Air New Zealand is probably a very good airline.
I can either not afford to fly with them (in New Zealand I have to) and when I can it is some sort of forced codeshare thingy.
Those of you who know this blog well know i'm not a big fan of airlines and I share my fear of investing in them with that famous billionaire Warren Buffett.
I fear the end of the line for Air New Zealand, soon.
What I am saying is the number of news stories, local and international, about airlines expanding into new territories is particularly worrying. GROWING airlines, growing seats, lowering fares, its the only business I know that people(investors)get excited about prices going down - you should be worried.
The Airline has been doing ok for a number of years but this year after oil prices hit the bottom (i'm picking in the mid to high teens) and start rising things will start to move the other way.
The staff labour costs, fees paid to airports, divs to the govt, cost of food, cost of computer systems and long flights proportionately cost more. There are in the air for longer and burn a shit load of fuel.
Passengers just pay for one ticket. Air New Zealand are flying longer flights - along with everyone.
Of course there's hedging. The person in charge of this I would say has the most important job in the airline. What he does now will ultimately affect what happens a few years down the road.
By all accounts Air NZ has a very good one/s.
Be very careful if you are a long term investor. I would avoid this stock at all costs.
If however you are in it for the short term then Bobs your uncle, go for it.
You probably know when to pick it.
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Discuss this stock at Share Investor
Look like your comments were very effective at pushing the share price down. Contrary to your opinion, I expect air NZ to produce a profit of $850m to $950m with dividend of between 24 to 27 cents for the year ending 30 June 2016.This is on the assumption that the average cost of fuel is US$54pb. Given the current over supply of oil, I believe the oil prices will remain at US$30 to us$35 pb for the next 16 months before the oil prices started to rise. There were talks about oil prices to remain at below US$50 until 2020 this morning. As long as oil prices remain at below US$50 Air New Zealand will continue to make a profit of close to a billion or more. Accordingly, the share price would automatically adjusted for the yield. The estimated yield is between 8.3% to 9.3% at the current market price of $2.90. Given my expectation of 27 cents to 30 cents dividend per share for June 2017 financial year, I expect the share price to be trading at around $3.50 to $3.75 by September 2016.
ReplyDeletemmmm, you could well be right or wrong. That's the nature of the beast ESPECIALLY with airlines. Your on to a loser if you keep this long term. Its a trading stock for sure. Its not a profitable business. As for oil, i'm a bit more negative/positive than you, i don't think its reached its lows yet. Its coming though, I see it in the high teens.
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