Air Canada Q3 profit $139M, cuts 2026 outlook on fuel

Air Canada (TSX:AC) reported record third-quarter revenue of $6.984 billion and net income of $139 million on Thursday, but lowered its 2026 adjusted EBITDA forecast to a range of $2.4 billion to $2.7 billion because of higher fuel prices. The airline had forecast $2.9 billion to $3.2 billion on Aug. 11.

The Montreal-based carrier said diluted earnings per share were 49 cents in the quarter ended Sept. 30, and adjusted earnings per diluted share were 75 cents. Adjusted net income was $214 million. Operating income was $261 million and adjusted EBITDA was $936 million, a margin of 13.4 per cent, according to the company’s news release. All figures are in Canadian dollars. Adjusted figures are non-GAAP measures.

Chief financial officer John Di Bert said strong demand lifted the passenger load factor 2.6 percentage points from a year earlier to 89 per cent, yield rose 11 per cent and cargo revenue grew 33 per cent. Total revenue was up 21 per cent from the third quarter of 2025. Fuel expense rose $906 million from a year earlier, and fuel prices were 10 cents a litre above the airline’s third-quarter expectations, he said.

The Canadian Press reported that the fuel costs pushed Air Canada to cut its profit forecast by hundreds of millions of dollars for the year. In its updated outlook, Air Canada assumes jet fuel will average about $1.72 a litre in the fourth quarter, up from the $1.29 it assumed in August, and expects to offset about 70 per cent of the extra fuel expense in the quarter, down from 100 per cent previously. The airline said fuel prices remain the key variable and noted disruption to shipping through the Strait of Hormuz.

Air Canada now expects free cash flow of break-even plus or minus $150 million for 2026, down from a prior range of $200 million to $500 million. It expects capacity to rise about 2.75 per cent from 2025 and adjusted unit costs to rise 5.5 to six per cent. Free cash flow in the third quarter was negative $440 million.

The airline ended the quarter with net debt of $4.219 billion and total liquidity of $8.018 billion. It said it used proceeds from the Aeroplan transaction to repay $1.7 billion of debt and to complete an $800 million substantial issuer bid, which cut shares outstanding by about 10 per cent to 252.7 million.

Air Canada shares closed Thursday at $21.87 on the Toronto Stock Exchange, up five cents, according to TMX Money and Yahoo Finance. The results came out after the close, so the stock’s first reaction was still to come when this article was published. Our TSX preview for Friday has the wider market picture, and our Thursday close report covers the day’s trading.

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