It’s not easy to take off once more!
While Transat needs financial assistance from the Canada Business Emergency Financing Corporation (CFUEC) to survive, Air Canada continues to post heavy half-yearly losses.
This is what explains why the securities of our two air carriers are very depressed these days.
At $17.85 a share, Air Canada is down a steep 66% from its pre-COVID-19 pandemic high. On January 13, 2020, the title of Air Canada had reached $52.71. And two months later, following the paralysis of air transport, the title was only a shadow of itself.
During this time, the title of Transat AT was literally going to collapse. From $16.14, the action of the Quebec aircraft manufacturer is worth only $3.20. In 80% freefall.
The federal agency CFUEC has agreed to pay a loan of $150 million to Transat. This financial assistance to Transat aims to protect the company’s jobs, while allowing it to continue its activities.
Now, which of the two carriers has the best prospects for a stock market recovery?
According to the financial analysts who follow the two titles, Air Canada wins the prize!
- Listen to Olivier Bourque’s economic editorial broadcast live every day at 7:20 a.m. at QUB radio :
AIR CANADA
Of the 16 analysts who cover Air Canada, 13 of them recommend its purchase, including 4 with the mention “strong recommendation”. The 3 other analysts recommend keeping the title.
Analysts do not seem in any way discouraged to see Air Canada continue to present heavy financial losses over the semesters.
During the 1is half of this year, the loss amounted to $ 1.36 billion.
The good news ? This is still $1 billion less than in the corresponding half of 2021, when the loss reached $2.47 billion. Scarred by the catastrophic impact of COVID-19 on air transport, the first half of 2020 ended with a $2.8 billion hole.
Morningstar’s research service estimates the “fair value” of Air Canada’s stock at $26.27, or $8.67 more than the current price.
- Listen to Sylvain Larocque’s business segment broadcast live every day at 4 p.m. 20 via QUB radio :
TRANSAT AT
For Transat, it’s a whole different story. One, there are barely five analysts who follow Transat’s financial results. This shows little interest in the Quebec carrier.
Worse still, out of the five analysts, four of them expect the stock price to be lower than the current level. And the remaining analyst opts to keep the title, nothing more.
Regarding Transat AT, Morningstar nevertheless assigns it a “fair value” of $6.01, or $2.85 more than the current stock price.
CHAOS
There is no doubt that the recent airport chaos with its delays and cancellations will have a negative impact on the next half-year results of air carriers.
Air Canada alone was forced to cancel 8% of its scheduled flights last July and August. This represents a reduction of approximately 154 flights per day, on average.
