Air Canada (AC.TO)

Trades at 3x EV-EBITDA vs. 4.5x historic. The overhang has been the neverending wait for the recession, and pilot negotiations and more Canadian competition are headwinds. AC is almost back to full pre-Covid capacity. Also, they're adding to the profitable Asia routes. Domestic routes are 30% and international 70%, so well-positioned. Their balance sheet is much better now. Assuming the EBITDA doesn't plunge, this should trade around $30.

Has higher-than-normal risk now. Bullish case: Air traffic has returned to pre-pandemic levels. During the pandemic, AC increased operating efficiency and right-size its fleet to make them more profitably. Reduced debt a lot to 1x EBITDA from 6x. There's limited downside. Bearish: cheap carriers could pop up to challenge AC on ticket price. If interest rates remain low, then consumer will spend.

Airlines must borrow a lot of money to buy planes while they're at the mercy of the wider economy which effect flight demand.  Also, they don't pay dividends and almost airlines have junk credit ratings. Westjet pilots just got a pay increase, but expect AC pilots to get a raise.

Business is booming but the stock is up only 1% from its 2020 levels with the worst conditions in the airline industry. There are several airlines trading at good values.

It's been flat even as the market has rallied. Is pent-up travel over? The economy is slowing down faster in Canada than the US, so it will impact travel. The only positive are lower fuel prices. The travel boom is not over, but a lot of it has.

The issue is that they had a very big year as Covid concerns lessened but next year may not be as good. There are some cost issues and pricing power may not be as good. The business is cyclical which adds to the volatility so it is not a good stock for the long term. You could own other things that will do better.

The travel business enjoyed the revenge travel bounce, which is wearing off a bit. The managed Covid well by shifting to cargo shipping. But business travel will never return to pre-Covid levels. That said, this remains a good business, judging by their last report. A good long-term story. Buy on further weakness, not now. Economic slowdowns are a caveat, though.

Airlines can't control headwinds such as higher labour and fuel costs. The U.S. airlines are already seeing the impact of higher oil prices. There are possible slowdowns in consumer spending and travel is still less than pre-Covid, especially in the lucrative business component since meetings can be done virtually.

He sold his shares recently, because AC doesn't hedge their fuel costs, they must settle a pilot contract, and if the economy weakens it could impact their passenger load.

Rising energy costs putting it under pressure. Revenge travel on leisure, business side is picking up. Basing since 2020. Now at 200-day MA, so if you own it, hold on for now, but look for a chance to exit or trade.

It has had a good run-up over the summer. It has good pricing power for now and is bringing in more planes. Many people are wanting to travel again at least for the time being, but business travel may slow down. It should do well for the next couple of years.

The chart has flatlined around $17-23, a range. He likes trading these stocks; it's easy. It hasn't returned to its pre-Covid highs. Don't guess it will break out. Just trade in this range.

Airline stocks very hard to invest in - business very competitive. 
High capital requirements and low profits. 
Company performing well lately.
Summer travel good for business.
Cyclical business that is not friend of investor.

Does not own airline stocks.
Cyclical business with high debt.
Large capital investments make for tough business.
Staffing shortages make for stress.
Cant keep up with summer travel demand.

Strong brand. Airlines are extraordinarily difficult businesses: capital intensive, huge fixed costs, unions, regulation. Not a recipe for success. Profitability is challenged. Considerable debt.