Air Canada (TSE:AC) Slides as Ottawa Takes Aim at New Fees

It was bad news for Canadian airline Air Canada (TSE:AC) today as the Canadian government called it out over carry-on baggage fees. Now, Air Canada will hit Ottawa to offer testimony to a government committee panel about it, and investors already do not like where this is going. Shares slipped nearly 1.5% in Wednesday morning’s trading.

Air Canada recently announced a new pricing scheme for those who travel light and only bring one bag with them directly onto the flight. That, of course, is costing airlines money, so Air Canada started up a new carry-on baggage fee schedule that raised concerns—and at least a little outrage—in both Canada and the United States.

The CEO, Mike Rousseau, will be joining several other airline executives via a videoconference, in which it explains its motivations and answers a slate of questions about the upcoming change, which is set to start January 3. The new fee is $25 for the first piece of carry-on luggage and an extra $36 for a second. The charges will apply, notes a New York Post report, to “…carry-on luggage larger than a handbag or small backpack.”

Domestically Produced Low-Carbon Fuels

Meanwhile, Air Canada is also looking to green up its fuel supply. Back on Tuesday, notes a report from The Globe & Mail, Air Canada started fueling some of its jets with a fuel made from “canola and animal fats.” It is the first such use of “domestically produced low-carbon fuels” and represents a significant step forward in air travel fuel.

Is Air Canada a Good Stock to Buy?

Turning to Wall Street, analysts have a Strong Buy consensus rating on Air Canada stock based on 10 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 40.9% rally in its share price over the past year, the average Air Canada price target of C$26.90 per share implies 7.05% upside potential.

See more TSE:AC analyst ratings

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