Key Morningstar Metrics for Air Canada
- Fair Value Estimate: C$17.20
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
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.