Pity it's protected by a paywall. Can you give us some idea what the article is about?
Printable View
Strange - no paywall when I read the article.
http://www.wsj.com/articles/american...ack-1480371091
Yes, as W69 wrote, US DOT rejected Qantas and AA proposal to have a deeper and closer alliance filed in July last year and Qantas has decided to drop the proposal altogether instead of appealing.
I recall Air NZ sp dropping on the news last year so this is positive for Air NZ.
Paywalls on both journals (wsj and Australian). Maybe you subscribed to both whilst having a glass of red and forgot about it?
Anyway, it's all in the Daily Telegraph
http://www.dailytelegraph.com.au/tra...70823d55d3effe
How do you know those routes are profitable? It may just be having committed to a capital investment it has to be utilised. If the A380 was a profitable aircraft then there would have been further orders for them. New orders and Airbus would still be manufacturing them. It was quite the contrary orders were cancelled. Filling an A380 to capacity does not mean it's making a profit. It all depends on the yield. There are numerous operating constraints ($$$$) it incurs related to its size.
Those Koru lounges more of a den of iniquity than the poker machine floor at Sky Casino
Yay, let's hope so. I bought a lot (by my humble standards) at 2.19 before it went xd. If it goes to 2.19 I'm literally (not figuratively) going to wet my pants.
Now $2 barrier well and truly broken its going to be steady ride up to $2.50 and then FY profit comes in >$600m back to $3 again
Plenty of good news and things going right for AIR - even lack of Gary's patronage won't do any harm
Had to sell some AIR 2 weeks ago to get some more HLG div=$11,300 paid in 2 days time. bought back 17000 AIR in last 2 days which brings av price up from 1.76 to $1.834:). Now in the green $23,000 and rising:t_up:. The TA people might start buying now. How are those charts looking now?
Couta1, every cent increase must be like a small 2nd division lotto win to you. How exciting!
That sounds a little licentious, what are you suggesting goes on in there mate ?
Bobdn - that cuts both ways though. I think Couta1 did exceptionally well to hold his nerve when the SP was taking in the low 170's a while back.
I must follow him up on which brand of calming herbal tea he drinks.
Haha yes, too true.
Day 3 in the green on a dividend adjusted basis and now poking it's head above the downtrend line if you are a pure capital value based line drawer.
Also perilously close to consensus broker values if you think 4-traders.com is the definitive source.
But still a little height before it hits the Tiger Valuation Target ($2.32) though.
Must be time to unbuckle the seat belts and start serving drinks with accompanying nuts.
Best Wishes
Paper Tiger
OPEC agree to cut oil production and accept Iran's increase in production.
Two points to consider, when oil prices rise a bit shale production will ramp up and maybe all those oil rigs cod stacked throughout the world will start coming back on line. I cant see prices reaching past highs anytime soon.
https://www.bloomberg.com/news/artic...soften-on-iran
Agreed. Here's how CNBC are reporting it.
http://www.cnbc.com/2016/11/30/the-o...kets-next.html
http://www.nzherald.co.nz/business/n...ectid=11758195
Another nice touch from AIR's marketing team....
if all the shale rigs come on line it will kind of defeat the purpose of an OPEC cutback and may just PO them enough to ditch the effort.
Also its winter in the states and cold as, in the Bakken area.(alot easier to carry on than to restart) And so far we are not seeing much growth to use all that oil--there are countries that desperately need to sell more oil that arent in OPEC.
So far its been an easy ride for the new admin in the US--Lets see how they do with their first real test economically--(whatever that may be)
Code shares, interline agreements, revenue or non-revenue sharing arrangements and other cooperative agreements inside or outside alliances make it all very confusing for the travelling public. The rates of earning airpoints, airmiles etc may or may not change when changing from one airline to another. Even that can change depending on what airline is actually flying that particular route. Baggage may or may not be routed through to the final destination depending on the particular agreement. So for the travelling public it is an increasing nightmare when flights have to be booked on two or more airlines to your final destination. Check the bewildering number of posts on flyertalk.com to see the variety of opinions - even though you might think the posters there have a reasonable knowledge of airlines.
