Discounted Cash Flow (DCF) Analysis Unlevered

Air Canada (AC.TO)

$18.14

-0.13 (-0.71%)

All numbers are in Millions, Currency in USD

Stock DCF: -357.44 | 18.14 | overvalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	18,065	19,131	5,833	6,400	16,556	20,893.62	26,367.68	33,275.93	41,994.12	52,996.45
Revenue (%)
EBITDA	1,819	4,241	-2,373	-1,633	1,012	-1,163.69	-1,468.57	-1,853.33	-2,338.90	-2,951.69
EBITDA (%)
EBIT	701	2,255	-4,222	-3,249	-628	-4,649.77	-5,868	-7,405.39	-9,345.58	-11,794.10
EBIT (%)
Depreciation	1,118	1,986	1,849	1,616	1,640	3,486.08	4,399.42	5,552.06	7,006.68	8,842.41
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	4,707	5,889	7,501	8,802	7,988	15,512.01	19,576.10	24,704.98	31,177.61	39,346.05
Total Cash (%)
Account Receivables	796	926	644	691	1,037	1,560.66	1,969.55	2,485.56	3,136.77	3,958.59
Account Receivables (%)
Inventories	220	212	166	224	318	442.64	558.60	704.96	889.65	1,122.74
Inventories (%)
Accounts Payable	1,927	2,456	685.52	752.15	1,945.73	2,455.51	3,098.84	3,910.73	4,935.33	6,228.37
Accounts Payable (%)
Capital Expenditure	-2,197	-2,025	-1,202	-1,073	-1,572	-2,908.98	-3,671.13	-4,632.95	-5,846.77	-7,378.60
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 18.14
Beta	2.405
Diluted Shares Outstanding	358
Cost of Debt
Tax Rate	-11.55
After-tax Cost of Debt	5.49%
Risk-Free Rate
Market Risk Premium
Cost of Equity	14.732
Total Debt	16,306
Total Equity	6,494.12
Total Capital	22,800.12
Debt Weighting	71.52
Equity Weighting	28.48
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	18,065	19,131	5,833	6,400	16,556	20,893.62	26,367.68	33,275.93	41,994.12	52,996.45
EBITDA	1,819	4,241	-2,373	-1,633	1,012	-1,163.69	-1,468.57	-1,853.33	-2,338.90	-2,951.69
EBIT	701	2,255	-4,222	-3,249	-628	-4,649.77	-5,868	-7,405.39	-9,345.58	-11,794.10
Tax Rate	58.77%	16.85%	4.24%	9.52%	-11.55%	15.57%	15.57%	15.57%	15.57%	15.57%
EBIAT	289.05	1,875.14	-4,042.78	-2,939.69	-700.52	-3,926.02	-4,954.62	-6,252.71	-7,890.91	-9,958.30
Depreciation	1,118	1,986	1,849	1,616	1,640	3,486.08	4,399.42	5,552.06	7,006.68	8,842.41
Accounts Receivable	-	-130	282	-47	-346	-523.66	-408.89	-516.01	-651.21	-821.82
Inventories	-	8	46	-58	-94	-124.64	-115.97	-146.35	-184.70	-233.09
Accounts Payable	-	529	-1,770.48	66.64	1,193.58	509.78	643.33	811.89	1,024.60	1,293.04
Capital Expenditure	-2,197	-2,025	-1,202	-1,073	-1,572	-2,908.98	-3,671.13	-4,632.95	-5,846.77	-7,378.60
UFCF	-789.95	2,243.14	-4,838.27	-2,435.05	121.05	-3,487.43	-4,107.84	-5,184.09	-6,542.30	-8,256.36
WACC
PV UFCF						-3,225.52	-3,514	-4,101.61	-4,787.47	-5,588.03
SUM PV UFCF										-21,216.63

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	8.12
Free cash flow (t + 1)	-8,421.49
Terminal Value	-137,606.03
Present Value of Terminal Value	-93,133.79

Intrinsic Value

Enterprise Value	-114,350.42
Net Debt	13,613
Equity Value	-127,963.42
Shares Outstanding	358
Equity Value Per Share	-357.44