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Air Canada
(TSX:AC)
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Rating:62Neutral
Price Target:
C$31.00
▲(11.71% Upside)
Action:Reiterated
Date:08/17/26
The score is anchored by mixed fundamentals: improving operations and positive cash flow are tempered by meaningful leverage and recent margin/cash-conversion softening. Technicals are supportive with a strong uptrend, and the latest earnings call was constructive on guidance and deleveraging plans, but fuel and unit-cost pressures keep the overall outlook moderate rather than high-conviction.
Positive Factors
Network demand and revenue strength
Broad-based passenger, premium, corporate and cargo growth indicates strong network relevance and customer demand. The industry-leading load factor and measured capacity management support revenue quality and provide a durable base for earnings recovery.
Negative Factors
High structural leverage
Despite improving equity and planned Aeroplan-funded debt repayment, absolute debt remains high relative to the equity base. This limits flexibility and leaves the company sensitive to demand downturns, refinancing conditions and prolonged operating disruption.
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Positive Factors
Negative Factors
Network demand and revenue strength
Broad-based passenger, premium, corporate and cargo growth indicates strong network relevance and customer demand. The industry-leading load factor and measured capacity management support revenue quality and provide a durable base for earnings recovery.
Read all positive factors
Air Canada (AC) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$7.86B
Dividend YieldN/A
Average Volume (3M)2.24M
Price to Earnings (P/E)19.5
Beta (1Y)1.24
Revenue Growth5.63%
EPS Growth-65.53%
CountryCA
Employees36,500
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)1.42
Shares Outstanding280,059,000
10 Day Avg. Volume2,409,892
30 Day Avg. Volume2,235,681
Financial Highlights & Ratios
PEG Ratio-0.16
Price to Book (P/B)2.32
Price to Sales (P/S)0.27
P/FCF Ratio8.03
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$32.05Price Target Upside15.50% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)1.38
Revenue Forecast (FY)C$25.25B
Air Canada Business Overview & Revenue Model
Company Description
Air Canada functions as a full-service airline, providing an array of flights across Canada, over the U.S. border, and to various international destinations. The company delivers scheduled passenger services through its primary Air Canada brand, a...
How the Company Makes Money
Air Canada primarily makes money by selling air transportation and related travel products. Its main revenue stream is passenger revenue, generated from ticket sales across its route network; pricing varies by cabin (e.g., economy and premium cabi...
Air Canada Earnings Call Summary
Earnings Call Date:Aug 11, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call highlighted robust top-line performance (record revenues +11% YoY), strong adjusted EBITDA ($719M) and exceptional balance sheet metrics (liquidity $8.9B, net leverage 1.7x), alongside strategic value realization via a $2.5B minority sale of Aeroplan that accelerates deleveraging and shareholder returns. Offsetting these positives are material near-term headwinds from fuel volatility (a $500M–$600M booking/fuel mismatch), higher operating costs (including $388M of excluded charges) and modest ASM growth, which pressure unit costs. On balance, the company demonstrated financial resilience and clear mitigation plans (fuel recapture expected to improve into Q4, sale-and-leaseback/SIB proceeds), so positives meaningfully outweigh the detractors.Positive Updates
Record Revenues and Strong EBITDA
Operating revenues of $6.3B, up 11% YoY, and adjusted EBITDA of $719M (adjusted EBITDA margin 11.5%), at the upper end of guidance and ahead of expectations.
Negative Updates
Significant Fuel Volatility and Headwind
Q2 average fuel price CAD 1.33/L (vs guide CAD 1.28/L); peak >CAD 1.60/L. Fuel expense rose ~49% YoY ($565M increase) net of $205M hedging gains. Management estimates a $500M–$600M headwind from fares sold before the fuel spike.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Revenues and Strong EBITDA
Operating revenues of $6.3B, up 11% YoY, and adjusted EBITDA of $719M (adjusted EBITDA margin 11.5%), at the upper end of guidance and ahead of expectations.
