Air Canada (AC CN) Canada
Industrials
With its profitability restored, deleveraging substantially complete, no significant growth plans on the horizon and a low likelihood of large-scale M&A activity, AC's choices for capital allocation are increasingly leaning towards shareholder returns. Given its strong performance as of late, Veritas has been fielding questions about the dividend potential for the company. In this note, they attempt to size the airliner's capacity to fund shareholder returns across a range of scenarios. Over the near term, a robust demand environment should enable the company to generate excess cash to support shareholder distributions. However, on a three-year outlook, $4bn worth of scheduled debt maturities and $8bn of new aircraft deliveries will pose headwinds to building cash in the years ahead.
Edition: 184
- 19 April, 2024