Here’s a scary 10-year forecast for Air Canada stock (TSX: AC)


Air Canada Management at (TSX: AC), while commenting on its first quarter results, said the company believes it will be able to reach pre-pandemic levels in about three years. Until then, the airline will continue to fly at a fraction of its full capacity. And while it sounds very realistic, it should be taken with a grain of salt as it comes straight from the source.Other estimates from US airlines and aircraft manufacturers also seem reaffirm this timeline. US airlines have stopped bleeding as profusely as before, but they are still not optimistic about the imminent resumption of regular flight operations.

Air Canada’s dark future

Air Canada has filled much of its scarce supplies, consolidated and limited operations to minimum levels – all to prepare for a bleak and cold future of low traffic and declining travel demand. But how long can the business really last?

While travel continues to be limited, the majority of Air Canada leisure travelers will stay away from travel for a very long time and international travel will remain limited. Thus, Air Canada may not reach pre-pandemic levels for a decade.

While the outlook may seem overly pessimistic, if there is a consensus among airlines and associated companies, it is that international travel will continue to suffer much longer than domestic travel.

This is where Air Canada is weak – and has dropped a few more stops since cutting 30 of its regional routes. The company is already focusing more on international travel than on domestic flights. If he continues to alienate local travelers like this, by driving them to other airlines, it could weaken his local position even further.

Another factor that can play a vital role in deciding Air Canada’s future is whether the company will need government assistance.

If this is the case, and government assistance comes with some constraints, the company may not be able to achieve a robust valuation or growth rate. As it did a few years before the pandemic, it may be a decade before the business is on a sufficiently solid footing.

Current stock status

The stock is currently trading for $ 16.33. The stock is continuously decreasing. It is currently 30% below its monthly high, which also turned out to be the highest point in the stock’s valuation since the March crash.

The stock could be in even more trouble as more thefts with potential causes have been identified. Out of 27 identified flights, 11 were from Air Canada. It includes international and domestic flights.

This is understandable given that the virus is not yet extinct and air transport is still one of the most powerful vectors of transmission, regardless of the security measures taken.

Take away idea

There is still a ray of hope. If a vaccine is developed and distributed and begins to show promising results by changing new cases and mortality trends, it could fight fears that people have flights and air travel.

And while that may not magically strengthen Air Canada’s position, it will start to push the company in the right direction.

Silly contributor Adam Othman has no position in any of the stocks mentioned.


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