Air Canada stock falls on 2025 outlook, 2028 targets

Investing.com — Shares of Air Canada (TSX:AC) dropped 8% following the company’s issuance of 2025 guidance and presentation on its long-term targets. Despite reiterating its previous forecasts, investors seemed unimpressed with the airline’s projections for the coming years.

The carrier’s presentation outlined a strategy to achieve approximately 10% annual EBITDA growth through 2028, leveraging capacity growth, network scale, and fleet cost optimization.

Air Canada expects to realize 15-20% cost efficiencies from a modernized fleet and aims for a 3% annual improvement in labor productivity, although these improvements are expected to materialize more significantly towards the end of the forecast period. These measures are part of a broader plan to offset rising inflation pressures.

Despite anticipating significant capital expenditures totaling C$18 billion over the 2024-2028 period, Air Canada is targeting roughly C$4-5 billion in cumulative free cash flow (FCF).

The airline also intends to maintain a leverage ratio below 2x, with liquidity targets set between C$6-7 billion, including the revolving credit facility (RCF).

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