Forum Archive Index - March 2001

["Stephen Lukey" <slukey@paradise.net.nz>]

Hi Michael

 

You have said you are now taking a long term view rather than lining brokers pockets - that is a good start. In my opinion, a long term view of AIR NZ might consider the following factors:

 

(1) The large impact that the oil price has on earnings (obviously high oil price at moment)

(2) The impact that the currency has (presumedly negative at moment)

(3) Whether the above two items are hedged (my understanding is that AIR NZ has not been lucky with its hedging)

(4) Maintance and fleet replacement costs

(5) Ansett merger costs / benefits

(6) Competition (since the first four factors are not going too well, one positive is that new operators won't be queuing up to compete on AIR NZ's routes, also the international airline industry seems to rationalising with great haste)

 

There is plently of potential for most of the above factors to improve to the advantage of AIR NZ. When all these factors have improved in a few years time, sell in a time of euphoria.

 

Steve (hold AIRVA - unfortunately bought at $2!!)