Gerard Ferguson Air Canada AC-T BUY ON WEAKNESS Feb 18, 2020

Notoriously terrible businesses. Tight margins, large capex. Travel slows down in tough economic times. Non-sustainable business model for long-term growth. Trying so hard to raise fees on everything. Avoid all airlines.

Started to put in a bit of a bottom a couple of months ago, as did many other airlines. This name's had a big move higher. There are 2 ways to consolidate: in price (sharp pullback) or in time (move sideways). Thinks we'll see consolidation at least for a bit, perhaps with a slight downward bias. (In tech analysis it's called a "flag".) Once done, it should resume the uptrend and move higher.

Once we get into August, put on the brakes or at least assess the risk.

It is buying back shares and did some cost cutting which could increase cash flow, but it still carries a lot of debt. It is a cyclical business and is battling U.S. giants. She wants to see a turn-around. If you own it continue to hold.

It is a trading opportunity and not a long term hold. There is still upside and there has been insider buying. It has announced an issuer bid. 18% of shares have been bought and cancelled in a year so revenue per share is going up. It is trading at a discount to its American peers and to its historical valuation.

Not compelling right now for transparently understanding where it could go to. With the tariffs, this business is something that could actually be on the table; the dynamics of the Canadian market might change dramatically. Makes most of its money off international flights.

Has been poorly managed for many years. Have a BB credit rating. History says that when things go well, they buy back a lot of shares, but don't touch their debt. They need a better balance sheet, stop issuing shares, and totally change of management style. The industry is so competitive that there is no consumer loyalty; consumers buy the cheapest flights online.

Planes to Europe are full. US will come back at some point. Every time a recession ends, travel blossoms. He's followed it for a long time and sees substantial upside. But airline stocks are very volatile. Thinks $31 is doable in the next 2-3 years.