Airline stock Air Canada (TSE:AC) hasn’t been in the best of shape lately, especially after its earnings report didn’t exactly bowl anyone over. However, the latest word might be a step toward turning that around, and investors were willing to give Air Canada the benefit of the doubt, sending shares up fractionally in Friday morning’s trading session. The move features Air Canada offering up a host of new flights out of the Canadian capital city, Ottawa.
Thanks to the new expansion, there will be roughly 60% more flights throughout the nation. Year-round service will go from Ottawa to Calgary and Winnipeg, and both Halifax and Quebec City are getting more flights. Even Vancouver is getting in on the action, with widebody service now connecting the two cities.
Moreover, Air Canada’s partner in the U.S., United Airlines (NASDAQ:UAL), is adding some Canadian connections between Ottawa and Chicago and Washington’s Dulles Airport in the wintertime. Ottawa Tourism hailed the move as a major advance, noting that “…the confidence that Air Canada has in our destination…” was welcome and will hopefully be rewarding to travelers.
Overreaching Regulators?
Meanwhile, some commentators are concerned about the level of regulation in the Canadian air travel business. Certainly, some amount of regulation is welcome. We all know about the troubles Boeing (NYSE:BA) has had of late and how regulation is helping to ameliorate these and make air travel safer in the process. But regulation, like anything else, can go too far. That’s why some commentators are noting that “…deciding who is going to compete and how isn’t real competition.” And this, for the most part, is true; a free market runs best, and beyond matters of safety, regulators should stay back.
Is Air Canada a Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Air Canada stock based on nine Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 15.59% loss in its share price over the past year, the average Air Canada price target of C$30.96 per share implies 65.24% upside potential.
