Air Canada (AC) AI Stock Analysis

• Market Cap: C$5.76B
• Dividend Yield: N/A
• Average Volume (3M): 2.24M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.30
• 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: 295,652,620
• 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$23.73
• Price Target Upside: 19.54% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): 1.16
• Revenue Forecast (FY): C$22.12B

• Rating: 47 Neutral
• Price Target: C$18.00 ▼(-9.32% 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

Fleet Expansion

The introduction of new aircraft types and routes enhances Air Canada's capacity and market reach, supporting long-term growth and competitiveness.

Cabin Renewal Program

The cabin renewal program improves customer experience and operational efficiency, potentially increasing customer loyalty and market share.

Strong Q4 Booking Trends

Strong booking trends indicate robust demand recovery, supporting revenue growth and financial performance in the near to medium term.

Negative Factors

High Leverage

High leverage increases financial risk, potentially limiting Air Canada's ability to invest in growth opportunities and weather economic downturns.

Decline in Passenger Revenues

Declining passenger revenues reflect challenges in maintaining market share and pricing power, impacting long-term revenue stability.

Fleet Delivery Challenges

Delays in fleet delivery could hinder capacity expansion and operational efficiency, affecting Air Canada's ability to meet demand and grow.

Air Canada Business Overview & Revenue Model

Company Description

Air Canada (AC) is the largest airline in Canada and a leading provider of air transportation services in North America and globally. The company operates in the airline industry, offering a wide range of services that include passenger and cargo transport, as well as travel-related services. As a member of the Star Alliance network, Air Canada connects customers to over 1,300 destinations worldwide while providing a variety of travel classes and amenities tailored to different customer needs.

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

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	22.01B	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: 19.85
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 19.85 is above the 20-day moving average (MA) of 18.91, above the 50-day MA of 18.56, and above the 200-day MA of 18.18, indicating a bullish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 67.94 is Neutral, neither overbought nor oversold. The STOCH value of 93.98 is Negative, 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$1.04B	23.35	5.64%	0.96%	8.84%	131.58%
CJT	67 Neutral	C$1.26B	10.55	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$494.30M	-13.13	2.09%	0.75%	-12.42%	69.23%
AC	47 Neutral	C$5.76B	―	-10.66%	―	-0.09%	-109.21%
JET	39 Underperform	C$69.11M	-33.66	―	―	16.18%	87.47%

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.