WestJet, Air Canada say high jet-fuel prices have cost them billions

Canada’s two major airlines have revealed the toll that soaring jet fuel prices have taken this year, with WestJet Airlines paying $1-billion in added costs while Air Canada AC-T said its fuel bill has risen by $1.5-billion for the first nine months of 2026.

WestJet’s fuel costs in 2026 are expected to double from last year to $3.2-billion, sending the Calgary-based airline to a loss in 2026, said Alexis von Hoensbroech, WestJet’s chief executive officer.

“Right now we are literally paying double what we paid a year ago,” he said in an interview.

Montreal-based Air Canada said in its third-quarter results on Thursday its fuel expenses were $2.1-billion, an increase of $906-million from the same period in 2025. For the first nine months of the year, Air Canada’s fuel bill was more than $5-billion.

The airline’s profit for the three months ending on Sept. 30 fell to $139-million from $264-million a year ago, even as revenue rose by 21 per cent to $7-billion.

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John Di Bert, Air Canada’s chief financial officer, told analysts on a conference call that fuel prices will remain high for the “foreseeable future.”

Aviation fuel prices soared after the United States and Israel began a war against Iran in late February that cut off the Strait of Hormuz – an important transitway for oil and refined products – and damaged refineries.

U.S. Gulf Coast kerosene-type jet fuel sold for US$4.44 a gallon on Tuesday compared with US$2.50 before the war, according to the U.S. Energy Information Administration.

Fuel prices have continued climbing after a lull in the summer, outpacing the rise in oil prices as refinery capacity remained limited.

“We have to work under the assumption that fuel prices will stay elevated,” WestJet’s Mr. von Hoensbroech said. “They may even go up further, and we work on the assumption that this will be true for all of ’27 and maybe into ’28.”

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He said the airline has covered the added costs with cash reserves, but the global fuel crisis has delayed its long-awaited plans to launch an initial public offering.

“An IPO requires a healthy environment, and the current environment is less healthy than it should be. So right now is certainly not the time to talk about this,” he said.

The world’s airlines responded to higher prices by slashing less profitable routes and raising fares and ancillary fees. WestJet’s fare increase is in line with the 15- to 20-per-cent hike reported by U.S. airlines, short of the required 25- to 30-per-cent increase, Mr. von Hoensbroech said.

Mr. von Hoensbroech said WestJet was unable to raise airfares enough to cover the higher fuel costs because of competition, and instead paid the extra costs from its cash reserves.

He said government fuel subsidies were a major reason why fares didn’t increase more, as airlines that accepted bailouts used them to expand their operations and undercut rivals’ fares. These subsidies undermine the industry’s ability to recover financially, he said.

Porter Airlines borrowed $125-million and Air Transat received $150-million, while WestJet and Air Canada requested no aid.

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WestJet is privately owned by Toronto’s Onex Corp. ONEX-T and does not publish financial details.

Air Canada, which published its financial results after markets closed on Thursday, said it flew more than 13.3 million passengers in the third quarter, an increase of almost 10 per cent from the same period last year. The airline expects to pay US$4.60 a gallon for fuel in the fourth quarter, up from its US$3.50 outlook in August.

Air Canada has removed unprofitable routes and eliminated some flights to the United States as Canadians have soured on U.S. travel.

Mark Galardo, Air Canada’s chief commercial officer, said capacity has been slightly reduced for the beginning of 2027 and the airline will remove more seats if needed – such as eliminating flights or flying different aircraft – to protect profit margins.

Even with higher fares, the airline was only able to recover 46 per cent of incremental fuel expenses in the third quarter. It expects this number to improve to 70 per cent in the next quarter.

Air Canada’s CFO Mr. Di Bert said the airline is looking to new aircraft to reduce its fuel bill, including the Airbus A321, which burns 15 to 20 per cent less fuel on a transatlantic route compared with a wide-body plane.

“This is meaningful in any environment, but it matters even more in this current fuel environment,” he said.