Trying to determine which Canadian airline will soar higher over the long-term is a difficult task; for years, up and comer WestJet Airlines Ltd. (TSX:WJA) has been the investment of choice for growth-oriented investors looking for a company with less perceived risk than incumbent sector leader Air Canada (TSX:AC), a company which always seems to be on the brink of bankruptcy every decade or two.
That being said, over the past 10 years, Air Canada has outperformed nearly every other stock on the TSX, soaring to new heights as investors continued to be wowed by higher and higher earnings supported by robust domestic and international travel to and from Canada.
Additionally, Air Canada has done an excellent job of finding new ways to price its flights more aggressively, prompting WestJet to respond with its announced discount airline Swoop, which is set to take flight soon.
The major selling point of WestJet over Air Canada from an investment perspective has, for a long time, been the ability of WestJet’s management team to maintain a non-unionized environment. With the airline’s pilots recently voting to form a union, followed by strike threats (which appear to be quashed), Air Canada continues to look like the better long-term play for investors betting on which airline will be able to swallow up market share and profitability at a time when profitability appears to be on the incline in the Canadian airline industry.
At this point in time, I remain firm in my belief that Air Canada will continue to outperform WestJet.
Invest wisely, my friends.
