A Look at Air Canada (TSX:AC) Valuation Following Major European Expansion and Fleet Renewal Plans

Air Canada (TSX:AC) is ramping up its growth engine with a sizable Summer 2026 expansion across Europe. The airline is launching new nonstop routes from Toronto, Montreal, and Halifax. Air Canada also introduced a comprehensive cabin renewal across its North American fleet, adding customer appeal and competitive strength.

See our latest analysis for Air Canada.

While Air Canada's new European routes and partnership expansion with Emirates highlight its ambitions, investor enthusiasm has yet to take off. The stock sits at $19.07, and despite recent news, its 1-year total shareholder return remains at -22.6%. Strong short-term momentum is building, with a 7-day share price return of 6.5% suggesting renewed optimism among investors. Over the longer term, returns have lagged, and market sentiment may depend on whether operational upgrades and route growth can translate into sustained profit and shareholder value.

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With shares still trading at a notable discount to analyst targets despite fresh momentum, the key question for investors is whether Air Canada is offering real value right now, or if the market has already accounted for future growth.

Most Popular Narrative: 21% Undervalued

Air Canada’s most widely followed narrative values the stock at CA$24.24, which is meaningfully above the last close of CA$19.07. This sets the stage for a closer look at what is fueling such a bullish outlook relative to current market pricing.

Aggressive international long-haul network expansion, notably into Latin America, Europe, and Southeast Asia, alongside successful development of sixth freedom traffic, positions Air Canada to capture a larger share of connecting global passengers. This supports both top-line growth and load factor resilience. Fleet modernization and upcoming entry of next-generation fuel-efficient aircraft are expected to drive down per-seat costs and enhance operational efficiency, supporting margin expansion and improved long-term earnings.

Read the complete narrative.

Want to see what is truly behind this fair value call? The narrative leans heavily on major capacity expansion and operational upgrades, but what assumptions really lift the stock’s potential? Find out which ambitious growth and margin projections are driving the analysts’ high target price inside the full breakdown.

Result: Fair Value of $24.24 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent labor challenges and intense competition on international routes still pose significant risks. These factors could limit Air Canada’s recovery prospects.

Find out about the key risks to this Air Canada narrative.

Build Your Own Air Canada Narrative

If you see the numbers another way or want to chart your own course, you can easily build a narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Air Canada.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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