New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Step-up in yields: The strong yield driven earnings rebound is consistent with airlines globally; robust COVID demand has been in excess of industry supply creating a very favourable pricing backdrop</li><li>Capacity in step with competition for now: AIR's international capacity recovery appears in step with competing airlines into the New Zealand market, though this is likely to change over the next 18 months</li><li>Cost reinvestment: The reinvestment in people and capability is adding unproductive costs in the near-term</li></ul>

Step-up in yields: The strong yield driven earnings rebound is consistent with airlines globally; robust COVID demand has been in excess of industry supply creating a very favourable pricing backdropCapacity in step with competition for now: AIR's international capacity recovery appears in step with competing airlines into the New Zealand market, though this is likely to change over the next 18 monthsCost reinvestment: The reinvestment in people and capability is adding unproductive costs in the near-term

Air New Zealand: 1H23 — Close to Full Thrust

<ul><li>Air New Zealand (AIR) will report an impressive rebound in profitability when it reports its 1H23 result on 23 February 2023.</li><li>In light of a very strong end to the half we expect PBT at the top end of management's guidance range of NZ$295m–NZ$325m</li><li>The strong yield backdrop will continue to boost earnings through 2H23, with upside risk to near term consensus earnings. </li></ul>

Air New Zealand (AIR) will report an impressive rebound in profitability when it reports its 1H23 result on 23 February 2023.In light of a very strong end to the half we expect PBT at the top end of management's guidance range of NZ$295m–NZ$325mThe strong yield backdrop will continue to boost earnings through 2H23, with upside risk to near term consensus earnings. 

Air New Zealand: 1H23 Preview — Return Flight to Profitability

<ul><li>Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats highlight a bumper end to CY22.</li><li>Our estimate (~NZ$650m) for its December 2022 pax revenue is comfortably ahead of December 2019 (~NZ$580m), implying ~NZ$18.5m/day</li><li>Demand remains strong in a capacity constrained market. Load factors (at 88.2%) are the third highest in its history (behind September and October 2022)</li></ul>

Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats highlight a bumper end to CY22.Our estimate (~NZ$650m) for its December 2022 pax revenue is comfortably ahead of December 2019 (~NZ$580m), implying ~NZ$18.5m/dayDemand remains strong in a capacity constrained market. Load factors (at 88.2%) are the third highest in its history (behind September and October 2022)

<ul><li>Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats continue to suggest passenger revenue is above CY19 levels</li><li>We expect revenue to remain at/above 2019 levels for the remainder of FY23, but with capacity increasing and yields/RASK declining from recent highs</li><li>AIR’s recent 1H23 earnings guidance upgrade (PBT of NZ$295m-NZ$325m) implies a strong FY23 result</li></ul>

Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats continue to suggest passenger revenue is above CY19 levelsWe expect revenue to remain at/above 2019 levels for the remainder of FY23, but with capacity increasing and yields/RASK declining from recent highsAIR’s recent 1H23 earnings guidance upgrade (PBT of NZ$295m-NZ$325m) implies a strong FY23 result

Air New Zealand: Revenue Remains Above 2019 Levels

Thematic (Sector/Industry)

<ul><li>Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levels</li><li>Air cargo's rates compression has been slower, mirroring the slow recovery in air seat capacity</li><li>In this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector</li></ul>

Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levelsAir cargo's rates compression has been slower, mirroring the slow recovery in air seat capacityIn this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector

Transport Trends: Nothing Normal About the Normalising

New Zealand

Air New Zealand Limited operates an airline business that provides international and domestic air passenger and cargo transport services throughout New Zealand and the South West Pacific. The Company also provides engineering and ground handling services.

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Air New Zealand (AIR NZ)

Air New Zealand: 1H23 — Close to Full Thrust

Air New Zealand's (AIR) 1H23 strong profit rebound result was driven by record yields, which have yet to show any signs of unwinding; First time...

Forsyth Barr

Air New Zealand: 1H23 Preview — Return Flight to Profitability

Air New Zealand (AIR) will report an impressive rebound in profitability when it reports its 1H23 result on 23 February 2023 and in light of a very...

Forsyth Barr

Air New Zealand: Record Revenues

Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats highlight a bumper end to CY22; Our estimate (~NZ$650m) for its December...

Forsyth Barr

Air New Zealand: Revenue Remains Above 2019 Levels

Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats continue to suggest passenger revenue is above CY19 levels; Demand remains...

Forsyth Barr

Transport Trends: Nothing Normal About the Normalising

The industry is normalising, but from different angles and at a different rates: Abnormal gains in international freight are unwinding rapidly,...

Forsyth Barr

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