Another rather simplistic view is that last week Management were the best thing since sliced bread and $3+ was just around the corner.
Now they suck and AIR is doomed?
That is what I have just gleaned in the last day reading this.
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Another rather simplistic view is that last week Management were the best thing since sliced bread and $3+ was just around the corner.
Now they suck and AIR is doomed?
That is what I have just gleaned in the last day reading this.
lol I kind of got that too. Its a pity they didn't have that epiphany when the price was well north of $3.
http://www.nzherald.co.nz/business/n...ectid=11609851
Good week for uncertainty around AIR.
Dobby41 re your last post - Six months ago i posted that
The Halo Effect by Philip Rozenzweig is a fascinating book
This seems to be the sharetrader view (sort of)- The book considers a succession of cases where companies were described as well-led, customer focused and innovative when their share price increased, but as soon as their fortunes changed suddenly “became” complacent, reckless or outdated in the eyes of commentators, or vice versa.
Sold my holdings at $2.88. I like the AIR management and think the company is doing well overall with the operating stats but this and the electric car thing is not giving me confidence in the short term. Might come back in if the SP drops again but I can see it coming under some selling pressure in the short term.
Slipped out myself today @ 2.88, been looking @ SCL but they might be getting a bit heady just now I reckon
I see VAH as a hugely important beachhead to Australia for AIR.
AIR's security of NZ routes, feeders to and from Australia, and growing alliances hinge on VAH.
AIR, and the other major shareholders have the opportunity to put VAH on a sound footing.
Forgoing a "special" one off dividend for a better VAH, is a small price to pay for the very real benefits a strong VAH will provide all AIR shareholders for years to come.
I have not thought of selling my shares.
medium to long term it could prove a good move but how much more will they throw at it? For me, AIR has never been a buy and hold, plenty of opportunity with the 30c SP swings it has and not hard to get a quick 5-10% profit each time it happens. I had anticipated holding for longer than I had this time around but just wonder if sentiment is for the negative at the moment. ASB securities has 73,000 buyers and 450,000 sellers which is a limited gauge I know but an indication of some sort
I often buy with the view of never selling.
With very experienced shareholders backing VAH their future will be excellent.
A strong VAH will benefit all VAH shareholders,AIR most probably the most.
I do not see AIR contributing funding to VAH as a negative.
Therefore I have no reason to sell.
Updating today's trans-Tasman cricket match today we have Roger retired after taking a line ball left field bouncer on the chin and enjoying a very well earned rest and drink in the pavilion, Percy has arrived at the stumps showing truly stoic defence against some spirited deliveries and the umpire (ACCC) changing his mind yet again on the rules. Meanwhile AIR's coach is said to be furiously pawing through the umpires new decision with a view to appealing this as blatant under-arm bowling. Perhaps an appeal to the third umpire is in order but can their impartiality be trusted ?
In the background the bean-counters are busy wondering if that $3m AIR were originally awarded in costs might have to be given back to the ACCC plus plenty more besides. (In the cheap seats some punters were heard to mutter that they were pleased there was some useful information in this commentary) Certain cynics in the crowd were overheard to be muttering aloud if it was some sort of coincidence that the day after foreign shareholders propped up Qantas's major competitor, the federal court cried fowl against AIR N.Z ? Some even muttered that they don't believe in coincidences. Complicated game...one bystander was heard to mutter that he wasn't entirely convinced this game is being played on a completely level playing field...
I'm with you Percy. Also, I like the electric cars. http://www.stuff.co.nz/business/mone...r-power-report
Doesn't look like solar power will be subsidised anytime soon, potentially good news for the Gentailers?
This mornings breakfast program had a women from ?Norway (cant recall) outlining the benefit of electric cars. They have 200,000 of them on the roads and a similar size country to NZ and although she was an advocate for them she did say without government incentives the cost of them versus petrol/diesel cars including outlay and costs in the long term were more than that of the good ol internal combustion engine and that was comparing cheaper little cars not the ones AIR just bought. mutter mutter mutter :)
Electric cars.Just trying to show they are a responsible citizen.Means a great deal to some of their customers.
The "Fat Lady" has not sung yet.
Today AIR's sp is $2.875.