For the airlines it's all about 'protecting your patch' and 'spreading the risk' to minimise the chances of a competitor suddenly eating into your market share. The ANZ / United deal from AKL to LAX is a case in point. Bookable on ANZ with usual airpoints earnings and revenue sharing. So ANZ lose some marketshare but retain some revenue so 'frees up' a plane to send somewhere else, hopefully retaining profit margin. United fly everywhere in USA and due to the alliance, bookings can be made straight through and the airlines take responsibility for getting you and your baggage to your final destination.
The ending of the QF/AA code share reduces the convenience factor and brings in the uncertainty of 'co-operation' so for the travelling public it's increased the risk factor and introduced some inconvenience to get somewhere in the USA that Qantas does not fly direct to. I suspect that is why ANZ introduced the 'Dave the Goose' campaign to entice travellers to destinations that QF does not go directly to (Vancouver, San Francisco [at present] and Houston) and with the surety of seamless code share with United.
However, the numbers of travellers swapping to ANZ/United from Australia are likely to be small so I would not think it is going to have much impact on ANZ profitability. It will be worthwhile as even a percentage point in load factor is good for the bottom line.
I was surprised to read another post on this thread that the ending of QF/AA code share would increase ANZ SP by up to 10c. It did go up 6c yesterday but most of that has been lost today. It will be an interesting question to ask at the next AGM, exactly what effect the ending of QF/AA had and if the load factors of Aussies transferring through Auckland to North America did increase as a result.
In the end, slightly good news for Air New Zealand I thought. Dave the Goose was well positioned to take advantage of that!
Thanks Robomo, appreciate your detailed reply. Remember the old Spot the Telecom dog campaign ? That campaign was extremely successful for them. It seems customers react very well to animals they can identify with so perhaps AIR's marketing campaign with Dave the Goose might be more value accretive to AIR than expected :)
In terms of the oil price jump today, I recall AIR's FY17 profit estimate range of $400m - $600m was predicated upon $55 Oil so we've been well below that all year and remain so.
From the conference call at the time of the annual result I think yield has been pretty much as expected so based on info in that regard to date based on maximum visibility I can see, it appears we're on track for the mid point of the forecast range. In regard to fuel and other matters, currency has been pretty much as expected and fuel appears to be materially undershooting the expected cost. Add in the recognition of the realised profit, (as compared the written down value of VAH shares at balance date), on the sale of their remaining VAH shares and factoring in everything we could well be looking at reported statutory profit before tax towards the upper end of the forecast range. The hound is staying on board for the dividends so is pretty much content to let others pontificate about where fair value lies...as long as I get my regular half yearly 10 cps fully imputed feeds and the occasional special I am happy :)
Which is why Qantas won't be taking up the rest of their A380 options (8 I believe). The point to point philosophy of Boeing (vs hub to hub of Airbus) and the better fuel economy and maintenance costs of 2 vs 4 engines is working well in favour of the Boeing 777-300 and Airbus A350 for large long haul. Air New Zealand's decision to go with the 787-9 was the right one.
Interesting though that Emirates, with their massive A380 fleet (up to about 80 now) are making big profits and have repeatedly called on Airbus to do a stretched version of the A380. Presumably Emirates would not have put on an A380 CHC-SYD if they were not going to make a profit.
Emirates also have the biggest fleet of 777 aircraft in the world. Also to park an aircraft for 6 hours in SYD is costly. That's why it's more effective to operate it trans Tasman at a loss than pay the parking fees in Australia. AIR has been complaining about this fare dumping for years.
Emirates save on the landing charges and then they offer frequent flyers complimentary business class across to aussie to tie you into travelling with them through the east to Europe.
Qantas A380s losing heaps does not surprise me, I always pass a number of them parked up at LAX in the maintenance area..I understand they have had real problems with them.
What I trying to achieve is how this chart might look like for FY17 amd what AIRs unique capabilities will have achieved
Transit through Kuala Lumpur airport recently and noticed several MAS A380s parked on the tarmac, side by side.
A quick google search reveals MAS had been trying to sell them and with zero success since 2015, decided to defer selling or leasing them until '2018' when airliners more suited to their needs become available.
SIA also decided not to renew the lease on its first A380 this year which speaks volume.
Seems there's a glut of them on the market?
