Bad news for Air Canada (TSE:AC) as the Canadian carrier was hit with fines by the U.S. government for flights it conducted to Iraq. The fines were modest, however, and shares slipped modestly in Monday morning trading.
The U.S. Department of Transportation levied a $250,000 fine against Air Canada for operating flights through “prohibited airspace” over Iraq. Specifically, Air Canada ran flights with a United Airlines (UAL) designator code over the sectors of Iraq in question. Since those areas are off limits to U.S. operators, the Department of Transportation leveled the fine against Air Canada.
Air Canada did not comment publicly on the fine.
Another Strike Coming?
Meanwhile, this will likely be a big week for Air Canada as its pilots union votes on whether or not to ratify the latest contract offer from the airline. Voting begins October 1 and runs until October 10. It will determine whether Air Canada remains operational in the near-term.
This may be the best deal the pilots get. Air Canada is reportedly turning to the government for help as it cannot afford the wages that Air Canada’s pilots are asking for. If Air Canada really is cash-poor, then the contract dispute might be referred to binding arbitration by the government.
Is Air Canada a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:AC stock based on 11 Buy and two Hold ratings assigned in the past three months, as indicated by the graphic below. After a 14.88% loss in its share price over the past year, the average TSE:AC price target of C$22.98 per share implies 41.05% upside potential.
