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Summary
- Air Canada’s (TSX:AC) bid for Transat AT (TSX:TRZ) has been okayed by the Canadian government.
- The airline released its full-year 2020 revenues that shows a plunge of 73 per cent year-over-year (YoY) due to COVID-led travel restrictions.
- Both parties to discuss the closing date extension, the previously fixed completion date is February 15, 2021.
- Both travel stocks have dropped more than half in one year due to the coronavirus impact.
Air Canada (TSX:AC) stocks are set to witness some interesting movements on the back of its 2020 financial results, which was declared on Friday morning, and the deal with tour firm Transat AT’s (TSX:TRZ).
Transat’s acquisition by the national carrier finally received the Canadian government’s nod on Thursday, February 11. Air Canada had offered C$ 5 per Transat’s common share, which is currently trading at C$ 4.65, as per a revised arrangement between both the parties.
Meanwhile, Air Canada reported full-year 2020 revenues of C$ 5.833 billion, down 73 per cent year-over-year (YoY) due to COVID-led travel restrictions. The airline held unrestricted available cash and cash equivalent of C$ 8 billion as of December 31, 2020.
Let us look at both stocks’ performances this year:
Air Canada (TSX:AC)
The national carrier stock gained was up marginally in Friday’s premarket hours (6:50 am ET), soon after it announced its financial results.
The stock traded in the green on the back of the government approval to its bid for Transat on Thursday and almost 3.5 million shares changed hand, with a marginal surge of 0.57 per cent.
It is currently trading at C$ 21.20 against its 52-week high of C$ 47.59. Air Canada shares are down by 7 per cent this year, as the company reduced its capacity by 25 per cent for the first quarter of 2021. It has a market cap of C$ 7.1 billion.
Air Canada stock is yet to bounce back from the COVID-caused blow. It has declined by 55 per cent in one year. It has a price-to-book ratio of 4.141 and an average 50-day volume of 5.43 million.
In the full-year 2020, ended on December 31, the airline’s Air Canada posted an operating loss of C$ 3.776 billion against operating income of C$ 1.650 billion in 2019.
Image Source: Kalkine Group @2020
Transat A.T. Inc. (TSX:TRZ)
The travel company’s stock has fallen by more than 71 per cent in one year due to multiple lockdowns. It plunged by over 2.5 per cent on February 11, as its government approved its takeover by Air Canada.
It has 37.747 million listed shares outstanding, with a market cap of C$ 175.52 million. It is currently trading at C$ 4.77 against its 52-week high of C$ 16.30.
In its Q4 FY 2020, ending October 31, 2020, revenue tumbled to C$ 28.4 million compared to C$ 693.2 million in Q4 FY 2019. Its first quarter results for fiscal 2021 is due for March 12, 2021.
Transat is likely to seek an extension of the completion of its acquisition arrangement from Air Canada. It is currently set to close for Monday, February 15, 2021. After the given date, if it is not completed or extended, the same proposal will stay in effect, except dismissed by one of the companies.
