Air Canada (TSX:AC) losses continue but bookings pick up

Be the First to Comment Read

Air Canada (TSX:AC) losses continue but bookings pick up

 Air Canada (TSX:AC) losses continue but bookings pick up
Image source: Copyright © 2021 Kalkine Media


  • Air Canada’s net cash burn dropped by 43 per cent to C$ 8 million in the second quarter of 2021.
  • The national carrier posted a marginal improvement in its Q2 EBITDA. 
  • The airline expects to cut its net cash burn by over 50 per cent quarter-over-quarter in Q3 FY21.

Air Canada (TSX:AC) reported an expected negative bottom line in the second quarter of 2021, although its losses narrowed on a year-over-year (YoY) basis.

The airline posted a surge in its Q2 operating revenue as air travel began to pick up this year.

The Montreal-headquartered firm registered C$ 1.13 billion in losses for the quarter, which was slightly down from that of C$ 1.55 billion a year ago. Its operating revenues were C$ 837 million in Q2 FY21, noting a surge of 59 per cent YoY from C$ 527 in the second quarter of 2020.

Air Canada’s quarterly top-line, however, missed Bay Street analysts’ estimation by around one per cent. 

The national carrier posted a negative EBITDA of C$ 656 million in Q2 FY21, up by C$ 176 million against that of C$ 832 million a year ago.

The company continued to burn cash of C$ 8 million per day, or C$745 million in total, in Q2 FY21, which was down compared to its outlook of C$ 13 million per day.

As of June 30, 2021, the company held unrestricted cash of C$ 9.8 billion. 

Let us look at the airline’s stock performance and financial outlook.

Air Canada (TSX:AC)

The carrier stock is trading slightly over C$ 25 apiece, posting a 10 per cent year-to-date surge in returns. It is down by 19 per cent from its a one-year high of C$ 31 per share (March 15). 

The stock recorded almost 49 per cent growth in the last one year, but it is still over 50 per cent down against its mid-January 2020’s share price of US$ 51 apiece. 

Analysts anticipate that Air Canada could start delivering a positive bottom line once it resumes operating 100 per cent of its fleet. In the next one year, its share price may rebound to the pre-pandemic levels. 

The mid-cap airline’s CEO Michael Rousseau seems positive about its performance on the back of rising inoculation and reopening of businesses across Canada. 

Air Canada’s one-year price trajectory against moving average multiple. (Source: Refinitiv)

The stock is currently moving in the bearish zone, but it is up five per cent against its 200-day simple moving average (SMA), holding a long-term uptrend

Air Canada’s Third Financial Quarter Outlook

The airline targets a net cash burn in the range of C$ 280 million to C$ 460 million (C$ 3 million to C$ 5 million per day) in the third quarter of 2021, representing a 50 per cent improvement projection on a quarter-over-quarter (QoQ) basis. 

This net cash burn forecast consists of C$ 2 million of daily working capital, net of financing, and debt and leases to cost around C$ 4 million per day for Q3 FY21.


Speak your Mind

Featured Articles

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK