NZSE:AIR

Stock Analysis Report

Executive Summary

Air New Zealand Limited provides passenger and cargo transportation services on scheduled airlines primarily in New Zealand, Australia, the Pacific Islands, the United Kingdom, Europe, Asia, and the United States.

Rewards

Trading at 42.7% below its fair value

Earnings are forecast to grow 9.32% per year

Risk Analysis

Has a high level of debt

Dividend of 7.28% is not well covered by earnings

Profit margins (4.7%) are lower than last year (7.1%)



Snowflake Analysis

Good value average dividend payer.


Similar Companies

AirAsia Group Berhad

KLSE:AIRASIA

Share Price & News

How has Air New Zealand's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AIR has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.0%

AIR

-4.4%

NZ Airlines

0.5%

NZ Market


1 Year Return

-8.6%

AIR

3.1%

NZ Airlines

23.7%

NZ Market

Return vs Industry: AIR underperformed the NZ Airlines industry which returned 8.8% over the past year.

Return vs Market: AIR underperformed the NZ Market which returned 22.5% over the past year.


Shareholder returns

AIRIndustryMarket
7 Day-1.0%-4.4%0.5%
30 Day-1.6%-6.3%1.8%
90 Day4.5%4.8%8.6%
1 Year0.9%-8.6%8.7%3.1%28.8%23.7%
3 Year82.5%40.0%74.3%54.7%61.3%40.1%
5 Year101.5%14.6%61.6%33.3%98.1%53.7%

Price Volatility Vs. Market

How volatile is Air New Zealand's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Air New Zealand undervalued compared to its fair value and its price relative to the market?

43.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: AIR (NZ$3.02) is trading below our estimate of fair value (NZ$5.27)

Significantly Below Fair Value: AIR is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: AIR is poor value based on its PE Ratio (12.4x) compared to the Airlines industry average (12.3x).

PE vs Market: AIR is good value based on its PE Ratio (12.6x) compared to the NZ market (19.8x).


Price to Earnings Growth Ratio

PEG Ratio: AIR is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: AIR is good value based on its PB Ratio (1.6x) compared to the XO Airlines industry average (1.9x).


Next Steps

Future Growth

How is Air New Zealand forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

9.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AIR's forecast earnings growth (9.3% per year) is above the savings rate (1.3%).

Earnings vs Market: AIR's earnings (9.3% per year) are forecast to grow faster than the NZ market (8.1% per year).

High Growth Earnings: AIR's earnings are forecast to grow, but not significantly.

Revenue vs Market: AIR's revenue (3.1% per year) is forecast to grow slower than the NZ market (4.8% per year).

High Growth Revenue: AIR's revenue (3.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AIR's Return on Equity is forecast to be low in 3 years time (17.2%).


Next Steps

Past Performance

How has Air New Zealand performed over the past 5 years?

0.03%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AIR has high quality earnings.

Growing Profit Margin: AIR's current net profit margins (4.7%) are lower than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: AIR's earnings have grown by 0.03% per year over the past 5 years.

Accelerating Growth: AIR's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: AIR had negative earnings growth (-30.8%) over the past year, making it difficult to compare to the Airlines industry average (-2.5%).


Return on Equity

High ROE: AIR's Return on Equity (12.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Air New Zealand's financial position?


Financial Position Analysis

Short Term Liabilities: AIR's short term assets (NZ$1.8B) do not cover its short term liabilities (NZ$2.7B).

Long Term Liabilities: AIR's short term assets (NZ$1.8B) do not cover its long term liabilities (NZ$3.0B).


Debt to Equity History and Analysis

Debt Level: AIR's debt to equity ratio (72.2%) is considered high.

Reducing Debt: AIR's debt to equity ratio has increased from 19.6% to 72.2% over the past 5 years.

Debt Coverage: AIR's debt is well covered by operating cash flow (65.3%).

Interest Coverage: AIR's interest payments on its debt are well covered by EBIT (10.5x coverage).


Balance Sheet

Inventory Level: AIR has a high level of physical assets or inventory.

Debt Coverage by Assets: AIR's debt is covered by short term assets (assets are 1.2x debt).


Next Steps

Dividend

What is Air New Zealand's current dividend yield, its reliability and sustainability?

7.36%

Current Dividend Yield


Dividend Yield vs Market

company7.4%marketbottom25%2.8%markettop25%5.3%industryaverage2.5%forecastin3Years7.8%

Current dividend yield vs market & industry

Notable Dividend: AIR's dividend (7.28%) is higher than the bottom 25% of dividend payers in the NZ market (2.83%).

High Dividend: AIR's dividend (7.28%) is in the top 25% of dividend payers in the NZ market (5.42%)


Stability and Growth of Payments

Stable Dividend: AIR's dividend payments have been volatile in the past 10 years.

