Air Canada Stock: How High Could it go?

AC stock is up 29% in the last six months alone, so should we expect more great things? Or is it due for a dip?

| More on:
little girl in pilot costume playing and dreaming of flying over the sky

Image source: Getty Images

Air Canada (TSX:AC) used to be the stock to beat. It was all the rage back in 2018, with only cannabis stocks taking as much attention. But wow, can things change over a few years – especially for Air Canada stock.

Of course, the main cause for Air Canada stock dropping so low was the pandemic. And the pandemic remains the main reason why the company continues to flounder. While it received bailout cash from the government, it’s still struggling to get travellers back in the air despite demand remaining at highs not seen since before the pandemic.

Shares of Air Canada stock are now up 2% in the last year, which is fine. They’re up 29% in just the last six months! So, there’s still a ways to go to reach 52-week highs. But could AC reach those levels?

What’s been going on with Air Canada stock

The last six months proved positive for Air Canada stock. The company saw a major increase in bookings during the summer of 2022. However, it was the holiday bookings that really increased its shares.

During the third quarter of 2022, Air Canada stock reported that its available seat miles more than doubled compared to the year before. Passenger revenue reached $4.8 billion, three times the year before, and 94% of 2019 levels. And what’s more, earnings before interest, taxes, depreciation and amortization (EBITDA) reached $1.1 billion, compared to a negative $67 million in 2021.

While it still operates at a net loss of $508 million, those losses are improving, down from $640 million the year before. So in the fourth quarter, we could certainly be in for more positive news.

Signs of growth

Earnings are due February 17 for Air Canada stock, and there may already be some positive signs that things are going well. The company announced several new routes to “prepare” for Summer 2023. Demand remains strong, management says, and they want to get ahead of it with more available bookings.

But for investors, a clue could also lie with Air Canada’s purchase of US$300 million in convertible senior notes, due for cancellation July 1, 2025. This will be used to help deleverage its balance sheet, the company said in a statement.

So with more cash coming in, more routes on the way, and more demand than ever, the company looks primed for a strong earnings report. In fact, this cash could bring down its net loss and it could flirt with a profit once more.

Expect more growth?

We now have earnings due in about two weeks. Shares are on the rise, and demand is climbing for summer projections. This could all point to another strong earnings report for Air Canada stock. And should that happen, shares may climb higher.

However, be careful. We are also expected to enter a mild recession this year. This could result in Canadians choosing to hold onto their cash, perhaps waiting to book their trips for the 2023 holiday season rather than the summer.

So I would definitely wait until after this earnings report before buying up Air Canada stock. Is it likely to hit 52-week highs again? Absolutely. Yet, anything could happen when a recession comes around. We’ve seen surprises before, and we could very well see some again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Coronavirus

eat food
Coronavirus

Goodfood Stock Doubles Within Days: Time to Buy?

Goodfood (TSX:FOOD) stock has surged 125% in the last few weeks, so what happened, and should investors hop back on…

Read more »

stock data
Tech Stocks

If I Could Only Buy 1 Stock Before 2023, This Would Be It

This stock is the one company that really doesn't deserve its ultra-low share price, so I'll definitely pick it up…

Read more »

Aircraft Mechanic checking jet engine of the airplane
Coronavirus

Air Canada Stock Fell 5% in November: Is it a Buy Today?

Air Canada (TSX:AC) stock saw remarkable improvements during its last quarter but still dropped 5% with more recession hints. So,…

Read more »

Airport and plane
Coronavirus

Is Air Canada Stock a Buy Today?

Airlines are on the rebound. Does Air Canada stock deserve to be on your buy list?

Read more »

A patient takes medicine out of a daily pill box.
Coronavirus

Retirees: 2 Healthcare Stocks That Could Help Set You up for Life

Healthcare stocks offer an incredible opportunity for growth for those investors who look to the right stocks, such as these…

Read more »

sad concerned deep in thought
Coronavirus

Here’s Why I Just Bought WELL Health Stock

WELL Health stock (TSX:WELL) may be a healthcare stock and a tech stock, but don't let that keep you from…

Read more »

healthcare pharma
Coronavirus

WELL Stock: The Safe Stock Investors Can’t Afford to Ignore

WELL stock (TSX:WELL) fell 68% from peak to trough, and yet there's no good reason as to why. So now…

Read more »

telehealth stocks
Tech Stocks

The Ultimate Growth Stock to Buy With $100 Right Now

After climbing 600%, this growth stock is now down 68%. But it won't be long before other investors catch on.

Read more »