Air Canada (TSX:AC) is one of the pandemic reopening plays that investors are keeping an eye on right now. The volume of this major Canadian airline is beginning to rise. As Justin Trudeau’s administration is steadily moving towards easing travel restrictions that have dented the airline industry significantly, Air Canada shares seems to be a compelling investment opportunity.
If tourism in Canada grows as sharply as it has in the United States, there’s no telling how far this stock might go. Air Canada continues to trade at half of its all-time high before the pandemic.
A quantum leap to all-time highs may not be as improbable as many investors believe. Air Canada’s outlook has distinctly improved in recent months.
Without a doubt, last year was a mess for the airline. Due to cancelled flights, Air Canada was losing $14 million a day. In absolute terms, this was lower than other US competitors. Relatively though, Air Canada has been under a lot of strain.
After receiving $5.9 billion in bailout money, Air Canada shares now have more liquidity. Cash flow may return to pre-pandemic levels when flights resume.
People now believe that the state of affairs for Air Canada is far better than it has ever been since the beginning of the Coronavirus pandemic. A renewed demand for travel domestically will result in capacity returning to 2019 levels.
Canada is rapidly nearing its 70% herd immunity vaccination goal for full border reopening. And with that happening, Air Canada shares will go off like a rocket. Therefore, now may be a good time to buy this stock.
In a nutshell, there is always risk involved with Air Canada shares. Jet fuel costs aren’t on the lower side because of the high oil prices. Moreover, until now, no one had been able to predict two elements that are crucial to this stock’s future: the time when the border would re-open, and the pace of the vaccination campaign.
That said, when travelers flock to the skies in unprecedented numbers, Air Canada shares should soar. This stock should be on every investor’s radar right now.