Air Canada (TSX: AC) is back on investors’ radar for a simple reason: the story looks a lot less fragile than it did a year ago. Travel demand hasn’t disappeared, premium and international bookings held up well, and management just posted a much stronger finish to 2025 than many investors expected. Add in fresh 2026 guidance, more fleet investment, and a stock that still trades far below its old highs, and suddenly this one looks interesting again.
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AC
Air Canada stock remains the country’s largest airline, so it gives investors direct exposure to Canadian and international travel demand. That also means the stock tends to swing with the economy, fuel prices, labour issues, and consumer confidence. Over the last year, it gave the market plenty to think about. A flight attendant strike disrupted operations in the summer of 2025, and that pressure forced management to suspend guidance for a stretch before resetting expectations later in the year.
Still, Air Canada stock didn’t spend the year standing still. It expanded its international network through Toronto, including plans to return to Shanghai and Budapest and add Prague for the summer of 2026. It also pushed ahead with fleet modernization, announcing eight Airbus A350-1000 aircraft with options for eight more. Long-haul demand remains one of the more attractive parts of the business, and newer planes can improve fuel efficiency and route economics over time.
There was also a clear shareholder-friendly angle. Air Canada stock completed a $500 million substantial issuer bid in June 2025 and continued buying back stock, with more than $850 million deployed to share repurchases in 2025. That doesn’t erase the volatility, but it does suggest management saw value in the stock and wanted to shrink the share count while rebuilding investor confidence.
Into earnings
Now to the numbers. Air Canada stock reported full-year 2025 operating revenue of $22.4 billion, operating income of $918 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $3.124 billion. Net income came in at $644 million, or $1.86 per diluted share. In the fourth quarter alone, revenue reached $5.77 billion, while net income hit $296 million, a sharp rebound from the prior year’s fourth-quarter loss. Those numbers don’t make Air Canada stock a flawless business, but they do show a company that handled a messy year better than many expected.
Valuation is part of the appeal. As of mid-March 2026, Air Canada stock traded at roughly 9.3 times earnings, which is not exactly expensive for a business that just returned to healthier profitability and continues to target growth. The market still seems to price in plenty of caution, and that’s understandable. Airlines rarely get the benefit of the doubt for long. Fuel can spike, labour costs can rise, and even good booking trends can change quickly if the economy stumbles. Furthermore, recent pressure on airlines globally from higher fuel costs tied to Middle East tensions.
Looking ahead, management guided for 2026 adjusted EBITDA of $3.35 billion to $3.75 billion, capacity growth of 3.5% to 5.5%, and free cash flow of $400 million to $800 million. It also said booking momentum remained strong heading into the year. That gives investors a reason to pay attention. Air Canada stock isn’t the kind of stock you buy for a sleepy, stress-free ride. It’s more of a recovery-and-execution story. But if you believe travel demand stays resilient, and management can keep costs under control, it could still fit as a higher-risk buy for 2026.
Bottom line
So, is Air Canada stock a buy in 2026? For cautious investors, maybe not. The stock still carries airline-sized baggage. But for investors who can handle some turbulence, the setup looks much more compelling than it did before. Air Canada stock has earnings momentum, growth plans, and a valuation that still leaves room for upside if management delivers.
