Air Canada T.AC

AC a value based opportunity

[Rouge10]

Leverage Ratio and FCF

LR will be <0.8 in 5 weeks from now with net debt ~$3.0B; equal to about 5 weeks of revenue. With target LR=1.5, AC can free upto $2.75B of capital for investments or return to shareholders. In my opinion AC will produce sufficient FCF in 2025,26 and 27 even after funding capex with cash. Also AC can decide to lease more planes than buy because of high ownership rate and free up more cash if need be.

All above can be achieved even with EBITDA of $4.-$4.5B, which is not too high than 2023/24 numbers (@ capacity lower than even 2019 with population higher than 2019 and international foot print stronger than 2019).

 
Return capital to shareholders.

With this much cash AC will initiate buy backs soon (post pilot contract). Lower share price will only help cheaper/more buy backs leading to higher EPS. Increasing EPS with lower stock price will only make the opportunity richer. Higher stock price is inevitable. Shorts need to be careful. CFO has already mentioned that conditions for return to shareholders are already met. Check out his next investment talk on June 5^th.


US Airlines.

United airlines have a huge capital program (much higher than AC) in coming years. They won’t see LR<2.5 for few years. Even with high EPS, their FCF numbers will not be as high.

DAL on the other hand is going to see more stable returns. They have more outstanding shares than United. Even DAL will have LR >2.5 for some time restricting their cash use.

No doubt DAL and UAL are good investments, AC is a bigger opportunity. AAL is a debt mismanagement mess (LR>4.5 even with capacity equal to 2019).

[Rob8043]

This post has been removed in accordance with Community Policy

[Jackie2001]

More dellusional comments from Cornholio.

[JuIieRichards]

Please Please. let's be more civil when we address our board troll. After all he is fragile and locked up in an institution. Robieeeeee... Seor Cornholio, please tell us more about the Lynx deal to Cancun. What is the secret access code to these deals. Do share. You talked about it via one of your other five account handles. People in your neighbourhood without Aeroplan are waiting. Don

[JuIieRichards]

Pardon me, Seor Cornholio.. Robbiiiiiieeee

[JuIieRichards]

Pardon me again Senor Cornholio, the Stockhouse software keeps pointing to a Se_w_er and keeps deleting the letter 'n' and systematically wants to insert the _w_ Sheesh!

[TradeForex]

Thank you Rouge10

[TradeForex]

Great write up by Rouge10 AC a value based opportunity Leverage Ratio and FCF LR will be All above can be achieved even with EBITDA of $4.-$4.5B, which is not too high than 2023/24 numbers (@ capacity lower than even 2019 with population higher than 2019 and international foot print stronger than 2019).   Return capital to shareholders

[StuffMyBunghole]

The likes and views are killing the roBOT. The daily diaper dribble continues.

[Nordico]

Excellent analysis Rouge. Perfectly details why i was spurred to start my large position a few months ago, and have been increasing it in recent days. AC is hella undervalued and will be forced up.