I will make this comment and this is not a ramp, it bothers me not one way or the other whether people think that, only 4% of holdings is retail so nothing to be gained by ramping IMO.
I remain of the view that nobody can reliably tell you which point of the airline cycle we're currently at.
What the company has done this year is show their business model in the face of arguably one of the fiercest periods of competition is extremely robust.
Their brand is strong, their management team are focused and their business model is underpinned by compelling tourism growth, a strong drive for cost reduction and a modern very fuel efficient fleet.
Looking forward, all things being equal I see competitor pressure further easing as we head into 1H Fy18 as we lap the year when new entrants launched with red hot opening specials and new entrants last year look to ensure their new routes are profitable or reduce capacity or extricate themselves from the route.
My preliminary thinking is I see nothing in today's announcement, (with further growth in depth on routes established last year for which the expensive development launch costs have already been expended) and further growth leveraging off the existing fixed cost base leading to further CASK efficiencies) which would make me think that ~ $550 before tax or $400m after tax isn't achievable all things being equal in Fy18 and FY19 with possible upside from there. $400m after tax gives 35.6 cps, this year I think we're slightly higher than that.
The average PE across the cycle is 11. John Key coming on board will add further depth to an already highly talented intellectual pool and very useful international contacts.
People who think $3 is the ceiling could be in for a big surprise in the years ahead.