The EMAs are as follows,50day $2.73,100day $2.57,200 day $2.15 and the 400 day $1.79.
For me to consider selling the sp would have to go below $2.15,and stay below it for a few days.Then before selling I would have to reassess the company,and its prospects.
Is this ACCC thing anything to do with that US class action where AIR and Air India are the last 2 standing?
More millions at risk?
And guys and gals - don't forget that AIR is a cyclical stock
As we know the herald never gets it wrong but this is in todays regarding the ACCC.
http://www.nzherald.co.nz/business/n...ectid=11610088
People thought Virgin could fly under its own steam and are disappointed it can't. The spotlight has been shone on Virgin's stretched balance sheet and people are wondering how much more money goes down that hole, possibly never to be seen again.
Competition keeps hotting up. Air Asia X starts flights tomorrow and offers a no kids zone...what a great idea, a travel agent once told me there are really only two classes of travel, with kids and without
http://www.nzherald.co.nz/business/n...ectid=11609986
It was not that long ago AIR needed to be recapped.The NZ Govt footed the bill.
VAH does not have govt backing,but their major shareholders, including AIR,are very successful airlines.
Therefore, they know what financial structure needs to be put in place for VAH to thrive.
VAH is a very important "beachhead" for them.
But Percy, why did AIR need recapitalisation in 2001 ?...when you answer that you have your answer why people are nervous.
Maybe?
However I see this as a great opportunity for the major shareholders to put VAH on a sound footing.
It is vital for AIR's future.Without VAH Air will go backwards quickly.They need Australia.
I'm wondering about Virgin's CEO. If he can't make that bird fly properly with the current velocity of tailwinds with existing resources... Will make for a fascinating discussion point at the next annual meeting along with the payback period on those fancy new electric cars.
Roger, as an accountant (I think), do you have any thoughts on what VAH means when the company says they are planning to "review of its capital structure"? I'm assuming that they are looking at changing the debt/equity ratio. Is there anything I'm missing here?
I've just downloaded financial report for VAH and going to have a close look through. I'm pretty unclear on whether this loan is a good or bad thing at the moment. Doesn't look like a great sign but I'm not sure we're got enough information to know for sure.
Interesting the see so many holders here bailing out on two events that I don't consider that major (although Virgin could obviously turn into a major issue).
On an unrelated note, looks like oil is back over the $40 mark, up from $30 about a month ago. Highest price so far this year.
Apparently Virgin fuel hedging hasn't worked for them, esp relative to the gains that qantas/air have been able to capture.
Emphasis seems to be on creating a full service / two class airline to attract the business traveller(from Qantas) -that seems where the cash keeps going
Wonder how Tiger Air going?
Going to be a +ve day for the AIR share price I reckon
I need to spend some more time on this but based on a really quick look at VAH's presentation and financials today for the period ended 31 Dec 2015 I observed :-
1. Still losing money on international flight op's ($30.8m)
2. Tiger Air is barely profitable
3. Their target is to get financial leverage down to 4x - 4.5x by FY17, currently looks quite stretched.
4. $934m equity on total assets of $5,848 so gearing is approx. 84%, a bit less if you offset unrestricted cash against current liabilities like some people do.
5. Unrestricted cash balance as at 31 Dec $544m down from $719m in pcp
6. Current assets as at 31 Dec 2015 $1.5b, current liabilities including unearned flight income of over $800m was $2.36b
7. 89 leased aircraft v 70 owned.
Those are not numbers that impress this bean counter.
As for how much AIR could be on the hook for here to strengthen VAH's balance sheet...having had a quick and dirty look at the balance sheet I'd have to reluctantly now say that the crutch they lent VAH may be just the start of it.
Disc - Still holding one third of original AIR shareholding...clinging on by the skin of my teeth.
Roger...Our stars are starting to align....That's spooky..eh:D
Well having now had a quick look at VAH's stretched balance sheet they will get that opportunity that's for sure. I reckon a sound footing is no more than a 2:1 debt to equity and on that basis VAH would need ~ $A1 billion, (AIR's share $A260m or just under $Kiwi300m)..lent them one crutch, convert that to equity and then make it another. Just as well AIR are enjoying the tailwinds and can afford it.
Caveat - this based on a real quick look. Have to find time to run the ruler over it properly really soon.
