Air Canada (TSE:AC) closed Wednesday at C$28.05, trading 3.3% beneath the minimum price of its C$800 million share buyback tender offer. The discount widened as roughly 1,000 Jazz Aviation flight attendants cast ballots on a potential strike mandate, a vote that could disrupt the carrier's regional network.
Regional Network at Risk
Jazz Aviation operates as Air Canada Express, connecting 65 destinations across North America with more than 400 daily flights. Its crews transport approximately 22,000 passengers each day, making the regional feed a critical component of Air Canada's overall operations. Any work stoppage, even a brief one, could sever connections and inflate rebooking costs for the airline.
The Canadian Flight Attendant Union (CFAU), which represents the Jazz crew members, initiated the strike vote following nine months of negotiations and mediation. The balloting is scheduled to conclude at noon Friday. Union president Marsha Walters emphasized that safety extends beyond takeoff and landing, linking adequate rest, working conditions, and compensation to passenger safety.
Stock Performance and Buyback Details
Shares of Air Canada rose 1.1% over the six sessions ending Wednesday, with a 2.8% gain on Tuesday. Trading volume on Wednesday reached 2.59 million shares, near the 2.66 million average. The stock's current price sits below the tender offer range of C$29 to C$33, which represents a premium of 3.4% to 17.6% over recent levels.
The C$800 million issuer bid, funded by proceeds from the Aeroplan investment, could retire between 8.7% and 9.8% of the company's outstanding shares. The offer is set to close on September 24, unless amended or withdrawn. Investors are not obligated to participate, and oversubscription could lead to proration.
Financial Context
Air Canada reported second-quarter revenue of C$6.27 billion, up 11% year-over-year. Adjusted EBITDA reached C$719 million, though the carrier recorded an operating loss of C$215 million, partly due to C$388 million in labour-related and other charges. Free cash flow for the quarter totaled C$174 million.
For the full year 2026, Air Canada guides free cash flow between C$200 million and C$500 million. The C$800 million tender offer represents 1.6 to 4.0 times that projected range, a significant deployment of capital. Chief Executive Michael Rousseau has cited cash generation and balance-sheet resilience as "key anchors" of the company's strategy.
Labour Uncertainty Weighs
The strike vote adds a layer of uncertainty to Air Canada's operations and its capital return program. Jazz Aviation has requested a conciliation officer and says it aims to reach a deal without service interruptions. A strike mandate alone would not trigger an immediate walkout, and no strike date has been set. However, the potential for disruption remains if negotiations falter.
Investors are watching the outcome of Friday's vote and subsequent conciliation efforts. A swift settlement could erase the discount to the buyback floor, while prolonged disagreement might increase labour and rebooking expenses. Fluctuating fuel prices or softer demand could also weigh on the stock, regardless of the labour situation.
Toronto trading resumes at 09:30 EDT Thursday. The next catalyst is the strike vote result, which will likely shape near-term sentiment for Air Canada shares.
