Air Canada Stock (TSX:AC): Should You Boycott it After the Bonus Scandal?

Air Canada’s stock price continues to soar higher, despite the bonus scandal that has caused uproar. What should investors do?

| More on:
Airport and plane

Image source: Getty Images

Air Canada (TSX:AC) has been quickly becoming one of the best post-pandemic buys. The airliner has suffered tremendously since the pandemic hit. But after many quarters of major losses and burning through obscene amounts of cash, there is hope in the air: hope of a sustained recovery for Air Canada’s stock price and for a return to normal.

This is why the news that came out last week was so disheartening. Air Canada executives pocketed millions of dollars in bonuses and received bailout money from the government. It’s a sad state of affairs. Should we boycott Air Canada stock in response?

Air Canada stock: The best post-pandemic stock to buy?

Air Canada stock has already rallied big in 2021. In fact, it’s up almost 20% this year. Furthermore, it’s up 125% from its 2020 lows. So, what does this mean? What does this say about Air Canada stock’s future?

Air Canada stock price

As one of the hardest-hit stocks since the pandemic started, Air Canada stock is presumably one of the best stocks to buy for a post-pandemic recovery. In fact, I really do think that it is one of the best comeback stocks of the year.

The tone on Air Canada’s Q1 conference call was better than it has been since the 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 will ride the boom every step of the way. As COVID-19 fears subside, travel will return, as consumers spend their big savings balances.

Bonus payments at Air Canada: A sign of bad corporate governance?

Moral responsibility is simply the responsibility to do the right thing. Today, investors as a whole are increasingly holding companies accountable. We want them to do the right thing.

Air Canada paying out millions of dollars in executive bonuses while asking the government for financial aid is clearly wrong. Doing so while laying off a big portion of staff is also a questionable practice. While these executives have “volunteered” to pay the money back, the question still lingers: is this just a reaction to being called out on the bonus payments? What else would they do that clearly puts their self-interest above all else?

It’s a complex question and there are no easy answers. All I know is that this doesn’t leave a good taste in my mouth. It makes me wonder if Air Canada’s motivations are as aligned with its shareholders’ as they should be.

Motley Fool: The bottom line

Air Canada stock continues to ride the wave of post-pandemic bliss. As lockdowns end and economies open up, people will begin to travel again. While the travel levels may not reach pre-pandemic levels, there’s a lot of room for Air Canada’s stock price to go higher yet. My conclusion regarding the company’s bonus payments is that I give them credit for doing the right thing in the end. It does not interfere with the recovery that is underway. But it does remind us that we have to monitor companies in order to ensure they are acting in line with shareholders’ interests.

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 companies mentioned.

More on Investing

money cash dividends
Stocks for Beginners

Where to Invest $10,000 in April 2024

If you've already created a diversified portfolio and are looking for more options from a windfall, here is where I…

Read more »

data analyze research
Investing

The Ultimate TSX Stock to Buy With $1,000 Right Now

Brookfield Asset Management (TSX:BAM) is one of the best Canadian stocks to buy for those looking to put capital to…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »