Air Canada (TSX:AC) has had a turbulent ride in 2025. After plunging 36% in the first quarter, the stock has staged a solid rebound in the second quarter with a 32% gain so far. Even with that recovery, shares remain down 16% year to date, currently trading at $80.64 with a market cap of $6.1 billion.
Investors are right to be cautious, given the ongoing macroeconomic uncertainty, fuel price volatility, and geopolitical tension weighing on the airline sector. But we can’t deny that Air Canada stock is also showing signs of resilience. And more importantly, the long-term story may be less about short-term turbulence and more about how the Canadian flag carrier adapts, innovates, and positions itself for the next decade of travel.
Let’s explore where Air Canada could be 10 years from now and what fundamental factors may shape its long-term outlook.
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Reasons behind Air Canada stock’s rollercoaster ride
Air Canada stock has been reacting to a mix of industry-specific turbulence and broader macroeconomic shifts. If we ignore the recent spike in oil prices due to the ongoing Israel-Iran conflict – which could prove to be temporary – fuel prices have actually been more forgiving this year compared to 2024. That has helped airlines cushion some of the pressure from softening demand.
However, the overall investor sentiment is still cautious, with geopolitical uncertainty and concerns about economic growth hanging over the entire travel sector.
Still generating big numbers in tough times
Despite these challenges, Air Canada has been proactive in managing capacity during a typically slow winter season, especially in the transborder segment.
The first quarter of 2025 was an unprofitable quarter for the company, but it wasn’t without strength. Air Canada reported $1.5 billion in operating cash flow for the quarter and $831 million in free cash flow. Similarly, its adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $387 million, even as margins slipped from last year. While depreciation, exchange rate swings, and ground packages drove its costs higher last quarter, lower fuel prices offered a bit of relief.
Meanwhile, Air Canada’s advance ticket sales increased as the airline headed into peak travel season, which showed consumer demand hasn’t disappeared. Plus, its leverage ratio improved to 1.3 times in the latest quarter from 1.4 times at the end of 2024.
Where will Air Canada stock be 10 years from now?
Interestingly, Air Canada has laid out a detailed roadmap to 2028 and beyond. It aims to cross $30 billion in annual revenue by 2030 while improving margins and keeping capital spending lean. Part of that plan includes expanding its global network, modernizing the fleet, and growing high-yield segments like Air Canada Cargo. The airline also plans to keep total shares under 300 million and recently bought back over 15 million shares, a move that could boost shareholder value over time.
If the airline hits its 2028 targets, including adjusted EBITDA margins of 17% or higher and consistent free cash flow, Air Canada stock could look much stronger a decade from now. The pieces are already in motion, and for investors willing to ignore short-term volatility, its long-term outlook looks really strong.
