How were air canada earnings today and how do you view going forward. The shares have had a nice pop this morning. They have announced a " substantial issuer bid of $500M to be completed by end of June......What does that mean and how will it affect the share price....should holders hold on in light of this news?
thx
EPS was -45c, beating estimates of -54c; revenue of $5.19B missed estimates of $5.28B. EBITDA of $387M beat estimates by 23%. Cash flow was $1.5B. Considering the economy, we would consider the results 'OK' overall. AC lowered its outlook due to a slower economy and lower travel to the US, but the outlook was still better than what analysts expected. It bought back 15M shares in the quarter. The details of the substantial bid are not out yet, but in such cases a company commits to buying back a set amount of shares (here $500M worth) all at once, as opposed to over one year like a normal course issuer bid. The company will set a price range, and will buy back all shares up to $500M at the lowest price of that range that allows it to do so. Investors can set their own price to tender, or submit to the 'clearing' price and take what everyone else gets. This process usually takes a month or so (AC hopes to complete by June 30). Generally, we do not like tendering to such deals. The company sees their shares as undervalued, and is willing to bet half a billion dollars on its viewpoint. In these bids the number of shares of course declines, and thus per-share leverage to good earnings increases. Until details are out, we would HOLD.