased to exist in 2008 and custom returned to the high margin Air NZ parent
If this defense strategy is rolled out again, then investors should expect the AirNZ parent to lose some of its domestic & transtasman market share to its created low margin company(s) group
I've always found Jetstar seats to be very cramped for leg room and I'm only average height, a couple of years ago my wife's flight was seriously delayed because the pilot didn't turn up so they sat there looking at an empty plane for 3 hours until another pilot turned up, the one credit I've give them is they fly their planes pedal to the metal with a sizzling 40 mins from Wlg to Ak albeit with a tail wind.
Fact 1: Jethole's domestic A320's are 29 inch pitch seats which is internationally recognised as the tightest in the world
http://www.seatguru.com/airlines/Jet...irbus_A320.php
Fact 2 Air New Zealand's A320's are 30 -33 inch pitch seats
http://www.seatguru.com/airlines/Air...rbus_A320D.php
Even in their tightest configuration at the back of an AIR A320 I could still walk off the flight as my knees had not been in excruciating pain like on the flight down on Jethole.
A minimum of 1 inch difference in pitch makes all the difference in the world if your pelvis to knee measurement is 30 inches, ie. its not all about how tall you are its about your pelvis to kneecap measurement that really counts.
Jethole can keep their crappy old rattling sardine cans for the poor unfortunates who feel they are compelled to buy the cheapest seat regardless of service level's or comfort. Even my Mum who is 5ft 6 inches reckons Jethole seats are very small. In my experience the thrill of a bargain is forgotten the moment you step on board and the bitter taste of poor quality lingers long after the flight as you struggle to walk from the pain in your knees.
Hey Zerof. Love these gaps .....up and down.Quote:
Xerof: So, what to do.....the AIR price will need to close above the 200EMA today, and close this mornings price gap at some point soon, otherwise she's off to the downside. The reef-fish are swimming right now, can see nothing wrong, and are underestimating a now established and proven competitor
I personally like $2.25 as a buy in level, (old resistance, now support) but then I'm just completely batty
The HNZ No More Gaps s taking a heck of a time to work out. What the theory/experience with filling gaps like the AIR one. Things 'gaping down' always seems worse than gaping up.
And it did close below the 200MA line as well. Suppose tomorrow a defining day as to where price is going over the medium term.
Intriguing and a bit spooky
PS just noticed that 22 you mentioned is about a FIB retracement level. I love Fibs
Tomorrow needs to be a "whoop whoop pull up" day
haven't got any charts with fibs on it, but $2.25 looks 61.8%. After a BAT reversal (which came in very nicely at my $3.00 prediction, right on cue), the initial target is 61.8%. After that, you won't want to know
That's right ....many fib support levels below 225
The 50% retracement is about 194
That bat of yours, was it one of these enormous walking bats
http://www.radionz.co.nz/news/nation...lking'-bat
Bought early this morning at 2.36. Still feeling a bit downward pressure. It may test the support tomorrow. Hopefully US and EU might have some good news/data
From my take, about 10% was wiped off the market capitalisation, on a announcement that Jetstar going to fly more routes domestically with limited real details (plus the background of higher oil and the lower dollar).
The equivalent of about $290m.
Seems silly. :confused:
http://www.scoop.co.nz/stories/BU150...nal-routes.htm
Here we go, looks like Air Nz ready to take on the challenge, game on!!!
Jetstar say they will take on 4 regional destinations. My guess is Hamilton, Palmerston North, Nelson and Napier; these are the four busiest regional airports. As well, there may possibly be more flights Queenstown to Christchurch and Wellington depending on capacity. Jetstar will be using Q300's, which are not as efficient as the ATR's that AirNZ uses for many of the flights from these 4 centres. Frequency will be far less than AirNZ and there will not be the continuity onto many of the International destinations from Auckland that AirNZ fly to. So on that basis it is hard to see Jetstar making any profit if they try to match AirNZ on price.
My guess is that these four regional routes (will they only be to and from Auckland?) contribute less than half of AirNZ's profit on all regional routes, which in turn is far less than the domestic main trunk routes. Overall it's only going to make a small dent in numbers changing from AirNZ to Jetstar.
