The airline industry remains among the hardest hit sectors of the economy following a tremendously tragic in volatile set of events related to the Coronavirus pandemic. Government mandated border closures an lockdown/social distancing measures have decimated a sector that has been prone to macroeconomic sensitivity in the past and is likely to remain volatile for some time as investors sort out the mess in the coming quarters.
That said, Canada’s largest airline Air Canada (TSX:AC) remains a top pick of mine in this sector due to a number of key factors. On a comparative basis, Air Canada’s balance sheet and liquidity/solvency metrics look better than most of its peers, allowing for some breathing room for fundamental value investors to consider owning a stock in such a ravished sector.
A gradual opening up of international borders which has begun will provide positive catalysts for investors over the near term and could spark investor interest in these risk assets.
With this in mind, now may be the time to consider Air Canada’s equity and bond offerings, particularly if government stimulus arrives for the sector soon. Air Canada’s bonds offer a very attractive yield relative to most government or corporate bonds, and the company’s stock is attractively priced for a sharp rebound should economic activity ramp up quickly.
Of course, headwinds such as pronounced second wave could derail this momentum, however keeping these assets on one’s watch list right now certainly seems prudent.
Invest wisely, my friends.