Posted at 7:00 am
Air Canada spent the day under pressure on the Toronto Stock Exchange on Thursday, the day after announcing a 15 percent cut to its flight schedules for the next two months.
Shares of the Montreal airline fell 6% of its value on Thursday, closing at $16.04 in Toronto after the highest trading volume in the stock since the company published its start of fiscal performance on April 26 was perceived as disappointing.
Investors pushed Air Canada’s stock to its lowest level in the stock market in 52 weeks. The stock had hit a low of $9.00 at the start of the pandemic in March 2020, when the airline was forced to ground planes due to the health crisis.
Air Canada on Wednesday evening announced a reduction in its flight schedule from a total of 154 flights on average per day in July and August.
Essentially, the frequency of cross-border and domestic flights will be reduced. The changes do not affect international flights.
Investors can expect continued short-term volatility given current operational challenges, recession fears and high fuel prices.
ATB Capital Markets’ Chris Murray said Air Canada’s announcement adds further uncertainties around near-term performance and how long it will take to see a return to normal operations.
At TD, Tim James describes Air Canada’s decision as prudent. “Management wants to improve the punctuality of its flights and minimize the need for unexpected adjustments. Although the situation is worrying, he believes that eventually rebuilding traveler confidence is the right thing to do.
Uncontrollable elements are disrupting the resumption of activity, Scotia resident Konark Gupta points out.
The reason for this decision to cancel flights is not the lack of staff at Air Canada, but the lack of staff at airports, especially customs officials and security officers.
Konark Gupta, an analyst at Scotiabank
RBC analyst Walter Spracklin said Air Canada’s announced flight cuts were negative, but the challenges were industry-wide.
challenges in Europe
In Europe, the airline Lufthansa stressed in a note to its customers on Tuesday that with the start of summer in the northern hemisphere and the lifting of almost all travel restrictions, all aviation players in the world are almost daily reaching the limits of the resources currently available.
“And the ramp-up of the complex air transport system, which has grown from almost zero to almost 90% today, is clearly not taking place with the reliability, robustness and punctuality that we would like to offer you again,” it says.
Lufthansa adds in its note that its partners and its ranks still lack many employees and resources.
Almost all companies in our industry are currently hiring, and several thousand new hires are planned in Europe alone. However, until the use of these capacities takes effect and stabilizes, it will have to wait until next winter.
The German airline Lufthansa in a statement
According to the management, there is also the ongoing war in Ukraine, which “severely” restricts the usable airspace in Europe, leading to considerable traffic jams in the sky and thus to many delays.
The German airline predicts that air traffic will have regained all of its stability by the summer of 2023.
At Transat, head of public affairs Andréan Gagné points out that management is staying the course. “Air Transat has not received any requests to reduce flights at this time and does not currently expect any cancellations. »
Still, Transat’s stock lost almost 4% of its value on Thursday, closing at $3.58 in Toronto.