Air Canada (AC) — $800M substantial issuer bid clears at $29 after oversubscription

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Quick version: 60-second Short

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The short version: a big buyback, a weak reaction

Air Canada (TSX: AC), Canada’s largest airline, closed at CA$28.96 on the September 24, 2026 screener print, up about 56% over twelve months but down about 1.5% over the last month. On September 28, it completed a C$800M substantial issuer bid, retiring about 9.8% of its shares at C$29. The Dutch auction cleared at the bottom of its range, and the stock sold off to about C$26.15 after the preliminary results. The new story is capital return, funded by selling a minority slice of Aeroplan.

On the screener, Air Canada trades at about 20x trailing earnings and only 0.33x sales, the cheapest sales multiple in its peer group. The question for a new buyer is whether C$29 was a bargain price for the company to buy back its own stock, or a warning that the market sees less value. Below we go through the bid, its funding, and how Air Canada compares with CPKC, CN, TFI International, Exchange Income and Chorus Aviation on size, returns, valuation and analyst targets.

What happened: the C$800M issuer bid completes

On September 28, 2026, Air Canada said it had taken up and paid for shares under its C$800M substantial issuer bid, a modified Dutch auction with a price range of C$29–C$33. The terms:

• 27,586,206 Class A and Class B shares bought at C$29.00, the bottom of the range.
• That is about 9.8% of the shares outstanding as of September 24, leaving about 252.7M shares.
• About 66.8M shares were tendered, so the offer was oversubscribed, and about 41% of successfully tendered shares were bought (odd lots excluded).
• Settlement by TSX Trust is expected on or before October 2, 2026.

Retiring nearly a tenth of the company in one step is a large move for an airline. Management says it brings the share count back below pre-pandemic levels. Because the shares were bought at the low end of the range, Air Canada got more shares for its C$800M than it would have at a higher clearing price. For holders who did not tender, the math is simple: each remaining share owns a bigger slice of future earnings, as long as those earnings hold up.

The Aeroplan funding and the market’s verdict

The bid was funded partly with proceeds from a minority equity investment in Aeroplan, Air Canada’s loyalty program, by funds managed by Blackstone and La Caisse, alongside other Canadian institutions. That matters: the buyback was paid for by monetizing a slice of a valuable asset, not by draining operating cash or adding debt.

The market’s reaction was cooler. The preliminary results on September 25 showed the auction would clear at C$29, the floor of the range, and the stock slid. By the September 28 close, it traded near C$26.15, about 10% below the screener price used in the tables and below the price Air Canada had just paid. The tables below keep the September 24 screener values, but the post-bid price is the more relevant starting point for anyone looking at the stock afterward.

Business overview: Air Canada vs transport peers

Air Canada flies domestic, U.S. and international routes from hubs in Toronto, Montréal, Vancouver and Calgary, runs a leisure airline (Air Canada Rouge) and a cargo business, and controls Aeroplan, one of Canada’s largest loyalty programs. Loyalty and premium cabins are the steadier parts of revenue; fuel, labour and travel demand make airline earnings among the most cyclical on the TSX.

On the TSX screener, Air Canada sits in the Transportation sector. The peers are the liquid names in the same sector: the two railways, CPKC (CP) and CN Railway (CNR); trucking and logistics company TFI International (TFII); Exchange Income (EIF), which owns regional airlines and aviation services alongside manufacturing; and Chorus Aviation (CHR), a regional aviation and leasing company. Chorus is included as an aviation peer despite being under C$1B in market value. CAE was left out because the screener classifies it in Commercial services.

Overview table

Company (Ticker)	Price	Market cap	Revenue (LTM)	Net income (LTM)
Air Canada (AC)	$28.96	$8.12B	$23.6B	$430M
CPKC (CP)	$123.53	$108.6B	$15.4B	$3.87B
CN Railway (CNR)	$169.57	$102.6B	$17.8B	$4.78B
TFI International (TFII)	$172.24	$14.2B	$11.2B	$464M
Exchange Income (EIF)	$121.47	$6.85B	$3.71B	$205M
Chorus Aviation (CHR)	$30.50	$688M	$1.32B	$48M
Average (incl. AC)	—	$40.2B	$12.2B	$1.63B

Source: TSX screener (September 25, 2026, tsx-2026-09-25.csv) · CAD · LTM = last 12 months. Average includes AC; blank cells skipped.

Air Canada is about a C$8.1B company, small next to CPKC and CN at roughly C$103–109B but larger than Exchange Income and Chorus. Its revenue is the biggest in the group at about C$23.6B, yet net income was only about C$430M, a margin under 2%. The rails earn more than C$3.8B each on less revenue, which explains most of the valuation gap.

