Canadian aviation stocks have experienced a rocky growth period after the pandemic hit in 2020 and triggered restrictions that forced airlines to stay non-operational for months.
In the wake of a ramped-up vaccine campaign, however, the economy is looking at a gradual reopening and phased resumption of airline operations. This can give room to airline stocks to pick up face going forward.
Keeping this in view, let’s look at some airline stocks that investors can explore in 2021, keeping the COVID-19 situation in view.
Air Canada (TSX: AC)
A C$ 9-billion market cap player that operates the largest passenger operations in Canada, Air Canada was left fraught with challenges amid the pandemic. However, its freight division, Air Canada Cargo, has picked up significantly since the beginning of the pandemic in March 2020.
As of July 5, 2021, it operated its 10,000th cargo-only flight.
Although the airline suffered in the first half of 2021 due to another wave of lockdowns and movement restrictions, some analysts believe that it will see a robust growth in the medium- to long-term period.
The industrial stock recorded a closing price of C$ 26.95 on July 5.
Cargojet Inc. (TSX: CJT)
A key freight operator in Canada, Cargojet Inc. is one of the top performing industrials stocks listed on the TSX.
The cargo air carrier held a market capitalization of C$ 3.2 billion, at a closing stock price of C$ 186.14 on July 5.
Cargojet’s operations include domestic and international cargo services spanning Canada, the US and Europe. The firm believes that the pandemic aided in setting a stage for the next phase of the e-commerce sector’s growth, in which Cargojet could play a central role through its freight operations.
Its total revenues grew to C$ 160.3 million in the first quarter of 2021, as against that of C$ 123 million in the same period last year.
Cargojet said in its earnings filing that it is looking into some expansions on international routes, a move that could help the stock inflate further.
Chorus Aviation Inc. (TSX: CHR)
The Canadian holding company offers contract flying, maintenance, repair and overhaul, and aircraft leasing services to its clients, with its operations divided into aviation services and aircraft leasing.
Chorus stocks returned over 31 per cent gains in year to date (YTD), beating the sectoral S&P/TSX Airlines (sub industry) index’s growth of 11.47 per cent in the same period.
The company has a market capitalization of C$ 785, and has over 161.8 million listed shares as on July 5.
CHR stock has earnings per share (EPS) of C$ 0.13, and a price-to-book (P/B) ratio of 1.318, as per TMX. The stock also posts a price to cash flow ratio (P/CF) ratio of 5.20, and a return on equity (ROE) of 3.53 per cent.
Transat A.T. Inc. (TSX: TRZ)
Classified as a consumer goods company, Transat A.T. offers holiday travel services including hotel stays, vacation packages and air travel services. Its primary serviceable areas include Transatlantic, Americas, and other regions, with its two brands including Air Transat, and Transat brands.
Transat A.T.’s operations were majorly hit as the tourism industry faced headwinds following the COVID-19-led restrictions.
Despite this decline in operations, Transat A.T.’s stock price recorded a one-year growth of over 18 per cent. Its stock closed at a value of C$ 6.55, on July 5, taking its market capitalization to about C$ 245 million.
Transat A.T. is one of the airlines that received federal aid due to COVID-19-led disruptions, the other being Air Canada.
As the rollout of vaccines catches pace in Canada, the company looks forward to an upbeat growth, it said.
Its brand, Air Transat, has launched its winter travel plans starting from November 1, covering destinations in the Caribbean, Mexico, US and Europe.
WestJet/Onex Corporation (TSX: ONEX)
Private equity investor Onex Corporation-owned WestJet Airlines is one of the key low-cost airline carriers in Canada. The company estimates a boom in its operations going forward as travel restrictions are likely to ease.
WestJet airline has resumed operations in some airports in Canada including Ontario, Alberta and British Columbia. The air carrier may also add some more destinations to its operations going forward, reports said.
The airline’s holding company, Onex Corporation, saw a gross return of about eight per cent on private equity investments in the first quarter that ended on March 31, 2021.
Onex Corporation has a market capitalization of over C$ 8 billion, with operations as an asset management and private equity investment company.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.