Air Canada is reporting a solid start to 2026, but growing uncertainty about fuel costs is forcing the airline to rethink its outlook for the year.
The carrier posted record first-quarter operating revenues of CAD$5.8 billion, up more than 11% year over year, alongside operating income of $117 million, a $225 million improvement from Q1 2025. Adjusted EBITDA reached a record $623 million.
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“In the first quarter, Air Canada built on the momentum of our best-ever fourth quarter to launch strongly into 2026,” said Michael Rousseau, President and Chief Executive Officer.
What’s driving the performance
Air Canada says bookings remain solid across its network, including for the second half of the year. Load factors climbed to 86.1%, and passenger volumes increased by more than five percent.
- Canadians are still travelling
- Pricing power remains relatively intact
- Long-haul and premium demand continue to support yields
The airline is also generating significant cash, with $1.6 billion in free cash flow in the quarter, giving it room to invest, manage debt and return capital.
Fuel volatility
Despite the strong quarter, Air Canada is suspending its full-year 2026 financial guidance.
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“Ongoing disruption in global energy markets… and the significant volatility in jet fuel prices” have made forecasting unreliable, the airline said.
The pressure points:
- Middle East conflict impacting global energy supply
- Disruptions to shipping routes, including the Strait of Hormuz
- Unpredictable fuel pricing for the second half of 2026
Air Canada expects to offset 50–60% of higher fuel costs through pricing and cost controls, but not all of it.
Looking ahead
Air Canada is still projecting a strong second quarter, with adjusted EBITDA between $575 million and $725 million.
“We continue to see strong demand across the network and throughout the booking window for the latter half of the year,” Rousseau said.
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