Air Canada was just upgraded by this analyst

National Bank Financial analyst Cameron Doerksen says Air Canada (Air Canada Stock Quote, Chart, News, Analysts, Financials TSX:AC) shares still have room to move higher after a strong rebound, helped by lower jet fuel prices and reduced labour disruption risk.

As reported by the Globe and Mail, in a July 7 report, Doerksen upgraded Air Canada to “Outperform” from “Sector Perform” and raised his target to $29.00 from $22.00.

The average target is $25.61.

Doerksen said Air Canada’s Q2 results, and to a lesser degree Q3, will still show the negative impact of higher fuel prices. But jet fuel has eased significantly from late-Q1 and early-Q2 peaks, improving the setup for the second half of 2026.

“Whereas previously we estimated Air Canada would need a 15%-plus yield improvement to fully offset higher fuel costs in H2, with the recent easing of jet fuel prices, we now estimate that in H2/26 Air Canada will only need a 7% yield improvement,” he said.

The analyst said some demand resistance is visible, particularly among leisure customers, which could limit fare increases during the peak summer period. But Air Canada has already booked stronger yields based on higher fuel assumptions well into Q4, which should support results in coming quarters.

He also said U.S. transborder demand appears to have stabilized, while Air Canada will face easier comparisons in Q3 and Q4 because of last summer’s flight attendant strike.

Doerksen has greater confidence that Air Canada can avoid a labour disruption this summer. The airline reached a new agreement with customer service agents in June, while a tentative deal with maintenance and ground handling workers was narrowly rejected later in the month.

“Given the closeness of the vote, we are more confident that a deal can be reached without a disruption,” he said.

Air Canada trades at 3.4 times his 2027 EV/EBITDA estimate, below its historical forward average of 3.8 times and well below U.S. legacy airline peers at 5.6 times.

Doerksen also said Aeroplan is an underappreciated asset, saying the loyalty program generates less cyclical, higher-margin cash flows and gives Air Canada a clear competitive advantage.

“Although Aeroplan is a core component of Air Canada’s business and will not be monetized, given the value ascribed to other airline loyalty programs as separate entities, we nevertheless view Aeroplan as providing valuation support for Air Canada shares,” he said.

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