Air Canada (AC) AI Stock Analysis

• Market Cap: C$5.77B
• Dividend Yield: N/A
• Average Volume (3M): 2.24M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.19
• Revenue Growth: -0.09%
• EPS Growth: -109.21%
• Country: CA
• Employees: 37,200
• Sector: Industrials
• Sector Strength: 72
• Industry: Airlines, Airports & Air Services
• EPS (TTM): 0.75
• Shares Outstanding: 294,549,620
• 10 Day Avg. Volume: 2,409,892
• 30 Day Avg. Volume: 2,235,681
• 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: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$23.52
• Price Target Upside: 13.81% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 47 Neutral
• Price Target: C$20.50 ▼(-0.82% Downside)

Air Canada's overall stock score reflects significant financial challenges, including high leverage and declining revenues. Technical analysis and valuation metrics offer limited support, while the earnings call provides some positive future outlooks but is overshadowed by recent disruptions and revenue declines.

Positive Factors

Market position & network scale

Air Canada's status as Canada's largest carrier and Star Alliance member gives durable network advantages: broad connectivity, hub scale, and partnership feed that support sustained passenger and cargo volumes, corporate contracts and loyalty program monetization over multiple cycles.

Fleet & network expansion

The targeted fleet renewal and expansion (A321XLR, 787-10) supports longer-range routes, improved unit economics and fuel efficiency. Over 2–6 months this strategic fleet mix strengthens capacity for international growth and premium cabin revenue, aiding long-term margin improvement.

Operational & customer metrics improvement

Sustained improvements in on-time performance and NPS indicate operational reliability and better customer experience. Over time this tends to increase repeat business, higher yields in premium and corporate segments, and supports stable revenue mix and lower disruption costs.

Negative Factors

High leverage

Very high leverage materially reduces financial flexibility, raising interest and refinancing risk. Over months this constrains capacity to absorb shocks, limits discretionary investment in fleet or routes, and increases vulnerability to rising rates or cyclical revenue shortfalls.

Declining revenue & negative profitability

A trend of revenue contraction combined with negative net margins weakens intrinsic earning power. Persisting declines reduce retained earnings to fund growth, pressure margins across cycles, and increase dependency on external financing to maintain operations and strategic initiatives.

Weak free cash flow generation

Negative FCF growth and low cash conversion of net income limit ability to pay down debt, invest in fleet, or build reserves. Over the medium term this constrains strategic execution, heightens liquidity risk, and may force asset sales or costly financing during downturns.

Air Canada Business Overview & Revenue Model

Company Description

Air Canada provides domestic, U.S. transborder, and international airline services. It offers scheduled passenger services under the Air Canada Vacations and Air Canada Rouge brand name in the Canadian market, the Canada-U.S. transborder market, and in the international market to and from Canada, as well as through capacity purchase agreements on other regional carriers. As of December 31, 2021, the company operated a fleet of 175 aircraft under the Air Canada mainline brand name comprising 97 Boeing and Airbus narrow-body aircraft, and 78 Boeing and Airbus wide-body aircraft; 123 aircraft under the Air Canada Express brand name, including 50 Mitsubishi regional jets, 48 De Havilland Dash-8 turboprop aircraft and 25 Embraer 175 aircraft; and 39 aircraft under the Air Canada Rouge brand name consisting of 14 Airbus A321 aircraft, 5 Airbus A320 aircraft, and 20 Airbus A319 aircraft. It also provides air cargo services in domestic and U.S. transborder routes, as well as on international routes between Canada and markets in Europe, Asia, South America, and Australia. In addition, the company operates, develops, markets, and distributes vacation travel packages in the Caribbean, Mexico, the United States, Europe, Central and South America, South Pacific, Australia, and Asia; offers cruise packages in North America, Europe, and the Caribbean; and provides travel loyalty programs. Air Canada was founded in 1937 and is headquartered in Saint-Laurent, Canada.

