Air N.Z. FPO NZX (ASX: AIZ) – or Air New Zealand in simple English – has seen its share price hit a new 52-high of $3.26, including a stunning rise of over 54% since the start of this year.
Like Qantas Airways Limited (ASX: QAN), Virgin Australia Holdings Ltd (ASX: VAH) and the travel agents Flight Centre Travel Group Ltd (ASX: FLT) and Helloworld Ltd (ASX: HLO), Air NZ has profited from rising airfares. Falling oil prices have also helped the airlines so far in 2017. Qantas shares recently hit a nine-year high.
Despite hitting a 52-week high, Air NZ is still expected to pay a dividend yield of roughly 5.6%, although it is unfranked.
A week ago the airline upgraded its 2017 financial year earnings outlook, expecting earnings before tax to exceed NZ$525 million, above its previous guidance of between NZ$475 to NZ$525 million. That could see Air NZ increase the final dividend to go with the NZ 9.32 cents per share it paid out in March 2017. Last year the airline also paid out a special dividend of NZ 25 cents per share – although that doesn't mean they will again this year.
Foolish takeaway
At current prices, I couldn't justify investing in Air New Zealand, particularly given my aversion to airline stocks and the myriad external threats they face to their business, which management has no control over. There are cheaper and better alternatives out there.