If no one wants to buy them then what should they do? Aircraft deteriorate with not being used, especially in a humid climate. To operate the Haj would normally mean taking aircraft out of service so why not use the 380's which are surplus. What they should do is park them in the Nevada desert to at least preserve them in hope of finding a customer. Google "Victorville" and select "map" and count the aircraft there.
First half of last year fuel was fairly expensive, (by today's standards), average price was $60 IIRC and average exchange rate was 65 cents U.S.
Benefits of cheaper fuel didn't really start flowing until 2H FY16 and even then some of the hedges they'd previously made meant they didn't fully realise the very low spot prices, circa $30 prevailing in the early part of this year.
This year the currency is stronger and they executed some very good hedging earlier this year which would have had a very strong effect in Q1 FY17, basically they went to maximum allowable hedge within their hedge framework earlier this year.
No they don't appear to disclose like QAN do. Consumption will be up a little bit due to the annualisation of route expansion started part way through FY16 but not nearly as much consumption growth as FY16, RPK growth is much lower and arrival of extra fuel efficient dreamliners and pending retirement of 767's will help with efficiency.
I haven't really modelled it up because fuel costs are inextricably related to yield, (witness some of the extremely cheap airfares a few months back when oil was really cheap) but my instinct is fuel is probably going to be about $100-125m cheaper than last year.
More importantly as mentioned yesterday, yields seem to be tracking where management expected them to be but their profit forecast was predicated upon an average price of $55 barrel. Its been well under that YTD, (especially when AIR was using super cheap forward cover they bought earlier this year in the low $30 range in Q1 FY17 and forward cover for the rest of the year is also well under $55. I think the actual fuel cost has the potential to be some $50 -75m less than what management expected when they made their profit forecast of $400 - $600m just over three months ago.
Is the much quoted $55/bbl price based on Brent (or similar) or Platts jet fuel? Av Gas trades about $10 higher than crudes. It's a significant difference, and should be clarified in any commentary.
Anywhoo, they DID do well to hedge aggressively near the lows - good on you Paul K
When the May fuel hedging announcement came out I had a go at modelling the whole fuel cost thing.
My estimate for FY2016 came out about NZ$30M higher than in the subsequent FY accounts.
At that time, using AIR volume estimates, assuming $44 a barrel (of Brent) and an US$ to NZ$ exchange rate of 0.7 my FY2017 estimate was approx NZ$30M less than my FY2016 attempt.
So on the assumption that the model reads a little high that would be a corrected value of $816M. I currently have no idea to what extent AIR currency hedging should be included in the model so it still needs a little latitude.
Much can happen between now and FY years end but in six months time I may try the exercise again and see how close I get to reality.
Best Wishes
Paper Tiger
Ok thanks W69, I should have bothered to look myself lol. So they buy jet fuel but hedge Brent, presumably relying on the strong correlation on differentials.
Here's a chart (second one) that shows the differentials/correlation
http://www.iata.org/publications/eco...velopment.aspx
looks to me that $55 for jet fuel will be tough to achieve going forward, especially given the forward curve is in contango, but it's not the end of the world at this stage.
discl: still long from low 2's cum divs, and added more at 1.80 ex divs
Extract from annual result announcement.Quote:
** Based on a fuel price of US$55 per barrel for the remainder of the year.
Ahhh, yes, my bad. Current spot price for Brent Oil this morning was $54. They have good hedges in place so overall for the year taking into account very low Q1 fuel costs I am comfortable with their assumption of an average of $55 for jet fuel. As you were gentlemen, back to the middle of the forecast range then ($500m before tax), until we hear something different :sleep:
Surprised there is no Qantas thread. if one has $A looking for home and yield this is a worthy option."they've been buying back their shares; they don't have enough franking credits good for us until they do which will attract more aussie investors"
Looks all good from here this evening from a high floor at the Novotel overlooking Auckland Airport...out tomorrow on one of the AIR birds although those A380s are always tempting...
There is one and it is >here< but strangely if you search for 'qantas' it never appears in the results!
Best Wishes
Paper Tiger
Quote 17 November 2016
From a divvy yield perspective QAN's record is shabby and FY16's final was pretty pathetic but fundamentally they're doing very well IMO.
