Air Canada (TSE:AC) Announces Quarterly Earnings Results

Air Canada (TSE:AC) issued its quarterly earnings data on Thursday. The company reported C$0.75 EPS for the quarter, FiscalAI reports. Air Canada had a return on equity of 16.92% and a net margin of 1.82%. The company had revenue of C$6.98 billion for the quarter.

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 Stock Down 7.7%

Shares of TSE:AC opened at C$20.19 on Friday. The company has a current ratio of 0.60, a quick ratio of 1.05 and a debt-to-equity ratio of 478.10. The firm has a market cap of C$5.10 billion, a price-to-earnings ratio of 15.41, a PEG ratio of 0.02 and a beta of 1.86. The stock’s 50-day moving average price is C$25.70 and its two-hundred day moving average price is C$22.35. Air Canada has a 12-month low of C$16.45 and a 12-month high of C$31.45.

Air Canada News Roundup

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

• Positive Sentiment: Air Canada reported third-quarter earnings of C$0.75 per share on C$6.98 billion in revenue, while adjusted earnings beat expectations. The results provide evidence of resilient operating performance and may support the bullish case for the shares. Air Canada Third-Quarter Adjusted Earnings Beat Estimates
• Neutral Sentiment: Scotia, National Bank Financial and BMO Capital Markets lowered their price targets to C$31, C$33 and C$33, respectively, but retained positive ratings ranging from “sector outperform” to “outperform.” Stifel Nicolaus also cut its target to C$32 while maintaining a “buy” rating. The reductions signal more cautious estimates, but the targets imply roughly 54%–64% upside from recent levels. Analyst Recommendations
• Neutral Sentiment: Coverage is focusing on Air Canada’s winter route changes and potential travel-market opportunities. Expanded or better-optimized routes could support demand, but changes to U.S. service are being closely scrutinized by investors. Which Winter Routes Could Boost Travel Options?
• Negative Sentiment: Reports that Air Canada is switching some U.S. routes appear to have unsettled investors, raising questions about network demand, capacity allocation and near-term revenue growth. Air Canada Is Switching Up Some of Its U.S. Routes
• Negative Sentiment: Scotiabank issued a negative earnings estimate for Air Canada, while ATB Capital Markets also reduced its price target, adding to the cautious tone surrounding the stock. Scotiabank Issues Negative Estimate

Analysts Set New Price Targets

Several research analysts recently commented on AC shares. Scotiabank reduced their price objective on Air Canada from C$37.50 to C$33.00 and set a “sector outperform” rating for the company in a research note on Thursday, October 15th. Jefferies Financial Group cut shares of Air Canada from a “hold” rating to a “moderate sell” rating and decreased their price target for the company from C$26.00 to C$19.00 in a research report on Monday, October 19th. Royal Bank Of Canada raised their price target on Air Canada from C$28.00 to C$37.00 and gave the company an “outperform” rating in a research note on Thursday, August 13th. National Bank Financial dropped their target price on shares of Air Canada from C$37.00 to C$33.00 and set an “outperform” rating on the stock in a research report on Friday. Finally, UBS Group boosted their price target on shares of Air Canada from C$24.00 to C$33.00 in a research report on Thursday, August 13th. Eight research analysts have rated the stock with a Buy rating, two have given a Hold rating and one has issued a Sell rating to the company’s stock. According to MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and a consensus price target of C$31.00.

Air Canada Company Profile

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.