Air New Zealand Limited (AIR.NZ) is New Zealand’s international and domestic airline providing passenger and cargo transport services. With currently 103 aircrafts, the company is connecting around 15m passengers yearly to 21 domestic and 31 international destinations across 19 countries in Asia Pacific, North America and the United Kingdom.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Two regional subsidiaries, Air Nelson and Mount Cook Airline, operate additional domestic flights with turboprop aircraft. Air New Zealand was twice awarded ‘Airline of the Year’ and ranks among the safest airline in the world. The airline is a member of the Star Alliance Group since 1999.
Air New Zealand was founded in 1940 and is headquartered in Auckland. The company is listed on New Zealand’s and Australia’s Stock Exchange since 1989 and 2002 respectively. ADRs can be traded in Germany and the US. Great Britain’s Queen is the major shareholder of the company with around 52%. The balance is owned by the public.
With a workforce of around 10,900 employees, Air New Zealand reported revenues of 2.6bn NZD (1.8bn USD) and profit before tax of 349m NZD (239m USD) – including a 22m NZD gain from non-recurring items – for the first six months of its fiscal year 2016/17. This is a decrease of 4% and 24% respectively compared to the same period a year ago. In the fiscal year 2015/16, revenues were up 6% and 40% respectively compared to the year before. The operating margin of around 15% is in line with its competitors. Air New Zealand’s cash reserves at the end of 2016 have been 1.3bn NZD (883m USD). The company has an equity ratio of 29% but comes with a high gearing, defined here as total liabilities to total equity, of 244%.
Air New Zealand’s shares are in an uptrend since October 2016 and gained more than 60% in value since, 28% alone this year. The company is still reasonably priced at only seven times earnings, compared to 22 times among its sector peers. Air New Zealand trades at 1.5 times book value and at only three times cash flow. The last dividend payments yielded more than 7%.
The company expects a capacity growth of 6% for its fiscal year 2016/17 and an EBIT between 475m and 525m NZD, which would be 21% and 28% behind the previous year. Nevertheless, New Zealand’s robust economic growth, a high domestic tourism and a double-digit inbound tourism growth with the peak traveling season ahead could bring some positive surprises on the revenue side. Air New Zealand’s share price has crossed its upturning 200 moving average line, technically a good signal for a longer term investment.
AIS Rating: ★★★☆☆
| 2010/11 | 2011/12 | 2012/13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 H1 only |
|
|---|---|---|---|---|---|---|---|
| EPS (NZD) | 0.08 | 0.07 | 0.17 | 0.24 | 0.29 | 0.41 | 0.23 |
| Change | 0% | -13% | 143% | 41% | 21% | 41% | -24% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | Debt/ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 7 | 22 | 1.5 | 3 | 29% | 23% | 244% | 7.3% |
* Equity / Total Assets, ** Total Liabilities / Equity
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