Performance: a strong year, a soft month

Performance table

Company (Ticker)	1M	3M	6M	1Y	5Y	10Y
Air Canada (AC)	−1.5%	+18.2%	+59.6%	+56.0%	+23.9%	+205%
CPKC (CP)	−5.6%	+0.0%	+13.9%	+20.6%	+49.4%	+217%
CN Railway (CNR)	−3.7%	−0.6%	+21.3%	+32.9%	+16.9%	+100%
TFI International (TFII)	−8.3%	−16.3%	+18.1%	+33.8%	+24.7%	+538%
Exchange Income (EIF)	−5.0%	−7.0%	+17.6%	+68.4%	+173%	+242%
Chorus Aviation (CHR)	+4.0%	+23.8%	+35.6%	+37.4%	+16.2%	−29.4%
Average (incl. AC)	−3.4%	+3.0%	+27.7%	+41.5%	+50.7%	+212%

Source: TSX screener (September 25, 2026). Average includes AC; blank cells skipped. Price change by window.

Over three months Air Canada is up about 18%, stronger than the rails, which are roughly flat, and far ahead of TFI, which is down about 16%. Over one year Air Canada is up about 56%, second only to Exchange Income near 68%. Chorus leads the one-month tape, up about 4%, while TFI is the weakest, down about 8%. The airline’s run was stock-specific: recovery and capital-return hopes, not a sector-wide move.

The longer windows favour the compounders. Air Canada is up about 24% over five years and 205% over ten, while TFI is up about 538% over ten years and CPKC about 217%.

Valuation: cheap on sales, cyclical on earnings

Valuation table

Company (Ticker)	P/E	Fwd P/E	PEG	P/S	P/B	P/FCF	Price/Cash
Air Canada (AC)	20.35	25.68	—	0.33	3.03	8.11	1.17
CPKC (CP)	28.69	22.18	—	7.15	2.34	45.60	299
CN Railway (CNR)	21.78	19.75	2.97	5.77	4.68	29.03	350
TFI International (TFII)	30.59	16.97	—	1.29	3.65	15.57	48.70
Exchange Income (EIF)	33.76	25.32	0.67	1.88	3.74	—	85.09
Chorus Aviation (CHR)	15.52	12.90	—	0.53	1.36	5.85	26.68
Average (incl. AC)	25.12	20.47	1.82	2.83	3.13	20.83	135

Source: TSX screener (September 25, 2026). Average includes AC; blank cells skipped. Highlighted = lowest (cheapest) positive value per column.

Air Canada trades at about 20x trailing earnings, toward the cheap end of the group (average about 25x), but about 26x forward, which signals that analysts expect earnings to dip. It is the cheapest name on price to sales (0.33x) and on price to cash (about 1.2x), and its price to free cash flow near 8x is second only to Chorus at about 6x. Chorus is cheapest on trailing and forward P/E, book value and free cash flow, reflecting its small size.

Against the rails’ high-20s earnings multiples and sales multiples of 6–7x, Air Canada screens like a cyclical airline, not a compounder. Thin margins keep the sales multiple low. That is why the buyback math matters more than any comparison with a rail-style valuation: shrinking the share count lifts per-share figures even if total profits stay flat. Air Canada pays no dividend, so there is no Dividends table; buybacks are its only form of capital return.

Analyst view: about 20% upside, more after the selloff

Analyst table

Company (Ticker)	Rating	Price	Target 1Y	Upside	Analysts
Air Canada (AC)	Buy	$28.96	$34.89	+20.5%	15
CPKC (CP)	Buy	$123.53	$139.63	+13.0%	30
CN Railway (CNR)	Buy	$169.57	$189.74	+11.9%	30
TFI International (TFII)	Buy	$172.24	$238.74	+38.6%	19
Exchange Income (EIF)	Strong buy	$121.47	$151.82	+25.0%	11
Chorus Aviation (CHR)	Strong buy	$30.50	$33.36	+9.4%	7
Average (incl. AC)	—	—	—	+19.7%	—

Rating & price: TSX screener (September 25, 2026). Target 1Y: S&P Global consensus via stockanalysis.com TSX forecast pages, pulled 2026-09-29 (AC 15, CP 30, CNR 30, TFII 19, EIF 11, CHR 7). All ≥5 analysts. Upside = target ÷ price − 1.

The TSX screener rates Air Canada a Buy, and the S&P Global consensus target is C$34.89 from 15 analysts, about 20% above the screener price and roughly 33% above the post-bid print near C$26. Recent notes from August and September: Scotiabank kept a Sector Outperform and lifted its target toward C$37.50, BMO has an Outperform at C$37, Stifel a Buy at C$38, CIBC an Outperformer at C$40, and Jefferies a Hold at C$31. Among peers, TFI shows the most upside at about 39% and Exchange Income about 25%, while the rails sit near 12–13%. The Street sees value in Air Canada even before counting the post-bid drop.

