Air Canada (TSX: T.AC.A, Stock Forum) today reported Q3 2008 operating income of $112 million, compared to record-setting operating income of $351 million in the same period last year. The Canadian airline suffered a net income loss of $132 million for the quarter, compared to net income of $273 million last year. An increase in fuel prices was a big factor for the company, which paid 49% ($1.1 billion) more this year than last year.
On the Air Canada Bullboard, Stockhouse investor rainman19 offered up some thoughts on October 22 about where the “true” price of oil lies and wondered whether or not his or her money manager would “see some value” in Air Canada stock. The post below from rainman19 has been edited for clarity:
It doesn't take much of an economist to figure out that oil prices of US $147 wreak havoc with airline profits. I've argued for quite some time now that world oil was being held there by the work of "fear mongerers, manipulators and speculators." Now that some of those groups have been brought back to earth by the efficiency of our markets some common sense has returned to the market place. In a nutshell, world oil has always settled at an inflation adjusted price. In recent years, ahead of the technology debacle, this price was about US $17.50. After the technology debacle, the US let the purchase value of its dollar fall by about 50%. (This alone should have lifted oil prices to about US $35). The US dollar was then let slide further by about another 25% which should have pushed oil to about US $52. Why did oil go to US $147.50? Now that oil has returned to earth we can start looking at investments in a more sensible way. I shifted some money from bonds to stocks. Perhaps my money manager will see some value here. JMHO