RE:RBC: A positive opinion from a bear.The real fact is that for RBC's coverage of Air Canada, Walter Spracklin was replaced by James McGarragle. James couldn't do a full 180 degrees turn around on Walter's negative monologue overnight.. so he will build up the RBC narrative to justify the change in outlook. If he doesn't, RBC will be wearing egg on their face in the not so distant future. AC's business is in excellent shape, even if pilot negotiations overhang creates some uncertainty. One might conclude that AC is in even better shape now than it was in pre-covid era with the Boeing Max overhang. It's network re-crafting and long haul expansion (with US 6th Freedom clients and with US JPM Aeroplan) is way ahead of where it was pre covid. New destinations like Vietnam on the docket. China direct routes load has obviously dropped, but the good news is that the Chinese government financed low cost flyers like Hainan went out of business, so when those loads return the margins will be much improved. AC's business has definitely shifted to "premium" economy. Tempo1 wrote: Sentiment: Positive
Our take:
Air Canada announced today an agreement with BOC Aviation for the placement of eight Boeing 737-8 aircraft, a positive as it highlights in our view Air Canada's better access into securing aircraft compared to peers (both with and outside of traditional OEMs). This is important because as we flagged in our Aerospace preview published today (details here), Air Canada in our view is carrying additional cost ahead of the delivery of aircraft expected over the coming quarters. However, we believe OEM delays point to near-term margin risk as extra headcount is utilized over a smaller fleet size. We believe today's announcement highlights Air Canada's better access to aircraft (compared to Canadian peers), which we see as reducing margin risk and aiding the company's capacity recovery as well as longer-term growth initiatives.