Key Morningstar Metrics for Air Canada
- Fair Value Estimate: C$20.10
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
What We Thought of Air Canada’s Earnings
Air Canada’s AC fourth-quarter revenue increased 6.8% to C$5.8 billion, and its operating profit of C$324 million came in at a 5.6% margin. The year included four days of lost revenue in August due to a flight attendants’ strike, as well as softer demand for travel to and from the United States.
Why it matters: The airline has yet to return capacity to its pre-pandemic peak, just shy of 113 million passenger miles; it flew 105 million seat miles in 2025. This continues Air Canada’s more gradual, disciplined post-pandemic expansion compared with some competitors, which is partly due to macroeconomic uncertainty and the recent strike.
- The company’s gradual growth trajectory is partly involuntary, constrained by delayed aircraft deliveries, but it also reflects its disciplined approach in a competitive environment where oversupply in some markets has curtailed near-term growth plans.
- Air Canada has also seen its cost structure expand, with structural unit costs reaching a record 15.07 cents per mile in 2025, up 4% from 2024, driven primarily by higher wage rates, which we anticipate will continue in 2026 and beyond.
The bottom line: We have updated our forecasts to reflect continued rebuilding of Air Canada’s capacity and persistent yields, resulting in our C$20.10 fair value estimate for the no-moat airline’s shares, up from C$17.80.
