Canada’s most dominant airline might be in dire straits next year with COVID-19 cases surging again. Air Canada (TSX: AC) didn’t take off in 2021 and is down 7.14% from a year ago. The hard luck growth stock might plummet soon if the country returns to lockdowns due to Omicron.
However, a company that was once embroiled in a scandal is doing much better than Air Canada. SNC-Lavalin Group (TSX:SNC) is attracting investors’ attention lately. The fast-rising industrial stock outperforms Air Canada and the TSX (+22.44%) with its 44.58% year-to-date gain.
Business disruption
Weather, not just Omicron, is the enemy of Air Canada and other airlines right now. Published reports say the proportion of cancelled flights between December 22, 2021, and December 26, 2021, was significantly higher compared with the early days of the month. According to Air Canada, it cancelled 4% (171) of its scheduled flights during the period.
The $7.63 billion airline company said it has crews to operate schedules, and have not been impacted as some other carriers have been by COVID-19. However, several Canadian airlines said some travelers cancelled their holiday plans because of rising COVID cases.
A company spokesman said, “Air Canada continues to evaluate and adjust its route network as required in response to the trajectory of the pandemic, government-imposed travel restrictions and quarantines, and regulatory requirements.” However, the airline announced that it is suspending services from Toronto to Bermuda effective January 9, 2022.
The resumption of service is unknown, although Air Canada will contact affected customers and offer options, including refunds for eligible customers and alternative routings where available. Meanwhile, effective December 21, 2021, all travelers returning to Canada (trips of 72 hours or less) from the United States or other international locations must take a PCR test in a country other than Canada before their scheduled departure.
Nuclear space
SNC-Lavalin, a $5.5 billion fully integrated professional services and project management company, has a bright business outlook ahead. On December 20, 2021, the company announced a joint-venture (JV) partnership with Westinghouse Government Services and Fluor Federal Services.
Its Atkins Nuclear Secured Holdings Corporation has been awarded a 14-month extension to continue operating two depleted uranium hexafluoride (DUF6) conversion facilities. One is the U.S. Department of Energy’s (DOE) Paducah Gaseous Diffusion Plant in Kentucky. The other is the Portsmouth Gaseous Diffusion Plant in Ohio.
Ian L. Edwards, president and CEO of SNC-Lavalin, said, “The nuclear space is one of SNC-Lavalin’s core businesses.” He sees an opportunity in the U.S. to drive growth within the sector. It should also expand the company’s market position in nuclear waste management.
In Q3 2021, SNC-Lavalin reported a 1.55% revenue growth versus Q3 2021. Its net income, however, was $600.6 million compared to the $85 million net loss. According to management, the financial performance thus far in 2021 positions the company to execute its “Pivoting to Growth Strategy.”
Contrasting outlooks
Rough times could be ahead for Air Canada if COVID cases due to Omicron rise to alarming levels. SNC-Lavalin’s controversy is now in the past, and the stock’s upward momentum should continue in 2022.
