Better Airline Stock: Air Canada vs WestJet?

Airline stocks were some of the greats, and should be making a roaring comeback post-COVID. So what’s going on?

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 26, 2025 5:00 pm EDT

When evaluating investment opportunities in Canada’s aviation sector, Air Canada (TSX: AC) stands out as the primary publicly traded airline. WestJet, once a public company, was acquired by Onex (TSX: ONEX) Corporation in 2019 and is no longer individually listed on the stock market. However, investors interested in WestJet’s performance can consider Onex’s overall financial health instead. So, let’s get into which is the better buy.

A airplane sits on a runway. — Source: Getty Images

Air Canada

Established in 1937, Air Canada has grown to become the nation’s largest airline, offering both domestic and international flights. It operates a diverse fleet, including Airbus A330s and Boeing 787 Dreamliners, catering to various travel demands. The airline also manages subsidiaries like Air Canada Rouge and Air Canada Vacations, expanding its reach in the leisure travel sector.

In 2024, Air Canada achieved record annual revenues of $22.3 billion, marking a 2% increase over the previous year, despite 5% capacity growth. The adjusted earnings before interest, taxes, depreciation and amortization (EBTIDA) reached $3.6 billion, slightly surpassing guidance.

Notably, the airline secured a new agreement with its pilots, avoiding potential operational disruptions, and achieved an 8-point improvement in on-time performance compared to 2023. Plus, Air Canada stock completed a share buyback program, repurchasing over 35 million shares. Looking ahead, the company aims to achieve $30 billion in operating revenues by 2028, targeting at least a 17% adjusted EBITDA margin and a 5% free cash flow margin.

Air Canada stock’s strategic initiatives have positioned it well for future growth. The airline has been expanding its international routes, particularly to Asia-Pacific destinations, to capitalize on the growing demand for leisure travel. The company also plans to increase its fleet size, with orders placed for new aircraft to enhance capacity and fuel efficiency. These initiatives are expected to contribute significantly to the company’s goal of achieving $30 billion in operating revenues by 2028.

WestJet

Onex, a private equity firm, acquired WestJet in 2019, integrating it into its diverse investment portfolio. Onex’s business interests span various sectors, including healthcare, manufacturing, and financial services.

In 2024, Onex reported a net income of US$373 million for the fourth quarter, an increase from US$303 million in the same period in 2023. The basic earnings per share (EPS) from continuing operations stood at US$4.81, up from US$4.00 in 2023. This growth reflects the company’s strategic focus on long-term shareholder value and strengthening its market positioning.

Onex’s diversified portfolio includes investments in various sectors, providing a buffer against industry-specific downturns. The company’s private equity investments had net gains of $121 million, or a return of 2% in the second quarter of 2024. Investments in credit strategies generated net gains of $17 million, or a return of 1% in the same period. This diversification allows Onex to manage risks effectively while seeking opportunities across different industries.

Foolish takeaway

For investors, the choice between Air Canada and Onex hinges on individual investment strategies. Air Canada stock offers direct exposure to the airline industry, with its performance closely tied to travel demand and operational efficiency. In contrast, investing in Onex provides access to a diversified portfolio, where WestJet is one component among many. This diversification can mitigate risks but also dilutes the impact of any single investment, including WestJet.

Investing in Air Canada stock offers direct exposure to the airline industry, with the potential for significant returns as the company executes its strategic growth plans. However, this comes with inherent risks associated with the aviation sector. On the other hand, investing in Onex provides diversified exposure across various industries, including aviation through WestJet. This diversification can offer a more balanced risk profile but may also result in more modest returns from any single sector.