Written by Adam Othman at The Motley Fool Canada
The delivery of vaccines has grown significantly in 2021, and a large part of the population is now vaccinated. While he should have put the pandemic in the rearview mirror, the Variants aren’t going to let that happen. The new Delta variant is sweeping the world and Canada enters the fourth wave of the pandemic. The number of new cases is increasing and fears buried earlier this year are starting to emerge.
A new wave, while not powerful enough to destabilize the market, would certainly be bad for business – at least some businesses, including air travel, which may make matters worse for already struggling. Air Canada (TSX: AC).
Air Canada shares
from Air Canada market valuation appears to have a different “level” for each year of recovery. The post-pandemic valuation level was $ 15 and the assumed cap was $ 20 per share. For 2021, it’s dropped to $ 25, as the valuation level moves, and the new roof is $ 30 per share. Currently, the company is trading at $ 25 per share (breakeven), and the chances of it going down (as the number of cases increases) are higher than the share going above $ 30.
If losses are relatively mitigated and cash consumption is a significant decline from the previous quarter, the following quarter’s results could give the business the boost it needs to gain ground in growth. By then, investors might get used to seeing the stock relatively flat.
The future of the airline
Air Canada’s resilience is not in question. The company survived for some time before the government stepped in and offered financial assistance, and it will survive Wave Four, perhaps without suffering any artificial losses. He’s laser-focused on his organic recovery and has taken drastic measures to stop the spread of vaccines through air travel.
All Air Canada employees must disclose whether or not they have been vaccinated, and those who have not been vaccinated without valid medical reason could face serious official consequences. This is likely to put travelers at ease, as employees of an airline are more at risk than passengers, as they are exposed to multiple batches of passengers in a day.
Air Canada is also resuming flights to Munich, an important step in the growth of transatlantic traffic. Cargo, the airline’s new focus, is gaining even more attention. It accounted for about 43% of last quarter’s revenue, and the airline may look for ways to grow it even further and leverage its extensive network to carve out a bigger niche in the North American cargo industry.
If you still believe Air Canada will reach its pre-pandemic (and soon) highs, you might consider purchasing this once-most coveted product. growth stocks for 100% growth. And while this recovery is almost inevitable, the timeline is not. The airline could hit $ 50 a share by next summer, or it could languish below $ 40 for all of 2022.
Air Canada’s one-year story of stagnation (TSX: AC) first appeared on The Motley Fool Canada.
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.