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Air Canada (TSX:AC) remained among the top active stocks on the Toronto Stock Exchange on Monday, March 1. The airline stock secured a jump of nearly five per cent, hitting a day of C$ 26.52 and finally closing Monday’s session at C$ 26.3.
After a long struggle through most of the pandemic-riddled year of 2020 amid operational and financial crunch, Air Canada stock noted a recovery of roughly 25 per cent in February. With the latest spike, its year-to-date growth now stands at over nine per cent.
Does the recent rebound indicate at Air Canada stock’s rise in 2021? Let’s take a closer look at the aviation giant’s performance to understand better.
Air Canada (TSX:AC) Stock Performance
In January 2020, right before the COVID-19 outbreak turned into a menacing pandemic, Air Canada stocks were trading at C$ 52.09 (January 13). In the span of the following two months, as the pandemic hit in March, the scrip nosedived by over 51 per cent. On March 18, 2020, it even recorded a multi-year low of C$ 9.26.
Since its pandemic lows, however, Air Canada share has recorded a noticeable recovery in the past year. While it is still way below its pre-pandemic levels, the stock has rebounded by about 184 per cent in the last nearly one year since its record low on March 18, 2020.
©Kalkine Group 2020
Air Canada Financials
The coronavirus’ rapid spread last year had forced governments around world to lock up their borders and ban nearly all kinds of travel. The lockdown quickly left the global aviation industry down in the dumps as business almost entirely came to a standstill and reportedly carved an annual loss of about US$ 118.5 billion in 2020.
Air Canada, the country’s top passenger airline, came directly in the lockdown restrictions’ the line of fire. As the company’s quarterly revenues fell and losses expanded, it was forced to snip its operations and resort to massive workforce reductions.
Air Canada’s total revenues declined 70 per cent year-over-year (YoY) to C$ 5.833 billion in 2020. It also recorded an annual net loss of C$ 4.647 billion for the year, as against a net income of C$ 1.476 billion in 2019.
Air Canada To Rise In 2021?
The International Air Transport Association (IATA) had estimated last year that the aviation industry would incur a net loss of about US$ 38.7 billion in 2021. The kickstart of the COVID-19 vaccine campaign late last year had sparked some hope for airline companies, but then came the emergence of new coronavirus variants which, once again, triggered travel bans around the world.
Taking all this into account, the IATA revised figures in February to predict a cash burn of about US$ 75-95 billion in 2021 for the aviation industry.
©Kalkine Group 2021
While these numbers puncture any hope for the airline sector, the delay of Air Canada-Transat AT merger deal could likely be fueling the former’s stock price rise.
After the deal’s deadline expired on February 15, Transat stock dwindled while Air Canada shares jumped nearly five per cent the next day after markets opened after Family Day.
Air Canada’s former CEO and president Calin Rovinescu had said during its earnings call last month that the airline’s “signs of progress in talks between the industry and the federal government regarding a bailout for the airline sector.
Another factor that could be driving its share value up is the likelihood of the Canadian government pumping money into the airline industry, although the funding’s timing and amount would play a vital role.
