Air Canada cuts some capacity in first quarter on higher fuel costs (updated)

Air Canada

29/10/2026 20:47

Recasts paragraph 1, adds details from conference call in paragraph 2 and 4
Oct 29 (Reuters) - Air Canada AC.TO said on Thursday that it is cutting some capacity in the first quarter of 2027, after a sharp rise in jet fuel prices pressured margins.
In a post-earnings conference call, Air Canada executives told investors that they have proactively cut more than 2 points of planned capacity from the first quarter to help shield margins.
Since the start of the Iran war, airlines have raised fares sharply to cushion margins, but soaring jet fuel costs have outpaced fare hikes. The volatile environment has also made it harder for carriers to forecast future fuel expenses.
Air Canada now expects jet fuel prices to hover around C$1.72 per liter ($1.23) in the fourth quarter, from its prior estimate of C$1.29 per liter, prompting it to cut its annual core profit forecast.
Earlier this month, major US rivals including Delta Air Lines DAL.N and American Airlines AAL.O also trimmed their full-year earnings forecasts, warning that the industry may need deeper capacity reductions to defend pricing power and contain costs.
The Canadian flag carrier expects full-year adjusted EBITDA in the range of C$2.4 billion ($1.72 billion) to C$2.7 billion compared with previous expectations of C$2.9 billion to C$3.2 billion. 
With the war showing no signs of abating, analysts remain uncertain how much of the fuel-price increase airlines can pass on to flyers through higher fares before hurting travel demand, which has so far remained resilient.
Air Canada said its winter demand remained steady across most geographies despite some pressure in the domestic market.
The carrier's operating revenue rose about 21% to about C$7 billion for the three months to September. 
Its net income fell to C$139 million, or C$0.49 per share, from C$264 million, or C$0.88 per share, in the year-ago period.


($1 = 1.3989 Canadian dollars)

 (Reporting by Shivansh Tiwary and Nathan Gomes in Bengaluru, additional reporting by Anshuman Tripathy; Editing by Diti Pujara)
 ((Shivansh.Tiwary@thomsonreuters.com; X: @Shivansh_19_;))