Air Canada’s third-quarter profit fell sharply as labor disruptions and softer travel demand dragged down earnings, marking one of the airline’s weakest quarterly results since the pandemic recovery began.
The Montreal-based carrier reported a net income of C$264 million (US$192 million) for the third quarter of 2025, a steep drop from C$2.04 billion recorded a year earlier.
Adjusted net income also fell to C$223 million, down from C$969 million in the same period of 2024.
Total operating revenue declined nearly 5% to C$5.77 billion, compared to C$6.11 billion in the previous year.
The airline’s adjusted EBITDA margin slipped to 16.6% from 24.9%, signaling reduced efficiency and profitability.
Labor Strike Hits Operations
A strike by approximately 10,000 flight attendants in August 2025 disrupted hundreds of flights, costing the airline an estimated C$270 million in lost operating income, according to company filings.
The disruption not only affected summer travel but also dented customer confidence and bookings for the months ahead.
“While we faced significant headwinds from labor disruptions, our teams worked tirelessly to minimize customer impact,” said Air Canada CEO Michael Rousseau. “We’re now focused on restoring operations and rebuilding demand.”
Demand Weakens on Key Routes
Beyond the labor challenges, Air Canada cited softer demand for U.S.-bound and international travel, particularly on transatlantic routes, as another key factor behind the decline.
Analysts attribute the drop to a combination of high ticket prices and shifting consumer spending trends amid global economic uncertainty.
Outlook Revised Downward
The airline revised its full-year guidance for 2025, trimming its operating income forecast due to the weaker-than-expected third quarter.
However, management remains optimistic about 2026, expecting travel demand to stabilize as new fleet additions and digital initiatives take effect.
“Despite this challenging quarter, Air Canada remains financially resilient with strong liquidity,” Rousseau added.
Market Reaction
Following the earnings release, Air Canada shares fell modestly in early Toronto trading, reflecting investor concern about the pace of recovery and cost pressures from labor agreements.
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