RE:RE:CIBC Economics Not Bullish On AerospaceYou're right Club.
Last week CIBC published 2 analysis favorable to airlines:
The first about the pent-up demand: The conclusion:
''The ending line in a recent Expedia commercial is “Do you think any of us will look back on our lives and regret the things we didn’t buy or the places we didn’t go?” This sums up our positive view on the recovery we expect to see in air traffic as many of us have been couped up for two years. With the Canadian government easing travel restrictions, we finally see a path towards a sustained recovery in Canadian travel demand. In turn, we have greater confidence in AC returning to pre-pandemic earnings, generating strong FCF, and reducing its debt levels over the next three to four years. On this last point, we see AC’s share price benefitting from a shift in its EV from debt to equity. We maintain our Outperformer rating, with our price target moving from $33 to $35, primarily on lower pro forma net debt.''
The second one the impact of higher fuel price on AC: The conclusion:
'' We have tweaked our estimates for AC to reflect a higher jet fuel price in H1/22. The underlying impact is relatively muted despite all the fears the last few weeks that surging energy prices would be an unsurmountable headwind for AC and the broader airline space. With jet fuel prices retrenching from recent highs and the underlying demand environment strong, we see AC as being able to absorb this higher fuel price. We maintain our Outperformer rating and $35 price target.''