Air Canada slips into the red but tops investor expectations for the second quarter.
Air Canada reported a $215 million operating loss for the second quarter of 2026, driven largely by increased fuel prices and one-time labour costs.
The Montreal-based carrier reinstated its financial guidance for the year, albeit at lower levels than previously forecast. Its now adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) is between $2.9-$3.2 billion where it had previously forecast $3.35-$3.75 billion.
“Our reported results were negatively impacted by specific labour-related and other charges, primarily non-cash, that are not reflective of the underlying earning power of the business,” says chief executive Michael Rousseau, whose resignation will take effect by September.
In May, Air Canada reached an agreement with Unifor, the union that represents about 6,000 contact workers across customer relations, concierge, call centre and other related departments. The wage increases and bolstered pension benefits, along with other labour, legal, and benefits items, totalled $388 million in the quarter, significantly impacting operating income.
For the rest of the year, Air Canada expects capacity as measured by available seat miles (ASMs) to grow 2.25-3.25% over 2025, a decrease from the originally planned 3.5-5.5%. This reflects a “focused approach to matching capacity with demand while retaining flexibility in a dynamic environment”, chief financial officer John Di Bert told investors and analysts on an earnings call on 11 August.
That capacity growth and profitability projections should be aided by the delivery of two Boeing 787-10 aircraft by the end of the year, as well as seven Airbus A321XLRs and 11 A220s. Total fleet size should shrink from 211 to 207 by the end of the year, thanks to the transfer of 47 Boeing 737 Max 8s to Air Canada Rouge, its low-cost subsidiary.
Despite lingering fuel choppiness that has caused headaches across the industry, Air Canada says it expects to recapture above 100% of fuel costs by the end of the year.
“Our commercial and fares strategy have offset the remaining fuel exposure, which means we’re selling on average into the market at the cost of the fuel that we’re paying,” says Di Bert.
Shares of Air Canada rose as much as 16% in trading following the earnings report, which largely topped analyst expectations.
Outside investment in AeroPlan
Air Canada also on 10 August announced an outside investment in its Aeroplan loyalty programme.
The private equity firm Blackstone and other Canadian investors will take a 25% minority stake in the programme for $2.5 billion, a deal that values AeroPlan at $10 billion.
The carrier plans to use the proceeds to pay down debt and buy back shares. Air Canada will have the option to repurchase shares in five to eight years at a price that reflects a total rate of return of 6.5% for the outside investors.
“This transaction crystallises the value of what we believe is one of the best and most prestigious airline loyalty programmes in the world,” says Di Bert.
The post Air Canada swings to a loss as it looks to recapture fuel costs first appeared on FlightGlobal.