Air Canada shaken up on the stock market

Air Canada shaken up on the stock market

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The tour operator saw its share lose 6%

Posted yesterday at 7:00 a.m.

Richard Dufour

Richard Dufour
The Press

Air Canada spent the day under pressure Thursday on the Toronto Stock Exchange, the day after the announcement of a 15% reduction in its flight schedules for the next two months.

The Montreal carrier’s stock fell 6% of its value on Thursday to close at $16.04 in Toronto following the highest trading volume recorded in the stock since the publication of the beginning of the fiscal year performance of the company, on April 26, which had then been considered disappointing.

Investors pushed Air Canada’s stock down to its lowest level in 52 weeks on the stock market. The stock had hit a low of $9.00 at the start of the pandemic, in March 2020, when the carrier was forced to ground planes due to the health crisis.

Air Canada announced Wednesday evening a reduction in its schedule of a total of 154 flights on average per day in July and August.

Essentially, the frequency of cross-border and domestic flights is reduced. The changes do not affect international flights.

Investors can expect volatility to continue in the near term, given current operational challenges, recession fears and high fuel prices.

Chris Murray of ATB Capital Markets said Air Canada’s announcement adds further uncertainty around near-term performance and how long it will take to see a return to normal operations.

At TD, Tim James calls Air Canada’s decision prudent. “Management wants to improve the punctuality of its flights and minimize the need for unexpected adjustments. Although the situation is worrying, he believes that it is the right thing to do to eventually rebuild the confidence of travellers.

Uncontrollable elements are disrupting the resumption of activities, underlines Konark Gupta, of Scotia.

The key factor behind this decision to cancel flights is not the lack of personnel at Air Canada, but rather the shortage of employees at the airports, particularly customs officers and those responsible for security.

Konark Gupta, analyst at Scotiabank

RBC analyst Walter Spracklin said Air Canada’s announced flight cuts were negative, but said the challenges are industry-wide.

Challenges in Europe

In Europe, the carrier Lufthansa stressed in a message sent to its customers on Tuesday that with the start of summer in the northern hemisphere and the lifting of almost all travel restrictions, all aviation players in the world almost daily reach the limits of currently available resources.

“And the ramp-up of the complex air traffic system, which has grown from almost zero to almost 90% today, is clearly not happening with the reliability, robustness and punctuality that we would like to offer you again” , is it mentioned.

Lufthansa adds in its note that many collaborators and resources are still lacking among its partners and within its ranks.

Almost all companies in our sector are currently recruiting and several thousand new hires are planned in Europe alone. But it will be necessary to wait until next winter for the deployment of these capacities to take effect and stabilize.

The German carrier Lufthansa, in a note

The management specifies that to this is added the persistent war in Ukraine, which “severely” limits the usable airspace in Europe, causing considerable congestion in the sky and therefore many delays.

In the summer of 2023, air traffic will have regained all its stability, predicts the German carrier.

At Transat, the head of public affairs, Andréan Gagné, indicates that management is staying the course. “Air Transat has not received any requests for flight reductions at this stage and does not anticipate any cancellations at this time. »

The action of Transat nevertheless lost nearly 4% of its value on Thursday, to close at $3.58 in Toronto.

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