Air Canada (AC) AI Stock Analysis

• Market Cap: $5.56B
• Dividend Yield: N/A
• Average Volume (3M): 2.56M
• Price to Earnings (P/E): 4.5
• Beta (1Y): 1.25
• Revenue Growth: 0.33%
• EPS Growth: -15.99%
• Country: CA
• Employees: 37,200
• Sector: Industrials
• Sector Strength: 72
• Industry: Airlines, Airports & Air Services
• EPS (TTM): 0.75
• Shares Outstanding: 296,202,850
• 10 Day Avg. Volume: 2,518,646
• 30 Day Avg. Volume: 2,556,750
• PEG Ratio: -0.20
• Price to Book (P/B): 3.34
• Price to Sales (P/S): 0.36
• P/FCF Ratio: 6.16
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $23.85
• Price Target Upside: 27.14% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 61 Neutral
• Price Target: C$20.00 ▲(6.61% Upside)

Air Canada's overall stock score reflects a strong revenue recovery and undervaluation, but is tempered by high leverage and operational challenges. The mixed earnings call sentiment and technical indicators suggest cautious optimism, with potential for growth if operational efficiencies and fleet expansions are successfully executed.

Positive Factors

Revenue Growth

The significant revenue growth indicates a strong rebound post-pandemic, suggesting effective market recovery and potential for sustained expansion.

Operational Metrics Improvement

Improved operational metrics reflect enhanced service quality and customer satisfaction, which can drive long-term loyalty and competitive advantage.

Network and Fleet Expansion

Expanding the network and upgrading the fleet positions Air Canada for future growth and efficiency, enhancing its competitive edge in the airline industry.

Negative Factors

High Leverage

High leverage poses a financial risk, potentially impacting financial stability and limiting flexibility in managing economic downturns or unexpected costs.

Cash Flow Challenges

Declining cash flow growth suggests potential liquidity issues, which could hinder the company's ability to invest in growth opportunities or manage debt effectively.

Labor Disruption Impact

Labor disruptions can significantly affect operations and financial performance, indicating potential vulnerabilities in workforce management and operational resilience.

Air Canada Business Overview & Revenue Model

Company Description

Air Canada (AC) is the flag carrier and largest airline of Canada, headquartered in Montreal, Quebec. It operates a comprehensive domestic and international network, serving over 220 destinations in more than 50 countries. The airline is a member of the Star Alliance, which enhances its global reach. Core products and services include passenger air transportation, cargo services, and various ancillary services such as in-flight entertainment, seat selection, and loyalty programs through Aeroplan.

How the Company Makes Money

Air Canada generates revenue primarily through passenger ticket sales, which account for a significant portion of its income. Additionally, the airline earns money from cargo services, providing air freight solutions for businesses. Ancillary revenues are also crucial, coming from services such as baggage fees, in-flight sales, and premium services. The Aeroplan loyalty program plays a significant role in revenue generation, as it allows customers to earn and redeem points, creating customer loyalty and additional sales through partnerships with hotels, car rental services, and other travel-related services. Strategic partnerships, including codeshare agreements with other airlines within the Star Alliance, also contribute to its earnings by expanding its market reach and providing customers with more travel options.

Air Canada Financial Statement Overview

Summary

Air Canada shows strong revenue recovery post-pandemic, but profitability and cash flow metrics indicate ongoing challenges. High leverage poses a significant risk, requiring careful management to ensure financial stability. The company needs to focus on improving operational efficiency and cash flow generation.

Income Statement

Air Canada's income statement shows a strong recovery in revenue with a TTM growth rate of 50.8%. However, profitability metrics like gross profit margin (20.44%) and net profit margin (6.60%) are moderate, reflecting industry challenges. EBIT and EBITDA margins have declined compared to previous years, indicating pressure on operational efficiency.

Balance Sheet

The balance sheet reveals high leverage with a debt-to-equity ratio of 6.60, which poses a financial risk. Return on equity is strong at 63.72%, but the equity ratio is low, indicating reliance on debt financing. This high leverage could impact financial stability if not managed carefully.

