Air Canada (TSE:AC) Releases Earnings Results

Air Canada (TSE:AC) posted its earnings results on Thursday. The company reported C$0.49 earnings per share (EPS) for the quarter, FiscalAI reports. The company had revenue of C$6.98 billion during the quarter. Air Canada had a net margin of 1.82% and a return on equity of 16.92%.

Here are the key takeaways from Air Canada’s conference call:

• Record third-quarter revenue and resilient demand: Operating revenue rose 21% year over year to CAD 7 billion, supported by nearly 6% capacity growth, an 89% load factor, and 11% higher yields. Premium, corporate, sixth-freedom, and cargo revenues all performed strongly.
• Higher fuel costs pressured profitability and guidance: Fuel expense increased by CAD 906 million as fuel prices rose 68% year over year, limiting adjusted EBIT growth and reducing the EBITDA margin to 13.4%. Air Canada lowered its 2026 adjusted EBITDA outlook to CAD 2.4–2.7 billion and now expects roughly breakeven free cash flow.
• Capacity growth is being moderated for 2027: The airline has removed more than two points of planned first-quarter 2027 capacity and is evaluating marginal flying, aircraft utilization, and ultra-long-haul routes to protect margins if fuel prices remain elevated. Management still expects to reach pre-pandemic capacity levels over time.
• Balance sheet and shareholder returns remain strong: Net leverage ended the quarter at 1.3 times, liquidity was CAD 8 billion, and there are no material corporate debt maturities until April 2028. An CAD 800 million share buyback reduced shares outstanding by approximately 10%, while a renewed NCIB is expected to be used opportunistically.
• Fleet renewal and cargo provide potential offsets: New A321XLR, 787-10, and A220 aircraft are expected to improve fuel efficiency and margins, while cargo revenue rose 33% and is benefiting from strong freight pricing and close-in booking patterns that allow higher fuel-cost recovery.

Air Canada Price Performance

TSE:AC traded up C$0.05 during trading hours on Thursday, reaching C$21.87. 2,805,147 shares of the company were exchanged, compared to its average volume of 2,914,028. The business has a 50 day moving average of C$25.88 and a 200 day moving average of C$22.34. The company has a market capitalization of C$5.53 billion, a P/E ratio of 16.69, a P/E/G ratio of 0.02 and a beta of 1.86. The company has a debt-to-equity ratio of 478.10, a current ratio of 0.60 and a quick ratio of 1.05. Air Canada has a 1-year low of C$16.45 and a 1-year high of C$31.45.

Wall Street Analyst Weigh In

Several research analysts have weighed in on AC shares. Scotia increased their price target on shares of Air Canada from C$33.50 to C$37.50 and gave the company a “sector outperform” rating in a report on Wednesday, August 19th. Canaccord Genuity Group upgraded Air Canada from a “hold” rating to a “buy” rating and reduced their price objective for the stock from C$29.00 to C$25.00 in a report on Thursday, October 22nd. Canadian Imperial Bank of Commerce upped their target price on Air Canada from C$26.00 to C$40.00 in a research report on Friday, August 14th. BMO Capital Markets upped their target price on Air Canada from C$30.00 to C$37.00 and gave the company an “outperform” rating in a research report on Wednesday, August 12th. Finally, UBS Group increased their target price on Air Canada from C$24.00 to C$33.00 in a research note on Thursday, August 13th. Eight research analysts have rated the stock with a Buy rating, two have given a Hold rating and one has assigned a Sell rating to the company’s stock. According to MarketBeat, Air Canada has a consensus rating of “Moderate Buy” and a consensus price target of C$32.12.

Air Canada News Summary

Here are the key news stories impacting Air Canada this week:

• Positive Sentiment: Stifel Nicolaus maintained a “buy” rating while lowering its price target from C$38 to C$32. The revised target still implies approximately 46.5% upside from recent trading levels, suggesting the firm believes Air Canada’s valuation and longer-term earnings potential remain attractive. Stifel Nicolaus stock recommendations
• Neutral Sentiment: Air Canada reported quarterly earnings of C$0.49 per share and revenue of C$6.98 billion. Its net margin was 1.82% and return on equity was 16.92%. Without a comparable analyst consensus in the provided results, the market may focus on whether profitability and revenue momentum support the company’s full-year earnings outlook.
• Neutral Sentiment: Coverage highlighted Air Canada’s winter route changes and potential new routes, which could expand travel options and support seasonal demand. However, route adjustments may also alter capacity and operating economics, leaving the earnings impact uncertain. Winter routes could boost travel options
• Negative Sentiment: Analysts continued to reduce expectations: Scotiabank issued a negative earnings estimate, while ATB Cormark also cut its price target. These revisions reinforce concerns about near-term profitability and likely contributed to investor caution. Scotiabank negative earnings estimate ATB Cormark price target cut
• Negative Sentiment: A flight returning to Calgary after declaring an emergency adds negative operational and reputational headlines, although the available report does not indicate the financial impact or cause. Air Canada flight AC138 emergency

About Air Canada

Air Canada is Canada’s largest airline, the country’s flag carrier and a founding member of Star Alliance, the world’s most comprehensive air transportation network. Headquartered in Montréal, Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and Internationally on six continents. It holds a Four-Star ranking from Skytrax. Air Canada’s Aeroplan program is Canada’s premier travel loyalty program, with more than 10 million members worldwide. Members can earn or redeem points on the world’s largest airline partner network of more than 50 airlines, plus through an extensive range of merchandise, hotel and car rental partners.