Air Canada stock prices

[AC_A340-500]

I'm not sure if I posted this in the right category, but here goes anyhow:

Air Canada stock prices have have had an average price of about $6 Canadian Dollars over the past 2 years. Currently the are around $3 dollars. I suppose a large part of the low price is the general downturn of the stock market and fears of a pending war but I would think that the losses that AC had recently have something to do with it as well.

Does anyone think that now is a good time to invest in AC or other airlines for that matter? Especially in light of the rough situation that UA and AA find themselves in? Is it conceivable that AC may not be around in a few years? Or are they in a position that would ensure their existence in the future, even though they've been in the red as of late?

Just curious.

[iceman]

Here are some things to keep in mind:

Bad:
1. They have a huge debt and I’ve heard rumors that much of it is due as early as the summer. Doesn’t help that they are experiencing massive losses right now.

2. They don’t have as much market share as they used to; it recently went down to 70% from 80%. Competition is increasing steadily with WestJet and Jetsgo.

3. They are heavily integrated within the Star Alliance and there’s a good chance that UAL might collapse. This would seriously hurt AC.

4. Many of their routes are hurting very badly; in particular, the US and some of their international ones. Also, I question the idea of introducing a flight to BEY at this time.

5. Ties into the above point, but the airline industry in general is hurting bad and it looks like it will stay this way for the foreseeable future. Traffic growth has been close to as good as many analysts have predicted. This is the case the US and Canada.

6. AC is absolutely getting reamed on their routes in the West, particularly in Alberta, which is the wealthiest and fastest growing province in Canada. Westjet has that region locked up.

7. Much higher cost structure than any of its competitors.

8. Still a lot of labor strife between ex-CP and AC staff.

9. Ridiculous labor rules promising no lay-offs (not that I agree with that practice) to FA’s.

10. Morale is generally low at this time.

Good:

1. They are improving their cost structure by introducing Tango, which is very popular.

2. They are supposedly setting up an all-cargo division and cargo is doing better right now than pax. Very Smart move, in my opinion.

3. They have a good FF program with excellent loyalty. Can’t say the same for WestJet or the others. The FF program will retain a lot of passengers.

4. Vast improvements with business class service (about fucking time!).

5. Good route structure.

6. YYZ is an excellent location for a hub and airport improvements will only increase its potential. There’s even talk of making it into a major Star hub in the future.

7. Love them or hate them, AC’s Airbus fleet has saved them tremendous amounts of money in training and retraining because of cockpit commonality. Any method of cost saving is a good thing.

These are my opinions and perhaps I’ve left out a few major factors.

I like Milton and think he’s doing his best to restructure this airline. He gets a lot of flack, but I think it’s more because he’s American than anything else. Remember though, he lives in Canada and has Canadian citizenship and has stated his loyalty to the company, Montreal and the country. Those actions say more to me than his background and birthplace, which should be meaningless.

AC was woefully mismanaged even before Milton’s arrival and he’s had a difficult job to do to get AC’s shit in order. The bad debt and obscene labor cost structure were in place even before his arrival. Not to mention the fact that it was difficult to predict the results of the CP-AC merger, which were pretty disastrous. I don’t blame him for any of those.

Overall, AC will never ever regain the market share they enjoyed the last couple of years. I think Milton realizes this and is doing the things he has control of to ensure they can reach profitability within the current and future environment. But much of what happens depends on things that AC has little to no control of. One is their debt situation and how they handle it, if they can. The potential war in the Gulf also plays a major role; AC is hurting right now because of war-jitters. Don’t also count out the effects of UAL.

But in the end, I would not advise you to buy any airline stocks right now, including AC’s. I don’t foresee any improvements in the aviation industry in the short-term. I also think that AC’s in a pretty volatile situation right now and they could go either way. Jury's out on which path they go...

[AC_A340-500]

Wow, you sure raise some interesting points! Certainly an interesing time for them. I just can't figure out whether the pending demise (heaven forbid) of UA would benefit AC. On the one hand they would lose passengers being "fed" to them by UA, but on the other hand they could pick up routes and pax no longer served by UA. But maybe I should quit talking about UA in this manner, cause they're still here and hopefully they will continue to be in the future.

AC had all-cargo before with the DC-8's. Why did they get rid of that, assuming that it was profitable? What AC would they have for cargo if they re-introduced all cargo flights?

I think part of the reason that WestJet is so popular in Alberta is the fact that (especially) Edmonton was grossly under-serviced by AC (or at least Edmontonians had this impression). This wasn't just for domestic flights, but also for flights to the USA and Europe (while Calgary had 14 AC flights a week to Europe, Edmonton had none). Add the fact that WJ is Alberta based (or at least Western Canadian), and it becomes apprent why AC isn't that popular.

Nonetheless, I hope that AC wil stabilize and be profitable again in the future.

Thanks for the interesting post!

[iceman]

I don’t recall AC ever having a separate cargo division. You could be right about it, but I’ll have to look it up. The point is, they don’t have one right now and they want to have a set up similar to what KE and CX have. KE and CX both run successful cargo joints and AC would probably do just as well with their own. They’re already building a large cargo facility at YYZ.

As for UAL, I don’t think it is wrong to assume that they will collapse. They haven’t really done what it takes to improve their financial situation and it is conceivable that they won’t be around much longer. A war in Iraq certainly won’t help them. And I can’t see its collapse helping AC in any way. My mother’s friend is a senior AC employee out of YEG. She was telling me that they’re really hoping and praying that they survive. That says enough for me.

