# Air Canada



## pnky (Jul 16, 2012)

Fell like crazy again yesterday, recovering a bit today. Any idea why this stock is taking such a beating ?


----------



## CPA Candidate (Dec 15, 2013)

Same general reasons WJA is falling - the market thinks that nobody is going to fly because the economy is bad and that there is too much capacity and competition. At one time low fuel prices were good for the airlines, now they are bad. There is also a worry that fuel prices will rise and hurt margins. So basically, the market is worrying about opposite sides of the coin at the same time.

I know half a dozen people jetting off to Mexico just this month. I feel like I fly the least of the people I know and I've taken 8 flights in the last 3 months. I think airline travel is in a long term secular growth phase. Younger people like to travel more than their parents.

It will take a while for the sentiment to pass, but there is huge value in the airlines.


----------



## besmartrich (Jan 11, 2015)

CPA Candidate said:


> Same general reasons WJA is falling - the market thinks that nobody is going to fly because the economy is bad and that there is too much capacity and competition. At one time low fuel prices were good for the airlines, now they are bad. There is also a worry that fuel prices will rise and hurt margins. So basically, the market is worrying about opposite sides of the coin at the same time.
> 
> I know half a dozen people jetting off to Mexico just this month. I feel like I fly the least of the people I know and I've taken 8 flights in the last 3 months. I think airline travel is in a long term secular growth phase. Younger people like to travel more than their parents.
> 
> It will take a while for the sentiment to pass, but there is huge value in the airlines.


Well said!


----------



## Pluto (Sep 12, 2013)

Airlines are not an investment. At best they are a trade, and you have to be very nimble. Ever hear of Buffett buying an airline? Nope. That's because they are not an investment.


----------



## jargey3000 (Jan 25, 2011)

any connection between the drop in share price(s) and the Zika virus??


----------



## tygrus (Mar 13, 2012)

Just dollar conversion is the reason, but that should have been offset by nice low fuel prices. Airlines better be hedging hard.


----------



## rav1 (Dec 14, 2015)

Pluto said:


> Airlines are not an investment. At best they are a trade, and you have to be very nimble. Ever hear of Buffett buying an airline? Nope. That's because they are not an investment.


You may want to take a look at Berkshire Hathway returns for the past year as well BRK-B ....owned by Buffett. Just coz Buffett says airline are trade by best doesn't mean that's always going to hold true. Look at Alaska Air ...for past 5 year returns. Definitely value there.


----------



## atrp2biz (Sep 22, 2010)

tygrus said:


> Just dollar conversion is the reason, but that should have been offset by nice low fuel prices. Airlines better be hedging hard.


USD/CAD has definitely hurt the airlines. However, WJA (not sure about AC) generally doesn't hedge its fuel exposure--at least as of 12/31/15, WJA did not have any hedges in place (see bottom of page 12).

I generally don't like airlines, but if I had to pick, it would be either WJA or LUV.


----------



## thepitchedlink (Feb 17, 2014)

doubled down today


----------



## CPA Candidate (Dec 15, 2013)

Pluto said:


> Airlines are not an investment. At best they are a trade, and you have to be very nimble. Ever hear of Buffett buying an airline? Nope. That's because they are not an investment.


Buffet has owned airlines before. Munger even served on US Air Board of Directors.

If all they are is a trade, wouldn't buying them at book value be a good time? I mean, if you sold off all the planes and everything else, each shareholder would get the current share price back in cash. The market is basically valuing the future cash generating ability of the company at zero. It doesn't make sense.

WJA's January load factor actually increased year over year. Usually if these were decreases, the market sold the stock. Now when they are increasing.....the market sells the stock.


----------



## NewBrunswick (Nov 30, 2015)

Nice little jump yesterday, not sure the cause.


----------



## Ethan (Aug 8, 2010)

Pluto said:


> Airlines are not an investment. At best they are a trade, and you have to be very nimble. *Ever hear of Buffett buying an airline? Nope.* That's because they are not an investment.


How about the time he invested $358 million in US Air?


----------



## CPA Candidate (Dec 15, 2013)

I love that AC's CEO told short-term investors to buzz off (which is basically the same message to analysts). More CEOs need to start doing this.


----------

