Air Canada is the largest aviation company in Canada in terms of fleet size and the number of passengers transported. Under brands like Air Canada Vacations and Air Canada Rouge, it offers domestic, US transborder, and international airline services. It also provides its services through capacity purchase agreements with other regional carriers.

Economic cycles have a significant impact on airline stock prices. In light of the uncertainties surrounding the pandemic, continued difficulties, and escalating high inflation levels, Air Canada stock is currently down 25% year to date. The stock is currently trading at a very cheap value that is very near to its 52-week low. So, will its stock rise again now that travel restrictions are easing and demand for travel is progressively increasing? Here we answer, Is Air Canada stock a good buy?

Facing Several Headwinds

Over the last two years, Air Canada has experienced a number of challenges that have significantly impacted its operations. The valuation of this airline operator was significantly impacted by those series of events.

In essence, because the aviation industry is so vulnerable to economic cycles, there is typically a great deal of risk associated with it. Back in 2020, when people were compelled to stay at their homes due to the global pandemic and traveling had mostly stopped, the airline industry, globally, was severely impacted. Even while the travel restrictions began to loosen again after a while, the situation didn’t really get much better. Again, by the second quarter of this year, prices for energy items, including jet fuel, began to rise as a result of the impact of the Russia and Ukraine war. The cost of jet fuel has indeed soared to multi-year highs, straining Air Canada’s bottom line.

The long-term forecast for the aviation sector, in general, is still quite positive, despite all these ongoing unfavorable events and conditions. The company’s post-pandemic financial recovery may be somewhat delayed by these short-term macroeconomic factors, but in the long run, as travel restrictions are further relaxed and demand for travel returns to pre-pandemic levels, the stock of Air Canada could start rising once again.

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