Air Canada (AC.TO)

Very strong brand. Airlines are historically difficult businesses: capital intensive, huge fixed costs, unions, commodity pricing, government regulation. It doesn't have impressive profitability, high ROE, or strong balance sheet. He'd be open to buying if the metrics changed.

Air Canada enjoys a monopoly in Canadian air travel. Yes, there’s Westjet and some discount carriers, but realistically, AC is the only ballgame here. In the first four months of 2023, AC-T sunk 2.2% while leading U.S. carrier, American Airlines, climbed over 7%. AC trades at a nosebleed 2.41 beta and $-4.88 EPS. Its P/E is a N/A, meaning its stratospheric, and it offers a one-year return of -17.6% and -21.16% over five years. Read Travel winners & losers for our full analysis.

Airline traffic has recovered from Covid. Not quite at 2019 levels, but on the way. International traffic is a big driver and is rebounding. New planes are more efficient. Paying down debt acquired during Covid will strengthen balance sheet. Economy will be strong and benefit AC.

His colleagues says that if AC can't make money in this environment, when can it? In this environment, revenue seems reasonable. Jet fuel costs have come down, so that might be a tailwind. Extremely tough sector. He focuses on other names in that space in the industrial sector, such as CAE or HON.

Stay clear. Better financial shape than previously, but still very highly leveraged. B-rated credit, which is deep into junk. There will be a reckoning when they come to refinance. High beta. Cyclical. Business travel won't be the way it was. Consumers tightening belts will dampen demand. Intense competition.

Wage costs and oil costs are beyond the control of airlines. Have high cyclical risk. The economy is slowing, perhaps a recession, so avoid this sector.

It's consumer discretionary and we're heading into a recession. Lord knows what'll happen to fuel prices. Too many unknowns. Ottawa is limiting flights into Pearson to relieve that airport's congestion. Flying AC is very less pleasant now and frustrating.

Shares recovering with passing of Covid-19 and travel recovery.
Recent pullback presenting a good buying opportunity.
Expecting further growth to be muted with recession fears.
Inflation making costs hard for the company. 
Staffing also an issue with pilot shortage.

Should be a year that's pretty big for travel. A lot of the US airlines are starting to pick up. Still likes it. Decent potential upside. Chart shows relative strength coming in, recently improving technicals, higher lows. Likely going to see an attempt to retest highs of $23. 

Shares have come down to make this an opportunity. Global travel is coming back in a very strong way.

Volatile stock. 
Has owned in the past.
Unsure whether still owns shares.
Base that company broke out of.

Pretty good compared to other North American airlines. The whole travel sector had a bounce in January. Travel will continue to be stronger. The major airlines have greater capacity to handle problems. 

Planes are packed and AC is doing well in an awful industry--because you have no control over the weather, cost of fuel and what people will pay for plane tickets (to quote Warren Buffett). People are travelling.

Economy recovering which will stimulate travel demand.
Current share price presenting good buying opportunity.
Cash flow recovering. 
Balance sheet getting better. 
Long term is a good hold.

Airlines are a difficult business. Capital intensive, lots of regulation. He avoids investing. Strong balance sheet. Profitability trails the market. Wait for profitability to return and revisit.