Air Canada closed out last year in the black, reporting a profitable fourth quarter despite a sharp decline in travel demand between Canada and the United States amid prolonged trade tensions and tariff disputes.
The Montreal-based airline announced a net income of $296 million for the final three months of 2025, a significant turnaround from the $644 million loss it posted during the same period a year earlier. The results were shared during a conference call with investors and analysts, part of the company’s mandatory earnings disclosure as a publicly traded corporation.
The profit comes at a time when many Canadian travellers have been steering clear of U.S. destinations. Surveys over recent months show a growing preference among Canadians to holiday domestically or travel overseas instead of crossing the border south. Statistics Canada data reinforces that trend: return trips by Canadian residents from the U.S. dropped by an average of 23.6 per cent in November compared with the same month the previous year. October marked the ninth straight month of declining passenger numbers at Canadian airports for U.S.-bound flights, regardless of travellers’ citizenship.
Air Canada executives acknowledged the downturn in cross-border demand but emphasized that the airline successfully adjusted its strategy.
“We leveraged our diversified geographic exposure to pivot capacity to areas of strength, such as to Canada and the Atlantic in the summer months, fully mitigating the impact of reduced Canada-U.S. demand,” said Mark Galardo, the airline’s chief commercial officer and president of cargo, during the earnings call.
The slump in U.S.-bound travel follows nearly a year of economic friction triggered by tariff measures introduced by U.S. President Donald Trump. The tariffs, which have targeted sectors including steel, aluminum, automobiles and lumber, have weighed on parts of Canada’s economy. Trump has also suggested that Canada could avoid such trade penalties by becoming the “51st state,” comments that have further strained public sentiment.
Against that backdrop, a growing “Buy Canadian” movement has taken hold, encouraging consumers to support domestic businesses and industries including choosing Canadian or overseas travel options over U.S. trips.
Air Canada appears to have capitalized on this shift. Strong demand for international routes, particularly across the Atlantic and Pacific, helped offset the weakness in transborder travel. Overseas flights often generate higher ticket revenues, which further strengthened the airline’s bottom line.
Corporate travel played a key role in the rebound. Galardo noted that business traffic to Europe and the Pacific rose by nearly 30 per cent, reflecting Canada’s broader push to diversify its trade partnerships beyond the United States.
“We’re seeing a lot of corporate demand growth on the North Atlantic,” Galardo said. “We attribute part of that to Canada looking to diversify trade corridors.”
Cargo operations also contributed to the improved performance. As Canada expands trade relationships with new markets, Air Canada expects additional opportunities to broaden its cargo routes and revenue streams.
While the decline in Canada-U.S. travel remains a challenge, the airline’s latest results suggest that strategic shifts toward international markets and cargo services have helped cushion the impact. For now, Air Canada appears to be navigating turbulent trade winds with a diversified flight path and a return to profitability.