Roger - whats AIRs 'unrestricted cash'?
Is it disclosed?
That's not a term I've ever seen AIR use mate.
Hi all, I'm new to these forums - I've been reading and learning for the past few months but this is my first post, so please bear with me if my question is breathtakingly stupid! :blush:
Last November I bought a small number of AIR shares (1000) with the intention to buy and hold (I'm just beginning my journey into investing in shares, so decided to start small and learn the ropes before investing larger amounts). Now my underlying intention is still to buy and hold; but as I see the share price start to climb above the 50 day and 200 day EMA I started wondering - why wouldn't you sell at a higher price, take the profit (making sure that I do actually sell at a profit after brokerage fees are accounted for), and wait until the share price falls again to buy back in?
The risk that I see is that the share price may NOT fall back to what I see as the current "normal" level, and may establish a new higher level - which would kind of scuttle my "buy back in" plans. :scared:
But taking that risk into account, is there some reason that I'm missing (entirely possible) why you wouldn't do this?
Thanks all for your contributions to these forums, I have learned a huge amount over the past few months from simply reading the posts (but still have so much more to learn!)
Why not? Because you may miss out on future SP appreciation.
E.g. from my experience. In September, thinking I was smart (a bad sign with share investing) I sold off my EBO shares at $11.60 for a nice little profit. The SP is now $16.35. That nice little profit would be a nice BIG profit if sold now.
My guess that the SP would retreat and allow a cheaper re-purchase was way off target!
Must be the Easter spirit then eh mate...AIR's cash being the sacrificial lamb to atone for the virgin's sins. Given the season I suppose one must be charitable and say that one hopes VAH's senior exec's are truly worthy of redemption.
You're suggesting its not just some of the older aircraft engines that need an overhaul ?
Any way you slice and dice this VAH just scraping a miserly profit, (just a fraction above break-even) when almost every other airline in the world has booming profits suggests the entire operation really does need a very comprehensive review. They have the intellectual horsepower on the board so one can only hope they do a very thorough job.
Until proven otherwise, In my opinion people can be forgiven for worrying about this as some sort of potential Ansett MK2.
Thanks for your comment Onion.
I think I'm maybe falling into the trap of thinking I'm smart and trying to dreamg up ways to beat Mr Market. Don't know why I'm falling into that trap, reading the posts here shows me just how much I have to learn!
Anyway, having risen slightly this morning, AIR now seems to be sticking firmly around $2.90, and I had already decided that if I was going to sell it would have to reach $2.95 for it be worth my while, so currently I'm holding, watching, and continuing to learn (hopefully).
Thanks Percy.
My primary intention is indeed to buy and hold shares, and despite what I said above about considering selling AIR to make a profit (albeit rather a small one) that still holds true. But I'm curious if you can have it both ways?
As an example, I look back to January when the share price climbed briefly to $3.225 on the 26th before descending again down to $2.69 two weeks later. When I bought AIR it was at $2.78, so in a perfect world where I'd timed the exit and re-entry perfectly (which I know I couldn't do, but you get my point) even on my small holding I'd have made just under $400 profit after brokerage fees were taken out, and be able to buy back in at a lower price than I originally paid. When I compare that to the dividend I received last week there's a considerable difference!
I'm just starting out with looking at shares as a serious investment vehicle - my wife and I have held several small parcels of shares for years, but they've been very much buy-and-forget (usually on those offers where mum and dad investors were targetted) - so I consider myself very much a beginner and looking to learn. At this stage I'm very much looking to buy and hold rather than trade, but just pondering if one can occasionally take advantage of momentary peaks and troughs as above.
Yeap she's a pretty deep and dark hole that one and now with the ACCC ruling against them and having already settled with the N.Z. Com Com on the same freight matter AIR might be digging a hole for themselves by not settling the civil litigation on the same matter in the States. One or two headwinds have emerged but according to some, nothing's changed :ohmy:
Nothing is perfect in this world.I hung onto a share for 10 years.Gave up on it, and it tripled in price 6 months after I sold .
Usually when I buy a share it will do one of three things;
1] Go down.
2] Go up.
3] Stay at the same price.
The more research you do the more likely your share will go up.May take a bit of time.
