AIR-Air New Zealand Limited

[Crackity]

Implications of price gouging were strenuously denied by Greg Foran in a recent interview.  I think he took umbridge at the suggestion. Just for fun I did that mate.  Suppose I had to travel to Napier (to make it fair I picked one week from today) on business for the day.  Best priced flights Auckland to Napier timed to enable almost a full days work there were $264 each way.  I think Greg Foran mentioned in a recent interview "we're not a charity"  lol

Yeah - when Jetstar flew there I used to pay $39 each way to visit friends

Flew midday Saturday / drinks at the Gin Trap / coffee at Crazy Good / a bit of cycling / a nice walk to the airport Monday and back on another midday flight 👍👍

Back to Greg - I think he's gonna under promise and over deliver next year though I do have my parachute nearby just in case.....

[Sideshow Bob]

Implications of price gouging were strenuously denied by Greg Foran in a recent interview.  I think he took umbridge at the suggestion. Just for fun I did that mate.  Suppose I had to travel to Napier (to make it fair I picked one week from today) on business for the day.  Best priced flights Auckland to Napier timed to enable almost a full days work there were $264 each way.  I think Greg Foran mentioned in a recent interview "we're not a charity"  lol

Flew Qtwon to Hamilton a couple of months ago, was about $1,100.

Hard not to feel like are being gouged.

But to be fair, it was only $100 to get to Hamilton, but $1,000 to get back out....!!     

[Crackity]

Press Release No: 26

Date: 5 June 2023

Airline Profitability Outlook Strengthens


Istanbul - The International Air Transport Association (IATA) announced an expected strengthening of airline industry profitability in an upgrade of its outlook for 2023.

Airline industry operating profits are expected to reach $22.4 billion in 2023, much improved over the December forecast of a $3.2 billion operating profit. It is also more than double the $10.1 billion operating profit estimated for 2022.


Jeez - so everyone happy in airline land including AIR - interesting

[Basil]

Nice calm clear blue skies out there at the moment eh Crackity.  Almost perfect flying conditions.
Great that this time it's different and its always going to stay that way 
Chart looks very uninspiring.

[Crackity]

Chart looks very uninspiring.

Yep it's been in a holding pattern all year - when it's over 85cps it'll look much better and I'll give you the buy signal 🤔

[Waltzing]

Break out... uummm take off... arrh air borne ....

https://www.youtube.com/watch?v=6aTp5fM0ykQ

up up and away in your ...

https://www.youtube.com/watch?v=FVhX-Sh2110

[Arbroath]

EPS will be over 12+ cps for the year to June - wonder how much the dividend will be, maybe 3cps.

More importantly, competition will increase for FY24 but I'd suggest they can still make 10cps and pay 5cps.

They are under promising and over delivering under Foran but pandemics aside there are so many variables it's hard to say they are worth anymore than $1.00 tops.

[Basil]

AIR in a new world of pandemic(s).  A different view.
https://www.marketscreener.com/quote/stock/AIR-NEW-ZEALAND-LIMITED-6491407/financials/
Average broker estimate for FY23 is 12 cps and then FY24 is 10 cps and FY25 also 10 cps.
So the easy and tempting thing to do is to say, okay FY24 and 25 are probably fair mid point of the cycle so the company can earn 10 cps and seeing as there's no growth we whack a no growth PE of 8 on there and bingo, fair value is 80 cps.  So provided we never get another pandemic we're all good at 80 cents.

But lets flip this thing around and have a look at the losses over the last 3 years which total (according to market screener) a whopping $1.07 per share.  So combined FY23, FY24 and FY25 they are forecast to earn 32 cps and 32 / $1.07 means they have expunged only 30% of the losses incurred in the previous 3 years. Hmmm...So it will take them 10-11 years to eradicate losses incurred due to Covid.  No wonder Greg Foran says we are not running a charity..

What are the chances of another worse variant creating another lot of havoc sometime in the next decade  or two ?

