Air Canada and Transat fly low

It’s not easy to undress again!

While Transat needs financial backing from the Canada Business Emergency Financing Corporation (CFUEC) to survive, Air Canada continues to post heavy half-year losses.

For this reason, the securities of our two airlines are currently very depressed.

At $17.85 per share, Air Canada is down 66% from its pre-COVID-19 pandemic peak. On January 13, 2020, Air Canada’s stock had reached $52.71. And two months later, after air traffic came to a standstill, the title was just a shadow of itself.

During this time, the Transat AT title was in danger of literally collapsing. Starting at $16.14, the Quebec aircraft manufacturer’s promotion is only worth $3.20. In 80% free fall.

The federal agency CFUEC has agreed to pay Transat a $150 million loan. This financial support to Transat aims to protect the company’s jobs while allowing it to continue its activities.

Which of the two airlines now has the best chance of a stock market recovery?

According to the financial analysts tracking the two titles, Air Canada wins the award!

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AIR CANADA

Of the 16 analysts covering Air Canada, 13 recommend buying, including 4 with a mention of “strong recommendation”. The 3 other analysts recommend keeping the stock.

Analysts don’t seem disheartened at all by seeing Air Canada continue to post heavy financial losses throughout the semesters.

During the 1ah Half of this year, the loss amounted to 1.36 billion dollars.

The good news? That’s still $1 billion down from the corresponding half of 2021, when the loss hit $2.47 billion. The first half of 2020, marked by the catastrophic impact of COVID-19 on air travel, ended in a $2.8 billion hole.

Morningstar’s research service puts the “fair value” of Air Canada stock at $26.27, or $8.67 more than the current price.

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TRANSAT AT

For Transat it’s a completely different story. First, there are barely five analysts following Transat’s financial results. This shows little interest in the Quebec airline.

Worse, out of the five analysts, four expect the stock price to be below current levels. And the remaining analyst chooses to keep the title, nothing more.

Still, with respect to Transat AT, Morningstar assigns it a “fair value” of $6.01, which is $2.85 more than the current share price.

CHAOS

There is no doubt that the current airport chaos with its delays and cancellations will negatively affect the airlines’ next half-year results.

Air Canada alone had to cancel 8% of its scheduled flights last July and August. This corresponds to a reduction of around 154 flights per day on average.

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