Air Canada (TSX:AC) stock finally turned the page on a series of challenging years, delivering a 19.1% gain in 2024 — marking the airline’s first positive annual performance since 2020. However, the start of 2025 has been less promising, with the stock down nearly 10% in January amid renewed concerns about macroeconomic and geopolitical uncertainties. With shares now trading at $20.10 and a market cap of $6.8 billion, many investors are questioning whether Air Canada stock can navigate these temporary headwinds and deliver consistent returns through 2030.
In this article, let’s take a closer look at Air Canada’s financial performance in recent years and long-term prospects to find out whether sticking with AC stock could be a smart move for patient investors.
What helped Air Canada’s stock surge in 2024?
Air Canada’s impressive 2024 performance was no accident. This was largely driven by its operational and financial recovery and ability to benefit from surging travel demand. In the fiscal year 2023, Air Canada achieved a 31.9% YoY (year-over-year) revenue growth, reaching $21.83 billion. For the year, the airline also significantly improved its profitability, posting an adjusted net profit of $1.71 billion, reflecting a solid 273% jump from the previous year
Operational efficiencies and strategic initiatives also played key roles in helping AC stock surge last year. In the third quarter of 2024, the largest Canadian passenger airline company saw on-time performance improve by 8% compared to the same period in 2023. Despite challenges like higher fuel prices and pilot negotiations, Air Canada navigated these hurdles quite effectively, which helped it avoid big disruptions and ensure customer loyalty
Last year, Air Canada also made bold moves to return value to its shareholders. For example, the company announced a share buyback program in late 2024 to repurchase up to 10% of its shares. This buyback plan clearly reflected the airline’s efforts to address pandemic-era shareholder dilution while signalling confidence in its future growth potential
Bright long-term outlook despite short-term challenges
While Air Canada ended 2024 on a high note, the start of 2025 has been more volatile. Renewed geopolitical uncertainties, macroeconomic concerns, and some company-specific concerns have pushed AC stock down.
In November, higher jet fuel prices and the impact of contract-related cost adjustments forced the company to slightly cut its full-year 2024 capacity and profitability guidance. However, we shouldn’t forget the fact that Air Canada still expects its capacity to rise by 5% YoY for the full year. Also, its continued focus on cost optimization could be seen by looking at the improvement in its third-quarter adjusted cost per available seat mile
I expect Air Canada’s diversification across passenger services and cargo to strengthen its fundamentals, help it navigate short-term challenges, and provide a steady revenue stream even as economic conditions and commodity prices fluctuate.
Similarly, its investments in fleet modernization efforts could set the stage for sustainable growth in the coming years
