Air Canada Earnings: Cautious, Disciplined Approach Continues

Management expects a 3%-5% capacity expansion in 2025 amid uncertainty about economic results in Canada.

Nicolas Owens 18 February, 2025 | 4:15PM
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A logo sign outside of a Dollarama retail store location in Saint-Bruno-de-Montarville, Quebec, Canada.

Key Morningstar Metrics for Air Canada


What We Thought of Air Canada’s Earnings

Air Canada AC increased revenue just under 2% and earned a 5.7% operating margin in 2024, with 5.4% more capacity than in 2023. Management expects a 3%-5% capacity expansion in 2025 amid uncertainty about economic results in Canada.

Why it matters: The airline has yet to return capacity to its pre-pandemic level, which was just shy of 113 million passenger miles. We forecast about 108 million for 2025. This continues the firm’s recent trajectory of a more gradual, disciplined expansion compared with some of its competitors.

  • Air Canada has also seen its cost structure expand, with structural unit costs reaching a record 14.46 cents per mile in 2024, up 6% from 2023, mostly due to increased wage rates.
  • The company’s growth trajectory is partly involuntary, limited by delayed aircraft deliveries, but also reflects its disciplined approach in a competitive environment. Management cited potential oversupply in some of its markets as curtailing its near-term growth plans.

The bottom line: We have not altered our fair value estimate of C$17.20 per share. The stock appears fully valued even though investors disappointed by the company’s cautious outlook sent the price down more than 2.5% on the day after the earnings announcement.

Air Canada Stock vs. Morningstar Fair Value Estimate

Source: Morningstar Direct. Latest price as of 10:41 AM EST. Data as of Feb. 18, 2025.


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

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About Author

Nicolas Owens  is an industrials equity analyst for Morningstar Research Services, LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the aerospace and defense sector, including Boeing, Airbus, and major North American commercial airlines and defense contractors.

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