Hopefully another Ansett type event won't occur. If Qantas bankroll a loss making airline in NZ for long enough and take international traffic could it make a bit of a dent?
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I don't think Qantas will have the stomach to bankroll a loss making entity for a long time .... It was only a year ago they had this shocker ......
http://www.theaustralian.com.au/busi...-1227039576970
A shame to see it close so low before going Ex, an irrational price IMO. Impossible to say how it will behave going Ex, in a rational market it wouldnt drop at all because its already heavily discounted(Ive seen that happen a few times with other stocks) however it's a different market at the moment so it could get hammered back into the $2.30 ish area again in a day or two, toss a coin to decide the correct outcome.
You may think the market is being irrational but I don't see it that way. Airlines are in a high risk cyclic industry and all stars have been aligned which is enabling great profit growth. You have to ask the question, is FY15/16 as good as it gets? You would need very rose tinted glasses to be confident that Air NZ can deliver these kind of profits for the next 10 years without any downturns.
I don't think its a bad investment but my gutometer says stay away.
Well, there is an Ansett of sorts, called Virgin. There's two sides to this story. At last year's annual meeting I asked Chris Luxon when he expected Virgin to be profitable and he said in the FY17 year. They're now expecting it to be profitable in FY16 so while its fair to say Jetstar will be nibbling away at AIR's share of the market here, (and probably costing QAN money), Virgin will be nibbling away at QAN's market share in Australia and making AIR money :)
Yes its a little frustrating mate. Christopher Luxon a little frustrated with analysts on the recent conference call and not without some grounds I feel. Analysts are forecasting EPS for FY17 of only 36 cps,a steep fall from FY16's consensus estimate of 45cps. Presumably this is based on the expectation that we are at the peak of the cycle in FY16, (how anyone in their right mind could call the current economic conditions a peak of any sort I have no idea whatsoever), and that economic conditions and oil prices will conspire against AIR in FY17. Curiously analysts in Australia are not predicting this same cyclical phenomenon with QAN earnings at all, go figure ? I would have thought they are roughly at the same stage of the economic cycle and with the Australian economy mainly commodity based are exposed to not dissimilar macro and micro economic factors as AIR.
Nasi Goreng. - You need to keep in mind that the ten year average PE for AIR is 10 and the current PE based on consensus broker estimates for FY16 is 5.4 so clearly the market is not expecting the current year profit to be repeatable ad infinitum. The real question is whether the current circa 50% discount to average PE is warranted, i.e. will profits halve going forward ? Even using the conservative broker forecasts of 37 cps next year its clear they won't halve. The market is clearly sceptical that AIR can fill their planned 11% capacity increase this year with business and consumer confidence plumbing multi year lows. For me I draw my answer from sheeting this question back to the quality of the management and the marketing team. Do I have upmost confidence the CEO and senior management team can navigate their way through the challenges they will face this year and into the future. For me that's an emphatic YES but its up to others to draw their own conclusions.
Perhaps others who haven't met the team will draw some comfort in these interesting times from recalling that this company and its Chairman won the prestigious company of the year and Chairperson of the year awards at last year's Deloitte annual company awards. Clearly other individual's at the highest level's in N.Z. business circle's are extremely impressed with the way this company is being managed.
Imagine how well they'd do in Fy17 if the economy recovered and oil stayed low...those conservative analysts might have to change that 37 to a 47 cps EPS...Couta1, I and others might even get our $3.50 then :D Regardless of how it pans out I'm in this for the long haul. Some will recall the projected dividend yield I recently talked about recently over the next couple of years...
I pay Air New Zealand so little attention that I had not even bothered to read the financial results for a number of years.
But given the rave reviews that they have been getting here of late I thought I ought to be open to giving the accounts a quick once over.
So did you know that there was a big jump in 'interesting bearing liabilities' during FY2015?
So did you know that, cumulatively, over the last six years (FY2010 to FY2015) AIR have spent slightly more on capital investments (planes etc) than they received from operations (moving people on planes)?
and they currently say that they will spend another $2.6B on planes and things over the next four years.
Still definitely not an investment for me.
Best Wishes
Paper Tiger
Yes PT they've been investing in an expanded and far more modern fleet and investing in Virgin. Gearing is still only just a tad over 50% including capitalising operating leases which is very conservative for an airline that's growing and modernising their fleet. Have you had a look at QAN's accounts :eek2:
Yep spend money to make money, Qan will have a lot to spend in the not too distant future when they retire all their old 747s or are they going to bring them to NZ like the rest of their old dogs. Woof Woof. PS- I quite like 747s because they have 4 engines but they are about as fuel efficient as my big block V8.
About $90M up on last year - AIR seem to keep their advance payments in liquid form.
Qantas FY2015 report hits a low on page 5 (part picture shown - what was he thinking?):
Attachment 7593
and then gets better
They have the budget allocated.
Best Wishes
Paper Tiger
Disc: QAN is not for me either