[BlackPeter]

AIR in a new world of pandemic(s).  A different view.
https://www.marketscreener.com/quote/stock/AIR-NEW-ZEALAND-LIMITED-6491407/financials/
Average broker estimate for FY23 is 12 cps and then FY24 is 10 cps and FY25 also 10 cps.
So the easy and tempting thing to do is to say, okay FY24 and 25 are probably fair mid point of the cycle so the company can earn 10 cps and seeing as there's no growth we whack a no growth PE of 8 on there and bingo, fair value is 80 cps.  So provided we never get another pandemic we're all good at 80 cents.

But lets flip this thing around and have a look at the losses over the last 3 years which total (according to market screener) a whopping $1.07 per share.  So combined FY23, FY24 and FY25 they are forecast to earn 32 cps and 32 / $1.07 means they have expunged only 30% of the losses incurred in the previous 3 years. Hmmm...So it will take them 10-11 years to eradicate losses incurred due to Covid.  No wonder Greg Foran says we are not running a charity..

What are the chances of another worse variant creating another lot of havoc sometime in the next decade  or two ?

Worthwhile reminder. Cheers.

I think it was Buffet in his better years stating never to buy airlines (until he did and lost money).

AIR is the prototype of a cyclical, and nobody can predict when the next downcycle starts. As you said - the next virus might be already in its wings, and I can't really imagine that global warming will help with AIR 's business either, unless they manage to change their fleet of jet planes to engineless gliders ;

Still - probably plenty of fun ahead for traders, one just needs to know in advance when to be long and when short.

[Onemootpoint]

Inside the Qantas offensive against Air NZ

https://www.stuff.co.nz/travel/news/300901893/inside-the-qantas-offensive-against-air-nz

Article highlights AIR's plane shortage and paints a somewhat bleak-ish picture.

[Waltzing]

Just highlights the rebound in travel stocks like flight centre and that the KANGAS are expecting to return to holidaying!!

even though  GDP forecasts for the  Kandas is flat.

Does  not mean AIR cant survive but thrive.

And the winner() is the flying public with lower prices and AIR will have to up its game.

Who wont start booking flights with lower prices!!

[Basil]

Excellent article, thanks for sharing and adds very important perspective.  In terms of this companies future, I think the view out the front window of the aircraft is very different to the one out the side window, so to speak. 

I wouldn't mind wagering a few bob the AIR board were seriously annoyed when Qantas hired Cam Wallace.  Those restraint of trade clauses in some employment contracts are never long enough in certain situations like this.

Yeap BP, even Warren Buffet needed a reminder lesson there's no real money long term in airlines.  It's refreshing when even the best make expensive decisions, makes us all feel better about our own mistakes lol.

[Waltzing]

AUS GDP is flat for the next 3 years so there view out the front window is not that wonderful either as China rebound halts itself.

Head winds everywhere for a while and you would better put your AIR shares perhaps in TRA....immigration driving up demand for cars...after they have failed with driving tests...

people use cars more than planes ...

Kangas rate NZ AIR well.. maybe this means that all things KIWI are now rated higher in Kanga land and it flow on for many areas of Tourism.

Maybe Tourism NZ should be targeting Kanga Land and then NZ brands in AUS will prosper.

Put Gangs on white island ... teach them to fish... Tourist Attraction!!!

[Basil]

I reckon you're right.   Demand for used cars is very resilient even in tougher times.

[KW]

Singapore Airlines has been named the World's Best Airline for the third year running, with Qantas missing out on a top ten spot. Qatar and ANA All Nippon Airways rounded out the top three spots, followed by Emirates and Japan Airlines.

Singapore Airlines also received top billing for their first class seats and amenities, while Qatar's Business Class was dubbed Best Cabin, Lounge and Seat.
The awards, which began in 1999, are considered the Oscars of the aviation world, with the winners announced this week at a gala event held in the Air and Space Museum at the Paris Air Show.

AirAsia won World's Best Low-Cost Airline again, having taken out the award each year since 2010, while Scoot won World's Best Long Haul Low-Cost Airline.

Antipodean airlines didn't make a splash this year, with Qantas ranked 17th on the World's Best Arlines list, behind Fiji Airways and Iberia, while Air New Zealand placed 19th.