The profitable passengers in all these centres come from the business community, frequent flyers and those continuing on to overseas on AirNZ. It's hard to see many of them giving up their FF cards and lounge access and frequency for Jetstar, which won't offer these perks and indeed might only be flying for a year or two.
Qantas have only just emerged from a bruising price war with Virgin in Australia, which did not benefit either airline. Virgin survived in part from the huge support provided by AirNZ, Etihad and Singapore Airlines. A big market for all those four airlines so worth fighting for. What is Qantas got to gain from flying a handful of 'bargain basement' passengers from a few tiny towns in NZ?
Some years ago Qantas pulled the pin on their codeshare with Origin Pacific, which promptly went out of business. Qantas also abandoned it's Christchurch - Rotorua flights years ago as they were unprofitable. How could they succeed now, given past failures?
Setup costs for Jetstar will be substantial and given the price war that is bound to occur it's going to take years for Jetstar to recover setup costs, let alone make any profit.
Check the hyperbole in 2004 when Pacific Blue and Jetstar announced their respective plans for New Zealand http://www.theage.com.au/articles/20...732539983.html
So, am I worried about Jetstar introducing a few clapped out Q300's into four regional airports to carry a handful of budget passengers at $49 a seat? Not on your life. AirNZ might lose $10 million of profit in 2015/16 with price matching but that will only shave about 5% off Net Profit. My bet is that Jetstar Regional will be gone within 3 years, having cost Australian Shareholders a heap of money.
Yes, I did increase my AirNZ stake by 10% with this latest fall!
LOL really ? According to Craigs AIR investors have enjoyed compound annual returns of 12% per annum for the last decade. Very few other stocks can match that with notable exceptions of other quality companies like FPH and RYM.
Pretty simple really, the airline business is volatile and has arguably more business risk that some other sectors. AIR trades on a forward PE of 6 that's one third of the market average !! of circa 18 times FY16 earnings.
Its up to investors to decide if a well managed business like AIR should be trading at such an incredibly deep discount to the market average and its international peers.
Some see risk, other see a brilliant opportunity to capitalise on negative sentiment and such negative sentiment may have an almost immaterial effect on real earnings going forward.
Chris Luxon and his team will give Jethole hell and burn Jetstar's profit and loss statement deep into the red in the process. AIR is in a VASTLY stronger financial position than Qantas.
Good post Robomo...exactly what my thoughts were too, don't think its going to hurt their earnings that badly as the market reacted y'day.
Probably Qantas strategy is to use some old surplus planes as a disruptive weapon to hurt one of AIRs uncontested profit engines.
Low cost operation but they know it won't be a gold mine (may not even be profitable) but might distract AIR elsewhere where they could benefit
Just a disruptive tactic in a bigger game, the games big boys play to stroke their egos.
Be all over in a few years time.
You forgot to mention one thing, Jetstar planes probably won't be on time (that is if they turn up at all!), making it even better for air nz...
Pertinent post. The Q300 planes are about 15 years old and have been in storage in Tamworth for some time.
How are they going to be serviced? AirNZ have established facilities for their Q300's all over New Zealand so I'm sure they could provide engineering services for a hefty fee!
Pertinent post. The Q300 planes are about 15 years old and have been in storage in Tamworth for some time.
How are they going to be serviced? AirNZ have established facilities for their Q300's all over New Zealand so I'm sure they could provide engineering services for a hefty fee!
I'm sure they are older - AirNZ bought the last Q300's to be made in 2005 and Qantas already had theirs. Q have bought more Q400s since 2005 but these won't be used in New Zealand. Anyway, they are still good for a few years yet.
Serviced by an Aussie arrangement? Sounds expensive and if they have to fly them back to Aussie for servicing the fleet size will be reduced by 20% for at least a couple of days at a time.
Air NZ now sustainably valued, say analysts.
First NZ Capital believes the market’s pricing of Air NZ now more adequately reflects a sustainable mid-cycle return profile, and so has upgraded its rating from underperform to neutral.
