Air Canada reinstates annual forecast, signals fuel price volatility remains a risk (updated)

Air Canada

11/08/2026 23:20

Adds details from company releases in paragraphs 5,6,7,8,12
Aug 11 (Reuters) - Air Canada AC.TO on Tuesday restored its annual core profit target but at a lower level from its previously suspended outlook, as it expects oil supply disruptions stemming from the U.S.-Israeli war against Iran to keep jet fuel prices elevated.
Canada's largest carrier had suspended its outlook in April after Iran blocked access to the Strait of Hormuz, a waterway that handles a fifth of global oil shipments, causing uncertainty over jet fuel supply and prices.
The company expects to post 2026 adjusted core profit in the range of C$2.9 billion ($2.08 billion) to C$3.2 billion. Prior to the suspension, it had projected C$3.35 billion to C$3.75 billion.
Aircraft jet fuel typically accounts for about ​a quarter of operating costs for airlines, making them vulnerable to sudden spikes or swings.
The pressure on jet fuel has been further exacerbated by significant disruption to international shipping trade routes, Air Canada said. Fuel expenses in the second quarter surged 49% over the year earlier.
The Montreal-based airline expects jet fuel price to average at C$1.38 per liter in the third quarter and C$1.29 per liter in the fourth quarter. It previously assumed an average of C$0.90 per liter for the full year.
These jet fuel estimates also reflect Air Canada's capacity plans, it said.
Air Canada expects to generate C$200 million to C$500 million in free cash flow in 2026, down from its earlier projection of C$400 million to C$800 million.
However, strength in premium and corporate travel, fare hikes and cost control measures led to a better-than-expected adjusted profit of C$0.40 per share in the second quarter.
Earlier in the day, Air Canada had said funds managed by Blackstone and three Canadian asset managers were making a C$2.5 billion minority equity investment in the carrier's travel loyalty program Aeroplan.
The investor group led by Blackstone and Quebec's La Caisse, along with PSP Investments and British Columbia Investment Management Corporation, are taking a 25% non-controlling equity interest in Aeroplan, which values the program at C$10 billion.
Proceeds from the investment will be used to repay a $1.2 billion bond maturity and strengthen the carrier's balance sheet. Air Canada said most of the balance would be applied to "accelerate share repurchases contemplated in its long-term strategic plan".
     
($1 = 1.3926 Canadian dollars)

 (Reporting by Nandan Mandayam and Aishwarya Jain in Bengaluru, Allison Lampert in Montreal; Editing by Shilpi Majumdar)
 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))