Air Canada lowered its full-year earnings outlook by hundreds of millions of dollars on October 29, 2026, pointing to sky-high fuel costs that nearly cut its latest quarterly bottom line in half.
Air Canada Cuts 2026 Profit Forecast Following Fuel Price Spike
The country’s largest airline now expects adjusted earnings between $2.4 billion and $2.7 billion for the year. That revision drops below the $2.9 billion to $3.2 billion range the carrier predicted less than three months prior, according to a corporate news release issued in Montreal.
The downward revision follows a third quarter where net income attributable to shareholders fell 47 per cent year-over-year to $139 million for the period ending September 30, 2026. The surging price of kerosene, particularly in September and subsequent weeks, drove a 75 per cent jump in fuel expenses.
Chief financial officer John Di Bert noted that the carrier recovered less than half of its fuel expense during the quarter. He expects kerosene prices to hover around $1.72 per litre for the foreseeable future, largely due to ongoing conflict in the Middle East restricting global oil exports.
Record Revenues and Rising Fares Fail to Cover Surging Expenses
Despite the profit squeeze, Air Canada posted a 21 per cent increase in operating revenues to reach a third-quarter record of $6.98 billion. The carrier leaned heavily on fare hikes to offset rising costs, which included a $906-million year-over-year increase in fuel expenses alone.
Statistics Canada data shows that airfares across the country rose 19.4 per cent year-over-year in September. Chief commercial officer Mark Galardo indicated that fare increases remain the primary tool available to offset the high-fuel environment.
Financial markets firm LSEG Data & Analytics noted that the airline’s adjusted earnings stayed flat at 75 cents per share last quarter. That figure surpassed average analyst expectations of 50 cents per share.
Air Canada Expands Overseas Network to Manage Fuel Costs
To manage prolonged fuel cost pressures, Air Canada is expanding its overseas network. The airline announced seven new routes to Europe and Asia for the upcoming summer season, utilizing new long-range Airbus A321 single-aisle jets and Boeing 787 wide-bodies.
Galardo expressed confidence in international demand, stating that the carrier sees strong potential in using Canada as a connecting point for transatlantic travelers between North America, South America, and Europe. National Bank analyst Cameron Doerksen observed in a note to investors that overall passenger demand remains solid, though recovering 100 per cent of fuel costs through fourth-quarter fare hikes remains an uphill battle.
Frequently Asked Questions About Air Canada’s Financial Outlook
Why did Air Canada lower its earnings forecast?
The airline reduced its 2026 adjusted earnings outlook to between $2.4 billion and $2.7 billion because of surging jet fuel expenses driven by high kerosene prices. Chief financial officer John Di Bert attributed the price pressure largely to conflicts in the Middle East affecting global oil exports.
How much did fuel costs increase for the airline?
Air Canada reported a year-over-year fuel cost increase of $906 million, or 75 per cent, during the three months ended September 30, 2026. The carrier recovered less than half of that expense through ticket sales during the quarter.
Are passengers facing higher ticket prices?
Yes. Statistics Canada reported that airfares rose 19.4 per cent year-over-year in September. Air Canada executives confirmed that fare increases remain their primary mechanism for offsetting elevated fuel expenses.
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