Starsearcher80 wrote: Air Canada, in normal times, is a very profitable company. In 2019, EBITDA was $3.636 billion. It's not uncommon for companies to carry debt, so that is not an issue, provided profitability continues.
But these are not normal times right now obviously. With no profitability due to Covid, cash on hand, or available cash, or the ability to raise cash, becomes everything to a company. To that end, as you note, Air Canada has $8billion in available cash, which is excellent under the circumstances, and which makes it amongst the most well-capitalized airlines in the world. Where most airlines are on absolute life-support, or already bankrupt, Air Canada has the capacity to survive this pandemic far better than most.
As Covid abates through vaccinations, or natural herd immunity, or a combination of both, Air Canada will return to normal operations, or whatever the "new normal" will be. There remains debate whether this will happen quickly, or ultimately take years to fully return. Business travel will be interesting. While zoom works, and worked prior to the pandemic, it can't replace in person contact. Personally, I think leisure will re-inflate first and fastest, with Business reinflating at a slower pace. Air travel is projected to rise dramatically in the coming years, so how much all this percolates down into what the "new normal" is, is anyone's guess.
But what we do know now, is that the world is on the precepice of ending the pandemic, and with that, there is every potential for AC stock to move up quickly. Cash in the bank, the youngest and most fuel efficient fleet, and strong management capable of navigating this current storm with both style and grace. Profitability will return, and sooner than some may think. A few months from now, the current share price will be looked back on as an incredible bargain. And it is. ;)
WestCoast78 wrote: I do have a few questions: AC has to roughly 8b in cash. Roughly 10b of debt. From everything I can tell, business travel accounted for 65-70% of profits. I'm curious, how will the debt servicing happening?
time will tell I guess. Good luck all.
WeedTheNorth wrote: AC or any airline doesn't deserve a bailout. Airlines aren't needed at present in a large way and there is certainly no need to make current shareholders the shareholders after the pandemic. Let it go bankrupt and see who owns it in a year and a half when travel actually begins again. Shareholders holding airline stocks are fools, its the bondholders who will own it in the end.
Starsearcher80 wrote: Globe says Air Canada has high hopes for Jan. bailout 05:02 The Globe and Mail reports in its Friday edition that the federal Liberals lured Michael Sabia to the Finance Department on expectations the former corporate boss could build bridges between the worlds of politics and business during a nation-defining pandemic. The Globe's Andrew Willis writes that Mr. Sabia's engineering skills now face their first test, to hammer out a support package for Canada's airlines. Given the current chasm between the government and the airlines, it will have to be a big bridge. In early November, then-transport-minister Marc Garneau raised expectations on all sides. He promised ticket refunds and preservation of regional flights, which are priorities for many voters. On Monday, Mr. Garneau moved on, and former Liberal backbencher Omar Alghabra is now in the hot seat as Transport Minister -- and there is still no package. Enter Mr. Sabia, who stepped in as deputy minister in late December. While the Transport Department ultimately owns the file, responsibility for negotiating an agreement falls to Finance mandarins. Several industry sources, who confess to being eternal optimists, predict the new Transport Minister may have something to announce before parliament reconvenes on Jan. 25.