Which of These Canadian Airline Stocks is Poised to Take Off

ByDan Kent Published On:

Key takeaways

The airline industry is cyclical and heavily impacted by economic conditions. Airlines thrive when travel demand is strong but struggle during recessions or crises, making them a high-risk, high-reward investment.

Competition is increasing, especially from low-cost carriers. Established airlines like Air Canada and WestJet face growing pressure from budget airlines, forcing them to adapt their pricing and service models.

Diversification within the industry matters. While pure-play airlines like Air Canada and Transat are directly exposed to travel trends, companies like Onex offer indirect exposure with a broader investment strategy.

3 stocks I like better than the ones on this list.

It would be challenging to identify an industry more severely affected by the COVID-19 pandemic than Canadian airline companies. Even in 2025, despite the resurgence of air travel, they continue to experience the repercussions.

For one, travel reached a complete standstill as borders closed and international travel was halted. In addition, travel is often booked well in advance. So not only was the forward outlook for Canadian airline stocks crushed, but it also had to dish out some hefty refunds to customers who couldn’t go on the trips that had been planned.

Some required government bailouts in order to pay refunds.

But now that we are well beyond the pandemic and more Canadians are travelling again, many investors are asking whether these Canadian stocks and airline carriers are worth the gamble or have been materially impacted.

In this piece, I’ll review 2 of the best airline stocks and discuss whether or not they’re worth investing your hard-earned money in today.

Remember, both airline stocks are related to passenger travel, and this list doesn’t contain the cargo services and freight company Cargojet (TSE:CJT).

What are the best Canadian airline stocks in Canada today?

Canada’s largest airline

Air Canada (TSE:AC)

Air Canada is the dominant airline in Canada, providing domestic, transborder, and international flights. It operates a full-service model, competing with both budget airlines and global carriers. The company also has a strong loyalty program (Aeroplan), a cargo business, and a regional subsidiary (Air Canada Rouge) focused on leisure travel.

P/E: 3.2

5 Yr Revenue Growth: 3.1%

5 Yr Earnings Growth: -2.8%

5 Yr Dividend Growth: -%

Yield: -%

  • The largest and most established airline in Canada, with a strong brand.
  • Benefits from business travel recovery and premium seat sales.
  • Aeroplan loyalty program drives repeat customers and additional revenue streams.
  • Expanding cargo business helps offset some passenger travel volatility.
  • Fleet renewal efforts are improving fuel efficiency and reducing costs.
  • Government support during downturns gives it an added safety net.
  • Business Travel Recovery – Corporate travel is returning, but at a slower pace than leisure travel.
  • International Expansion – New long-haul routes can boost revenue growth.
  • Loyalty Program Strength – Aeroplan’s ability to attract and retain customers is a key revenue driver.
  • Cost Pressures – Rising fuel prices and labor costs impact profitability.
  • High Operating Costs – Airlines face rising costs, from fuel to wages.
  • Economic Sensitivity – Recessions or downturns hit demand for air travel hard.
  • Competition from Low-Cost Airlines – Budget carriers like Flair and WestJet are undercutting on price.
  • Regulatory Challenges – Government rules on pricing, fees, and environmental policies can add costs.

Private equity owner of WestJet

Onex Corporation (TSE:ONEX)

Onex Corporation is a diversified private equity firm with investments across multiple industries, including airlines. It owns WestJet, Canada’s second-largest airline, which operates both a full-service and ultra-low-cost carrier model. Since acquiring WestJet in 2019, Onex has worked to streamline operations and expand its reach.

P/E: 17.4

5 Yr Revenue Growth: -9.6%

5 Yr Earnings Growth: -37.4%

5 Yr Dividend Growth: 1.2%

Yield: 0.4%

  • Private equity backing allows for long-term strategic investments in WestJet.
  • Expansion of WestJet’s ultra-low-cost division (Swoop) increases market share.
  • WestJet’s focus on Western Canada gives it a strong regional advantage.
  • Less exposure to public market volatility compared to pure-play airline stocks.
  • Onex’s broader portfolio diversifies risk beyond just aviation.
  • Potential for future sale or IPO of WestJet could unlock shareholder value.
  • WestJet’s Growth Strategy – Expansion plans, including fleet size and new routes, will impact its future.
  • Ultra-Low-Cost Competition – How well Swoop competes with new budget airlines is a key factor.
  • Airline Profitability – If WestJet performs well financially, Onex benefits as an investor.
  • M&A Opportunities – Onex could make additional airline-related acquisitions or partnerships.
  • WestJet’s Performance – If WestJet struggles, it could weigh on Onex’s overall returns.
  • Cyclical Nature of Airlines – The airline industry is prone to booms and busts.
  • Limited Direct Exposure for Investors – Onex investors aren’t buying an airline stock directly.
  • Exit Strategy Uncertainty – The timeline and potential success of a future WestJet IPO or sale remain unknown.

Overall, Canadian airline stocks are likely to have rocky times ahead even in 2025

I am not a gigantic fan of airlines. They tend to be too cyclical, dependent on both the consumer and the economy, and can also be impacted by a wide variety of commodities, such as oil and gas in terms of fuel prices.

As more and more discount airlines pop up, consumers are demanding lower airline prices and as a result margins are compressing.

In addition to this, although balance sheets are improving, they are still nowhere near where they were pre-pandemic. There is also no guarantee we won’t have a future major event that disrupts travel materially.

Air Canada and Onex are certainly two of the best (and arguably the only 2) but I’m not sure I’d own either in a long-term portfolio.

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