Air Canada stock rides upward draft this summer

Discussion in 'Air Canada | Aeroplan' started by guinnessxyz, Sep 11, 2013.  |  Print Topic

  1. http://www.theglobeandmail.com/repo...is-summer/article14237947/#dashboard/follows/
    Air Canada benefits from its leadership position as the only Canadian airline covering Europe, Latin America and key Asian destinations in addition to North America. This gives the airline exposure to many lucrative business travel markets, said Cormark Securities analyst David Newman.
    Building on that advantage, the airline is expected to save millions in interest costs from its plan to refinance $1.1-billion in debt, and secure further savings through other cost-cutting measures, Mr. Newman said.
    Some of those measures include using new aircraft with more seats to lower costs per passenger.
     
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  2. Canadi>n
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    Canadi>n Gold Member

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    True, AC has risen from about $1 to the $3+ range. When it was trading pre-bankruptcy, AC shares ranged between $8 and $20 before plunging to nothingness. IIRC ACE went public at $10 a share. ACE then dumped its Tech/Maintenance division, spun off AC, AE and JAZZ. Not sure what ACE ended up dissolving itself at and distributing to its shareholders, I sold my shares off after getting AE and JAZZ shares. (And pre-bankruptcy took up AC's offer to buy back its shares at $16 each having bought them at $8 when the company first went public.)

    So today, AE (AIMIA) closed at $16.30, Jazz (Chorus) at $2.50 and AC at $3.30. That's $22.10 which is higher than AC ever traded for in its original incarnation. It was also argued at the time by Robert Milton that AC's parts were worth more separately than as a single company. I guess he was right, though it appears that it's the FF program (well AE/AIMIA) that's valued most by The Market, and even the much smaller Jazz/Chorus is within range of the much larger "parent"? (JAZZ pays a monthly dividend while AC has never, in either incarnation, paid a dividend.)
     
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  3. The parts are always worth more than the whole enchilada. Also in getting rid of the maintenance bases they saved lots of costs and perpetual losses.
     
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  4. slalom

    slalom Silver Member

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    .....the tech maintenance division that AC spun off - Aveos - shuttered its doors and put all its employees out on the street in bankruptcy last year.
     
  5. AC tried to shutter it some years back but the unions wouldn't let it happen so spinning it off finally proved this was a bad business for them to be in.
     
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  6. Stephan

    Stephan Silver Member

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    I guess one needs to ask whether or not AC shares trading at anywhere from $8 -$20 back in the day, reflected a realistic valuation at the time. I suspect many would argue that today's prices were/are more realistic and I guess any good news is good news if you own that stock.
     
  7. The shares when issued were overpriced as is the norm with new issues. they have issued more shares in the interim and are just now tracking towards sustainable profits. they have righted the ship and cut the hell out of their cost regime and continue to do so while putting more seats in their planes,etc. Their business model is sound even if the less than SE fliers whine about it. And their planes remain full.
     
  8. tomh009
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    tomh009 Gold Member

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    A company, any company, is unlikely to keep ALL its customers happy. The key to success is figuring out which ones really matter for the company's long-term health.
     
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  9. That should be the mast head on TOBB:D
     
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  10. Stephan

    Stephan Silver Member

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    I guess given the further unannounced devaluations today - which even some SE's here may find annoying, it seems that AC has decided that the only ones it really wants to appeal to now, are the once a year Ma and Pa Kettle holiday flyers on Tango fares.
     
  11. I continue to be happy with the program as an SE and 2MM who will fly over 175K miles this year. The more people who cannot get upgrades( read won't pay the appropriate fare) the easier it will be for me. I fly on passes in NA and to Europe and always in Z to Asia. Airlines are for profit businesses not a benefit program. You should have seen this coming if you follow the industry closely.

    I also believe that even SE's will eventually have to pay more for upgrades and other "privileges/benefits" . AC offers me good service and convenience which is what I look for in all aspects of my business life.

    Would I like to pay less and get more for it? Of course. But I would also like to pay less for gasoline, food, clothes or for my car also. Life is not quite like that
     
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  12. I also like it when people who don't even fly make absurd comments while AC continues to surge ahead with growth and many more BIS which is what it is all about if you are in the airline business.
    25

    "More importantly where is that small cadre of SEs crowing about what a great improvement this is and how "it sucks to be you" to everyone else?"

    I say it sucks to be someone who is beyond irrational
     
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  13. Wow, the whiners are out in full force on TOBB. Its a business people and the airline is supposed to make money and not be a lottery for better seats. Pay up or fly in the back.
    Their share price will now start to reflect some better value for investors.
     
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  14. tomh009
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    tomh009 Gold Member

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    If you're talking about the fare classes changing to Tango, it's on the front page of AC's web site. Not exactly unannounced.
     
  15. http://www.theglobeandmail.com/glob...an-it-fly/article14785611/#dashboard/follows/

    There is still plenty of room for Air Canada to improve on its already stellar rally, Mr. Malik said. “Equity holders could be in a position to earn some really good returns.”

    For years, Air Canada’s stock was beaten down by high operating costs, high costs of capital, debt, low returns and a pension funding shortfall that swelled to $4-billion.

    Since management was replaced in 2009 and Calin Rovinescu was installed as CEO, the company has undergone a makeover, slashing its pension liability with the help of a federal government lifeline, cutting costs – partly through labour concessions – and deleveraging.
     
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  16. 2by4

    2by4 Silver Member

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    The change in payment procedures did not reduce the
    The changes to the labour agreements and the changes to the bank rate have done that..
     

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