So it pays to start off buying a small position,then adding to it as the performance of the company confirms the reasons you brought the shares are correct.
You don't have to be right every time.I think if you get 6 out of 10 right you will make money.I would think the more experienced posters on Sharetrader would get about 9 out of 10 right. If you realise your research was flawed sell.
Using moving averages helps with you timing.But the best way is to understand the company really well that you invested in.Then when an announcement is made you can quickly work out what that means to the company.You then can buy/sell on facts,rather than noise.
Certainly did.!!
In the next month or so, I may find out whether my long term view of a company I started investing in, on April 15th 2009 is right or not.
Some things take time.!!!
If I am right I will buy more.If I am wrong I may have to put off my retirement another 35 years.!! lol.
Cyclical stocks are poor buy and hold investments.. much better if bought at the bottom but very bad if one has bought towards the top of its cycle...
Where abouts is AIR in it's cycle???..no body knows for sure where this top is...but we know for sure where the last bottom was..around 85c for a period of the first 6 months of 2012....so AIR is +300% within its present cycle, definitely well of its bottom..eh!!!
I'm not trying to put you off buying AIR...I'm trying to tell you to use a different discipline to manage your AIR stocks in your portfolio...
http://www.nzherald.co.nz/businessvi...lery_id=158971
AIR Asia X commenting on their arrival into Auckland this week. Completely different price bracket to what AIR can manage.
What concerns me with the crash they had, was it 2014 ?, was that questions were raised regarding the adequacy of their pilot flight training methodologies. That and tiny sardine can 16.5 inch width seats would put me off but what about others looking for cheap circa $300-$400 no frills flights to / from Asia ?
I would not fly with them for this reason however a lot of people are very price sensitive. Jetstar would not exist if that wasn't the case.
A client commissioned market research report of disposable income focused on the detailed Auckland market came across my desk this week...made interesting reading, the levels of high disposable income for families (sufficient for the service my client provides) is very concentrated and is a small overall percentage in Auckland, no surprise there however it showed many demographics are being squeezed in Auckland on the disposable income front. Price will matter even more in time if currency drops further as intended by the powers that be, for overseas trips. Asia overall can make it price wise a good option for these people for a holiday...
Will Air Asia X help expand the market or cannibalise AIR current sales.
Some people will just grit their teeth, be prepared for a few hours of discomfort, close their eyes, get off and then start enjoying their holiday. They are the ones that fly Jetstar and AirAsia.
For others, like me, the journey is just as important as the holiday. I love the buzz of the airport, relaxing in the lounge, the anticipation of the travel, admiring the planes waiting to go to exotic destinations, fiddling with the entertainment unit, having a little luxury (Premium Economy is my choice), chatting with the cabin crew and other aviation buffs on the plane, soaking up the views and culture of the destination. Coming home, I love the easy familiarity of the Kiwi crew, the Kiwi accent, the silver fern (oops, sorry - still the Union Jack), the watchable safety video (bring back the bikini girls!) and admiring the big black 777-300. Yep, I remember the getting there and back just as much as what we did whilst away. Air NZ can count on my patronage, even if they do cost a bit more.
One day I'll meet Roger and we can see who can talk up ANZ more!
100% agreed mate and amen to the highlighted part especially :) Nice post. I reckon the same principle applies with holiday resorts and hotel rooms, some people have to chose the cheapest and nastiest and thankfully I'm not one of them.
Interesting post RAZ. On the AIR Asia X thing as an experiment I went onto their website and priced a couple of random flights at their regular price. By the time you add luggage and a meal the price wasn't all that much different to flying our national airline when their airfares are on special. (Acknowledge I'm comparing apples and oranges). That said there's definitely a market for cheap flights and I expect that we'll see some modest loss of market share for AIR but mostly growth in the overall size of the market.
Happy Easter everyone... for your viewing pleasure... https://www.youtube.com/watch?v=q0tkeGPG_8Q
And wrapping up the week on things that chip and chew away at AIR's cash, (as if we needed it after the VAH and ACCC matters), I just noticed under general disclosures page 12 of the interim report that arrived this week, note 2(B) is pretty interesting. Yet another reason for the modest interim dividend.
