Wouldn't we expect to see a juicier SP in the coming weeks leading up to dividend dates aswell as from unhedged oil etc? Not entirely sure how it all works around ex-div.
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Wouldn't we expect to see a juicier SP in the coming weeks leading up to dividend dates aswell as from unhedged oil etc? Not entirely sure how it all works around ex-div.
Sorry sb9, all patently untrue.
The last update on fuel hedging shows they are carrying a 73mill loss on hedges to end of FY15, and a 14m loss on FY16 so far. That was in May, so those hedges will be even further in loss now with oil stable but currency down. In the meantime, further hedges will have been put in place. Granted, some of their requirements will remain unhedged, but with oil relatively stable now, and the currency falling further, it is unlikely to have made a lot of difference.
Like most other company's AIR have a prudent hedging policy, with very little wiggle room for the Treasurer to display any risk taking skills. Unfortunately for him but fortunately for shareholders, directors will always cover their arses, and insist the policies are adhered to.
There are a few US airlines who take massive risks with fuel costs, but they tend to go in and out of Chapter 11 with each cycle:)
In the end it's just timing difference, so they should see some benefit in future years when the oil cycle turns back up, but then everyone benefits, and fares will drop anyway.
They might have lost $73 million on the hedges but this should be more than made up for by reduced fuel costs. Since they were 62% hedged in H2, then the reduced fuel bill would be $108 million, I guess.
Also for the future, the hedging is at a much lower cost. H2 15 Brent collars were at 105/96, for H1 16 they are at 69/56. Close to $40 per barrel lower.
Also, AIR might be losing money on the hedges now but they will inevitably make it back the next time the United States starts another war for oil (or freedom, or whatever). Vote Republican, get war with Iran?
Absolutely correct. My point was they were NOT completely unhedged from a certain date as sb9 was ill-informed about.
It's not strictly a loss either, more of an erosion of the full possible impact
Point taken Xerof...
They are also very well hedged in terms of the $U.S.. How much of this is used for capex on new planes v normal operational costs, who would know. About half their revenue comes from overseas ticket sales so there's a natural hedge right there and of course a lot of their costs are in $Kiwi e.g. 11,000 staff.
Aircraft operational costs, maintenance, lease payments, interest etc. could still take some shine off AIR's profit, despite USD revenue climbing due to the FX rate. I suspect the former will outweigh the latter. The upcoming FY announcement should still be significant though!
AirNZ's latest 787-9 has just been delivered (24 July 2015) in Seattle and presumably has now arrived in Auckland. Nice to now have 4 of these revenue/profit-generators in operation.
Yep, its all looking good.