Forum Archive Index - January 2001

["Jeremy Ardley" <jeremy@ardley.org>]

> Lower jetfuel prices, plus a timely increase in the NZ/US dollar x-rate
plus
> a strong improvement in Australian passenger yields means it is recovering

Don't place too much value jet fuel prices.  As far as I recall they are
typically about 10% of the total operating costs of an airline, so a 30%
change in fuel price is only a 3% change in operating costs.

A rising kiwi will improve returns on domestic operations with reduced cost
of aircraft and fuel imports.  It has very little nett effect on
international flights that are operated by AirNZ, and it has a negative
effect on profits from Ansett which will become less in NZ $ if the Kiwi
rises against the Aussie.

In terms of share price, a rising kiwi is a strong buy signal to overseas
investors, so you should see continued share price rises in the overseas
ownable shares in AirNZ.  This interest (and share price) will tail off
dramatically when the value of the kiwi is perceived to be at a peak or
actually falling.


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