Air Canada cuts annual profit forecast as fuel costs outpace fare hikes

Air Canada AC-T cut its 2026 core profit forecast on Thursday as a sharp rise in jet fuel costs squeezes margins, outrunning the airline’s ability to offset the impact through fare hikes.

Since the start of the Iran war, airlines have raised fares sharply to cushion margins, but the increases have not kept pace with soaring jet fuel costs. The volatile environment has also made it harder for carriers to forecast future fuel expenses.

With the war showing no signs of abating, analysts remain uncertain how much of the fuel-price increase airlines can pass on to flyers through higher fares before hurting travel demand, which has so far remained resilient.

Major U.S. rivals including Delta Air Lines and American Airlines cut their full-year earnings forecasts earlier this month, warning that the industry may need deeper capacity reductions to defend pricing power and contain costs.

Air Canada said on Thursday that it expects jet fuel price to hover around $1.72 per litre in the fourth quarter, compared with its prior estimate of $1.29 per litre.

The Canadian carrier’s operating revenue rose about 21 per cent to about $7-billion in the third quarter ended Sept. 30.

The Canadian flag carrier now expects its adjusted EBITDA in the range of $2.4-billion to $2.7-billion compared with previous expectations of $2.9-billion to $3.2-billion.