Still waiting.........Got my MMH and a BNZ Bond payment...
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$moke and mirrors? I imagine Air NZ want them to care a little but not too much, so that they still jump on a plane to whizz around the World and buy produce that needs to be air freighted into the country.
https://en.wikipedia.org/wiki/Enviro...ct_of_aviation
Today's thought ?
What to do with "the nice juicy dividend" ??
Back in AIR @ pre div price ??...perhaps not, then where ?
It was nice to see a reasonable increase in the SP yesterday along with the dividend. To be honest I was a little underwhelmed with the size of the dividend 10 cps but understand that they're making a huge investment in efficient new aircraft over the next few years. From memory on the whole green thing, C.L. told the 2014 annual meeting they're setting the airline to be profitable if and when $120 oil comes along again, which I suppose is inevitable at some stage.
In the short run now that all the good news on the recent half year result is out along with full year guiance it wouldn't surprise me to see some consolidation around the current level however what continues to impress is how resilient the airline's performance is, seen even in February's operating stat's at a time when some thought we were on the verge of another GFC or at least a second leg to the first one.
I remain of the view that AIR is highly likely to pay a special along with its final this year. AIR is in good shape, has retained around 67% of its first half earnings so its balance sheet is stronger by 20 cps in cash than six months ago and the recent small pop upwards in the currency will make the capex this year a little less expensive.
Blockhead - Market looks close to fully priced with the odd exception. This and scales look like good opportunities to me or maybe better still just reinvest back into AIR in terms of enjoying some travel :)
Hi Roger, analysing can be done with many different approaches, looking at the P/E as you have done and AIR indeed looks a bargain. I decided to look at the ASB web side and took an 9 year average of the free cash flow.
9 year average of FCF = $24mil. If one takes the present market cap of app $3.2bil then by my calculation the 9 year P/FCF equals app 132. That doesn't look so appealing. However future FCF is hopefully a lot better. What are you expectations of the FCF for the next few years?
Cheers,
Hi Forest,
AIR are expanding their fleet at the fastest rate in their 75 year history and by FY 19 they are forecasting their average fleet age to come down to 6.2 years, was nearly 8 years in 2014 IIRC so quite a dramatic modernisation programme is effected because of the rapid fleet expansion with new aircraft.
I am sure you can imagine this programme is capital intensive and consensus analyst forecast off 4 traders for capex is as follows last year and for the next 3 years, comparative figures for Qantas, also provided
FY15 $1.18b $1 share (QAN $1.35b 65 cps)
FY16 $901m 80 cps (QAN $1.38b 67 cps)
FY17 $856m 76 cps (QAN $1.36b 66cps)
FY18 $962m 86 cps (QAN $1.45b 70cps)
If we take off circa $450m per annum in depreciation you can see the net cost of a fairly dramatic investment in fleet expansion and modernisation.
FCF IMHO is better suited to companies that aren't on such an extensive fleet expansion and modernisation programme but for what its worth management did comment in the conference call in February 2016 that there's tremendous potential for free cash flow later this decade. As you can see from QAN comparative figures, they're neither expanding or modernising their fleet at anything like the rate AIR are and indeed this year are forecasting RPK growth of circa 5%, whereas AIR's forecast is 12% this year and 8-10% next year.
The short answer is AIR are reinvesting back for growth and QAN is rebuilding its somewhat stretched balance sheet and is therefore still using old fuel hungry planes like the 747-400 which are okay now but will really hurt them when fuel goes back up.
I tend to focus on operating cash flow per share, (about $1 per share) and let management who are far smarter than I decide on capex and run the airline how they see fit.
Thanks for your view on this, I think cap exp might be a little higher then normal (a few hundred $mil) in the coming years, and it is likely money well spend. But for AIR it is also likely that cap exp (maybe $500mil plus) is a yearly occurrence and should be taken into any valuation.
No worries Forest. Another way to look at this is and give it more clarity is to look at the depreciation rate itself.
If AIR weren't expanding or modernising their fleet then they would need to replace it at the same rate as its been depreciated. i.e. depreciation is the amortisation of the fleet over its useful life, generally 18 years per aircraft. In this instance AIR would therefore have to spend about 450m on capex each year to match its depreciation expense.
Remember that consensus analyst forecast this year is circa $850m before tax, (I am around $950m) but this is after accounting for $450m depreciation...i.e. underlying profit before tax and depreciation is $1,400m in my estimate.
Depending upon what management want to do with the airline, (if they just want to leave the airline the same size and allow average fleet age to gradually return from 6.2 years to half life, 9 years) it could be a truly massive cash flow generator from FY19 onward. Maybe the Govt might like that ?
12.5% drop in share price for Virgin, right on 5 pm local time Friday 18 March. Over 5 million shares traded, much higher than usual. No apparent reason for this drop, and nothing in the Media or on Hotcopper. Seems strange given the stunning positive results released just a week ago. The only negative in the results was the lack of guidance for the coming year. But 12.5% drop in one day???
It will be interesting to see if this has any effect on the AirNZ share price on Monday, given they own 26% of VAH.
Probably index rebalancing mate and probably recover fairly quickly.
Update on the wifes AK-Vancouver AIR flight---She got 2 seats so was lucky but froze the whole way---Is that bad customer service or just a bad plane?-(maybe they were warm in another area)--The same thing happened when we flew that route 3 years ago----Thats a pretty basic thing to get wrong---Has any one else had that problem?
[QUOTE=skid;612403]Update on the wifes AK-Vancouver AIR flight---She got 2 seats so was lucky but froze the whole way---Is that bad customer service or just a bad plane?-(maybe they were warm in another area)--The same thing happened when we flew that route 3 years ago----Thats a pretty basic thing to get wrong---Has any one else had that problem?[/
The temp is controlled by the Cabin staff. This is often rationalized by other passengers complaining its too hot. From my experiences "the squeaky door is the one that gets the oil"
My wife often complains its too hot or too cold and I'm usually feeling the exact opposite in exactly the same environment...just saying.