The analysts revised their forecasts for 2017 earnings before interest and tax by -16%
Forsyth Barr says yesterday’s share price reaction was over-done, and so it is keeping its outperform rating on the stock.
Forsyth Barr calculates Jetstar will look to increase its current 1.7 million domestic passenger load by about 30%, targeting revenue of about $60 million. This level of revenue represents around 4% of Air NZ’s existing domestic revenue base, or 1% of global revenue.
http://www.nbr.co.nz/article/air-nz-...ts-cs-p-174408
http://www.nzherald.co.nz/nz/news/ar...ectid=11467804
If this is anything to go by.....imagine when they start the domestic services...:scared:
Well, remember this Air NZ fiasco from only May last year: http://www.nzherald.co.nz/nz/news/ar...ectid=11248179
Or this Air NZ one from July last year: http://www.stuff.co.nz/travel/travel...waii-stranding
It seems like there is way too much love for Air NZ going on here at the moment and not nearly enough pragmatic analysis.
There are lots of people who have sworn never to fly Jetstar again, but probably just as many who will never fly Air NZ again because of issues they have encountered. When you've only got a few travel options you fly with whoever offers the best combination of price and product.
Recently I queued an hour for check-in with Air NZ and then flew and a clapped out old plane. I've had many good Air NZ experiences so you take the good with the bad.... but what if that was someone's first Air NZ experience?
This "propstar" announcement will be an interesting shake-up and it'll be interesting to see where the pieces will fall.
Personally, I was hoping to significantly reduce my holding of AIR after their upcoming profit announcement but maybe I left it too long.
It was perhaps a little naive watching Air NZ expanding into other markets without expecting others to expand their own offerings quite this soon. Air NZ has had a pretty golden run, helped out by a lack of any real competition for a long time, except on the Tasman routes.
Point taken mikey. Just putting things in perspective in the light of recent developments. Agreed, Air had their own issues in the past.
Well done to Craigs for a quick update on AIR.
"Elasticity of demand helps mitigate the impact."
"For every 10% price decline demand lifts 15-20%"
"Forecast domestic yields to decline by 2.5%"
Personally its a win/win form hopefully. I don't give stuff which airline i fly domestically being in the air for an hour max.If the prices drop so i don't feel robbed,dearer than going to aus and back great.
I have bought AIR 20% off its recent high for an est impact of "c4-7% of EBIT" so feel I've got a reasonable margin of safety if these estimates are in the ballpark. Hope its up from here then i would have to reassess ,hold reduce or sell.
Jet Star's reputation in NZ isn't helped by stories like this;
http://www.nzherald.co.nz/nz/news/ar...ectid=11467804
KW there may be tens of thousands of investment opportunities but any one of them could face difficulties at short notice given the occurrence of certain Macro events so why not Air a well run company driving increasing profits, besides I mainly stick to supporting NZ companies.
Totally agree KW, and that is what the CEO is diligently hoping and trying to mitigate. I think he may be partially successful based on historical norms but not completely. Just too many variables in the Airline business.
Disc. Bought back in yesterday in the high 2.30's
NPL also has much higher PAX numbers than TGA and ROT. Some of this will be due to relative distance, but economic factors (such as the median salary in that region being very high) also play a part.
For airports in NZ domestic traffic to Auckland dominates the passenger statistics, so with HLZ only 1 hour away from AKL driving has always been a viable option. Hamilton now has an hourly bus service direct to Auckland Airport.
Australian broker 'slashes' AIR forecast
http://www.smh.com.au/business/aviat...0150621-ghs8zs
Extract Overall, as a result of the trans-Pacific threat and the entry of Jetstar onto regional NZ routes, the broker has slashed its 2016-17 EBIT forecast for Air NZ by 16 per cent, or $NZ90 million, to $NZ464 million.
He really stupid eh, probably calls himself a guru broker as well.mpack of overpaid non productive people I reckon but they keep the merry go round of high fees and all that going round.
Well done to Craigs for a quick update on AIR.
"Elasticity of demand helps mitigate the impact."
