In early 2025, the United States imposed a 25% tariff on Canadian imports, igniting a retaliatory trade standoff with Canada and other nations.
As the economic tit-for-tat intensifies, Air Canada (AC:CA) finds itself in the crossfire, with direct implications for its operations, revenue streams, and investor sentiment.
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What Tariffs Mean for Air Canada’s Bottom Line:
The ripple effects of these tariffs are already being felt in Air Canada’s business:
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Vanishing Passengers: The airline has seen a 10% decline in bookings to the U.S. over the next six months. That’s part of a wider trend, with cross-border flights down over 70% year-over-year.
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Route Cuts & Strategic Retrenching: In response, Air Canada is scaling back service to popular U.S. destinations like Florida, Las Vegas, and Arizona by 10%.
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Cargo Headwinds: With the U.S.-China tariff tangle also hitting trade flows, Air Canada’s cargo division could face reduced demand and tighter margins — especially on trans-Pacific lanes.
Stock Target Advisor’s Analysis on Air Canada:
As of April 2025, Stock Target Advisor indicates that Air Canada has a consensus rating of “Moderate Buy,” based on evaluations from 12 analysts. The average price target is C$24.67, suggesting a potential upside from its current trading price.
Analyst Ratings
Recent analyst activities reflect the challenges faced by Air Canada:?
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Jefferies Financial Group downgraded Air Canada from “Hold” to “Underperform,” adjusting the price target from C$18.00 to C$12.00.
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BMO Capital Markets lowered their price target from C$31.00 to C$29.00 while maintaining an “Outperform” rating.
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JPMorgan Chase & Co. downgraded Air Canada from “Overweight” to “Neutral,” with a revised price objective from C$34.00 to C$24.00.
Conclusion:
The ongoing trade tensions and resultant tariffs have markedly affected Air Canada’s operations and financial outlook. The significant decline in U.S.-bound travel, coupled with capacity reductions, underscores the challenges the airline faces.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
