Air Canada has lowered its earnings forecast for the second time this year, citing persistently high fuel costs despite reporting its highest-ever third-quarter revenue.
Canada’s largest airline issued its third-quarter financial report on 29OCT.
The good news was that Air Canada returned to profitability in the third quarter, reporting operating income of $261 million after posting an operating loss of $215 million in the second quarter.
But Air Canada also said fuel expenses jumped $906 million year-over-year, and that fuel prices were 10 cents per litre above its third-quarter expectations.
Air Canada said it’s lowering its financial guidance for full-year 2026 to an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to a range of $2.4 to $2.7 billion.
In its second-quarter report, Air Canada had forecast its full-year adjusted EBITDA at $2.9 to $3.2 billion. That, in turn, was lower than the previous forecast of $3.35 to $3.75 billion.
Still, Air Canada had its best-ever third quarter, bringing in $7 billion in revenue, said John Di Bert, Executive Vice President and Chief Financial Officer, adding that planes were fuller than they were a year ago, with 89% of seats occupied on average, and the airline also earned more money from each passenger.
Strong demand across its network helped drive the results, Di Bert added.
"We delivered adjusted EBITDA of $936 million and operating income of $261 million,” he said.
A 33% jump in cargo revenue helped drive total revenue up 21% year-over-year, Di Bert said. Pricing, capacity and cost-control measures offset much of the fuel-cost impact, even as fuel prices came in 10 cents per litre higher than expected.
“While we expect the challenging environment to persist, our strong financial position provides us with the flexibility to respond to near-term developments. We remain focused on executing on what we can control,” Di Bert said.
The airline pointed to its recent Skytrax Awards win for best North American airline as a sign the company is on the right track, despite fuel prices burning away its profits.
The airline said it assumes the price of jet fuel will average about $1.72 per litre in the fourth quarter of 2026 (previously $1.29 per litre).
