Some Canadian stocks go through wild turbulence. But when the business behind the scenes still looks strong, a dip can be a gift. Right now, one of the most iconic companies in Canada is trading well below recent 52-week highs. We’re talking about Air Canada (TSX:AC). Down nearly 30% from recent heights, and 70% from pre-pandemic levels, the Canadian stock might have signs of life. In fact, despite headwinds, this might be one magnificent Canadian stock to buy and hold for good.
About Air Canada
Air Canada isn’t just another airline. It’s Canada’s largest domestic and international carrier, responsible for flying more than 150,000 people a day at its peak. It’s deeply embedded in the country’s infrastructure. If the Canadian stock succeeds, Canadians benefit through tourism, business travel, and global trade. That’s why when the world shut down, Air Canada felt the impact hard. And it hasn’t fully recovered.
As of writing, Air Canada trades around $19 per share, far below the $50 mark it flirted with in early 2020. While the Canadian stock recovered somewhat in 2021 and 2022, it has remained stuck in a low-altitude range, reflecting investor caution. Travel demand is back, but so are rising costs, union negotiations, and global uncertainty.
Earnings improvements
Yet despite all that, the business is improving. In its most recent earnings report for the first quarter of 2025, Air Canada reported revenue of $5.2 billion. That’s down slightly from $5.23 billion in the same quarter last year, but the big picture matters more. The airline still generated $387 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). It also posted a loss of $108 million, which might sound discouraging, but for an airline in Q1, when travel is often seasonally lower, that isn’t unusual.
Most importantly, Air Canada’s capacity is growing. Its available seat miles rose 11% year over year, showing that it’s ramping up flights to meet global demand. Load factor, how full its planes are, hit 84.5%, an impressive number that shows Canadians and international travellers are coming back.
More to come
Air Canada has also been smart about managing its network. It’s adding high-demand international routes like Montreal to Madrid and beefing up flights to South America and Asia. This is key for long-term profitability. International routes tend to offer higher margins and more flexibility. The airline is also investing in digital upgrades and fleet improvements, including more fuel-efficient aircraft.
One concern investors have is debt. Air Canada had to borrow heavily to survive the pandemic. It ended Q1 with about $11.9 billion in net debt. That’s a lot. But it’s actively paying it down. Free cash flow came in strong at $1.1 billion last year, and it continues to focus on improving its balance sheet. In fact, the Canadian stock is now up 46% since its 52-week lows! So investors are clearly taking notice.
Foolish takeaway
So why is the stock still down? Part of it is simple caution. Plus, there’s no dividend here, so it’s not for income-focused investors. But for someone looking for a Canadian stock with upside over the next 5 to 10 years, Air Canada may be a rare case of value in the skies. If the company continues to grow international routes, pay down debt, and benefit from global travel tailwinds, the stock could easily climb much higher from here.
