Morning Report Thursday 28 August 2014
QANTAS reports today while Air NZ is now the most “profitable airline in the world”
Within 48 hours of buying Myer (MYR), a stock that I have disliked since it listed, I am turning my attention to a stock I have disliked for much longer. Alan Joyce has just announced for QANTAS a Full Year Net Loss of $2.84 Billion. An awful result was always expected so I do not expect a major sell off, but this is not a reason to buy. Air New Zealand, conversely yesterday unveiled a 45% increase in profits and is paying a special dividend - two companies in the same industry but in very different places. Unfortunately, relative improved corporate efficiency across the Tasman has also been reflected very clearly in the respective indices. Since August 2011, the NZX50 has outperformed the ASX200 by a massive 41% - see charts 3 & 4. When it comes to airlines, my opinion has not changed; they are a trade, not an investment. Also, when trading airlines I believe you are starting off from a position of weakness, purchasing something you are unlikely to have interest in holding long term, hence making you a nervous long from trade initiation.
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