An Air Canada plane takes off from Los Angeles International Airport in November, 2025.Mike Blake/Reuters
For all the bad news emanating from Air Canada over the past month, this may come as a surprise: It is one of the best-performing North American airline stocks so far this year.
That doesn’t make the stock a safe bet, though.
Let’s get one key caveat out of the way. The airline sector is suffering through a wobbling economy and surging fuel costs, which have battered just about every player.
The U.S. Global Jets ETF, an exchange-traded fund that holds shares in international airlines and manufacturers, tumbled 10 per cent through the first quarter of 2026.
More specifically, American Airlines Group Inc. AAL-Q fell 27.4 per cent and Southwest Airlines LUV-N declined 7.5 per cent over this three-month period.
By comparison, Air Canada AC-T looks better: The stock fell just 2.4 per cent over the same period, in line with the dip at Delta Air Lines Inc. DAL-N
But this outperformance hardly puts the stock in the clear.
Since the United States and Israel attacked Iran at the end of February, triggering a global energy crisis, the price of jet fuel has nearly doubled – and could shred the industry’s quarterly financial forecasts
The global average price was US$195.19 a barrel, as of March 27, according to the International Air Transport Association. That’s the highest level over the past decade.
While this week initially took a turn for the better when U.S. President Donald Trump sounded keen to end the war with Iran, it ended with a thud after the President resumed his threats of escalation.
On Thursday, West Texas Intermediate, the U.S. oil benchmark that influences the price of jet fuel, jumped about 11 per cent to US$111.54 a barrel, up roughly 70 per cent since the start of the war.
Airline stocks, which had been recovering some lost ground earlier in the week, went back into a tailspin.
Rising fuel prices are pushing airlines to either swallow the additional cost or raise prices, creating mayhem for anyone trying to figure out the likely impact on profits.
Jet fuel accounts for about 27 per cent of a North American airline’s revenues, on average. But the actual numbers can vary widely by airline, with hedging efforts adding another wrinkle.
Though stocks are down and valuations are compelling, investors appear wary of approaching this notoriously volatile sector, where surviving a severe downturn is hardly a sure thing.
“We are in the midst of an industry-wide fuel shock whose magnitude rivals events that have historically led to deep airline recessions and major financial distress,” John Godyn, an analyst at Citigroup, said in a March 20 earnings preview for the sector.
Stock performance over the past month has largely revolved around the exposure of airlines to rising jet fuel prices, according to data from Citigroup.
Airlines with a higher ratio of fuel costs to revenue were generally punished more in the stock market.
Delta, with a lower ratio of jet fuel costs to revenue, escaped much of the market carnage; American Airlines Group, with a higher ratio, was hit harder.
Air Canada reported jet fuel costs of $4.7-billion in 2025, which is 21 per cent of its full-year operating revenues – also a lower ratio than most, which may explain the stock’s relative strength next to harder-hit peers.
Nonetheless, the stock remains vulnerable to the energy crisis and Mr. Trump’s threats against Iran.
Air Canada comes with an additional layer of uncertainty after Michael Rousseau, the airline’s chief executive officer, announced this week that he will step down at the end of September, 12 months ahead of his planned retirement.
Mr. Rousseau was criticized by politicians in Ottawa and Quebec City for his English-only response to the fatal crash of an Air Canada Express flight at New York’s LaGuardia Airport on Sunday.
Now, investors have to juggle the question of who will take over from Mr. Rousseau, who steered the airline over the past five challenging years of travel restrictions, soaring labour costs and shifting demand for U.S. destinations.
In the airline’s fourth-quarter financial results, released in February, Air Canada reported that net income rebounded to $296-million, up from a loss in the same period last year. Profit margins rebounded to 5.6 per cent, up from an average of 4.1 per cent through all of 2025.
That’s looking like old news, though. The shares ended Thursday at $17.86, down from $23.29 last summer.
Yup, Air Canada is a beaten-up stock that could reward risk-averse investors who expect that the conflict in Iran will end very soon. But the market is saying: Buckle up.