Is the Sky Finally Clearing for Air Canada Stock?

Air Canada (TSX:AC) stock has had a tough few years after Canada’s flag carrier airline hit an all-time high before the pandemic sent it into oblivion. But recently, there has been a big increase in the share price, especially after paying off a lot of debt. But after years of working to raise its bottom line, is it time for investors to take to the skies with Air Canada stock?

The case of the bull

Air Canada stock could be a great opportunity for investors hoping to see the $50 share price once again. The pandemic has been hard on the stock, but since COVID-19, bailouts and increased travel have led to further recovery. What’s more, the company has started to expand again, hoping to bring in more clients.

Air Canada stock is not looking to miss any opportunity with pent-up demand for travel. It has a long history of business demand, with international business travel now back in full swing. However, recent efforts like Rouge have led to further growth for the company, with more affordable airlines on offer for travelers to consider.

In addition, the company has made progress in reducing costs over time. This has certainly helped in this era, where higher interest rates and inflation have led to more costs for the company, with the potential for travelers to find other airlines at lower prices.

With its strong market position, Air Canada stock maintains a competitive advantage over its peers. It continues to improve fuel efficiency, reduce emissions, and drive long-term growth for investors. In addition, the company has made a major focus on its long-term finances, with a strong balance sheet currently on offer, which provides stability and flexibility to endure. the current storm and to pursue further growth opportunities.

The bear case for Air Canada stock

Many of the same issues the company overcame remain issues today. The pandemic is, of course, one of them. The lingering effects continue to provide uncertainty about the future of air travel, with the potential for more costs to damage the airline once again, leading to further financial challenges.

Even if it only happens in the next few years, investors will still have a hard time getting back on board with Air Canada stock. What’s more, there are more options for investors to consider these days. Competitors continue to provide cheaper options, and while Air Canada stock may have a handle on business travel, it still has a long way to go in terms of low-cost air travel.

To stay competitive then, it can be expensive. Whether that means investing in the airline to provide lower fares, improving fuel efficiency, or keeping up with regulatory challenges, it can all affect a company’s operations and profits.

So, while the company received government aid programs and raised capital through equity offerings, debts remained high. It’s currently sitting at a loss of $1.7 billion, and while that’s progress, there’s clearly more to come.

Bottom line

The stock of Air Canada rose by 51% last year, with a huge increase, because it recently announced the payment of financial loans to acquire 19 Airbus planes for $ 650 million. However the features are still there HALF where they were before the March 2020 crash, and there they are years now. So, until this stock is close to paying off all its debts, I wouldn’t say it should be bought at this stage.