He’s never been much for airline stocks, but portfolio manager Michael Sprung of Sprung Investment Management, says if he did own Air Canada (TSX:AC) he would be selling it now.
On Tuesday, Sprung appeared on BNN’s Market Call and fielded a phone call asking his opinion of Canada’s largest airline. While acknowledghig that Air Canada has had a good run, the portfolio manager said he would be careful going forward.
“I have always been wary of airline stocks” Sprung said. “When I look at (their) business models, you are dealing with extremely expensive aircraft, largely unionized employees, and a very, very competitive environment for price setting. Yes they benefit when fuel prices are low and that is a good chunk of their cost base, but I think there are a lot of other things to look at. To me the airlines have had a good run over the last while.”
So what is Sprung’s conclusion?
“I don’t own them, but if I did I would be taking profits,” he said.
Sprung’s opinion runs contrary to the street consensus. According to data from the Wall Street Journal, ten analysts currently have a “Buy” rating on the stock and one has an “Overweight” rating, while five analysts say the stock is a “Hold” and just one says sell.
At press time, shares of Air Canada on the TSX were up 0.2 per cent to $23.59.