Air Canada suspended its full-year financial guidance because of the surge in jet fuel prices caused by the war in Iran.
“Since late February, the situation in the Middle East and the sharp increase in global jet fuel prices have created a significant external shock for our industry,” Chief Executive Officer Michael Rousseau told analysts Thursday. “The pace of that increase is testing demand resilience across commercial aviation.”
The airline was able to reduce the financial hit in the first quarter by hedging its fuel costs, Chief Financial Officer John Di Bert said.
Other airlines have also recently provided a cautious outlook due to the same pressures. United Airlines Holdings Inc. slashed its full-year profit forecast over higher fuel prices, while Delta Air Lines Inc. decided to not update its full-year outlook.
Air Canada shares fell 2.1% to C$18.26 on Friday in Toronto.
Separately, Canadian Transport Minister Steven MacKinnon announced the government will increase a regulator’s power to fine airlines for violations of consumer-protection laws. The maximum penalty will now be C$1 million ($736,000) for “systemic violations” of the Air Passenger Protection Regulations.
The airline said it “has never been fined for a systemic issue, which is the stated intent of the new maximum fine,” and it has “a very strong regulatory compliance culture and record.”
Air Canada, the country’s largest airline, is forecasting a slight increase in capacity in the second quarter and said it expects to offset between 50% and 60% of the incremental fuel expense through “various commercial and cost actions” such as fuel surcharges for certain bookings.
The airline is halting flights to New York’s JFK airport from Toronto and Montreal beginning June 1, with plans to resume them in October.
Air Canada reported an 11% increase in first quarter revenue to C$5.8 billion ($4.3 billion), beating analyst estimates of C$5.5 billion.
Raymond James analyst Savanthi Syth said in an investor report that “revenue and demand remain strong, with Air Canada still seeing healthy international, premium, corporate, and sixth-freedom trends and no sign of demand degradation despite multiple fare increases.”
Rousseau announced he’ll retire from Air Canada after he caused a political storm in Quebec with a video that offered condolences for the death of two pilots. He spoke almost entirely in English, even though the company is based in the Montreal region and one of the deceased pilots was from Quebec, where the majority language is French.
“We are watching whether new leadership, following Mr. Rousseau’s planned departure, will initiate any strategic pivots, particularly with respect to capacity growth and capital expenditure,” said Syth.
Written by: Mathieu Dion @Bloomberg
The post “Air Canada Pulls 2026 Outlook on Fuel Costs; Shares Drop” first appeared on Bloomberg