Air Canada Expects Higher Core Profit Amid Growth in International Travel

TORONTO, Canada — Air Canada announced on February 13, 2025, that it expects its core profits for 2025 to exceed analysts’ predictions, driven by strong international travel demand and an increase in business bookings. The airline forecasts adjusted earnings before interest, taxes, depreciation, and amortization to be between C$3.4 billion ($2.39 billion) and C$3.8 billion, surpassing the average analyst estimate of C$3.5 billion.

The Montreal-based airline has noted a significant rise in demand for its services, particularly for routes to Asia Pacific and China, leading to increased capacity in those markets. In the fourth quarter of 2024, Air Canada reported operating revenue of C$5.40 billion, which reflects a 4% increase compared to the previous year.

Travel trends indicate that consumers are focusing more on experiences than goods, creating favorable conditions for airlines operating international routes. However, Air Canada also faces challenges, including rising labor costs and increased aircraft maintenance expenses, which are placing pressure on profit margins.

The airline reported an adjusted per-share profit of C$0.25 for the fourth quarter, a decrease attributed to escalating labor costs. Last year, Air Canada negotiated a new labor agreement with pilots, resulting in a cumulative four-year pay increase of approximately 42%, leading to an estimated C$1.9 billion in additional labor costs.

Another hurdle for Air Canada comes from the decline of the Canadian dollar relative to the U.S. dollar, which has raised foreign exchange costs. Additionally, decreased cross-border travel to the United States has been noted, with some Canadians opting to avoid trips due to concerns surrounding trade tariffs imposed by former U.S. President Donald Trump, who paused a 25% tariff on most Canadian goods for 30 days.

As the airline industry continues to recover from the pandemic, Air Canada’s focus on expanding its international offerings could position it for long-term growth amid fluctuating economic challenges.