Growing Dividend: AIR's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (91.5%), AIR's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AIR's dividends in 3 years are forecast to be covered by earnings (77.6% payout ratio).


Next Steps

Management

What is the CEO of Air New Zealand's salary, the management and board of directors tenure and is there insider trading?

2.0yrs

Average management tenure


CEO

Jeff McDowall 0

0.3yrs

Tenure

0

Mr. Jeff McDowall serves as an Acting Chief Executive officer at Air New Zealand Limited since September 26, 2019. Mr. McDowall had been Chief Financial Officer at Air New Zealand Limited since January 201 ...


Management Age and Tenure

2.0yrs

Average Tenure

Experienced Management: AIR's management team is considered experienced (2 years average tenure).


Board Age and Tenure

5.6yrs

Average Tenure

61yo

Average Age

Experienced Board: AIR's board of directors are considered experienced (5.6 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellNZ$82,02020 Sep 19
Cam Wallace
EntityIndividual
Role
Senior Key Executive
Chief Revenue Officer
Shares30,410
Max PriceNZ$2.70
SellNZ$236,38517 Apr 19
John Whittaker
EntityIndividual
Role
Senior Key Executive
Chief of Air Operations & People Safety Officer
Shares84,616
Max PriceNZ$2.80

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Greg Foran (58yo)

    Chief Executive Officer

    • Tenure: 0.3yrs
  • Mike Tod

    Chief Marketing & Customer Officer

    • Tenure: 7yrs
  • David Morgan

    Chief Operations Integrity & Standards Officer

    • Tenure: 7yrs
  • Cam Wallace (47yo)

    Chief Revenue Officer

    • Jodie King

      Chief People Officer

      • Tenure: 3.9yrs
    • John Whittaker

      Chief of Air Operations & People Safety Officer

      • Tenure: 3.3yrs
    • Leila Peters

      General Manager of Investor Relations & Financial Planning

      • Jeff McDowall

        Acting Chief Executive Officer

        • Tenure: 0.3yrs
      • Jennifer Page

        General Counsel & Company Secretary

        • Tenure: 0.8yrs
      • Stephan Deschamps

        Acting Chief Financial Officer

        • Tenure: 0.3yrs

      Board Members

      • Linda Jenkinson

        Independent Non-Executive Director

        • Tenure: 5.6yrs
        • Compensation: NZ$168.25k
      • Jonathan Mason (61yo)

        Independent Non-Executive Director

        • Tenure: 5.8yrs
        • Compensation: NZ$205.23k
      • Rob Jager

        Independent Non-Executive Director

        • Tenure: 6.8yrs
        • Compensation: NZ$178.00k
      • Jan Dawson (65yo)

        Deputy Chairman

        • Tenure: 6.3yrs
        • Compensation: NZ$189.41k
      • Dame Walsh

        Independent Chairman

        • Tenure: 0.3yrs
        • Compensation: NZ$166.69k
      • John Key (58yo)

        Independent Non-Executive Director

        • Tenure: 2.3yrs
        • Compensation: NZ$145.80k
      • Laurissa Cooney

        Independent Non-Executive Director

        • Tenure: 0.3yrs

      Company Information

      Air New Zealand Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Air New Zealand Limited
      • Ticker: AIR
      • Exchange: NZSE
      • Founded: 1940
      • Industry: Airlines
      • Sector: Transportation
      • Market Cap: NZ$3.365b
      • Shares outstanding: 1.13b
      • Website: https://www.airnewzealand.co.nz

      Number of Employees


      Location

      • Air New Zealand Limited
      • Air New Zealand House
      • 185 Fanshawe Street
      • Auckland
      • 1010
      • New Zealand

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      AIRNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDJan 1992
      AIZASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJan 1992
      ANZF.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
      AIZCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 1992
      AIZCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 1992
      BZUDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
      ANZL.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDOct 2008

      Biography

      Air New Zealand Limited provides passenger and cargo transportation services on scheduled airlines primarily in New Zealand, Australia, the Pacific Islands, the United Kingdom, Europe, Asia, and the United States. The company also offers ground handling services; engineering and maintenance services, including aircraft and component maintenance, repair, and overhaul services; and aircraft leasing and financing services. It operates a fleet of 113 aircraft. The company was formerly known as Tasman Empire Airways Limited and changed its name to Air New Zealand Limited in April 1965. Air New Zealand Limited was founded in 1940 and is based in Auckland, New Zealand. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/24 10:34
      End of Day Share Price2020/01/23 00:00
      Earnings2019/06/30
      Annual Earnings2019/06/30


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.