Air Canada Stock Price: The Recovery Story Wall Street Almost Missed

Over the past few months, Air Canada’s stock has behaved like a true recovery story, something that its detractors weren’t entirely prepared for. Not flawless. Not a seamless one. However, something more akin to a company regaining its footing following a difficult period. Investors who abandoned it in the middle of 2025 are starting to reappear in a quiet, almost sheepish manner, similar to how people go back to a restaurant they once vowed to avoid.

It is difficult to ignore the airline’s presence when strolling through Toronto Pearson on a weekday morning. Wide-bodied ground crews from Frankfurt, Tokyo, and Dubai, the red maple leaf on white tails, gate after gate. It has a rhythm that conveys a company operating rather than limping. However, that rhythm was anything but consistent for a large portion of the previous summer. The stock appeared, at least momentarily, to be just another cautionary tale in an industry full of them after a flight attendant strike complicated operations and compelled management to withdraw guidance.

Actually, it’s the numbers that have changed. Revenue for the entire year 2025 was $22.4 billion, with operating income of $918 million and adjusted EBITDA of $3.124 billion. Just the fourth quarter generated $5.77 billion and a net income of $296 million, which is a significant improvement over the loss of the previous year. These numbers don’t make a company untouchable, but they do reveal something crucial: the company managed a truly difficult year better than the majority of Bay Street investors were prepared to wager.

The international push, on the other hand, seems more aspirational than protective. Eight A350-1000 aircraft are on order with options for eight more, plans to return to Shanghai and Budapest, and a new route to Prague for the summer of 2026. There is a perception that management would prefer to focus on long-distance, high-end travel over pursuing smaller domestic profits. That might be the right decision. Newer aircraft typically pay for themselves in fuel savings faster than investors give them credit for, and long-haul has been the more resilient segment of the industry.

I was most surprised by the capital-return story. Over $850 million in repurchases throughout the year and a $500 million significant issuer bid that was completed in June 2025 are not indicative of a company preparing for impact. It sounds more like a group that thinks its own shares are being mispriced by the market. Although airlines are rarely cheap for no reason, the stock is cheap by almost all measures at about 9.3 times earnings in mid-March 2026. Tensions in the Middle East have caused fuel prices to fluctuate once more, and labor costs have continued to rise. The story can be completely changed in a single negative quarter.

With adjusted EBITDA between $3.35 billion and $3.75 billion, capacity growth of 3.5% to 5.5%, and free cash flow between $400 million and $800 million, management’s 2026 forecast gives investors a tangible point of contention. They claim that reservations were high at the beginning of the year. That is encouraging. However, airlines have a way of making forecasts appear absurd.

The speed at which sentiment has changed is difficult to ignore. The topic of survival was discussed a year ago. It’s all about execution now. Fuel curves and Dreamliners won’t determine whether Air Canada’s stock continues to rise; instead, it will depend more on how patient travel demand is with a carrier that appeared worn out not too long ago. The price still carries some degree of uncertainty. Perhaps that is precisely where the opportunity resides.