Quote:
Originally Posted by mykalberta
(1) Q2 2009, they will cancel the money losing Airmiles contract and start their own FFQ plan - lilely the only stumbling block still left to attract long time AC employees - that should result in 1-1.75 conservatively in stock price jumps.
(2) After investors get past the one time charges and look at the buisness fundamentals (all revenue/profit is made by them and them alone, they arent currently reliant on any code shares). they should easily hit their high before today and get back up to 16$.
(3) With the new carribean routes, WJ Vacations will liekly show a sharp rise in profits from year from now, that will likely result in a $1 - $1.25 increase (investors love products that could be spun off in the future as individual vehicles for growth)
(4) The code sharing is coming - already they exclusively use BA to Europe, Asia, SA, Africa and Quantas to Australia. Eventually investors will take that as a sign of a limited OW partnership as soon as they can get the reservation issue worked out. OW alliance is the natural progression for a carrier in Canada. They are based at all the important markets from Canada, Star is simply second fiddle for carriers based in Canada.
That takes you to about 19$ not counting the normal increases in buisnes growth forecasted at a conservative 10%.
Arilines at the best of times are risky, but in Canada with only one competitor that has its own problems its as safe as you get.
I think if they were a little more ballsy they could get that to 22.50 if they were to properly exploit the new travel 4th Freedom arrangements in the US and attack some of the wounded Elephants in the US but they havent been ballsy in the past so I doubt it would happen now. Although it would give them a great platform to grow 2nd teir buisness markets which is another reason I believe the stock price is depressed.
MYK
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All fairly good points. I'm not much of an airline investor, largely because higher fuel prices can take a huge dent out of profits at any time, especially when your investment time horizon is longer than most. I agree with the sentiment that one-time issues are difficult for investors to figure out (although they shouldn't be), however when a company has a reputation for always having 'one time' charges every quarter it really takes one's faith out of normalized earnings (not speaking about West Jet in particular but rather the airline business in general).