Older fleet with less efficient planes and they use a LOT of leverage so they do well when the tailwinds are blowing but I don't think their business model is as robust as AIR's, (AIR made money throughout the GFC, no multi billion dollar losses for them, unlike a certain other carrier). AIR well positioned if fuel goes up with a very young and efficient fleet and quite moderate gearing. Lack of ability to claim back franking credits, (when available) a disincentive for Kiwi investors too.
According to 4 traders average expectations for the next 3 years put QAN on about 5.2% yield whereas AIR are on 9.5% plus imputation credits = 9.5 / 0.72 = 13.2% gross.
And speaking of Ripley's believe it or not, someone has really put the dream into the term Dreamliner
http://www.stuff.co.nz/travel/themes...tarter:taboola
Airlines such as Emirates have proclaimed the fact that the A380 is profitable in industry magazines. Airbus, who are obviously anxious to quash rumours of their unprofitable nature, have also used these airlines as examples of how the aircraft should be utilised. There have however been a number of airlines (SQ springs to mind) that deployed A380's onto routes that were not optimal for that aircraft and suffered accordingly.
There are simply far too many variables at play to claim that the A380s are unprofitable based solely on the fact that orders were cancelled.
Speaking to a pilot friend who recently left his job flying with Emirates, the A380's struggle to make a profit because although they can sell the extra seats, they lose revenue on cargo. The baggage and cargo hold isn't as large per passenger as the 777 or similar, and it is not uncommon for Emirate to charter a cargo plane following an A380 just to take passenger luggage!
This, and the double maintenance expense of 4 engines are the reason why airlines are cancelling orders. Its also a pig of a plane to fly, so I am told...
You are on to a winner Winner! They could tow a glider!
https://en.wikipedia.org/wiki/Military_glider
Cargo capacity on the A380 depends upon the interior configuration chosen by the purchaser. Lower crew rest areas significantly affect the amount of cargo that can be handled, but overall the passenger version of the A380 was not designed to be a major cargo carrier. Add into the mix falling cargo yields, and you can see why EK made the decision to focus on passenger yields for the A380. Horses for courses.
As for the charter flights tailing the A380, he's taking the proverbial.
The bottom line is that the A380 doesn't suite AirNZ's market, but it does other airlines. Some have purchased the aircraft and have applied it to sectors that it is not suited, for others it is working very well.
Funny you should say that. Every 30 minutes in an A380 an alarm sounds in the cockpit reminding the pilot to go through fuel management procedure. This involves balancing the tanks in the body, of which there are multiple, and topping up the tanks in the wings, where the engines draw fuel from.
There was an article in the herald recently about pilots asleep in the air. Personally I am much more comfortable with them resting in a Boeing and managing only a couple of fuel pump switches, than flustered pilots trying to manage the pitch of an aircraft due to fuel weight distribution every 30 minute.
... sorry to go so off topic :)
Regarding A380's V 777's and Emirates
I understand high air temperatures at takeoff can adversely effect takeoff weight. An aircraft taking of from Dubai where air temperatures of 50c are not uncommon are punished by this less if they have four engines instead of two. This may explain Emirates greater enthusiasm for the A380 than other airlines.
Boop boop de do
Marilyn
https://www.youtube.com/watch?v=sr6lr_VRsEo
SP $2.17 at time of posting less 20 minutes delay which I am sure that Air New Zealand never do because they always leave on time.
Emirates have a younger fleet than Air New Zealand
Best Wishes
Paper Tiger
Not really a factor in choice of four engines as opposed to two. They have longer runways for the temps bearing in mind that lift from the wings is also reduced with reduce air density/temps. Their choice of A380's was more about max capacity of seats per govt reciprocated operating approvals.
I wonder what the perfect price of a barrel of jet fuel is for Air NZ. Not so low as to encourage every Tom Dick and Harry to fly here but not so high to really blow out operating costs.
No need for an answer. Onto to my third pint of ale and just thinking out loud.
Haha, why not $42. Ive sobered up now.
We now have a very clear break above the 100 day moving average even for those who didn't want to adjust for the effect of the special 25 cent dividend. All are still most welcome to climb on board but please note that the captain has left the seat belt sign on and you should be prepared for the possibility of turbulence at any stage of your flight :)
2.19! That monster dividend was free to me :) just enjoying the moment
Sadly, I think I may have jinxed it, back down a bit.
