AC:CC - Air Canada: Profits And Deleveraging

2024-02-13 06:57:43 ET

Summary

• Air Canada is currently generating substantial profit in terms of Q3 2023.
• Demand is strong given the passenger load factor of 89.8% in Q3 2023 versus 83.4% in 2019 before the pandemic.
• Air Canada has risks if demand decreases for any number of reasons or if jet fuel prices rise too much.
• I think potentially decreasing interest rates will help sentiment and improve the valuation, assuming demand remains strong and fuel prices remain relatively affordable.
• Given airlines lose money if demand decreases enough and demand can change quickly, airline stocks are risky and should only be a small part of a portfolio in my view.

Air Canada ( OTCQX:ACDVF ) is the largest airline in Canada.

Air Canada's stock declined from 2020 given the pandemic, and it hasn't recovered since, despite its passenger load factor exceeding 2019 levels.

Given stronger demand, a good passenger load factor, and more affordable fuel costs than 2022, Air Canada is currently fairly profitable in terms of the last twelve months ....

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