I doubt the 106 staff earning more than $400,000 per annum need it and the top earners especially which would have been the main beneficiaries of the $21,000,000 share buy-back for their share incentive scheme.
Maybe they should incentivise the extremely hard working junior flight attendants instead that do the real hard donkey work for about a tenth of that at circa $40K per annum ? They're probably struggling to put food on the table for their families at that rate.
Even more controversial later this year will be fat bonus's paid to senior staff because of the record profit...much of which is simply because of cheap fuel. Better be a record dividend too otherwise some very pithy comments might be forthcoming at the next annual meeting.
Its been an "interesting" week. 13 cps of shareholders money down the Virgin rat hole when almost every other airline in the world is making record profits and nearly 2 cps of shareholders money buying up shares to honour lucrative and extremely generous senior staff share incentive schemes to staff that are mostly earning over $1m per annum. That's 15 cps of shareholders money in one week of interesting disclosures plus the other somewhat questionable investments in green initiatives. No wonder shareholders got a comparatively miserable 10 cps dividend despite 30 cps earnings for the last half !
Oh yes how could I forget, we had salt rubbed into the wound with the ACCC freight decision this week too so that's Australians taking more of our money...hope next week doesn't bring more bad news.
"Heaven has no rage like love to hatred turned, Nor hell a fury like a woman scorned"
is from Act III, Scene VIII of The Mourning Bride written in 1697 by William Congreve.
This quote is sometimes mistakenly attributed to that other Bill, William Shakespeare.
Best Wishes
Paper Tiger
Not hatred PT / Percy, just objectiveness and a sense that developments this week were anything but positive.
On a much needed positive note I see AIR are expanding to daily flights to Housten in the summer of 2016/7 to meet peak seasonal demand.
To ensure I remain objective and balanced I shall try and squeeze in some viewing time when out at Auckland airport tomorrow to watch a few of my planes take off and land.
Disc - Still holding a modest long position.
Not "May be the nature of the beast" but
'May be "the nature of the beast" ' may be?
It is Houston my dear boy, Houston
I looked at her gleaming body,
lit by the last light of the day,
then with a roar like thunder, my divvie flew away.
Best Wishes
Paper Tiger
So looks like AIR looking to sell holding in VAH. I'm picking this is good news for AIR shareprice, we'll see I guess
This is an interesting development:
Air New Zealand reviews its financial investment in Virgin
https://www.nzx.com/companies/AIR/announcements/280020
Nice volume to kick things off. I'm glad I didn't sell on the back of the loan announcement.
It's all a bit confusing. A few days ago AIR is lending money to prop VAH up. Now they are looking at pulling out of their shareholding and Luxon immediately removes himself from the board. Did they have fisticuffs at the cocktail party or something? Seems quite strange given how close together both of these events are.
It will be interesting to see what price VAH opens at after the trading halt. It might give an indication of what Air NZ may get for their holding in VAH, surely they won't get the current market price for it?
I'm confused as well. Why would you give a loan to an entity then proceed to potentially sell your portion of it? My thoughts are that by selling their investment in VAH, they don't have confidence in the future ability and profitability of the airline, which would negatively impact their loans. Unless of course they truly believe they can invest that capital in their own fleet to achieve a higher return.
I imagine they wanted to get the 'house in order' before the sold it- seems reasonable. The obviously calculated that putting Virgin in better financial footing would bring them more $$$ in long run. It was a syndicated loan too- it wasn't just AIR NZ.
The loan has been made and I have written off the 13 cps in my valuation of AIR. I am very pleased they are reviewing their shareholding. Anyone with an in-depth knowledge of the aviation industry knows they don't need to own stakes in airlines they have an alliance with and VAH's performance has been anything but stellar so it makes common sense for them to review their stake given the woeful financial performance in the prevailing highly assistive environment. This announcement makes it crystal clear that AIR will not invest further funds into VAH and they're not on the hook for another 13 cps in capital which is what I think the VAH balance sheet needs as a minimum. In effect if if the CEO Borgetti wants more capital he can "go fish" as far as AIR is concerned and that suits me just fine.
I can't go on record with what I have a strong suspicion about in regard to C.L.'s confidence in the CEO Borghetti but I think you can read a fair bit more into his immediate resignation from the board of VAH than the official reason given.
