Another Strong Quarter for Air Canada, Full-Year Guidance Suspended Due to Volatility

Air Canada followed up its strongest-ever fourth quarter to end 2025 with another successful three months to start 2026. While the airline says demand remains strong, the outlook is clouded by the volatility and uncertainty of fuel pricing, so the carrier has suspended its full‑year 2026 financial guidance.

“In the first quarter, Air Canada built on the momentum of our best-ever fourth quarter to launch strongly into 2026. We reported record operating revenues of $5.8 billion, up more than 11%  from the same period in 2025,” said Michael Rousseau, President and Chief Executive Officer.

“Our operating income of $117 million was a positive $225 million swing from a year ago, and we generated record adjusted EBITDA of $623 million, up 61%. During the quarter, we generated $1.8 billion in cash from operating activities, $1.6 billion in free cash flow and repurchased more than $140 million of our shares,” Rousseau added.

Rousseau said second quarter guidance reflects strong demand and an expectation that the airline can offset between 50-60% of higher fuel costs  through 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. 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,” said Rousseau.

The Montreal-based carrier reported net income of $48 million during the first quarter, compared with a net loss of $102 million during the same period last year. 

“This performance reflects our prudent approach to capital allocation and balance sheet management, allowing us to invest in the business, manage debt and return capital to shareholders while preserving financial flexibility,” Rousseau stated.

In an earnings call with financial analysts, Rousseau said the situation in the Middle East and soaring global jet fuel prices represent a significant external shock for the airline industry.

“This is not unique to Air Canada, it is an industry-wide challenge that affects how airlines think about capacity, pricing and risk,” he said.

Air Canada was among the first to raise fares and ancillary fees as the war in Iran has roiled global fuel markets. EVP and Chief Commercial Officer Mark Galardo told analysts that multiple fare and fee increases have helped soften the blow while testing demand resilience.

“We are seeing resilient demand across most geographies and customer types,” he said, adding that the company believes its commercial and cargo actions will contribute to a recovery of the incremental fuel expense of about 50-60% in Q2.