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Summary
- Canadian national airline Air Canada is set to lay off 1,700 employees on the back of the latest stringent travel restrictions.
- Stocks of Air Canada are down by 56 per cent in the last one year, with a present debt-to-equity ratio of 7.67.
- The layoffs come after Air Canada's planned first-quarter service cuts in Atlantic Canada went into effect on Monday, January 11.
Air Canada (TSX:AC) is sacking 1,700 employees and reducing its operations by 25 per cent in the first quarter of 2021 due to the new COVID-19 travel restrictions and testing rules.
The layoffs come after Air Canada's planned first-quarter service cuts in Atlantic Canada went into effect on Monday, January 11. The national airline informed airports in the Atlantic Canada region this week that it would slash additional routes. Air Canada has decided to suspend all its services in Gander, Goose Bay and Fredericton, effective from Saturday, January 23.
Following the latest reduction, Air Canada’s operating capacity in the first quarter of 2021 will be 20 per cent of what it was in the first quarter of 2019, the company said.
Meanwhile, leisure tour company Transat AT (TSX:TRZ) has reiterated its support for its planned takeover by Air Canada.
In the wake of these developments, let us delve into Air Canada’s market fundamentals:
Air Canada (TSX:AC)
Current Stock Price: C$ 22.99
Having incurred massive losses amid the lockdowns, Air Canada said it will further evaluate and alter its services in response to the new COVID-19 mutant, government-enforced travel curbs and testing, and market conditions.
The airline stock marginally dropped by 0.6 per cent on Wednesday, January 13. Its shares have plunged nearly 56 per cent in the last one year. However, the stock has recovered over 47 per cent in the last three months.
The company saw 3.29 million stocks changed hands on Wednesday. Its 10-day average trading volume is nearly 4 million and currently ranked among TMX’s top volume companies.
Stocks of Air Canada have a price-to-book of 3.971 and a debt-to-equity ratio of 7.67, and its market value stands at approximately C$ 7.64 billion, as per TMX data.
In its third quarter of 2020, the airline saw a negative EBITDA of C$ 554 million, a steep drop from C$ 1.472 billion in Q3 2019. The company’s unrestricted liquidity amounted to C$ 8.189 billion at the end of Q3 2020.