"For every 10% price decline demand lifts 15-20%"
"Forecast domestic yields to decline by 2.5%"
Repeating yourself me old mate Joshua
If AIR capacity and load factors are already high doesn't any price decline fall straight through to the bottom line, despite more bums on other airline seats because of this 'price elasticity'
And then there's the other part of the 'elasticity' equation - consumer choice and preference - that can impact outcomes
I've now had the time to fully review Craigs analysis which is a very high quality bit of work IMHO. They note the record high load factors in 2H FY15 that I've previously eluded too and are 3% better than they were forecasting.
Interestingly Winner, if yield's, load factors, oil and currency stay at current level's the FY16 PE becomes 4.4 !!
They are forecasting some decline in yields and load factors in their model and forecasting FY16 PE at 6.5 which is well short of the long run historical average of 10.
All assumptions seem reasonable to me. They rate it a BUY with a 12 month price target of $3.30.
Opportunity knocks for those with the stomach for not expecting a silky smooth ride.
Well summed up Roger, looks like Mr Market agrees with you....:)
Didn't mo have a theory that the more AIR made the lower the PE went ....something based in cyclical earnings to get that average of 10 over time
Oh I dunno KW...rumour has it, its a great place to buy a cheap car :)
http://www.nzherald.co.nz/business/n...ectid=11469866
Radar fault grounded all commerial flights.. FYI
Any one else fly today during the drama period? I read outage started at 14:30, I had a 1600 flight that eventually left at 1625. First I heard of the delay was at the airport via an announcement.
You think they could push this kind of thing to the Airnz app?
I thought it was very considerate that planes in the air were "allowed to land". hee
A pretty garbled explanation from the airline pilots association spokeswoman and the TV3 reporter.
Both seemed to be talking rubbish.
:t_up: for today....quietly.
Operating stat's for May should be out any day now. Should make for interesting reading. Up until April's stat's, load factors have been at record level's notwithstanding the most recent GDP number being rather disappointing. Load factors don't seem to have been affected much by the slightly cooler economic breeze, in fact quite the opposite. Must be all those cheap airfares if you are canny enough to book ahead eh KW :)
Very impressive numbers in my opinion, not stopping from here I reckon, eh Roger...
The $520m normalised EBIT seems lower than Rogers expectations?
No, Craigs as I stated the other day did some very high quality research with which I fully concur. They have proved to be pretty much on the money with normalised profit expectation of $544m before tax.
Company range of $520-$530m looks highly satisfactory to me. Should give EPS after tax of circa 34 cps. Craigs have 2016 EPS at 38 cps and the company just confirmed profit growth expectations for 2016.
Load factor down a little in May partly as a result of larger capacity aircraft 787-9's replacing 767's on some Asian routes.
In one week, (commencement of FY16), the company starts using what is ostensibly unhedged cheap fuel...cheap in as much as the barrel of Brent is still circa $64 and the company has good FX cover.
Craigs recently reiterated BUY with a $3.30 price target. I think that a fair call although I'd probably rate it a STRONG BUY. Was a COMPELLING BUY the other day at $2.41 when a few weak holders got their panties in a bunch over some old worn out Q300's that Qantas can't sell. Very pleased indeed to have secured a top-up to my holding at that price.
Normalised operating profit before tax at $525m would represent a 47% increase on 2014's figure of $357m.
SB9 - Quite correct mate, $216m for 1H FY15 and circa $309m for 2H FY15 is an outstanding result and even better the company guided higher for FY16 !!!
An extremely well managed business trading on very undemanding fundamental's that's well positioned to enjoy the boost in tourism that a lower dollar will provide. BUY.
I see our old mate Ewan Wilson is proposing to reincarnate himself back into the N.Z. aviation scene with a single old turboprop aircraft flying unproven routes targeting students.
The likelihood of success, slim to none, in my opinion.