And Westjet is successful in Alberta for many reasons. For one thing, it is an Alberta airline and there may be some regionalism involved. Speaking as someone who used to live there, Albertans harbor a great deal of mistrust towards anything from the East, and that includes institutions such as AC. You’re also right that AC has really screwed YEG in the past, but much of this is YEG’s fault for their local government being as bumbling and incompetent as they were. Furthermore, Westjet has a really good reputation. They’re like Jetblue (indeed, Neelman was among the founders of Westjet and holds a significant amount of its stock) in terms of service – low-cost, but friendly and helpful. This has helped their reputation, especially when AC’s service has been going to the shitter the last few years.

Just curious, what do you mean by a jumbo shrimp? Not the food, do you?

[AC_A340-500]

I found a picture of AC Cargo:

http://www.airliners.net/open.file/274478/M/

I'll be cool if they get back into the al cargo business. I wish they'd build a cargo hub at YEG as a sort of hub for Asian cargo. They've got enough room at YEG, and it's not that much further from the Orient than YVR if you take the polar route.

Yeah that's pretty scary that your mom's friend is so sceptical about the company's future. Let's hope they pull through.

Yeah I think Edmonton's airport consolidation came too late to help make YEG a viable competitor for YYC. Where did you live in Alberta? I lived in Edmonton for the first 26 years of my life. I moved to Germany 3 years ago, but I fly back home 2-3 times a year. You bet Albertans are sceptical of anything East. Mentioning the term "transfer payment" is likely to start a riot back home!

I'm a pretty big fan of WestJet too. Glad to see something Alberta based in the air again. Alberta has been home to a lot of airlines eh? PWA, Wardair, etc.

"Jumbo shrimp" (the food) simply strikes me as an oxy moron, in a silly kind of way. I couldn't think of anything better as a signature.

[a78jumper]

Air Canada's cargo service was in place until 1994 when they retired the last of six DC-8-73s....the main actvity was for Purolator Courier, and Canada post. (I believe he former is owned by the latter). So when Purolator decided to use another carrier (I think Kelowna Flightcraft had something to do with this) , AC shut down that part of their cargo operation that used dedicated freighters. Of course they still carry cargo in other aircraft in the fleet which included 3 X 747-433Combis, they used to have 3 747-233Combis as well which were retired in the late 90s.
________
Marijuana Vaporizers

[a78jumper]

AC stock is a joke( reflective of the company's management)-it premiered in the late 1980s in the first public offering in the mid teens. I would not touch it with a ten foot pole, unless you like taking big risks....did you buy Nortel at $127??LOL
________
Herbalaire vaporizer

[Ramp Pilot]

I made a bunch of money on AC stock last year. Bought at about $2.20CAD, and sold at about $7.50CAD. Still buying more ($60) every month, which is a great deal, considering it was worth more than $20CAD a couple years ago. It will go up eventually, I am in it for the looooong term. The only way I can really lose is if the company goes bankrupt and dissapears altogether, which I doubt will happen. The Liberals don't want 35,000 canadians from one company (based in PQ, BTW) to be out of work. Could hurt them in the next election.

[AC_A340-500]

Ramp pilot:
Yeah that's what I was kind of thinking as well. AC stocks haven't been this low before, and the chances of them disappearing all together is pretty slim, given that they have a big market share and a government that will support them if need be. So basically I was thinking that I should take advantage of the low price and wait, even if there is a slight chance that I'll loose it all. The stock price can't really go any lower unless they disappear altogether. At least that is how I'd like to see it.
Then again, there's probably a good reason that I'm not stinkin' rich yet...

[iceman]

I made a bunch of money on AC stock last year. Bought at about $2.20CAD, and sold at about $7.50CAD. Still buying more ($60) every month, which is a great deal, considering it was worth more than $20CAD a couple years ago. It will go up eventually, I am in it for the looooong term. The only way I can really lose is if the company goes bankrupt and dissapears altogether, which I doubt will happen. The Liberals don't want 35,000 canadians from one company (based in PQ, BTW) to be out of work. Could hurt them in the next election.

Liberals don't care about the next election. Chretien has already got his "legacy".

[Greg]

Shrimp has 2 meanings. One meaning is small, but the other means aquatic creature so Jumbo shrimp isn't necessarly an oxymoron. it would only be one if you were using the wrong definition. And oh yes losing AC would be very bad.

[a78jumper]

From canoe.ca News. "Air Canada shares hit a 52 week low". A little more investigation may reveal an all time low! Maybe now is time to buy?

Not for me thanks....their market share has decreased from 80% to 70% in a year, despite the launch of Tango and Zip, which are included in the parent company's results.

They also have a huge debt load, partly the result of the absorbsion of Canadian in 2000, and are going to run out of cash if passenger loads do not rebound soon. To keep going they keep selling planes to leasing companies, sell off assets( soon including Aeroplan and Jazz ). About the only thing that has gone right in the past ten years was being able to sell off their investment in Continental which was picked up for a song when CO was in dire straits in the early 90s. Even then, perhaps they wish they still had an alliance with CO, as the Star Alliance with United as a major partner has a doubtful future.
________
Brunette Pregnant

[a78jumper]

AC Stock

A bargain at less than C$1.00 all this week! Buy it quick before it is gone!
________
Milf videos

[Dash8King]

I think at the 96 cents it closed at on Friday is a good deal, seeing as how I don't think the company will ever liquidate because I believe the government would step in. If you have balls of steel than go for it and I wish you luck. I recommended to a friend awhile back who always gets me to analyze stocks for him to buy Westjet when it was at 13.85 and he wishes he had now that it is at 17, oh well you can't get them all eh.