Why it matters: from pandemic rebuild to capital return

The old narrative was Air Canada as a leveraged airline rebuilding after the pandemic. The new narrative is capital return: an oversubscribed issuer bid funded by monetizing a slice of Aeroplan, with the share count back below pre-pandemic levels.

Value investors care whether C$29 was a gift or a warning that the clearing price sat at the floor. Growth investors care whether the New Frontiers strategy and premium demand can thicken a thin net-income print on about C$24B of revenue. The open question is whether earnings per share actually rise now that there are fewer shares.

Bull case

1. Per-share accretion. Air Canada retired nearly 10% of its shares at C$29 in an oversubscribed offer; if earnings hold, earnings per share rise.
2. Smart funding. The cash came from the Aeroplan minority stake sold to Blackstone and La Caisse funds, not from a stretched balance sheet.
3. Cheap screen, bullish Street. Targets cluster in the mid-to-high C$30s, and at 0.33x sales Air Canada is the clear cheap name among transport peers.

Bear case and risks

1. No floor at C$29. The auction cleared at the bottom of the range and the stock fell toward C$26, so the market is not treating C$29 as support.
2. Thin margins. Net income of about C$430M on about C$24B of revenue leaves little room; fuel, labour and demand swings can erase the buyback benefit quickly.
3. No dividend. Income buyers get nothing while they wait; the thesis rides on earnings power and a recovery in the multiple.

What to watch

1. Settlement on or before October 2. The final share count should land near 253M.
2. Q3 results, expected in late October. Whether strong revenue finally shows up in net income.
3. Aeroplan milestones. How the loyalty partnership develops after the minority sale.
4. Fuel costs and travel mix into winter, especially leisure versus business demand, and whether the stock moves back toward the ~C$35 consensus.

Bottom line

Air Canada has used the value inside Aeroplan to shrink its share count by about 10% in one transaction, bringing it back below pre-pandemic levels. On the screener it is the cheapest name in its transport group on sales, and the Street sees about 20% upside even from the pre-bid price. The issue is earnings quality: margins under 2% and a forward P/E above the trailing one suggest profits may soften, and the market’s selloff after the auction shows doubt. The next test is whether the late-October results turn about C$24B of revenue into per-share earnings growth.

Video chapters

• 0:00 Hook — $800M buyback at $29
• 0:20 What happened — SIB complete
• 1:10 Overview — Air Canada vs transport peers
• 1:38 Performance heatmap
• 2:07 Valuation
• 2:35 Analyst ratings & price targets
• 3:10 Why it matters
• 3:36 Bull case
• 4:01 Bear case
• 4:28 What to watch + close

Data notes

Table figures are TSX screener values (merge tsx-2026-09-25.csv, 929 rows; September 24 close; CAD). Peers are same-sector (Transportation) liquid names: CPKC and CN (rail), TFI International (trucking and logistics), Exchange Income (regional aviation and services) and Chorus Aviation (regional aviation and leasing, included despite a market value near C$0.7B); CAE was excluded as Commercial services. Air Canada pays no dividend, so there is no Dividends table. Average rows include AC and skip blank cells. Target 1Y is S&P Global consensus via stockanalysis.com, pulled 2026-09-29 (AC 15, CP 30, CNR 30, TFII 19, EIF 11, CHR 7 analysts; none under 5). The post-bid September 28 close of CA$26.15 (stockanalysis.com) is about 9.7% below the screener print; tables keep screener values. Bid figures are from Air Canada’s September 25 and September 28, 2026 releases.

Sources

• Air Canada news release, September 25, 2026 — preliminary results of the substantial issuer bid
• Air Canada news release (GlobeNewswire), September 28, 2026 — completion of the C$800M substantial issuer bid
• Broker notes: Scotiabank, BMO, Stifel, CIBC and Jefferies (August–September 2026)
• stockanalysis.com — S&P Global consensus for AC, CP, CNR, TFII, EIF and CHR (pulled 2026-09-29) and September 28 close
• TSX screener merge September 25, 2026 (929 rows)

Media credits

Air Canada logo via Flickr (air-canada-logo-592x300, public domain mark). Photos: airplane takeoff (StockSnap, CC0); Air Canada Executive First cabin (Flickr, CC BY-SA); Victoria–Vancouver seaplane commute (Flickr, CC0); aerial view looking down (Flickr, CC BY). No AI-generated images were used.

By Andrew · stocksummarizer.com