Air Canada (TSX:AC) Stock: Should You Buy It Before Q2 Ends?

The COVID-19 pandemic, in all its mutant forms, continues to batter aviation companies around the world, including Air Canada (TSX:AC). The top Canadian airline generates its maximum revenue from overseas passengers, and with the COVID-triggered bans in place, that segment has been majorly hampered.

Bay Street analysts have marked Air Canada as an undervalued stock to buy post inoculation drive. However, the national carrier has been losing more than a billion dollars quarterly due to parked flights.

Stocks of Air Canada rebounded in the first quarter of the current financial year and recorded a 52-week high of C$ 31 apiece on March 15, 2021. But renewed travel restrictions in Canada continue to take a toll on advanced ticket sales due to the lingering uncertainty over the reopening of businesses.

Hence, the airline witnessed a massive loss of C$ 1.3 billion in Q1 2021, led by the weak operating performance.

Let us delve into the airline’s stock price movement and forecast.

Air Canada (TSX:AC)

Air Canada had about C$ 6.582 billion worth of free cash available as on March 31, 2021. It holds five credit facilities sponsored by the federal government, worth C$ 5.9 billion, at low-interest rates.

The national airline stock has increased 7.3 per cent year-to-date (YTD) and dropped around 6.57 per cent quarter-to-date (QTD). However, it improved by over 73 per cent in the past one year, beating the S&P/TSX Airlines Index in the same period.

At its previous close of C$ 24.43 apiece, AC shares were trading almost four per cent below the 30-day simple moving average (SMA), showing a short-term bear market. Meanwhile, it was up 13.43 per cent from the 200-day SMA, indicating a long-term bull market.

Copyright ©2020 Kalkine Group

CEO Michael Rousseau had requested the Liberal government to connect and execute a reopening strategy for the country. He also said that the government should reconsider blanket curbs, rapid COVID-19 testing and selective quarantine rules.

The company reported revenues of C$ 729 million in Q1 2021, a drop of 80 per cent year-over-year (YoY), led by the massive operating capacity dip of 82.1 per cent YoY.

Air Canada posted a negative bottom line due to a net cash burn of C$ 1.3 billion in the first quarter of the current fiscal year. It had expected total expenses between C$ 1.35 billion and C$ 1.53 billion for the quarter.

Air Canada’s Forecast For Q2 2021

Air Canada estimates that its current quarter’s operating capacity will double YoY. Though it predicts an 84 per cent drop in its operations in Q2 2020 against Q2 2019.

The company has also lowered its expenditure losses of C$ 1.180 billion to C$ 1.370 billion during the ongoing quarter, representing a sign of marginal recovery.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.


Disclaimer
The website https://kalkinemedia.com/ca is a service of Kalkine Media Incorporated (Kalkine Media), Business Number: 720744275BC0001. The principal purpose of the content on the website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.
   
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