The Bull Case For Air Canada (TSX:AC) Could Change Following Ground Pay Deal With Flight Attendants

• Air Canada has resumed flights and is restoring service after resolving a strike by its 10,000 flight attendants, following a mediated agreement with the Canadian Union of Public Employees (CUPE) and a directive from the Canada Industrial Relations Board.
• The new tentative agreement not only ends a high-profile labor dispute but could also set new pay standards for ground work across the airline industry, potentially impacting long-term cost structures.
• We'll explore how the introduction of ground pay in Air Canada's labor deal could affect its future earnings outlook and industry cost trends.

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Air Canada Investment Narrative Recap

To believe in Air Canada as a shareholder, you need confidence that its international demand and premium cabin growth can offset rising costs and competitive pressure. The recent end to the flight attendants' strike resolves operational uncertainty, but with new ground pay implemented industry-wide, rising labor costs remain the key risk in the short term, potentially impacting margins and earnings. If material, this trend could affect Air Canada’s ability to capitalize on upcoming travel demand and its cost base.

The most relevant recent announcement is Air Canada's suspension of its third quarter and full-year 2025 guidance due to the labor disruption. This underscores how quickly operational stability can shift and highlights the uncertainty of forecasting performance when labor relations become unpredictable, especially as capacity increases and travel is restored following major disruptions.

However, investors should also consider that, despite recent resolutions, the new labor agreements mean sustained wage pressures could remain a risk...

Read the full narrative on Air Canada (it's free!)

Air Canada's outlook anticipates CA$26.3 billion in revenue and CA$877.4 million in earnings by 2028. This is based on an expected annual revenue growth rate of 5.6%, but a decline in earnings of about CA$622.6 million from the current CA$1.5 billion.

Uncover how Air Canada's forecasts yield a CA$25.63 fair value, a 29% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members produced 11 fair value estimates for Air Canada, ranging widely from CA$15.51 to CA$173.60 per share. As labor cost pressures intensify, be aware that market participants hold sharply different expectations for Air Canada's future performance and outlook.

Explore 11 other fair value estimates on Air Canada - why the stock might be worth 22% less than the current price!

Build Your Own Air Canada Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Air Canada research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Air Canada research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Air Canada's overall financial health at a glance.

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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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