Air Canada Inc. (AC:CA) (ACDVF)
Jefferies lowered its 12-month target price on Air Canada to C$18 from C$19, citing near-term margin pressure stemming from delayed aircraft deliveries and escalating labor costs. The analyst noted that persistent supply chain disruptions continue to affect aircraft availability, limiting Air Canada’s ability to expand capacity and optimize fleet efficiency ahead of the busy travel season. These delays are expected to constrain revenue growth opportunities while increasing maintenance and leasing expenses on older aircraft.
Jefferies highlighted that higher wage settlements and staffing shortages across key operational areas are placing upward pressure on unit costs. While passenger demand remains resilient, particularly in transatlantic and premium travel segments, rising input costs could offset much of the benefit from robust load factors and steady ticket pricing.
Analysts acknowledged that Air Canada’s cost-control initiatives and ancillary revenue growth, including loyalty program expansion and cargo operations provide partial offsets, but not enough to fully counteract current margin headwinds. Despite the short-term challenges, Jefferies maintained that the airline’s long-term fundamentals remain sound, supported by a strong brand, diversified route network, and balance sheet repair progress.
The modest target cut reflects the firm’s view that operational constraints and cost inflation will limit earnings expansion in the near term, keeping the stock range-bound until fleet normalization and cost stability return later in 2026.
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