Been a bit of resistance around this level for a week now... not surprising - tempting profits to be had for those that got in circa 1.80 and cant blame them. No shortage of buyers lining up at this level though so I am sitting tight and sticking to my view it will be a good year for AIR and more to come.
I think they are doing very well and their latest marketing to me personally... customised with options has been impressive..I was keen to share what they come up with for me however I think they deserve to gain as much from the innovation as possible and will not let the wider market know what they are doing for regular customers....true it will get out in time however they deserve to gain what they can out of it. Using bid data and rewarding loyalty on a scale with benefits I have not seen before by any airline....
You guys read the latest stuff from Boeing & IATA?
Best Wishes
Paper Tiger
http://www.iata.org/publications/eco...rformance.aspx
http://www.boeing.com/commercial/mar...ket/downloads/
http://www.airbus.com/company/market...ast-2016-2035/
Best Wishes
Paper Tiger
Disc: I am so good to you
Qantas predicts 'game changer.' Perth to London direct in 17hrs.
https://www.bloomberg.com/news/artic...ith-dreamliner
Qantas are late to the party with their Dreamliners. Existing ones are used by Jetstar and IIRC have been configured in a truly horrendous way with an incredibly dense seating configuration (377 seats from memory). Feedback from pax on www.seatguru.com has been overwhelmingly negative.
Perth is a lovely city in its own right but as a stopover destination it doesn't really cut the mustard and break the journey up much being less than 7 hours flight time. It will be a gamechanger alright, for anyone living in Western Australia.
Qantas negiotiated that that Perth / london flight can leavevfrom domestic terminal to save transfers for inter-state punters. Never been there but obviously a bit of a didtance between terminals?
It appears that rising fuel costs are hitting AIR's asian competitors hard. http://www.stuff.co.nz/travel/news/8...ing-fuel-costs
apparently so:
"There are two separate terminal precincts at Perth Airport that are separated by a short, 15 minute drive: the T1/T2 precinct and the T3/T4 precinct." - 5 minute drive is short, not 15minutes lol???
have a look at this link. You will see the terminals qantas uses for it services.
T1 - all international
T3/T4 - Qantas domestic services
https://www.perthairport.com.au/at-t...which-terminal
There are so many ways to get to the UK anyway - Shanghai has become an common port to use as well these days.
If you can call it business class. Note the economy has a seat pitch of only 30 inches for long haul flights ! https://www.seatguru.com/airlines/Je...eing_787-8.php
Folks please scroll through some of the featured user comments on the right hand side of the page to see for yourself what customers think of how QAN have configured this plane for their Jokestar subsidiary.
Surely QAN wouldn't expect people to put up with a 30 inch seat pitch on a 17 hour flight :eek2:
Be a bugger if AIR allowed this
http://www.stuff.co.nz/travel/news/8...-are-not-happy
Just imagine those punters who assumes the caller is a long long away so has to yell into the phone to make sure thy are heard
Some people are like sheep, its in their nature to bleat. Fact, Jokestar's business class 787 seats have less width and pitch than AIR's premium economy 787 seats !.. Like I said earlier, Business class, if you can call them that, (really not even premium economy). AIR keep winning awards for their premium economy seats and recently got sixth in the world for their economy class seats. 30 inch pitch for long haul travel must surely rank right up there with AIR Asia X as amongst the very worst in the world. Possibly okay if you are of slim build and under 65 kg and also under five foot eight, otherwise :eek2:
North American bookings up 5% on last year. Talking to an AIR rep in IAH recently, she happened to say yields were higher than expected right across Nth America.
Dead right there mate, reading those bleating comments on the likes of Stuff are enough to do your head in, for every valuable comment there are 3 trolling ones from people who lives operate in a tiny box space.
You get what you pay for....
http://www.nzherald.co.nz/business/n...ectid=11765368
Not saying AIR doesn't have issues but I think they deal with it better than this.
Caught up with a mate today that paid for return airfares with AIR to Brisbane and back, the return flight was a surprise to him when he boarded a virgin plan - code sharing - he said you notice the difference in service from staff and economy seats in the virgin plane were noticeably smaller. Good news is he said he will double check in future and make sure he is on an AIR flight to avoid the same thing happening again.