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Air Canada
(TSX:AC)
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Rating:62Neutral
Price Target:
C$27.00
▲(16.03% Upside)
Action:Reiterated
Date:05/30/26
The score is held back mainly by high leverage and softer profitability versus the 2023 peak, despite solid operating cash flow. Offsetting factors include strong recent technical momentum (though overbought) and a low P/E valuation multiple.
Positive Factors
Strong cash generation
Air Canada’s sizable trailing‑12‑month operating cash flow and positive free cash flow provide durable internal funding for operations, capex and some debt reduction. Robust absolute cash generation improves resilience across airline cycles and supports strategic investments over the next several months.
Negative Factors
Elevated leverage
Balance sheet leverage remains high, limiting financial flexibility and increasing refinancing and interest‑rate exposure. In a cyclical industry where demand shocks occur, elevated debt constrains capital allocation, raises default risk in downside scenarios and reduces room for strategic investments.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Air Canada’s sizable trailing‑12‑month operating cash flow and positive free cash flow provide durable internal funding for operations, capex and some debt reduction. Robust absolute cash generation improves resilience across airline cycles and supports strategic investments over the next several months.
Read all positive factors
Air Canada (AC) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$7.21B
Dividend YieldN/A
Average Volume (3M)2.24M
Price to Earnings (P/E)10.4
Beta (1Y)1.15
Revenue Growth3.31%
EPS Growth-44.10%
CountryCA
Employees37,000
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)2.63
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$28.39Price Target Upside22.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)1.41
Revenue Forecast (FY)C$24.87B
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
68
Positive
Balance Sheet
41
Neutral
Cash Flow
57
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 22.96B | 22.37B | 22.25B | 21.83B | 16.56B | 6.40B |
| Gross Profit | 7.14B | 6.85B | 5.46B | 6.15B | 2.79B | -1.23B |
| EBITDA | 3.69B | 3.41B | 3.04B | 4.84B | 1.01B | -1.63B |
| Net Income | 794.00M | 644.00M | 1.72B | 2.28B | -1.70B | -3.60B |
Balance Sheet | ||||||
| Total Assets | 33.09B | 31.21B | 31.21B | 30.17B | 29.51B | 30.61B |
| Cash, Cash Equivalents and Short-Term Investments | 6.69B | 5.53B | 6.98B | 8.55B | 7.99B | 8.97B |
| Total Debt | 12.30B | 11.58B | 12.67B | 13.86B | 16.31B | 16.52B |
| Total Liabilities | 30.37B | 28.62B | 28.82B | 29.38B | 31.06B | 30.61B |
| Stockholders Equity | 2.72B | 2.59B | 2.39B | 796.00M | -1.55B | 9.00M |
Cash Flow | ||||||
| Free Cash Flow | 1.24B | 747.00M | 1.29B | 2.76B | 796.00M | -2.64B |
| Operating Cash Flow | 3.93B | 3.66B | 3.93B | 4.32B | 2.37B | -1.56B |
| Investing Cash Flow | -1.05B | -1.00B | -1.36B | -1.83B | -2.50B | -1.87B |
| Financing Cash Flow | -2.17B | -2.37B | -2.87B | -2.37B | -1.61B | 4.01B |
Air Canada Technical Analysis
Positive
23.27
Price Trends
23.81
Positive
21.39
Positive
20.25
Positive
Market Momentum
0.89
Negative
66.31
Neutral
83.65
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 23.27 is below the 20-day moving average (MA) of 24.60, below the 50-day MA of 23.81, and above the 200-day MA of 20.25, indicating a bullish trend. The MACD of 0.89 indicates Negative momentum. The RSI at 66.31 is Neutral, neither overbought nor oversold. The STOCH value of 83.65 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$656.80M | 14.89 | 12.73% | 1.57% | -3.60% | ― | |
72 Outperform | C$2.18B | 47.52 | 5.48% | 0.57% | 10.42% | 12.81% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | C$7.21B | 10.37 | 34.23% | ― | 3.31% | -44.10% | |
59 Neutral | C$1.29B | 38.87 | 4.92% | 1.72% | 0.80% | -66.47% | |
52 Neutral | C$69.11M | -67.89 | 1.84% | ― | 7.42% | 89.31% |
* Industrials Sector Average
TSE:AC
Air Canada
27.27
7.73
39.56%
TSE:JET
Global Crossing Airlines
1.36
0.00
0.00%
TSE:CHR
Chorus Aviation
29.77
9.44
46.42%
TSE:MAL
Magellan Aerospace
37.73
20.69
121.46%
TSE:CJT
Cargojet
93.67
-7.80
-7.69%
Air Canada Corporate Events
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.