RE:CIBC - Q1 PreviewCan you imagine what this preview would have looked like if AC had taken over TRZ back in 2019?
Remember that mess. With the 737 MAX debacle I addressed in an earlier comment, lemonade was made that lemon. WithTRZ, that company was running out of cash and was about to fail. Air Canada offered to rescue them for $520 million on June 27 ($13 per share) and within 2 months they whined it up to $720 million ($18 per share). AC was supposed to rescue all of their staff, take over all their aircraft leases, take over all debt and all pension obligations.
I don't know if AC backed out from wisdom and from the bad memories of taking over another bankrupt "Canadian Airlines" or was it simply they realized they should not be taking another bankrupt airlines into a pandemic situation where they would have to pay all these people for years to do nothing. TRZ is still hanging by a thread and is overpriced at $3.39 per share. That is called dodging a bullet.
Would we be hearing that AC is not thrown off its plan if fuel prices rise? because they have new fuel efficient airplanes with more capacity than the old airplanes that other airlines are flying with. Bookings are fine. New routings like BKK are flourishing and SIN flights are full. Indonesia is the fastest growing economy in the world. Both are adding frequencies in the fall. Japan has reawakened. Australia is just fine with SYD and BNE. Folks can connect to MEL with codeshare on Virgin Australia. Korea never really slowed down. Demand for India is so strong that customers just find new routes through 3 hubs in the middle east and through Brisbane. And what have we learned about doing business with China? You wonder why AC needs 18 more planes? The analists worry that the pilots may go on strike. Look, the pilots (and the other unions) signed10 year contracts to let the management get AC's house in order. They did. Now it is time to pay up to labour. I hope and believe there is enough respect by both parties for the work done over the last 12 years that none of them want to ruin what has been created. Americans seem ready to ride on AC rather than ride in fleets of mostly old airplanes. And the 737`s have them spooked.
Watch out for those FCF numbers and Have a happy witching Day.