Business & Investment

Air Canada (TSX: AC) Inventory: 2 weeks until review date

Just two weeks from tomorrow Air Canada (TSX: AC) We will release a quarterly report that can change everything. Quarterly and full-year earnings announcements reveal the magnitude of the company’s losses in the fourth quarter and 2020, as well as the forecast for 2021. All this information is very important to investors. And it can determine if AC stocks have a place to go in the first quarter of this year.

Background

AC was a major victim of the COVID-19 market crash. In March, most stocks plummeted as the size of the pandemic became apparent. However, AC fell even further than most stocks, down 74%.

In November, AC stocks began a spectacular rise, rising 84% from bottom to top. Since then, it has given up much of its benefits.

According to the company reveals February 12, AC can resume its rise or return to its March and April locations. Now let’s see what information the company reveals.

February 12: Examination date

On February 12, Air Canada will release its fourth quarter and full year reports.

  • Standard financial information such as revenue, net income, cash flow, assets / liabilities
  • Operational data such as passenger level and number of routes in operation
  • Forecast for the first quarter and full year of 2021

Perhaps the most important is the last item on the list. Management earnings forecasts tend to influence analysts’ estimates, which in turn affect stock prices. If Air Canada forecasts another billions of dollars in losses in 2021, AC’s share price will probably fall. The AC’s November rally began with the announcement of the vaccine.

If it turns out that the deployment of the vaccine does not immediately improve the company’s situation, its inventory may begin to decline again. It may drop to the level of March 2020.

What management expects

For the fourth quarter, Air Canada’s management forecasts:

  • 75% reduction in overall capacity
  • 100 freight flights per day – to make up for passenger flight losses
  • From $ 1.1 billion $ 1.3 billion cash burn
  • Termination of CEWS payments received by the company

None of these numbers are good on their own. However, some of them are better than what we saw in mid-2020. For example, a 75% reduction in capacity is better than most of last year when flights were reduced by 88% to 90%. It will also be interesting to see how much revenue AC can generate with additional freight flights. In most cases it does not make up for the loss of passenger flights, but it can fill some of the gaps.

Stupid takeaway

In 2020, Air Canada TSXThe biggest loser of. Stocks were really disappointed, down 74% from top to bottom, about 55% annually. Two weeks from tomorrow, we’ll have a solid indicator of whether it will continue in 2021. When you make money, you know if Air Canada’s business is improving. So far, there have been both good and bad signs. Personally, I don’t expect much.

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Stupid contributor Andrew Button There are no positions in any of the listed stocks.

Air Canada (TSX: AC) Inventory: 2 weeks until review date

https://www.fool.ca/2021/01/28/air-canada-tsxac-stock-2-weeks-until-judgment-day/ Air Canada (TSX: AC) Inventory: 2 weeks until review date

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