Air Canada Stock Declines Amid 2025 Outlook and 2028 Targets

Investing.com -- Air Canada (TSX:AC) shares fell by 8% after the company published its 2025 guidance and presented its long-term objectives. Despite the airline reiterating its previous forecasts, investors do not seem to be swayed by the company's projections for the coming years.

The carrier's presentation outlined its strategy to achieve approximately 10% annual EBITDA growth by 2028, leveraging capacity expansion, network scale, and fleet cost optimization. Air Canada expects to achieve 15-20% cost efficiency from its modernized fleet and targets an annual improvement of 3% in workforce productivity, although these improvements are expected to become more pronounced towards the end of the forecast period. These measures are part of a broader plan to balance increasing inflationary pressures.

Although Air Canada forecasts significant capital expenditures totaling CAD 18 billion over the 2024-2028 period, it aims for a cumulative free cash flow (FCF) of approximately CAD 4-5 billion. The airline also targets maintaining a leverage ratio below 2x and has set liquidity objectives, including a revolving credit facility (RCF), between CAD 6-7 billion.