Air Canada (AC:CA) (ACDVF)
Scotiabank has revised its 12 month target price forecast for Air Canada’s stock downward, from C$25 to C$21, citing a combination of factors that are expected to weigh on Canada-U.S. travel volumes in the coming months. The bank’s analysts pointed to a noticeable softening in demand for cross-border travel, driven by both macroeconomic and sociopolitical elements.
One key reason for the downgrade is traveler caution, as Canadian consumers show increased sensitivity to discretionary spending amid persistent economic uncertainty, including inflationary pressures and elevated interest rates. In this climate, international travel — particularly to the U.S. — is becoming a less attractive option.
Scotiabank notes a rise in patriotic sentiment, with more Canadians opting to vacation domestically, partly to support local tourism as a catalyst of the American tariffs. This trend is compounded by heightened border scrutiny and regulatory friction, which can discourage casual or spontaneous travel between the two countries.
The analysts also flagged the widening currency gap between the Canadian dollar and the U.S. dollar, which makes travel to the U.S. more expensive for Canadians. The weaker loonie increases costs for airfare, accommodations, and everyday spending, making the U.S. a less affordable destination.
All of these factors contribute to Scotiabank’s more conservative outlook on Air Canada’s performance, particularly in its trans-border segment. While the airline has made strides in restoring capacity and improving operational efficiency, analysts believe these headwinds could limit revenue growth and pressure margins in the near term.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