How the Company Makes Money

Air Canada primarily generates revenue through its passenger transport services, which account for the bulk of its earnings. The airline charges customers for tickets, with prices varying based on factors such as route, demand, and travel class. In addition to ticket sales, Air Canada earns revenue from ancillary services, including baggage fees, seat selection, and in-flight services. Cargo transport is another key revenue stream, as the airline provides freight services for various industries. The company also benefits from loyalty programs, such as Aeroplan, which encourage repeat business and generate income through partnerships with hotels, car rental services, and retail outlets. Strategic partnerships, including those with other airlines in the Star Alliance, enhance connectivity and expand Air Canada's market reach, further contributing to its earnings.

Air Canada Financial Statement Overview

Summary

Air Canada's financial statements reflect significant challenges, including declining revenue, negative profitability, high leverage, and limited cash flow growth. These factors pose risks to financial stability.

Income Statement

Air Canada's income statement reveals a challenging period with declining revenue and profitability. The TTM data shows a negative revenue growth rate of -1.49%, indicating a contraction in sales. The gross profit margin stands at 22.42%, while the net profit margin is negative at -1.34%, reflecting operational inefficiencies and high costs. The EBIT and EBITDA margins are also low, suggesting limited operational profitability. Overall, the income statement indicates financial struggles, with declining revenues and negative profitability metrics.

Balance Sheet

The balance sheet of Air Canada highlights significant leverage, with a debt-to-equity ratio of 6.60 in the TTM period, indicating high financial risk. The return on equity is negative, reflecting poor returns for shareholders. The equity ratio is low at 7.03%, suggesting limited equity financing. Overall, the balance sheet shows high leverage and low equity, posing financial stability concerns.

Cash Flow

Air Canada's cash flow statement shows a mixed picture. The operating cash flow to net income ratio is 0.29, indicating some cash generation capability. However, the free cash flow growth rate is negative at -8.86%, reflecting challenges in generating free cash flow. The free cash flow to net income ratio is 0.21, suggesting limited cash flow relative to net income. Overall, the cash flow statement indicates moderate cash generation but challenges in sustaining free cash flow growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.01B	22.25B	21.83B	16.56B	6.40B	5.83B
Gross Profit	4.93B	5.46B	6.15B	2.79B	-1.23B	-2.31B
EBITDA	2.32B	3.04B	4.84B	1.01B	-1.63B	-2.37B
Net Income	-296.00M	1.72B	2.28B	-1.70B	-3.60B	-4.65B
Balance Sheet
Total Assets	31.02B	31.21B	30.17B	29.51B	30.61B	28.91B
Cash, Cash Equivalents and Short-Term Investments	6.40B	6.98B	8.55B	7.99B	8.97B	7.61B
Total Debt	11.77B	12.67B	13.86B	16.31B	16.52B	12.99B
Total Liabilities	28.84B	28.82B	29.38B	31.06B	30.61B	27.20B
Stockholders Equity	2.18B	2.39B	796.00M	-1.55B	9.00M	1.72B
Cash Flow
Free Cash Flow	730.00M	1.29B	2.76B	796.00M	-2.64B	-3.56B
Operating Cash Flow	3.91B	3.93B	4.32B	2.37B	-1.56B	-2.35B
Investing Cash Flow	-641.00M	-1.36B	-1.83B	-2.50B	-1.87B	-733.00M
Financing Cash Flow	-2.78B	-2.87B	-2.37B	-1.61B	4.01B	4.70B

Air Canada Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 20.67
• 50DMA: Positive
• 100DMA: Positive
• 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 20.67 is above the 20-day moving average (MA) of 19.42, above the 50-day MA of 19.20, and above the 200-day MA of 18.87, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 66.70 is Neutral, neither overbought nor oversold. The STOCH value of 63.10 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
MAL	72 Outperform	C$1.18B	26.32	5.64%	0.93%	8.84%	131.58%
CJT	67 Neutral	$1.42B	11.84	16.75%	1.67%	7.71%	3170.43%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
CHR	56 Neutral	C$502.03M	-13.43	2.09%	0.76%	-12.42%	69.23%
AC	47 Neutral	C$5.77B	-31.54	-10.66%	―	-0.09%	-109.21%
JET	39 Underperform	C$69.11M	-33.66	―	―	16.18%	87.47%