Forum Archive Index - May 2001

["Peter Maiden" <pmaiden@xtra.co.nz>]

Thanks Snoopy for the response to my wee rant.

 

Obviously an invitation for me to do some raving.

 

I can't argue with your last comment in that you wouldn't generally buy 'airline' shares either -  but could have a successful investment by selectively buying the 'best' airline.

 

It is true that not all stocks in underperforming sectors are dogs. There is always a hero stock somewhere that in it's own right outperforms not only the sector it is tagged with but can be a star in the whole market.

 

Is Air New Zealand one of these stars then  - a best of breed?  That is where we are most likely agree not to agree.

 

You say that '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'

 

Air New Zealand is no doubt one of the most highly regarded airlines in the world. However from my perspective since it's transformation into an international airline one could hardly rave about it's financial performance.

 

Earnings per share have fallen from 53.5 cents in 1995 to 46.3 cents in 1996 to 32.9 cents last year - anybody's guess what it will be this year. This year in particular looks pretty disastrous..

 

Obviously this declining earnings performance is the main reason for the decline in the Air New Zealand share price. That decline has been greater over the last two years than any other period since 1993 - shareholders, in total, have lost more over the last two years than any prior period..

 

There is an old adage in that a trend in motion tends to stay in motion.

 

Trend theory also says that longer a trend has been in effect the longer it will take, from it's reversal point,  to enter a new sustainable uptrend.

 

Snoopy, as we agree airlines per se are not for us - but I cannot agree with you with Air New Zealand is currently demonstrating any reasons why they should be treated as a 'best in breed'. Airlines are not for me.

 

Mind you I bet a few traders cleaned up on Qantas today - up 20%.

 

Cheers

 

Peter