Air Canada (AC.TO)

Trading at 3X earnings, because earnings have done relatively well recently. He doesn’t like investing in airline stocks, which are capital intensive, highly unionized and very cyclical. This has just gone through a great positive cycle where earnings have gone up. You want to look at these when they aren’t earning very much and have been in a downtrend.

Canadians love to complain about them, yet compared to most south of the boarder, they are enjoyable to fly. They have a long history of zigging when they should be zagging when it comes to hedging. The most likely scenario is they do well.

A tough one. He has never owned it. There are 2 costs. Fuel, which is out of their control and labour which is under their control, but only by a small amount. This should be a pretty good time for them. The market has been a bit better, people are feeling better, but the market just does not want to pay a high valuation for it. If you own it, he would go on to other things.

All airline stocks, even though they have been making money, share prices have been pulling back. They’ve been adding a lot of capacity. Haven’t been passing through the benefits of lower fuel costs when energy prices were going down, but instead have been expanding their international routes at the same time that global GDP has been slowing. A lot of air traffic is predicated upon GDP growth. She doesn’t buy airlines because they are very cyclical and don’t have a control over their major costs.

Had a great run and has been one of the best investments recently. They’ve done many things right in spite of many hiccups. He is always careful when investing in any airline. Throughout the cycle it is not a good investment, but from time to time you get those unique opportunities where you get an uptick in the industry and they fix the problems. This one has had both. At this time, he is very careful about investing in any airline, because he feels the industry is starting to peak and there is increased competition.

He likes this. Trading at 3 or 4 times earnings. Load factors are good. They are controlling their revenue per available seat mile and are driving down their costs. Also, taking advantage of their international routes. Feels the stock is stupidly cheap.

Not a big fan of this airline, seeing it go bankrupt 2 or 3 times during his career. Would be a little careful at this point, because a lot of those results are based on fuel costs which they procured when energy prices were a lot lower. With energy costs having come up, that could impact margins a little.

(A Top Pick June 2/15. Down 40.06%.) Quote: In retrospect, this was my foolish attempt to outsmart the market. -This has a dominant position in this country and if you get the timing right, they can be great investments. Thinks there is too much weakness in the economy now.

*LONG* (Pairs trade with a Short on Air Transat (TRZ-T). It’s not so much that he likes this company, but he wants to hedge out some of the industry specific risks such as jet fuel prices, weather, regulations.

Doesn’t rank very well from a fundamental standpoint. There are going to be a few more headwinds going forward with higher fuel prices and a stronger Cdn$. There is also some low cost competition coming into Canada. Airlines are one of those things you want to trade, and not really own. Has owned this in the past.

(Market Call Minute.) He is not inclined towards airlines. You have interest rates at record lows, fuel prices at record lows and the tailwinds are there, but if prices go up that is not favourable for airlines.

Any airline is rented, not owned. These stocks are very volatile. It is quite cheap right now, but the question is what will take it high in the next year. They are facing competition from WJA-T. He does not own it because he is not a trader. It is a trade and not an investment.

Wouldn’t touch this. It is very expensive, probably the most expensive in the world right now. It is a good trader where you can make 4% one day, and lose 6% on another day.

One of the impacts of the weaker Cdn$ is that there are fewer people flying. Feels they are having trouble selling seats to US destinations. He is not bullish on the stock.

Has had an amazing run, but has been beaten up somewhat. Not his kind of company, because of the debt load and it has moved up so much. Feels Transat A. T. (TRZ-T) is far more interesting, which has just come to an agreement with their pilots, but is still too expensive.