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Air Canada shares fell sharply on Tuesday on fears that its market value would be diluted after the Canadian government took a discounted equity stake in the flagship carrier as part of a deal for C$5.9 billion ($4.7 billion) in aid.
But analysts and investors said Air Canada's decision to accept the bigger-than-expected aid package, which was announced on Monday, was the right decision for Canada's largest carrier to ride out the crippling downturn in air travel caused by the coronavirus pandemic.
The deal gives Ottawa a roughly 6 per cent stake in Canada's largest carrier at a discount of 14 per cent, which prompted several analysts to cut their price targets.