Air Canada braces for 2026 as labour costs climb and U.S. travel eases

Air Canada is girding for a testing 2026 as rising labour expenses and a slowdown in U.S. leisure travel are set to pressure results. The carrier nonetheless plans to add 35 aircraft to its roster as part of a longer-term push to boost capacity and efficiency.

At an analyst briefing on Wednesday, management highlighted that despite near-term financial headwinds the airline will continue investing in fleet renewal and operational robustness. New jets are expected to cut fuel use, streamline operations and upgrade the onboard experience on both domestic and international services.

The company is still feeling the effects of recent disruption. In the third quarter, Air Canada recorded weaker profits after a cabin crew strike forced the cancellation of thousands of flights, denting passenger volumes and revenue during a busy travel period.

Compounding the challenge is a cooling of transborder leisure travel between Canada and the United States — a core market for the carrier. Consumers are showing greater caution and U.S. carriers' competitive fares have weighed on Air Canada’s cross-border performance.

Executives said tighter cost controls, revised scheduling and integrating the new aircraft should help offset some of the 2026 pressures. The airline is also scouting growth opportunities in other international markets to counter weaker demand to the U.S.

Following the earnings release, Air Canada shares fell roughly 3% in early trading, reflecting investor concern over near-term margins. Still, analysts note the fleet refresh and efficiency measures could support a recovery into 2027.