Spring results for North American AirlinesThis bulletin board has a focus on share price. Sage stock advice is to focus on what the assets are doing.
The biggest asset of the airlines are the airplanes. How airlines are using their airplane assets is divided into 2 camps. Locost airlines like the ones going bankrupt and economy cabin focus airlines like Southwest and American are not making money. Those like Delta and United are focused on business and international travel passengers who are willing to pay for the premium seats and services. They are making money or would have if there were not supply chain problems getting deliveries of new airplances in the case of United. Note that Air Canada is an airline focused on filling the forward cabins and premium seats as its top priority and then providing service to that demographic. Most of their fleet are almost new airplanes. The fleet is renewed. Take a look at Delta and United's share price after Q1 earnings vs AAL and LUV.
Business and premium traffic is up on both of those airlines. Also Loyalty program returns were noted to be up 12% Delta.
Air Canada's Loyalty membership has risen 25% to 33% to 8 million users since last year. They will never tell us about that and how much it increases the cash flow so watch the cash. This does not show up as earnings. Also there is a lot more upgrade availability on AC these days. That may mean more points that will be converted into cash.
Cash is a balance sheet item so on top of this increase, even though this is a trough year for airplane deliveries, it may be an even lower drain on cash if airplane deliveries are delayed. Watch for this to be addressed on Thursday.
Cargo Jet just announced that demand for air freight has just taken a jump again. I believe AC is up to 8 or 9 freighters and some may be underutilized. We should look for what Air Canada's Cargo segment is doing to react to this opportunity.
I am out there flying around somewhere just about every month so I keep an eye on flight availability and operational performance vigilantly. For those who are not out there here is the scoop...FLIGHTS ARE FULL...at least most of those that are in the air for more than 4 hours per flight leg. By that I mean they are 90 to 95 percent full. Remember most of these airplanes and the ones coming in the future will add 10% to ASM without increasing the number of flight legs because they have 10% more seats than their predecessors.
It AC shares do not climb after Q1 earning, it will be one of 3 things. It will have to be an extreme reversal of financial performance and I cannot see that happening with this team and the ball is all ready rolling. I repeat, flights are full especially in the front. Another is that the TSX and the mob that controls share prices on it are completely corrupt. Companies that procuce earnings at a P/E of 3.5 and have $10 billiion in cash should not be at the current price but triple that price. That is just corrupt. And finally, AC is stlll one of the most shorted stocks on the TSX. Thursday's report should give folks perspective that the shorts are blowing smoke and using your own shares to keep the price down. And to me that is corrupt.