Air Canada Cuts Profit Outlook, Trims 2027 Capacity Plan

MONTRÉAL — Air Canada (AC) lowered its 2026 adjusted earnings outlook on October 29 as higher fuel costs squeezed margins, while executives disclosed a reduction in planned flying for the first quarter of 2027.

The airline now expects adjusted EBITDA of CA$2.4bn–CA$2.7bn, down from CA$2.9bn–CA$3.2bn. The revision cuts the midpoint by CA$500m, or about 16%. Adjusted EBITDA measures earnings before interest, taxes, depreciation, amortization and impairment.

During Thursday’s post-earnings call, executives said they had reduced planned first-quarter capacity to protect margins, Reuters reported. The reduction is measured against an earlier plan; it does not establish that capacity will fall below first-quarter 2026 levels.

Fuel Assumption Rises by a Third

Air Canada raised its fourth-quarter jet fuel assumption to CA$1.72 per liter from CA$1.29, an increase of one-third. Air Canada reported record third-quarter operating revenue of CA$6.984bn, while net income attributable to shareholders fell to CA$139m from CA$264m a year earlier.

Its 2026 capacity guidance remains growth of approximately 2.75%, the midpoint of its previous range. That full-year forecast covers a different period from the first-quarter 2027 adjustment.

The pressure extends beyond Canada. American Airlines (AA) expects its network growth to slow in 2027 because of elevated fuel prices. Its third-quarter fuel expense rose US$1.9bn, or 67.5%, year over year, even as revenue reached US$16.3bn. American still forecasts fourth-quarter capacity growth, measured in available seat miles, of 5.5%–6.5% year over year, showing that slower expansion and an outright reduction in flying are different outcomes.

Delta Air Lines (DL), meanwhile, expects to absorb a US$6bn increase in fuel costs in 2026. Its fourth-quarter outlook assumes an all-in fuel price of about US$4.25 per gallon, including a refinery benefit.

What the Capacity Adjustment Means for Routes

The disclosures reviewed do not provide enough route-level evidence to rank exposure. Reuters reported some pressure in Air Canada’s domestic market, but that does not identify which routes account for the first-quarter adjustment or establish whether domestic or transborder flying bears more of it.

Air Canada’s published expansion plans also show why the timing matters. Its October 16 schedule announcement, previously covered in Airways’ report on six planned transborder routes, lists Toronto Pearson (YYZ)–Louisville (SDF) from April 28, with service increasing to daily in May; Montréal (YUL)–Indianapolis (IND) daily from June 1; and Edmonton (YEG)–Newark (EWR) four times weekly from June 1.

Those are announced services starting after the January–March period covered by the capacity disclosure. They cannot be counted as casualties of the first-quarter adjustment on the evidence available.

Identifying affected routes requires a comparison of dated schedules for the same travel period, including frequencies and aircraft size. A flight removed before launch reduces planned service. A frequency cut on an existing route also remains a plan until the affected travel period begins and the reduction takes effect.