Here’s what National Bank thinks of Air Canada right now

National Bank Financial analyst Cameron Doerksen said demand for air travel in Canada appears healthy and that near-term results for Air Canada (Air Canada Stock Quote, Chart, News, Analysts, Financials TSX:AC) could benefit from lower fuel prices, which may act as a short-term catalyst for the stock.

Reiterating a “Sector Perform” rating, Doerksen raised his target price to $24.00 from $23.00 The Street average target is $23.12.

Ahead of Air Canada’s fourth-quarter results, expected in early February, Doerksen said he expects the shares to remain range-bound, citing several near-to-medium-term headwinds to sustained share price appreciation. He noted that Canadian airline industry system-wide capacity growth, measured by seats, is up 0.6% year-over-year in Q1/26, representing a moderation from prior quarters.

“Demand for air travel still looks positive into early 2026, but we see some risk of yield erosion, notably on sun routes this winter as industry capacity is up significantly (7.0%),” Doerksen said.

As reported by the Globe and Mail, he added that an early look at transatlantic industry capacity for summer 2026 shows seats up 6.3% year-over-year, compared with 3.3% industry capacity growth in summer 2025.

Fuel prices represent a potential earnings tailwind at current spot levels, in his view. Doerksen said the average jet fuel spot price was $0.97 per litre in Q1/25, while prices averaged between $0.85 and $0.89 per litre in subsequent quarters. With the current spot price at $0.83 per litre, he said fuel could be a material cost tailwind for Air Canada in Q1/26 and a modest tailwind for the balance of the year. As a result, he has adjusted his estimates to reflect lower fuel costs.

Doerksen is now forecasting 2026 EBITDA of $3.4-billion, slightly below the Street’s estimate, though he noted consensus assumptions still reflect higher fuel prices than current spot levels.

“If Air Canada guides based on fuel and f/x rates that are closer to spot, we could see the guidance range for 2026 coming in closer to $4.0-billion, although we suspect management may take a more cautious approach,” he said, adding that potentially more constructive guidance could serve as a catalyst when the company reports Q4/25 results.

At approximately 3.0 times 2026 EV/EBITDA, Doerksen said valuation remains attractive. However, he expects the shares to trade in a range given ongoing competitive market conditions, continued weakness on U.S. transborder routes, and increased labour-related risk later in the year.

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