The past few months have been a wild ride for Air Canada (TSX:AC) shareholders. After peaking at $52 in January, the stock went on a rapid decline that was greatly exacerbated by the COVID-19 pandemic. In a period marked by dramatic upswings and downswings, the stock has been a long-term loser, trading for just $18.40 as of this writing.
Some investors are eager to buy AC ahead of its turnaround to lock in dramatic gains like those realized after the company’s 2009 bailout. But with the company’s long-term results uncertain, the bears are winning out over the bulls.
This Thursday, investors will get an opportunity to see how Air Canada is faring so far this year. On that day, the company will be holding its annual shareholders’ meeting. The first major event by Air Canada following its disastrous Q1 earnings, it could shed light on the company’s performance year to date and provide hints as to what’s happening in Q2.
What to expect from the meeting
According to Air Canada’s press release announcing its annual meeting, the meeting will be largely about making key decisions for the year. Those include electing board members, setting executive compensation and appointing auditors. Shareholders will be able to attend online using a company-provided link, which can be accessed from the aforementioned press release.
In and of itself, this agenda isn’t that interesting. Electing board members and setting executive compensation is pretty routine, and only large institutional investors can really influence the outcomes. What could be valuable about the meeting, though, is the information it reveals.
Annual meetings usually include a question-and-answer session where investors get the opportunity to grill board members on the company’s performance. The information that comes out in the meeting, therefore, could be very telling.
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According to Air Canada’s recent press release, investors will have the opportunity to ask management questions. All registered investors will be able to ask questions while guests will only be able to observe. Investors will likely be asking about the company’s year-to-date and second-quarter performance. So, we could get clues on pivotal matters, including the following:
- The magnitude of the company’s Q2 loss;
- Whether or not the economic re-opening is bringing back passenger volume;
- Whether the company plans more dilutive financing;
- And more.
Of course, none of the information on any of this is final until Air Canada releases Q2 earnings. But the general tone of management’s comments could reveal a lot about how things are going to go.
2020 has been and will continue to be a brutal year for Air Canada. The company has already said it will take three full years to get back to 2019 revenue levels, and its Q1 earnings seem to corroborate that. To hold this stock not expecting short-term losses would be the height of naïveté.
However, it is possible that AC could have long-term upside. In a best-case scenario, where the company turns things around this year, the stock could begin to climb. The information that comes out on Thursday will shed light on whether that’s possible. If you’re an AC shareholder, definitely mark this one on your calendar.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Andrew Button has no position in any of the stocks mentioned.