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Air Canada's (AC.B-T) stock has fallen by more than 40 percent in the last three months, as investors fret over the company's labour problems and a weakening economic recovery. But Will Randow, analyst at Citi Investment Research, is one of the few analysts that is bullish on the embattled airline.
"There's a lot of upside when you think about things like retirement of pension risk through higher long term Canadian interest rates," he tells BNN. "Each one point increase in long term Canadian rates is worth $1.3 billion in pension deficit reduction -- and they're only $2 billion negative today."
Randow believes that if higher interest rates allow the company to erase its pension deficit, it will shed a major albatross.
"Once you're in a position of zero balance I expect management to either annuitize the plan or push it off to an insurance agency to mitigate that risk," he says.
He also says Air Canada is one of the few legacy North American airline carriers that has enough assets to borrow against if the economy slips back into recession.
Randow has a 'buy' recommendation and a $3 price target.