After soaring 36% in the last quarter of 2024, Air Canada (TSX:AC) stock looked like it was finally ready to take off after years of turbulence. Investors cheered what seemed like a long-awaited turnaround, driven by improving travel demand and operational momentum. But just a few months into 2025, the optimism has fizzled.
With shares now down nearly 40% year to date and trading at just $14.17, questions are resurfacing about whether the fourth quarter was just a brief blip or if Air Canada is simply buckling under short-term macro pressures — from global economic jitters to Trump-era tariffs fueling fresh market volatility.
In this article, we’ll assess Air Canada’s financial resilience, market positioning, and long-term fundamentals to find out what the next six years might realistically hold.
So, what’s been weighing Air Canada stock down lately?
A big reason Air Canada stock has taken a nosedive in early 2025 is that investors are spooked by rising costs and squeezed margins. Although the airline posted record revenues in the fourth quarter and full year of 2024, a $490 million one-time pension charge tied to a new pilot contract hit its bottom line hard. This, combined with rising labour and maintenance expenses, pushed the airline to a quarterly operating loss of $254 million.
In addition, macro headwinds like volatile fuel prices, global economic jitters, and concerns about tariffs and international travel demand are making investors a little skittish. As a result, Air Canada shares are down around 40% year to date — even though some of the reasons behind that dip are one-offs rather than signs of long-term trouble.
Signs of long-term strength
Despite Air Canada’s headline-grabbing losses, there are encouraging numbers in the mix. In the fourth quarter, the Canadian flag carrier posted $5.4 billion in revenue — a new quarterly record and up 4% from the year before. Even more importantly, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped 34% YoY (year over year) to $696 million — showing that its core business is still pumping out strong cash flow.
For the full year, Air Canada brought in $22.3 billion in revenue, which marked another record and was driven by a 5% YoY increase in capacity. Its 2024 adjusted net profit clocked in at $1.34 billion, down from 2023 but still a solid figure given all the external pressures. Overall, the company ended the year with $3.9 billion in operating cash flow and a leverage ratio of just 1.4 — reflecting strong liquidity and balance sheet discipline.
Where will Air Canada stock be in six years?
It is important to note that Air Canada isn’t just flying on autopilot. It has its eyes set on 2028 targets — and the long runway ahead looks pretty promising. If management executes its 2028 goals, investors could be looking at a very different stock by then. The largest Canadian passenger airline firm is targeting $30 billion in revenue and an adjusted EBITDA margin of at least 17%, a big step up from today’s levels.
If it can keep costs in check, grow capacity smartly, and continue buying back shares, the next six years could turn out to be great for Air Canada as well as its investors. In addition, falling oil prices could ease one of its biggest cost burdens, giving margins more room to breathe.