Read all positive updates
Company Guidance
Air Canada reinstated full‑year 2026 guidance with ASMs growth of 2.25%–3.25%, adjusted CASM up 5%–6% versus 2025, and full‑year adjusted EBITDA of $2.9–$3.2 billion (bottom end includes a $100 million Q4 fuel allowance); Q3 fuel is assumed ~CAD 1.38/L (USD $3.70/gal) with 17% of Q3 purchases hedged at ~USD 0.88/L, Q4 fuel ~CAD 1.29/L (USD $3.50/gal), and management expects fuel recapture >60% in Q3 and >100% in Q4; free cash flow is guided to $200–$500 million assuming ~$1 billion of sale‑and‑leaseback proceeds (H1 S&LB $501M, Q2 $218M) and gross CapEx of ~$3.6 billion; balance sheet targets include maintaining ~ $8.9 billion liquidity (38% of TTM revenues), net leverage 1.7x (target <2x), paying down the Aug‑2026 USD $1.2B maturity with Aeroplan proceeds (25% minority sale for $2.5B valuing Aeroplan at $10B / 21x EBITDA), pursuing up to CAD $800M SIB, and continuing buybacks (14.5M shares YTD, $270M in 2026, $1.6B since Nov‑2024) while expecting gradual unit‑cost improvement through H2.Air Canada Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
41
Neutral
Cash Flow
55
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 23.59B | 22.37B | 22.25B | 21.83B | 16.56B | 6.40B |
| Gross Profit | 6.92B | 6.85B | 5.46B | 6.15B | 2.79B | -1.23B |
| EBITDA | 3.27B | 3.41B | 3.04B | 4.84B | 1.01B | -1.63B |
| Net Income | 430.00M | 644.00M | 1.72B | 2.28B | -1.70B | -3.60B |
Balance Sheet | ||||||
| Total Assets | 33.73B | 31.21B | 31.21B | 30.17B | 29.51B | 30.61B |
| Cash, Cash Equivalents and Short-Term Investments | 7.01B | 5.53B | 6.98B | 8.55B | 7.99B | 8.97B |
| Total Debt | 12.79B | 11.58B | 12.67B | 13.86B | 16.31B | 16.52B |
| Total Liabilities | 31.05B | 28.62B | 28.82B | 29.38B | 31.06B | 30.61B |
| Stockholders Equity | 2.68B | 2.59B | 2.39B | 796.00M | -1.55B | 9.00M |
Cash Flow | ||||||
| Free Cash Flow | 1.01B | 747.00M | 1.29B | 2.76B | 796.00M | -2.64B |
| Operating Cash Flow | 3.69B | 3.66B | 3.93B | 4.32B | 2.37B | -1.56B |
| Investing Cash Flow | -1.38B | -1.00B | -1.36B | -1.83B | -2.50B | -1.87B |
| Financing Cash Flow | -1.16B | -2.37B | -2.87B | -2.37B | -1.61B | 4.01B |
Air Canada Technical Analysis
Positive
27.75
Price Trends
25.64
Positive
22.74
Positive
20.89
Positive
Market Momentum
1.00
Positive
55.09
Neutral
8.78
Positive
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 27.75 is below the 20-day moving average (MA) of 28.07, above the 50-day MA of 25.64, and above the 200-day MA of 20.89, indicating a neutral trend. The MACD of 1.00 indicates Positive momentum. The RSI at 55.09 is Neutral, neither overbought nor oversold. The STOCH value of 8.78 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:AC.
Air Canada Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$649.58M | 14.15 | 9.32% | 1.57% | -3.60% | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | C$7.86B | 19.46 | 16.92% | ― | 5.63% | -65.53% | |
61 Neutral | C$1.24B | 27.55 | 6.30% | 1.72% | 0.80% | -66.47% | |
60 Neutral | C$1.91B | 31.20 | 7.11% | 0.57% | 15.36% | 57.18% | |
47 Neutral | C$69.11M | -14.71 | 8.11% | ― | 5.66% | 50.33% |
* Industrials Sector Average
TSE:AC
Air Canada
27.64
8.14
41.74%
TSE:JET
Global Crossing Airlines
1.36
0.00
0.00%
TSE:CHR
Chorus Aviation
28.30
8.24
41.10%
TSE:MAL
Magellan Aerospace
32.76
16.97
107.49%
TSE:CJT
Cargojet
85.13
-13.99
-14.12%
Air Canada Corporate Events
Business Operations and StrategyStock Buyback
Air Canada Launches $800 Million Share Buyback via Dutch Auction
Positive
Aug 18, 2026
Air Canada has finalized the terms of a substantial issuer bid to repurchase and cancel up to $800 million of its Class A and Class B shares through a modified Dutch auction.Shareholders may tender their shares between $29.00 and $33.00, with the ...
Business Operations and StrategyStock BuybackM&A TransactionsPrivate Placements and Financing
Air Canada Unlocks $2.5 Billion from Aeroplan Sale to Strengthen Balance Sheet
Positive
Aug 11, 2026
Air Canada has agreed to sell a 25% minority stake in its Aeroplan loyalty program to an investor group led by Blackstone and La Caisse for $2.5 billion, implying a $10 billion valuation for Aeroplan. The airline will retain a 75% controlling inte...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.