Okay..lets say it includes retired old biddies with nothing better to do plus the odd businessman going AWOL with the company credit card and the occasional tourist that wants to take a slow boat from Queenstown to Nelson :D I don't think Ewan realises that we southerners born and bred, (even though some of us with tough Scottish ancestry now reside in much hated Auckland according to our friend KW), just prefer to drive ourselves from Dunedin to Queenstown. I think its time Ewan got himself a proper job...one that doesn't involve destroying million of dollars of his investors money but I suspect a proper airline simply wouldn't hire him. What's he been doing all these years anyway ?
The guy is a joke. I don't know who would take him seriously in the aviation world [insert misinformed exception].
Maybe he will last more than a year this time, but I would happily bet against that. The first headline that comes up after googling Ewen Wilson is all you need to know about him. In fact, only the first 3 words - "Failed airline entrepreneur".
The word up our way is that Ewan reckons this time around his airline will keep well out of AirNZ's way. He learn't his lesson with Kiwi Air about competing head on with a giant..His business plan is to not compete with AirNZ therefore AirNZ won't see his airline as a threat and destroy his airlines profit margins...Theory has it that this strategy may work Roger as with any small new entrant the most successful way into a pond dominated by one very big fish and a couple of medium size chappies is to find a small dark comfy niche and keep well out of sight..
You mean just like a large Rat does :D
Not quite. Interesting that Craigs are the most optimistic, I'd say realistic about AIR with their value $3.30 but notwithstanding picking circa 38 cents EPS for FY16 are forecasting that as the peak, like many other brokers with EPS tailing off to 26 cps in FY17. Quite how brokers think they can pick such a dramatic tailing off in earnings in FY17 remains a mystery to me. What if they're wrong and growth just keeps on coming :) (Sits and waits for another explanation from Mod regarding peak PE's relative to normal year PE...perhaps some explanation of how they're so psychic with picking the peak of the earnings cycle so far out would be useful :)). I reckon all this peak of the cycle is nonsense. Economy is hardly firing off like a rock star is it !!
We have EPS this year of circa 34 cents and that's on most of the year paying quite a lot for fuel and we have a 10 year normal PE of 10, (you could argue to use 11-12 seeing as all PE's are super stretched because of ultra low interest rates which will remain so for the foreseeable future. Apply a PE of 11 to 34 cents and you get fair value of $3.74. Simple. Its too far out to reliably predict FY17 results in this industry so all brokers estimates are just guesses as far as I'm concerned. Fair value to me is $3.50-$3.75.
A little more competition for AirNZ from Jetstar - Qantas Points are now may be earned on Jetstar flights.
http://www.nzherald.co.nz/business/n...ectid=11470927
I am left wondering what is the market for HLZ - NSN flights? HLZ ranks 10th in NZ in terms of passenger numbers, some 50,000 passengers per annum behind NPL. HLZ has not experienced any passenger growth for some time, while most other have seen significant growth.
KRA also only have a single Saab 340. A foggy HLZ morning will see flights cancelled or delayed throughout their network, which will hardly be an auspicious start for them. Additionally, they face a VERY tight schedule due to flight timing restrictions in ZQN.
Flying unproven third tier roots won't have a material impact on either AirNZ or Jetstar.
Qantas adds more flights across Tasman
http://www.nzherald.co.nz/business/n...ectid=11471070
Off Wikipedia the last Saab 340 was manufactured in 1998 which suggests this early 1980's design is well and truly coming to the end of its useful life.
I can't imagine that people will really be happy to fly in 20 year old slow aircraft (467 k.p.h.) and that the economics of this 34 seat capacity plane are all that good compared to a modern ATR62 like AIR use.
AIR are retiring the Beech 1900 because of this sort of age and related inefficiencies and maintenance issues. Wilson is realty scraping the bottom of the aviation barrel flying a design of this age and type on third tier unproven routes. His backers will need a lot of luck.
https://en.wikipedia.org/wiki/Saab_340
http://www.nzherald.co.nz/business/n...ectid=11473472
More competition on the way.
It seems AIR monopoly for long haul destinations is slowing coming to an end. They have been very good at being the sole carrier for so many destinations for so long.
They only really faced competition on the Hawaii/Perth routes (excluding HKG due to code-share arrangements)