How to invest in Air Canada (AC) stock: A complete guide for Canadians

Once your account is active, you’ll need to deposit funds before you can place any trades. Depending on the brokerage, you should be able to transfer money from a linked bank account, add your brokerage account as a bill payment in your online banking portal or deposit a cheque. If you’ve opened a tax-advantaged account, such as a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), and wish to transfer funds from another brokerage account, you can initiate the process through the new broker.

You’ll need to locate the stock through your brokerage account to purchase Air Canada shares. You should be able to search using the company name or its stock ticker symbol (AC). From there, you’ll need to decide what type of order you want to place.

Market and limit orders are the most common. A market order indicates you wish to purchase the stock immediately at the best available price. You may or may not get the stock at the quoted price, but your order should be filled almost instantly. To place a limit order, you’ll set the maximum price you’re willing to pay for the stock and a time limit for the trade to occur. This could be by the end of the day, week, month, etc. If the order isn’t executed within that period, it will expire.

If you’re placing a limit order on Air Canada stock, you’re unwilling to purchase it at the current price but expect it to drop within the duration of your limit order.

Once you’ve purchased your Air Canada stock, you’ll want to monitor its performance. You can do this using brokerage tools, financial news apps or keeping an eye on Air Canada’s performance and the airline industry. Remember that any individual stock should be considered a long-term investment, so don’t worry about short-term fluctuations.

Air Canada’s most recent quarterly results (2024 Q3) exceeded expectations, leading to a sharp increase in the company’s stock price. The company did dodge a bullet by negotiating a new contract with their pilots in mid-September of 2024. While the labour uncertainty did lead to a loss of some passenger traffic, a strike would have been far more devastating to its financials.

Third-quarter operating revenues came in at $6.1 billion and operating income was $1 billion. At $2.57, the company’s adjusted earnings per share beat analyst expectations, as did its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.5 billion.

Looking ahead, Air Canada should benefit from strong passenger demand and lower fuel prices, while continuing to focus on strengthening its balance sheet after taking a huge hit during the COVID-19 pandemic. One step the company is taking in this regard is a share buyback of up to 10% of its shares, partly to increase value for shareholders.

Air Canada continues to be Canada’s largest airline, and the only true global airline in the country. Yet it faces increasing domestic competition. While Canada’s second largest airline, WestJet, has scaled back its routes in Eastern Canada in recent years, it has strengthened its foothold on the Western Canadian market. Meanwhile, Toronto-based Porter Airlines has rapidly expanded its fleet, and now competes head-to-head with Air Canada across much of Ontario and Quebec.

Airline stocks tend to be volatile because they are highly susceptible to changes in the economy, including regular economic cycles and unexpected events such as global pandemics or geopolitical conflict. Fuel price fluctuations can also wreak havoc on the industry.

No, Air Canada does not currently issue dividends. Like many major airlines, it aims to deliver value for shareholders by investing in the growth of its airline network. It also has a large amount of debt it must service. While total long-term debt of $7.85 billion is down significantly from over $12 billion at the height of the COVID-19 pandemic, the company will likely need to reduce its debt levels further before issuing dividends.

You can purchase Air Canada stock by opening a self-directed TFSA or RRSP account with an online brokerage, such as Questrade or Wealthsimple. Stocks held in these tax-advantaged accounts can grow tax-free, making them an ideal long-term investment vehicle.

Air Canada’s leadership in the Canadian airline market, along with its improved financial performance coming out of the pandemic, make it an enticing stock to buy in late 2024, especially as its stock price remains well below pre-pandemic levels. But remember positive financial results do not guarantee future results.

Also, airline stocks like Air Canada are highly volatile and can experience sudden price swings as a result of changes in travel demand, fuel price increases and economic cycles. Air Canada stock should not be considered a core portfolio holding, rather it should carry a small weighting in an otherwise well-diversified portfolio.