Air Canada ramps up flights at home, overseas as travellers shun U.S.

MONTREAL – Air Canada has cemented a pivot away from the U.S. as Canadians continue to shun their neighbour amid the trade war, all as the company recovers from a summer strike that cost it hundreds of millions of dollars.

The country’s largest airline ramped up flights at home and in Europe, the Caribbean and Latin America in response to travellers’ renewed interest in domestic and overseas trips.

“We mitigated the exposure to reduced demand between Canada and the U.S. In Q3 we quickly responded to Canadians’ growing interest to travel domestically,” chief commercial officer Mark Galardo told analysts on a conference call Wednesday.

“Sun and Latin American markets remain solidly ahead of last year for winter, with a robust advanced booking position from Air Canada Vacations.”

“The transborder sector remains stable, albeit at lower levels,” he said of Canada-U.S. travel.

Total capacity will nudge up this year, the company said, even as demand for U.S. flights stays weak.

The carrier’s transborder flight volumes fell 10 per cent year-over-year in September, according to aviation data tracker Cirium. The decline reflects a backlash to the tariff spat sparked by U.S. President Donald Trump as well as a relatively low Canadian dollar and fears around immigration enforcement in the U.S.

Flight volumes rose three per cent domestically, five per cent for Europe and 20 per cent for the Caribbean. For Latin America, capacity is poised to increase more than 40 per cent by December, figures from Cirium show.

A second hurdle sits in the rear-view mirror, leaving a dent in Air Canada’s income statement.

A three-day strike by more than 10,000 Air Canada flight attendants in August shut down operations, caused more than 3,000 flight cancellations and cost the airline $375 million, the company said earlier this fall.

In the quarter ended Sept. 30, revenue fell more than five per cent year-over-year to $5.77 billion due to the strike, which included $90 million in reimbursements to customers, chief financial officer John Di Bert said.

Net income in the third quarter — typically the company’s most lucrative — dropped 87 per cent to $264 million from $2.04 billion in the same quarter last year. 

Air Canada also cut about 400 management jobs to lighten its cost load after the financial hit.

On Tuesday, it narrowed its adjusted earnings forecast to between $2.95 billion and $3.05 billion compared with the $2.9 billion to $3.1 billion it predicted in September.

To recoup some cash, the airline is banking on steady corporate travel and a growing appetite for “premium” seats — larger ones with more legroom and enhanced services such as priority boarding and better meals.

“Demand is strong. In particular, business travel continues to recover,” said Di Bert.

Chief executive Michael Rousseau suggested Prime Minister Mark Carney’s push to expand trade in regions ranging from Asia to Europe would prove strong enough to bolster the airline’s sales.

“We think we can play a big part in that diversification. Strategically bringing in wide-bodies will allow us to work with Canada on diversifying trade,” he said, referring to a fleet shuffle that plunks bigger planes onto transatlantic routes.

Air Canada expects to add two Boeing 787 Dreamliner jets by the end of 2026, on top of more than three dozen narrow-body planes in a long-awaited fleet renewal.

Nonetheless, the carrier will have about a dozen fewer aircraft on any given month in 2026 due to delivery delays, hampering its capacity, Di Bert said.

On an adjusted basis, the Montreal-based company on Tuesday reported third-quarter earnings of 75 cents per diluted share, down from $2.57 per diluted share in the same quarter last year and well below analysts’ expectations of 95 cents per share, according to financial markets firm LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2025.

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