WestJet & Air Canada (AC): Are the airline stocks a buy amid omicron?

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WestJet & Air Canada (AC): Are the airline stocks a buy amid omicron?

WestJet & Air Canada (AC): Are the airline stocks a buy amid omicron?
Image source: © 2022 Kalkine Media®      

Highlights

  • The coronavirus pandemic has continued to take a toll on the airline industry in 2022 amid mounting omicron cases.
  • As the unpredictability around this new variant has triggered lockdowns in many regions worldwide, affecting international and local travels, airline businesses are suffering once again.
  • Canadian airlines WestJet (TSX: ONEX) and Air Canada (TSX: AC), apart from taking necessary steps to provide safe travel, are looking at reducing their flights in response to governments regulations.

The coronavirus pandemic has continued to take a toll on the airline industry in 2022 amid mounting omicron cases. As the unpredictability around this new variant has triggered lockdowns in many regions worldwide, affecting international and local travels, airline businesses are suffering once again.

Canadian airlines WestJet (TSX: ONEX) and Air Canada (TSX: AC), apart from taking necessary steps to provide safe travel, are looking at reducing their flights in response to governments regulations.

Let us have a look at the two TSX-listed airline companies.

Also read: 5 Canadian growth stocks to hold for the long haul

1.    ONEX Corporation (TSX: ONEX)

ONEX Corporation, which acquired WestJet in 2019, generated net earnings of C$ 607 million, including C$ C$ 493 from the investing segment and C$ 114 million from the asset management segment, in the third quarter of fiscal 2021.

WestJet is reportedly set to extend its scale-back schedule till February 28. In addition, the Calgary-headquartered air carrier is also said to be set to consolidate 20 per cent of its scheduled flights for February month.

Stocks of ONEX Corporation closed at C$ 95.85 apiece on Tuesday, January 18, and jumped by nearly 33 per cent in the last 12 months.

Financial ONEX Corporation (TSX: ONEX) and Air Canada (TSX: AC)

 Image source: © 2022 Kalkine Media®      

2.    Air Canada (TSX: AC)

The C$ 8-billion market cap company almost tripled its operating revenues of C$ 2.10 billion in Q3 FY2021, as compared to C$ 757 million a year ago.

The airline stock, on the other hand, closed at C$ 22.98 apiece on Tuesday, returning a one-month gain of over 14 per cent.

Air Canada, however, is said to have cancelled 15 per cent of its flights set for March 2022 and 11 per cent of flights scheduled for February flights in the wake of the fast-spreading omicron variant.

Also read: Enbridge (TSX:ENB) & Vermilion (TSX:VET): 2 oil & gas stocks to watch

Bottomline

Many airline companies at the present moment are struggling with operational hiccups due to inconsistent demand for air travel and rising lockdown regulations amid emerging COVID-19 mutations.

Investors with long-term investment goals, however, can keep a close eye on airline stocks as eventual improvement in the pandemic scenario can see the aviation industry take a turn for the better.

However, considering the present COVID-19 situation, investor should ideally do proper research and consider the risk factor before investing in airline stocks.

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