Business & Investment

Air Canada (TSX: AC) share price surges 5% despite disastrous financial results

Air Canada (TSX: AC) Fiscal 2020 results show how disastrous the COVID-19 pandemic was for air travel.

Air Canada Announces Hard Performance

Montreal-based airlines reported a net loss of $ 4.64 billion in 2020, or a diluted earnings per share of $ 16.47, while Air Canada reported $ 1.476 billion in 2019. That is, we posted $ 5.44 of diluted EPS.

Total revenue in 2020 was $ 5.83 billion, down 70% from $ 13.29 billion in fiscal year 2019. In addition, net liabilities as of December 31 were $ 4.97 billion, up from $ 2.13 billion on December 31, 2019.

In the fourth quarter of 2020, the company had a net loss of $ 1.16 billion, or a diluted loss per share of $ 3.91, while a net profit of $ 152 million, or dilution, in the year-ago quarter. It was $ 0.56 per share. Airlines operating revenues fell from $ 4.43 billion in the same three months of 2019, when the COVID-19 pandemic hampered air travel, to $ 827 million in the fourth quarter.

Analysts surveyed by financial data firm Refinitiv predicted that Air Canada would generate $ 858.36 million and lose $ 735.67 million, or $ 2.84 per share.

Revenues are close to what the company’s CEO called the darkest year in commercial aviation history.

Over the past year, Air Canada has had to dismiss more than 20,000 employees, or more than half of its employees, due to the crisis caused by the pandemic.

Air Canada’s passenger numbers fell 73% in 2020 after years of record growth for airlines, as the pandemic reduced the demand for air travel.

There is light at the end of the tunnel

Air Canada President and CEO Karin Rovinesk called an analyst Friday morning in recent talks with the federal government over months of unresolved bailouts. He said he was encouraged by the progress of the. All transactions include resolutions on passenger redemption, plans to return services to local markets, and financial support for the aerospace industry.

About the proposed acquisition Transat AT, Air Canada received approval from Canadian regulators on Thursday, but the transaction still needs to be approved. Air Canada claims that the transaction was scheduled to close by next Monday at the latest, but recalls that the deadline can be extended at any time by agreement of the parties and will remain in effect unless terminated by either party. I will.

Transport Minister Omar Argabra said last night that Air Canada’s offer to buy a Transat AT would increase the stability of Canada’s air transport market as the COVID-19 pandemic has a devastating impact on the industry. ..

Rovinescu, who has been Head of Air Canada since April 2009, said in a previous earnings announcement: Before retiring on February 15, he was confident in the company’s long-term future, despite pandemic issues.

“In 2021, uncertainties remain as a result of new variants of the virus and changes in travel restrictions, but new testing features and vaccine promises are encouraged and show some light at the end of the tunnel. Investors and financial markets share an optimistic long-term outlook for airlines, as evidenced by their successful significant liquidity throughout 2020, and sector-specific financial support over the past few weeks. I am also very encouraged by the constructive nature of discussing with the Canadian government about. At this stage, there is no guarantee that a final agreement will be reached on sector support, but I am optimistic for the first time in this regard. “

Investors also appear optimistic about Air Canada’s future as stock prices rose more than 5% in early Friday trading.

Despite the risks, buying part of Air Canada could bring significant profits in the near future as the company recovers from the pandemic. Air Canada is one of the cheapest companies to trade on. TSX,and Analysts are bullish on stocks..

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Air Canada (TSX: AC) share price surges 5% despite disastrous financial results Air Canada (TSX: AC) share price surges 5% despite disastrous financial results

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