Air Canada battles labor costs weak U.S. travel in 2026

Air Canada is preparing for a challenging 2026, as rising labor expenses and weaker U.S. leisure travel are expected to weigh on its financial performance. Despite the headwinds, the airline plans to expand its fleet with 35 new aircraft in a bid to strengthen its long-term growth strategy.

During a briefing with analysts on Wednesday, company executives emphasized that while the upcoming year poses financial pressures, the carrier remains committed to modernization and operational resilience. The introduction of new planes will enhance efficiency, improve fuel savings, and allow Air Canada to refresh its customer experience across both domestic and international routes.

However, the airline is still recovering from recent turbulence. In the third quarter, Air Canada reported lower profits after a cabin crew strike led to the cancellation of thousands of flights. The disruption significantly impacted passenger operations and revenue during the busy travel season.

Adding to the strain is the slowing demand for leisure travel between Canada and the United States — a key market for the airline. With travelers showing more caution and competitive pricing from U.S. carriers, Air Canada’s transborder performance has softened compared to previous quarters.

Executives remain optimistic that cost-control measures, strategic scheduling, and new aircraft integration will help mitigate some of the challenges in 2026. The airline continues to explore opportunities in other international markets to offset weaker U.S. demand.

Air Canada shares were down nearly 3% in early trading on Wednesday following the earnings report, reflecting investor concerns over near-term profitability. Still, analysts believe the airline’s fleet renewal and focus on efficiency could support a stronger recovery by 2027.