Air Canada: BMO Reiterates $33 Price Target Following Roadshow

BMO Capital Markets hosted Air Canada (TSX: AC) EVP and CFO Amos Kazzaz as well as the director of communications Valerie Durand for a roadshow. Fadi Chamoun, their analyst, reiterated their C$33 price target and outperform rating after this meeting. He writes, “We come out of the discussions more positive as trends in bookings later in H2/21 and into early 2022 are encouraging.”

Air Canada has 18 analysts who cover the name, with a weighted 12-month price target of C$27.97, a modest ~4% upside to the current stock price. Of those 18, five analysts have strong buy ratings, eight have buy ratings and five have hold ratings. The street high comes from Raymond James with a C$35 target and the lowest sits at C$25 from Cormark.

Chamoun says there was a few key takeaways during this roadshow, the first being that the transition for re-opening will be very easy as the government has appointed an expert advisory panel to provide safety guidelines for re-opening. He adds, “We sense that restrictions will begin to ease later in June/early July.”

The second major point he took away was that the executives mentioned bookings were gradually improving for August and into the fall for trans-Atlantic routes and leisure destinations. He looks to the American airlines who have had great pent-up demand and believes that there is still upside to their estimates that there will be a 45% traffic recovery in 2020.

The last point Chamoun got out of the roadshow was that the cost-cutting initiatives put on by Air Canada have worked. The company has cut costs by C$1.7 billion, this includes having a more fuel-efficient aircraft with improved technology. He believes that this will deliver long-term benefits, especially in the leisure segment. Lower costs will allow Air Canada’s leisure segment to have better margins and “will help restore profitability to pre-pandemic levels, notwithstanding a gradual business travel recovery.”

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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