Forum Archive Index - May 2001

[Bruce Withers <withers@xtra.co.nz>]

Re British Air Rights:
 Heathrow is almost at gridlock...who wants to encourage more landings from Air
NZ? Not in the Brits interest, so not an arguement for Virgin.

Rgds

Bruce

"tennyson@caverock.net.nz" wrote:

> Hi Peter,
>
> I enjoyed your wee rant on Airline shares.  But here are some of the
> counter view points, with particular regard to Air New Zealand.
>
> >
> >Airline in the news a lot  - what future for them? Will Air New
> >Zealand ever make money again?
> >
> >The orange Virgin 767 looks pretty impressive, and at home, sitting
> >on the tarmac at Wellington this afternoon.
> >
>
> And that may be the last we see of it.  It would seem Virgin are
> mainly interested in the trans- tasman route, with an Auckland
> Wellington Christchurch sweep stitched into the middle while they are
> here.  There is the tiny matter of international air rights to be
> negotiated.  And if Virgin are successful, it would seem that  Air
> New Zealand would get some compensation through better access to the
> British market.
>
> >
> >As said earlier AIRVA share price been trending down since 1993.
> >
>
> Air New Zealand is not really the same company any more.   It has
> gone from being a a niche fringe airline to a global sized player as
> it doubled in size.  I don't think you can take the past trend of
> AIRVA as a useful future predictor of the direction of AIR from here
> on.
>
>
> >
> >I have re-read the Unlimited story 'On a wing and a prayer'
> >
> >One part of the article that struck me was -
> > Andy Serwer wrote about
> > investment in airline stocks. "Never, I repeat, never buy
> > airlines," he said. His rationale was that airlines have the
> > cost structure from hell. To whit:
> >
> >
> > a.. They have to borrow huge sums of money to buy planes,
> > leaving them at the whim of interest rates (a factor totally
> > out of their control).
> >
> >
>
> Globally the world's equivalents of our Don Brash seem  to be doing
> what they can to keep interest rates low.  I don't see the return of
> 20% interest rates which sank some airlines in the mid 1980s.
>
> >
> >
> > b.. They use huge amounts of fuel, leaving them at the whim of
> > oil prices (a factor totally out of their control).
> >
> >
>
> As far as I can tell the bad news of rising fuel prices over the last
> year or so have already been built in to current airline share
> prices.   I feel it unlikely that the world's oil producing nations
> will drastically spike prices again in the foreseeable future.
>
> >
> >
> > c.. They are at the whim of strong unions
> >     (you guessed it, a factor almost totally out of their
> >      control).
> >
> >
>
> Air New Zealand would probably have a better employment record than
> say Qantas New Zealand or Kiwi Air.   If anything AIR are able to
> dictate the wages paid to their employees, not the other way around.
> There aren't too many other airline operators out there for
> disgruntled employees to move to.
>
> >
> >
> >d..
> > If, Serwer argues, some of the world's most serious investors -
> >including Warren Buffett with US Air - can lose big-time buying
> > into airlines, what hope is there for the rest of us?
> >
> >
>
> Buying into a US Airline in the USA is more akin to buying into a
> small shuttle bus company in New Zealand, rather than buying into Air
> New Zealand.
>
> US Air is a domestically focussed business.   There are few
> regulatory barriers to operating within the United States for a new
> airline start up.   On the other hand, an operator wishing to compete
> with Air New Zealand on international routes must negotiate
> international landing rights with the New Zealand Government (if a
> foreign airline) or with a foreign government (if New Zealand based).
>
> It could be argued that, Origin Pacific excepted, Air New Zealand is
> the only operator with a credible record of running a sustainable
> Airline business in our country's history.
>
> >
> >
> >Airline shares for me - no way
> >
> >
>
> I wouldn't buy 'Airline shares'(generic) either.   But that
> doesn't mean you can't have a successful investment if you
> selectively buy only the best 'Airline share'. SNOOPY
>
> disclosure:  Holds AIR
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "You can tell me I'm wrong twice,
> but that still only makes me wrong once."
>
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