Air Canada (TSX:AC) is a Montreal-based company that provides domestic, United States, transborder, and international airline services. This is the largest commercial airliner in Canada. The company has faced two major tests over the past quarter century and passed both with flying colours. Now, while I wait to be brought to justice for that pun, let’s discuss how much a $10,000 investment in Air Canada stock in 2010 would be worth today.
How has this top TSX stock performed over the past year?
Shares of Air Canada have increased 12% month over month as of early afternoon trading on July 7. The stock has surged 30% so far in 2023. Its shares have now soared 49% in the year-over-year period. Investors can see more of its recent and past performance with the interactive price chart below.
Charting Air Canada’s rise and fall and rise again
The 2007-2008 financial crisis and subsequent global recession presented a major risk to Air Canada and other major domestic and international airliners. In the worst throes of the recession, it appeared that the top Canadian airline risked bankruptcy. Fortunately, the company was able to finesse the economic crisis and came out as one of the strongest growth stocks on the TSX by the end of the 2010s.
Air Canada had just achieved record highs in the late 2010s and the beginning of 2020 when it was smacked with another major global crisis. The COVID-19 pandemic forced airliners to shut down operations domestically and around the globe. Revenues and earnings were slashed, and the top Canadian airliner was forced to dip into its extensive cash reserves, as it was faced with yet another existential crisis. At the time, the company predicted that it would take roughly three years to recover from the pandemic.
Three years later and Air Canada has largely fulfilled its promise. Shares of Air Canada closed at $1.89 per share on July 7, 2010. At the time, investors could have snatched up 5,291 shares of this TSX stock for a purchase price of $9,999.99. Fast forward to the present day, and this stock is trading at $24.87 per share as of mid-afternoon trading on July 7, 2023. The 5,291 shares we snagged in 2010 would be worth a whopping $131,587.17 at the time of this writing. That means we would have gobbled up capital growth over $120,000 in under 15 years.
Should investors be happy with the company’s recent earnings?
This company released its first-quarter fiscal 2023 earnings on May 12. Air Canada achieved record first-quarter passenger revenues of $4.08 billion, which was more than double the same rate in the first quarter of fiscal 2022. Moreover, operating revenues surged 90% compared to the previous year to $4.88 billion. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. The company posted adjusted EBITDA of $411 million in the first quarter of 2023 — up from an adjusted EBITDA loss of $143 million in the first quarter of fiscal 2022.
Why Air Canada is worth buying right now
Shares of Air Canada are trading in attractive value territory compared to its industry peers in the first half of July. This company has climbed back to profitability only a year removed from posting sharp losses due to the impacts of the pandemic. Its earnings are on track for strong growth going forward. Air Canada still has room to run in the 2020s.
