The number of professional traders shorting Air Canada’s stock has more than doubled as the carrier’s finances and reputation continue to erode.
With operational costs rising and seat bookings falling, the percentage of Air Canada stock that has a short position against it has risen to 19%, more than double the 7.4% rate a year ago.
A short position, also known as a “put option,” is a bet that a stock will decline within a certain period of time.
Short interest in Air Canada stock is now at its highest level since 2021 when pandemic travel restrictions were costing the airline hundreds of millions of dollars.
The increased short bets against Air Canada stock come as the airline faces a host of problems.
Data shows the Canadian economy is slowing and the airline faces contentious negotiations with its pilots’ union that could lead to higher pay.
At the same time, Air Canada’s share of the domestic airline sector has shrunk to 48% from 54% in 2019 and its finances have deteriorated.
In this year’s first quarter, Air Canada reported a loss of $81 million, equivalent to $0.22 per share. The loss was nearly three times larger than analysts’ consensus forecast. A year earlier, the carrier reported a profit of $4 million.
Air Canada also consistently ranks last in surveys related to customer service and reputation.
In May of this year, a poll by J.D. Power ranked Air Canada last among North American airlines when it comes to customer satisfaction.
The stock of Air Canada has declined 29% over the last 12 months and currently trades at $17.80 per share. The share price is down 57% through five years.
