- Air Canada (TSX: AC) has strategically partnered with Emirates
- AC stock rose by about five per cent on July 12
- Transat said its revenue zoomed by C$ 350.6 million year-over-year in Q2 2022
Operational setbacks rising from high fuel costs and lack of staff appear to be affecting the airline industry and resulting in flight delays/cancellations and airport congestion. However, at the same time, faded COVID-19 restrictions are giving way to increased air travel demand, which could mean growth for pandemic-hit airline stocks like Air Canada (TSX: AC), Transat A.T. (TSXL TRZ), WestJet (TSX: ONEX) etc.
Though operational headwinds are causing some travel chaos, investors with a mindset to invest for the long term could explore quality airline stocks that have survived COVID and could also tackle these travel challenges.
On that note, let us explore five TSX airline stocks that fall under the industrial sector.
1. Air Canada (TSX: AC)
Air Canada strategically partnered with Emirates, a Dubai-based global airline, on Tuesday, July 12, to create travel options for customers and enhance their travel experience. Both airlines intend to form a codeshare relationship later this year. The Canadian air carrier said this partnership aims to expand its global reach and explore growth opportunities in Visiting Friends and Relatives (VFR) markets.
In the wake of this strategic development, AC stock rose by about five per cent on July 12, making it one of the top three gainers of the TSX main stock index during this session. As per Refinitiv, Air Canada had a Relative Strength Index (RSI) of 41 (above the oversold range of 30) on July 12.
2. Transat A.T. Inc (TSX: TRZ)
Transat said its revenue zoomed by C$ 350.6 million year-over-year (YoY) to C$ 358.15 million in Q2 2022. This top line surge was driven by a 'significant' resumption of airline operations as Omicron effects subsided. However, the airline also noted that decreased demand and massive cancellations due to the Omicron variant offset revenue surge, resulting in an operating loss of C$ 87.51 million in the latest quarter.
TRZ stock decreased by approximately 19 per cent year-to-date (YTD). According to Refinitiv, TRZ stock seems to be on a bearish trend with an RSI of less than 30 on July 12.
3. Chorus Aviation Inc (TSX: CHR)
Chorus announced on July 12 that its subsidiary firm, Voyager Aviation expanded its product portfolio by adding ATR 42 and 72 aircraft types, thereby increasing cross-company support capabilities and diversifying Chorus's business.
CHR stock fell by roughly 16 per cent in one month and held an RSI of 32.34, marginally up from the oversold territory, on July 12, as per Refinitiv findings.
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4. WestJet Airlines: owned by Onex Corporation (TSX: ONEX)
Onex reported increased distributable earnings of US$ 25 million in the first three months of 2022, relatively higher than a loss of US$ 3 million a year ago. Onex's return on equity (ROE) was almost 15 per cent.
ONEX stock sank by over 28 per cent in nine months and, according to Refinitiv information, had an RSI of 38.21 on July 12.
5. Cargojet Inc (TSX: CJT)
The air cargo service company, Cargojet, raised its quarterly dividend by 10 per cent to C$ 0.286 in May compared to the previous payment of $ 0.26. The mid-cap company reported a revenue rise of 45.7 per cent YoY to C$ 233.6 million in Q1 2022.
CJT stock was up by over 16 per cent from a 52-week low of C$ 115.89 (June 17). According to Refinitiv data, CJT stock recorded an RSI of 42.2 on July 12.
These TSX air transportation stocks could see some impact of increased travel demand due to eased COVID-19 restrictions, considering they take appropriate measures to combat operational challenges. Long-term investors could explore such stocks to capture significant profits in future as some of these airline stocks expand their global reach.
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.