Canadian airlines have been ranked last for on-time arrivals among North American carriers. This ranking has raised concerns among investors, particularly American investors who are advised to avoid Canadian airline stocks. WestJet, a privately owned company, performed the worst among large North American airlines, with 29% of scheduled flights arriving more than 15 minutes late. Air Canada came second-last, with 28% of flights experiencing delays.
Investors have shown skepticism towards Air Canada, as its stock has declined by over 8% in 2023 and nearly 40% over the past five years. Morningstar.ca reported that Air Canada’s profitability is lower compared to its competitors due to its inability to control costs. This observation suggests that investors may want to avoid airline stocks on both sides of the border.
Bank of Nova Scotia also faced challenges as its shares dropped by more than 4% after announcing significant bad loan provisions in its Q4 earnings. The bank increased its provision for credit losses by 138% to 1.26 billion Canadian dollars. The concern lies in the upcoming quarters, as higher interest rates and mortgage renewals may impact the housing sector and potentially affect the banks’ growth.
CI Financial, one of Canada’s largest asset managers, has experienced a decline in its stock value. Revenues for Q3 2023 fell by 20.6% compared to the previous quarter, and adjusted income decreased by 2.4%. The company’s CEO, Kurt MacAlpine, aims to resume mergers and acquisitions but faces challenges due to the company’s debt levels.
In conclusion, Canadian airline stocks, along with certain stocks from other industries, have raised concerns among investors. The on-time performance of Canadian airlines, coupled with challenges faced by companies such as Air Canada, Bank of Nova Scotia, and CI Financial, have led investors to consider alternative investment options.
