Air Canada suspends full-year guidance as jet fuel costs remain volatile

Air Canada has scrapped its full-year guidance after rising geopolitical tensions in Iran drove up jet fuel prices and created uncertainty around travel demand.

Fuel costs, normally about 25 per cent of operating expenses, have surged to nearly double their previous levels since the conflict began.

The update was shared with the airline’s second-quarter forecast on Thursday (April 30), projecting adjusted EBITDA between $575 million and $725 million.

Air Canada posted a net profit of $48 million in the first quarter, a notable turnaround from the $102 million loss it posted during the same period last year.

That result translates to diluted earnings of 16 cents per share, compared with a loss of 40 cents per share a year earlier.

The airline also posted record first-quarter operating revenue of $5.8 billion, up from $5.2 billion year over year.

In a press release, CEO Michael Rousseau said the airline’s second-quarter outlook assumes it can recover roughly 50 per cent to 60 per cent of the added fuel costs through "various commercial and cost actions." 

“We continue to see strong demand across the network and throughout the booking window for the latter half of the year,” Rousseau said. “I believe Air Canada is very well positioned from a financial, fleet and network perspective.”

“As evidenced by two consecutive record quarters, the airline is performing well and the team is consistently executing on our long‑term strategy.

Air Canada trims schedule

The spike in fuel costs has pushed airlines to take defensive measures, including trimming flight schedules, raising ticket prices, and increasing fees for extras like checked baggage.

Air Canada has already suspended several routes, including flights between Toronto and Montreal and New York's JFK Airport — effective June 1 – as well as Toronto–Salt Lake City, which is not expected to return until 2027.

Flights between Fort McMurray and Vancouver will stop May 28, service from Yellowknife to Toronto will end Aug. 30, and a planned route from Guadalajara to Montreal has been cancelled.

Additionally, the airline has cancelled its seasonal Montreal – Algiers route for the summer 2026 season and, according to a new report, there are plans to scale back more service in North America and the Caribbean.

This include flights from Vancouver to Halifax, Quebec City, and Miami, as well as from Toronto to St. Maarten.

“As we regularly do, we monitor and review our network to ensure that routes are meeting profitability targets. Jet fuel prices have doubled since the start of the Iran conflict, affecting some lower profitability routes and flights which now are no longer economically feasible.”

“Schedule adjustments including some frequency reductions are being made in response,” Air Canada writes in a statement posted to its website.

WestJet has also trimmed capacity, reducing flights by about one per cent in April, three per cent in May and approximately six per cent in June, while consolidating service on lower-demand routes.

Air Transat, too, has reduced planned capacity by six per cent from May to October, with the extended suspension of its Cuba service through October accounting for most of that reduction.

Don't miss a single travel story: subscribe to PAX today!  Click here to follow PAX on Facebook.