Time to sell Air Canada, says portfolio manager Michael Sprung

He’s never been much for airline stocks, but portfolio manager Michael Sprung of Sprung Investment Management, says if he did own Air Canada (Air Canada Stock Quote, Chart, News: 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.