Air Canada (TSX:AC) Stock: 1 of the Best Canadian Stocks to Buy Now?

Air Canada’s stock price is ready to take off in 2021, with an easing of COVID-19 restrictions making it one of the best Canadian stocks to buy.

| More on:
Aircraft wing plane

Image source: Getty Images

Air Canada’s (TSX:AC) stock price has had a disastrous 2020. The COVID-19 pandemic all but ended Air Canada’s rise. It brought massive disruption to this once high-flying stock and massive uncertainty. But 2021 is shaping up to be a far better year. Have we finally come full circle? Is Air Canada stock one of the best Canadian stocks to buy now?

Air Canada stock: Range-bound but ready to take off

Air Canada reported its first-quarter results last week. The quarter was quite brutal once again. Revenue declined 80% and capacity and traffic plummeted. But all of this was pretty much expected. We know the state of things. And the market has priced much of this into Air Canada stock.

Air Canada stock price covid-19

The stock market is forward-looking. It really does not care all that much about the past. It’s concerned with the future. Air Canada’s stock price has stabilized in 2021. It seems to have brushed off its disastrous 2020. And it seems to be in a waiting pattern — waiting for news about an easing of COVID-19 restrictions and a return to some kind of normal.

In the meantime, Air Canada isn’t just sitting back. The airliner is making progress on different fronts. The goals are to be better positioned when things return and to take the business to another level.

From cargo flights to cost cutting to ambitious ESG targets

Air Canada is positioning itself for the future. For example, all cargo flights are increasingly in demand. Over 2,000 cargo flights took flight in the last quarter alone. Air Canada is building this program in order to better serve this market in the future.

Also, Air Canada is getting ambitious with its aim to reduce its impact on the environment. In fact, the airliner has plans for net zero emissions by 2050. Now, whether you believe this is achievable or not, this is a big goal. It’s something that Air Canada has not really discussed much — ever. To this end, Air Canada is building a better fleet. The Airbus 220 provides optimal aerodynamic performance and efficiency. In fact, it burns 25% less fuel per seat. It has half the noise footprint and decreased emissions. Low operating costs are the cherry on top.

Finally, reduced costs and cash burn are hallmarks of Air Canada’s improvements. This last year has been brutal. But we can at least say that Air Canada has used this time to make improvements. The airliner is planning for a better, leaner future. Cash burn in the quarter was $14 million per day. This was lower than expected. And it was a big improvement over prior quarters when cash burn was over $20 million per day.

Motley Fool: The bottom line

The tone on Air Canada’s Q1 conference call was better than it has been since the COVID-19 pandemic hit. Management seems optimistic that vaccines will start to make a difference — and soon. In fact, hopes for the return of domestic travel this summer are high. As the macro environment improves, Air Canada is positioning itself to come back as a leaner airliner with a better environmental record. This makes it one of the best Canadian stocks to buy now.

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 Karen Thomas has no position in any of the stocks mentioned.

More on Coronavirus

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

1 Growth Stock Down 15.8% to Buy Right Now

A growth stock is well-positioned to resume its upward momentum in 2024 following its strong financial results and business momentum.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Stocks for Beginners

3 Things About Couche-Tard Stock Every Smart Investor Knows

Couche-tard stock (TSX:ATD) may be up 30% this year, but look at the leadership and history of the stock to…

Read more »

Plane on runway, aircraft
Coronavirus

Can Air Canada Double in 5 Years? Here’s What it Would Take

Air Canada (TSX:AC) stock has gone nowhere since 2020. Can this change?

Read more »

Senior housing
Stocks for Beginners

Home Improvement Stocks Are Set to Fall (When They Do, Buy These Like Crazy!)

Home improvement stocks are due to drop further in the coming months. But with solid underpinnings for the sector, it…

Read more »

An airplane on a runway
Coronavirus

Forget Boeing: Buy This Magnificent Airline Stock Instead

Boeing (NYSE:BA) stock is looking risky right now, but Air Canada (TSX:AC) stock? Much less so.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

Goeasy Stock: Buy, Sell, or Hold?

When it comes to smart buys, goeasy stock (TSX:GSY) is up there as one of the smartest money can buy.…

Read more »

Woman has an idea
Stocks for Beginners

Here’s Why Magna International Is a No-Brainer Value Stock

Magna stock (TSX:MG) has been climbing back once more, but still offers huge value for long-term minded investors.

Read more »

Aircraft wing plane
Coronavirus

1 TSX Stock Down 60% That Could Bounce Back Stronger

Air Canada (TSX:AC) stock got severely beaten down in the March 2020 COVID crash. Here's why it's probably not going…

Read more »