If you happen to’re in search of a long-term discount on the TSX, Air Canada (TSX:AC) may be one of the crucial intriguing comeback tales available in the market. This isn’t a Canadian inventory for somebody chasing a fast win. But for affected person buyers, it represents an opportunity to purchase into one in every of Canada’s most strategic firms. All whereas it’s nonetheless buying and selling under its pre-pandemic highs. Air Canada dominates home air journey, instructions a powerful worldwide community, and advantages from model loyalty that few opponents can match. The Canadian inventory was devastated throughout COVID. But its rebound since then has been outstanding, and it’s nonetheless solely partway by means of its restoration arc.

The latest previous

Air Canada was hit laborious by the COVID-19 pandemic when journey basically floor to a halt. Like many airways, it confronted large income losses, fleet idling, layoffs, and authorities help. Since then, the Canadian inventory has been working its means again, ramping up capability, restoring worldwide routes, and decreasing debt. Traditionally, the airline enterprise is cyclical and weak to exterior shocks, and Air Canada was no exception. Previous to the pandemic, it held a powerful home place in Canada and was increasing globally, so the pullback left a spot that administration has been attempting to fill.

Presently, Air Canada is exhibiting indicators of stabilizing and average restoration whereas additionally dealing with headwinds. Throughout the second quarter, the Canadian inventory reported working revenues of CA$5.6 billion up 2% from final yr, and shifted to working revenue of $418 million from a loss. Adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) rose considerably to $909 million, a margin of 16%.

On the operational entrance, Air Canada is increasing routes (together with worldwide), enhancing its loyalty programme by means of Aeroplan, and optimizing its fleet and operations. But probably the most compelling a part of Air Canada’s story at present is how a lot stronger the basics look in comparison with the market’s notion. The airline has returned to constant profitability, reduce billions in debt, and generated optimistic free money movement for a number of quarters. Demand stays sturdy throughout each leisure and enterprise journey, and the Canadian inventory’s value management has improved dramatically. It’s leaner, extra environment friendly, and working at a scale that provides it pricing energy even with competitors heating up.

Is it good?

In brief, no. Air Canada and the flight attendants’ union reached a tentative settlement in August 2025, ending a strike that had disrupted operations. The airline introduced a number of new worldwide routes for 2026 (e.g., Montréal to Palma de Mallorca) and expanded its regional community, signalling its progress ambition. Although all this prices cash. In the meantime, labour negotiations stay unresolved in sure segments. The union representing flight attendants rejected a tentative wage settlement in early September 2025 (99% towards), although a strike just isn’t anticipated because of mediation.

So there are definitely objects buyers might want to watch in the event that they plan on getting in long run. A optimistic pattern in earnings and money movement will cut back threat and unlock worth, and new routes supply progress, although the value per seat wants to carry up. If competitors forces fares down, earnings could possibly be hit.

Moreover, labour disruptions and negotiations matter, with excessive labour prices probably consuming into margins or forcing reductions. Gasoline costs and prices may spike, and that has been handed on to Air Canada and the patron. Debt additionally must maintain coming down, all whereas the macro developments of air journey demand must sustain. So there’s rather a lot to think about for future buyers.

Backside line

All that stated, at at present’s share value, buyers are paying a fraction of what the inventory traded at earlier than 2020, although the airline is financially stronger now. Analysts have famous that Air Canada’s valuation continues to be nicely under U.S. friends. That disconnect creates a possibility, so there’s room for each earnings progress and a number of enlargement. For long-term buyers, that’s a recipe for compounding beneficial properties.

In brief, Air Canada appears like a basic worth play wrapped inside a restoration story. It’s Canada’s flagship provider, buying and selling at a reduction regardless of rising earnings, document journey demand, and enhancing fundamentals. For buyers who can abdomen some turbulence and assume in years, not months, this could possibly be probably the greatest long-term bargains on the TSX.