Turbulence Hits Second-Quarter Earnings
Air Canada’s second-quarter profit took a noticeable hit as U.S. travel demand faltered. The airline, Canada’s largest, is feeling the ripple effects of growing tensions between the two countries, which have strained both trade and tourism.
Passenger traffic to the United States — a major market for the airline — dropped significantly. The slowdown comes at a time when demand usually surges, making the blow even sharper for the carrier.
Canadians Avoid U.S. Amid Trade Disputes
Tensions between Ottawa and Washington have grown this year. Following U.S. President Donald Trump’s trade tariffs and controversial remarks suggesting Canada should be annexed, many Canadians began cancelling U.S. trips. Alongside that, there’s been a sharp decline in purchases of U.S.-made products.
This boycott-like behaviour didn’t just affect stores — it reshaped travel plans. Traditionally, summer means full flights and booming business. But this year, the mood shifted, and so did passenger volumes.
Domestic Gains Offer Some Cushion
Interestingly, while U.S. demand weakened, the trend brought a silver lining for Canada’s tourism sector. More Canadians opted to vacation at home. Hotels, resorts, and local attractions benefited from this shift.
Recent June data showed increased activity across domestic destinations, giving the hospitality sector a welcome boost. These “elbows-up” vacations — referring to bustling homegrown travel — are slowly reshaping Canada’s internal tourism map.
Strategic Moves Ahead Despite Setback
Despite the earnings dip, Air Canada remains optimistic. For the upcoming third quarter, it plans to expand available seat miles (ASM) capacity by 3.25% to 3.75% compared to last year. This suggests a confident push toward recovery and growth, even in a complex geopolitical climate.
The carrier still saw total operating revenue rise slightly, hitting $5.63 billion, up from $5.52 billion last year. However, profit per share slipped from 98 cents to 60 cents, marking a significant decline.
Looking Forward, With Eyes on Policy Shifts
While the profit dip highlights a rough patch, Air Canada’s future strategy will depend heavily on policy trends and traveler sentiment. If trade relations ease, a rebound in cross-border demand could follow. Until then, the airline appears set to maximize domestic and alternative international markets.
Stay tuned to Maple Wire for more updates on Canada’s aviation industry and economic shifts.
