Air Canada (AC.TO)

(Market Call Minute.) He doesn’t buy airline companies. There are too many things they can’t control. As soon as they make money, the unions get aggressive.

On a technical basis, this is a bit mixed. Chart shows the trend is okay. Relative to the market, it is pretty well neutral. Historically this does very well prior to the Christmas buying season, from late August right through until usually around the end of November. Look for an opportunity to buy more in late August.

Airlines are trades and he is a long term investor. Economy and fuel prices impact them heavily. The CAD$ going down was also painful.

He has never been too big on airlines. Very economically sensitive. 89% of revenues from passengers rather than cargo. With fuel prices going up, he does not think it is a place he wants to be. He would take profits. It is a capital intensive, highly unionized business.

(Market Call Minute.) Likes this one. Airlines have pulled back in the last couple of days on some concerns on things going on in Europe. This company has new capacity coming on, and doing a good job of managing it.

Spectacular run here. Airlines are doing all the right things. AC.B came out last night with strong load factors and he thinks they will have strong yields when reporting quarters. Strong yields on international routes. But it is an airline and you rent the stocks, you don’t own them. There is a limited amount of new capacity being added internationally. Airlines should to fairly well, but perhaps take some money off the table. It should do well for the balance of the year.

Got some press last week with the Dream Liner when they were received their 1^st plane. They’ll be getting 35-40 more planes in the next 4-5 years. New planes will decrease their general cost base, and will probably open up opportunities in the more lucrative international routes. She is not very attracted to airlines as a general rule because the fixed costs are so heavy. Fuel expenses are beyond their control, and this is their primary costs. She prefers buying the airline suppliers.

A great move over the last year. It is relatively cheap relative to US airlines. They are so focused on cost reductions. They were hit this year because of the falling Canadian dollar. Last quarter they increased their capacity and their load factors are good. Their pension is fully funded again. There is no reason this could not trade at $12-$15, however this is not a stock without risks.

(A Top Pick Oct 16/13. Up 75.65%.) Expects there will be more travel during our current business expansion. Also, all of the airlines are now trying to find fees in other ways, and that is what is going to drive the numbers.

Had a strong performance recently. Did a bond issue recently that has done particularly well. The airline industry is extremely cyclical and if we got into a bear market it would go down more than the market. It is not defensive. The bond would have a much lower risk profile.

Judging by some of the operating statistics they released, there is a chance this quarter will probably be a very good quarter. Fundamentally they have done very well over the last little while because of cutting costs, generating more fee revenues and managing better. A lot of volatility and not for the faint of heart.

Stays away from airline stocks. As Canadian dollar goes down, their costs go up. Play airlines in the states. These stocks are traders.

After 2008 you’ve seen a huge run up. The easy money has already been made. Thinks this trade is done.

(Top Pick Oct 16/13, Up 54.31%) He doesn’t like airlines for the long term, but their earnings were ramping up late last year and this year.

He has a distinct bias against airlines, having seen various airlines come and go and this one dangling on the edge of the precipice at various times. Doesn’t follow it. A bit of bad news and the stock collapses. This is a speculative stock.