Cash Flow

Cash flow analysis shows a decline in free cash flow growth (-25.07%) and a moderate operating cash flow to net income ratio (0.29). While free cash flow to net income ratio is 0.21, indicating some cash generation, the overall cash flow position suggests potential liquidity challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.34B	22.25B	21.83B	16.56B	6.40B	5.83B
Gross Profit	7.32B	7.38B	7.51B	3.71B	-1.28B	-1.83B
EBITDA	2.67B	3.03B	4.83B	1.00B	-1.65B	-2.39B
Net Income	1.48B	1.72B	2.28B	-1.70B	-3.60B	-4.65B
Balance Sheet
Total Assets	31.15B	31.21B	30.17B	29.51B	30.61B	28.91B
Cash, Cash Equivalents and Short-Term Investments	6.36B	6.98B	8.55B	7.99B	8.97B	7.61B
Total Debt	11.79B	12.67B	13.86B	16.31B	16.52B	12.99B
Total Liabilities	29.36B	28.82B	29.38B	31.06B	30.61B	27.20B
Stockholders Equity	1.79B	2.39B	796.00M	-1.55B	9.00M	1.72B
Cash Flow
Free Cash Flow	801.00M	1.29B	2.76B	796.00M	-2.64B	-3.56B
Operating Cash Flow	3.83B	3.93B	4.32B	2.37B	-1.56B	-2.35B
Investing Cash Flow	-881.00M	-1.36B	-1.83B	-2.50B	-1.87B	-733.00M
Financing Cash Flow	-2.64B	-2.87B	-2.37B	-1.61B	4.01B	4.70B

Air Canada Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.76
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:AC, the sentiment is Positive. The current price of 18.76 is above the 20-day moving average (MA) of 18.28, above the 50-day MA of 18.58, and above the 200-day MA of 18.09, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 57.49 is Neutral, neither overbought nor oversold. The STOCH value of 73.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:AC.

Air Canada Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAE	76 Outperform	$12.31B	29.60	8.73%	―	8.04%	―
MAL	67 Neutral	C$967.93M	25.52	4.85%	0.89%	6.58%	121.23%
CJT	65 Neutral	$1.25B	8.72	19.73%	1.74%	14.37%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BBD.B	63 Neutral	$19.58B	30.89	―	―	6.69%	64.89%
AC	61 Neutral	$5.56B	4.53	101.32%	―	0.33%	-15.99%
CHR	56 Neutral	C$596.93M	-17.93	2.81%	0.34%	-16.92%	77.04%

Air Canada Corporate Events

Air Canada Reports Resilient Q3 2025 Amid Labor Disruptions

Air Canada reported a solid third quarter in 2025, with operating revenues of $5.774 billion, despite a 5% decline from the previous year, largely due to a labor disruption during the peak summer season. The company demonstrated resilience with strong performance in the Atlantic market and premium cabins, and it plans to continue its growth trajectory by upgrading its fleet and focusing on operational efficiencies. The positive booking momentum into the fourth quarter and early 2026, along with strategic initiatives and cost discipline, positions Air Canada well for future expansion and shareholder value enhancement.

The most recent analyst rating on (TSE:AC) stock is a Hold with a C$19.50 price target. To see the full list of analyst forecasts on Air Canada stock, see the TSE:AC Stock Forecast page.

Air Canada Updates 2025 Guidance Amid Labour Disruption Impact

Air Canada has announced its estimated results for the third quarter of 2025 and updated its full-year guidance, following a significant labour disruption in August 2025 due to a strike by the Canadian Union of Public Employees. The company anticipates a decline in operated capacity and a decrease in operating income compared to the previous year, largely due to the cancellation of over 3,200 flights. The labour disruption is estimated to have a $375 million impact on operating income and adjusted EBITDA. Despite these challenges, Air Canada is proceeding with arbitration to finalize a new agreement with CUPE and has updated its 2025 financial outlook to reflect these disruptions, projecting adjusted EBITDA between $2.9 billion and $3.1 billion.

The most recent analyst rating on (TSE:AC) stock is a Hold with a C$22.00 price target. To see the full list of analyst forecasts on Air Canada stock, see the TSE:AC Stock Forecast page.

Air Canada Suspends 2025 Financial Guidance Amid Labor Disruption

Air Canada has suspended its guidance for the third quarter and full-year 2025 operating results due to a labor disruption caused by the Canadian Union of Public Employees (CUPE), which led to the suspension of all flights. Despite the Canadian Industrial Relations Board’s directive to resume operations, CUPE instructed its members to defy this order, impacting Air Canada’s operations and prompting the suspension of its financial guidance. This situation has significant implications for the airline’s stakeholders, customers, and the communities it serves.

The most recent analyst rating on (TSE:AC) stock is a Buy with a C$28.00 price target. To see the full list of analyst forecasts on Air Canada stock, see the TSE:AC Stock Forecast page.