Good move - no more AIR cash down a big black hole.
Maybe have realised that there really isn't much future for Virgin (at least a profitable one). The current strategy with the huge increase in capex and expense base hasn't hurt Qantas much.
Lets hope they get a decent price for their 25% odd share
Air New Zealand have finally accepted the wisdom of
"Never invest in airlines"
Best Wishes
Paper Tiger
Vin, you still around
That $3 beckons - maybe tomorrow just in time for year end for sum
Ansett MK2 is in the process of being avoided. Common sense is in the process of prevailing.
Hi all
A little confused by this move,
-VAH sp is at recent lows
-What "alternative uses of capital" are there? (that we are being prevented from taking up in any case?)
-What has changed since the minority investment was taken up (as to its desirability)
-While Air NZ "Remain commmitted" to the alliance doesn't this move raise the possibility of losing it in future (i.e control of VAH is gone)
-Isn't the VAH aliiance a strategic pillar for Air NZ?
I'm hoping that AIR has a specific buyer lined up for the stake, at a very high premia, with guarantees for alliance longevity and an excellent alternative capital utilisation plan, rather then just change for change sake.
First big test for Mr Luxon's strategic nous, he's great at the operational efficiency game, now we'll get to see what the long term vision really is..
Interesting times.
disc - small long
The board appear to have been listening to someone and as much as I'd like to think that's me I seriously doubt it. The reality is probably the board themselves are extremely disappointed In VAH and this recent request for further assistance given the current extremely favourable business conditions is the straw that's broken the camel's back. I'm a little surprised the early price action in the Australian market for VAH shares hasn't been more negative, down 1 cent when I looked a few minutes ago.
Interesting snippet from NBR today:
"Air NZ holds a 25.9% stake in Virgin worth about $A344 million ($NZ384 million), which it has increased in recent years despite the Australian airline making a loss.
According to its annual report, Air NZ has invested a total of $422 million in Virgin, excluding a recent commitment to lend a further $145 million to the Australian-based airline."
So their $422 ml stake is only worth $384 ml now, no wonder they want to get out!!!
Since someone mentioned Ansett Mk II earlier in the thread, I did notice that they never explicitly ruled out a takeover of Virgin.
This is sale proposal certainly is an interesting development. I guess the bottomless and neverending money pit that is Virgin might have just become too much for AIR to keep shovelling money in to.
We don't know the details yet but it's good to see something happening with this investment, even if it is just getting out at a loss. It'll also be interesting to see what other investment opportunities they are looking at.
What's AIR's stake in VAH worth now? About $400m or so? What'll that buy? A couple of Dreamliners? Another airline somewhere?
Bloomberg note suggested a Chinesec airline cold be interested in Airs stake in Virgin
Same note said Branson is also keen to quit oart or all of Virgin America - prob a bit worred about in his 10% in Virgin Aust
Too many fishhooks and unknowns for me in this stock at current price, will probably buy some more at $2.75 or below, more volatility a certainty I reckon.
Tip a whole lot of cash in one week and talk about baling a week later ?????
Too puzzling for me, not unhappy I swapped them for Scales last week.
AIR signalling their near 26% is/could be for sale means VAH share register is now unstable.
This could create a wonderful opportunity for a major airline to expand into the land of opportunity.
We certainly live in interesting times,
I feel like a parent who constantly nags a child to tidy up for themselves who then becomes mystified when they actually do what you ask.
Is Cullen Airlines stake in Virgin(Underarm Bowlers Division) a controlling interest under Aussie securities law and becuse of this Cullen Airlines are obliged to inform the market when they recieve a credible approach?
Boop boop de do
Marilyn
I also wondered about that winner. I have read in the last week that Alaskan Airlines is negotiating a takeover of Virgin America after VA has expanded quite a bit in the USA.
I do not understand why AIR would loan the large amount of money to VAH just before they announce they want to pull out. I am glad I sold out of AIR after the loan announcement as this is now far too uncertain for me. How much will AIR write off from this foray and how much has it really helped their Australian access ?
This from Tony Carter is baffling. "Mr Carter says Air New Zealand does not want a large minority equity position in Virgin Australia as it focuses on its own growth opportunities". They willingly invested in VAH to be a large minority shareholder. What has changed ?