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Summary
- Stocks of Canadian airlines traded in the red on Wednesday on the back of new travel restrictions.
- WestJet airline is set to sell four cargo flights this year. Its parent company’s stocks have decreased by 15 per cent in one year.
- Air Canada’s scrips have been actively trading across the Toronto Stock Exchange (TSX), but the stock has tumbled 53 per cent in one year.
In the wake of stringent travel restrictions imposed by the federal government, the aviation industry ‘expressed frustration’ at the mandatory COVID-19 testing requirements for international travelers from Wednesday, January 6.
Airlines requested the federal government for an extension in implementation of the testing protocols until January 18.
The International Air Transport Association (IATA), in an official statement, said that the short notice decision of the federal government puts travelers at a risk of being stranded in countries where the testing is not readily available.
However, Canadian Transport Minister Marc Garneau said the new rules would come into effect from Wednesday.
Canada has already banned all flights from the United Kingdom on December 20 following reports of new mutation of the COVID-19 strain.
IATA claims the global aviation industry has suffered from losses to the tune of US$118 billion in 2020 while demand fell by 61 per cent (as compared to 2019).
Let us look at how the following airlines’ stocks of Air Canada and WestJet are faring on the back of these developments:
ONEX Corporation (TSX: ONEX/WestJet Stock)
Current Stock Price: C$ 73.20
Stock of WestJet Airlines’ parent company ONEX declined marginally on January 6. The Canadian carrier is selling four of its cargo flights to Amazon this year.
WestJet Wednesday disclosed that it plans to resume its passenger flight in two weeks. But after the new travel restriction, the airline’s plan looks uncertain.
Stocks of the airline corporation have plunged nearly 15 per cent in the last one year, steered by the COVID-led lockdowns. However, the company distributed a consistent quarterly dividend of C$ 0.10 per unit in 2020 and currently yields 0.546 per cent.
The stock is offering a positive return of 4.78 per cent and a return on assets of 2.86 per cent as per TMX data.
Air Canada (TSX:AC)
Current Stock Price: C$ 22.72
Calendar 2020 has been harsh for Air Canada. The flight stock have plummeted almost 53 in one year. The scrips dropped 1.26 per cent on Wednesday.
The stock has been trending on the TSX for the last few months, driven by its higher trading volume across the Canadian market. Its 50-day average volume is 6.6 million units, making it among TMX’s top volume performers.
The giant airline recently revealed plans to hire digital influencers to motivate people to travel despite the ongoing pandemic-related restrictions.
Units of airlines are offering a current price-to-cashflow of 22.80. Its debt-to-equity stands at 7.67, according to TMX data.
