That’s BIG news for an airline. Pretty much everything is working against them in this economy: fuel costs, environmentalism, security costs, lower tourism, etc.
But, Air Canada managed to make $277 million this quarter.
Unfortunately, $295 million of that was due to the appreciation of the Canadian dollar versus foreign currencies, mostly the USD because jets and oil are sold in American dollars. Taking that into account it was an operating loss of around $18 million.
Oh well, Air Canada. I’d say “better luck next time”, but currency speculation has a pretty big luck element already. Maybe make your business more efficient, how about that?
Next quarter is going to be a monster for them because of the Olympics. They probably only book revenues once planned trips have actually occurred (if you buy a Christmas vacation ticket in June that shouldn’t show up in their financials until January). If I was an investor I’d be looking to see if I could pick the stock up cheaply (and probably soon) and then sell them at the end of the first quarter of next year when they report their take from the Olympics.
WestJet might be a better play because they’re traditionally a more efficient, smaller company. Olympic travel will probably be a disproportionate component of revenues and as a discount carrier specializing in Western Canada they might book a disproportionate share of traffic. Their efficiency on some flights will increase — more bums in seats — possibly to an extent that will affect company-wide numbers, which is less likely with AC because of its size.
As always, first I’d read their financial statements and run some simple quantz to make sure the companies aren’t on the verge of implosion and the expected Olympics revenues aren’t already included in prices. Remember though: Wall Street is about day trading. They don’t like holding positions over the weekend, let alone over two whole quarters.
Tags: Business