AIR-Air New Zealand Limited

[Basil]

I won't be flying anywhere anytime soon either, mask or no mask but I reckon anyone who does so without a mask, breathing in everyone else's exhaled air in a very tight confined space...you need your head looked at if you do that without a mask.

[Crackity]

I won't be flying anywhere anytime soon either, mask or no mask but I reckon anyone who does so without a mask, breathing in everyone else's exhaled air in a very tight confined space...you need your head looked at if you do that without a mask.

I must need my head read Beagle - I got some of these a few weeks ago at 73 av 

Since then Qantas have upgraded guidance/ Singapore have just announced record profits today and the chunky AIR upgrade can't be far away

Hmmmmm

[Basil]

I must need my head read Beagle - I got some of these a few weeks ago at 73 av 

Since then Qantas have upgraded guidance/ Singapore have just announced record profits today and the chunky AIR upgrade can't be far away

Hmmmmm

I've lost count of the number of airlines who've announced they're coming back to N.Z. in the last few weeks, latest was Air Canada in an even bigger and better way that before, (None other than Rob Fyfe on the board).  As usual this industry which is riddled with giant ego's will swing towards over-capacity as a true cyclical always does.

Funnily enough it also crossed my mind to have a cheap and nasty punt on this momentum play given the uptrend but then I thought about the horribly stretched state of their balance sheet and came to my senses thinking to punt on this lame duck you'd have to be absolutely crackers 😜

[Shareguy]

Flew to the Gold Coast yesterday morning on a full Jet star who were $800 cheaper for our family.

Majority were not wearing masks and at Broadbeach just a few masks to be seen.

In the past I have done very well out of Air NZ. Sold out last lot before COVID hit. From time to time I have a look but have not been tempted. Such a risky business but also a lot to like.

Yesterday Greg Foran said this

But here's the joy of this business. What's it going to look like in a year's time when mortgage rates start to go from 2% to 6%; when more capacity's come back because Air Canada says instead of doing twice a week, why don't we move that to five or to seven times a week, and American Airlines want to put some more planes on?" he said.

Both economic and geopolitical factors would come into play, and everyone was still waiting to see what was happening with one of the world's largest China.

[Shareguy]

Thought I would have a look at what Craigs latest note says

But how long will it last?
AIR has not provided guidance for the full year, and has 'strongly cautioned' against extrapolating this good 1H over 2H. We have lifted our FY23 PBT forecast from -$126m to +$325m (1H $240m / 2H $85m). There remains a large degree of uncertainty as to how long the strong demand ('revenge travel') will last, particularly with the potential impacts of a weaker global economy, and so we think there remains a wide range of possible outcomes. We think there could be some upside risk in the medium-term if market supply is slow to return to pre-Covid levels. AIR has previously guided to some financial objectives for FY25 being EBITDA and NPAT close to FY19 levels. We don't think this long-term view has changed because of the current short-term strength. We do think a stronger FY23 result will help to improve Balance Sheet strength so we now assume an earlier resumption of dividends in FY25 of 5.0 cps.
Neutral rating remains.

Target price $73 cents

[winner (n)]

The snazzy new AIRplanes to be used domestically don't have engines

That'll save on the fuel bill ....and cut soen emissions

You cannot view this attachment.

[Basil]

People Falling out of love with AIR ?
https://www.stuff.co.nz/business/industries/130478535/have-we-fallen-out-of-love-with-air-new-zealand?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+18+November+2022
"Cattle class" is exactly that no matter how you slice and dice it and it seems that phrase encapsulates their attitude to customer "service" as well.

[777]

They complainers should fly with airlines in the USA and then comment.

[Left Field]

Crikey.... an upgrade.

https://www.nzx.com/announcements/403747

Continued strong travel demand across the domestic and international networks, as well as a recent decline in jet fuel prices has accelerated the airline's financial recovery. As a result, Air New Zealand is today upgrading half year earnings guidance for the 2023 financial year.

The airline now expects earnings before other significant items and taxation for the first half of the financial year to be in the range of $295 million to $325 million. This compares to the previous guidance range provided on 21 September 2022 of $200 million to $275 million for the half year.

[Minimoke]

They complainers should fly with airlines in the USA and then comment.

I recently flew Delta. Excellent. On time both ends. Could have nabbed US$2,000 in their  bump seat auction.

[Arbroath]

analysts have rarely been optimistic enough with AIR...always worried about the variables which are real but always too conservative in assessing them. 

balance sheet is not much worse than in 2019 before Covid hit and the current earnings tailwind should see the FY23 balance sheet back to where it was in 2019.  All they did was hemorrhage about NZ$1.2b in losses over 24 months and then replace that with NZ$1.2b of new shareholder capital so instead of the shares being about $2.50 each there are 3 times as many, and they are c. 80 cents each.

imho the real value change here will come in FY24 when they continue to make decent money (probably not as much as FY23) and the prospects of dividends is then very close again - might even be at the FY 24 result...

[Poet]

analysts have rarely been optimistic enough with AIR...always worried about the variables which are real but always too conservative in assessing them. 

balance sheet is not much worse than in 2019 before Covid hit and the current earnings tailwind should see the FY23 balance sheet back to where it was in 2019.  All they did was hemorrhage about NZ$1.2b in losses over 24 months and then replace that with NZ$1.2b of new shareholder capital so instead of the shares being about $2.50 each there are 3 times as many, and they are c. 80 cents each.

imho the real value change here will come in FY24 when they continue to make decent money (probably not as much as FY23) and the prospects of dividends is then very close again - might even be at the FY 24 result...

Hmmm, I wouldn't be too quick to discount the threats to airline profitability that are still out there. China covid situation is a powder keg if you ask me - might turn out OK but might also unleash some pretty nasty new variants as the virus mutates through another billion or so infected people.

Global economy doesn't exactly scream optimism for travel industry right now either.

Then there is the situation in Ukraine which could also turn very nasty.

With respect to Air NZ itself, I think people underestimate how much goodwill it has destroyed with its behaviour during the pandemic. It is likely that a good portion of the current strong demand is just people who are using up their forced credits. And not surprisingly AIR has ramped up the prices for these captive customers as well. Let's see how things play out when some other airlines return and the pandemic credits run out.

[Basil]

Excellent post Poet.  Huge new capacity coming to New Zealand, Emirates with their A380 and Air Canada with increased services compared to pre-pandemic level's just two of many examples.
The current modest fuel prices won't last in my opinion.  World is currently doing okay demanding ~ 100m barrels a day of oil and Russian oil will get shipped in a way to beat the price controls but once China gets up and underway again and the US stops releasing their strategic petroleum reserve the market will be out of balance again and we all know what happens when demand exceeds supply.

[Arbroath]

Poet

I'm not discounting the threats at all...just saying the threats are almost always overstated with AIR, who apart from the Covid nightmare, have often outperformed in the last 10-15 years.  Agree with you on the goodwill point but often people move on when there are not great alternatives.  The key for AIR is their almost monopoly domestically so competition to get to NZ is fine as that usually means strong international travel and AIR capitalise when those visitors are in NZ.

I'll stay glass half-full and let's see where we're at in 12 months' time...

[winner (n)]

Amazing that how things are going this H1 profit could be 2nd highest ever ....only beaten when luxon had the benefit of super cheap fuel.