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There may be some turbulence yet for Air Canada (Air Canada Stock Quote, Charts, News, Analysts, Financials TSX:AC) but the potential for business to spike with the return of air travellers is a huge positive for potential shareholders. So says portfolio manager Ross Healy, who nonetheless said it could be a while yet for the stock to rebound. Air Canada shares were down significantly on Monday as the market took a beating across the board. Airlines in particular have been hit hard of late, with the US Global Jets ETF dropping about 15 per cent in the past week alone. For AC, it’s been a steady loss of altitude since early last year as hopes have drifted off on the idea that there’s be a quick end to the COVID pandemic and an ensuing opening up of the flood/airport gates to all that pent-up travel demand. Last month, the International Air Transport Association (IATA) said the recovery in passenger traffic was happening faster than it had previously assumed, with a return to pre-pandemic levels likely by 2023 as opposed to a year later by previous estimates. "We're seeing very strong bookings,” said IATA Director General Willie Walsh to Reuters in May. “Certainly all the airline CEOs that I'm talking to are seeing not just good demand for year-end travel but they continue to see demand as they looked through the year.” For Air Canada, it would be a welcome result for a company that was humming along superbly before 2020 hit. And now two years of strife later, Healy says the company’s balance sheet is still not too bad. “Assuming there's a strong bounce in travel, which by all accounts there is, then Air Canada is in a very strong and sound position operationally, having gone through the COVID wars, to say the least,” said Healy, chairman of Strategic Analysis Corp, who spoke on BNN Bloomberg on Monday. “The shareholder equity has been wiped out, that’s true and that's a bit of a negative, but a return to positive earnings will start rebuilding that equity base, and, actually, they don't need much cash right now as they're sitting on a pile of it, so any argument that an equity raise is needed, I think, is a bit a bit early now,” he said. Air Canada tripled its quarterly revenue with its first quarter 2022 numbers, delivered in April, hitting $2.57 billion in revenue compared to $729 million for the Q1 2021. That went along with a first quarter 2022 loss of $2.72 per share compared with a loss of $3.90 per share a year earlier. Analysts had on average estimated a loss of $1.49 per share. Management reiterated its call that seat capacity for the full 2022 year would turn out to be three-quarters what it was for 2019, with its workforce upgrades showing that optimism. Air Canada reported 27,300 full time equivalent employees by the end of the first quarter, which compared to just 16,100 a year earlier. "The year began with weakness brought on by the Omicron variant and travel restrictions. However, we quickly rebounded in March with passenger volumes exceeding the strong December levels and passenger ticket sales in March 2022 over 90 per cent of March 2019 levels, a leading indicator to much stronger 2022 second and third quarter results,” said President and CEO Michael Rousseau in a press release. But along with the unknown factor of when airplanes will get back in the air at full capacity, airlines are now having to contend with higher fuel costs brought on by the rise in the price of oil, and that represents a big headwind for Air Canada, according to Healy. “The problem is air fares react slowly to fuel costs. When you've got persistent and rising fuel costs the majority of summer bookings were booked either in the winter or the spring, you're going to get a really strong headwind until you can pass those costs along,” Healy said. “So, there's a ton of pent up demand and with US -testing requirements falling away, the surge will only intensify. Frankly, the only missing piece is travel to the Pacific region, which is still very restrictive. And Air Canada isn't likely to get back to their pre-pandemic traffic levels until those countries open up,” he said. Currently, Air Canada’s share price is down about ten per cent year-to-date, while over the past 12 months the stock is down 33 per cent. “But profitability is closer than some might think. Because of the huge cost rationalization that they've gone through their labor force has been right-sized, their planes have been modernized for fuel efficiency and they doubled down on automation to trim overhead costs,” Healy said. “So, bottom line, nothing is sure this year, the stock isn't cheap in terms of price to book as the balance sheet rebuilds, but the shares may be cheap on a P/E basis and on a bounce back basis. I would rate the shares as being on the positive side of speculative,” he said.