Air Canada reported a sharp drop in second-quarter earnings as demand for U.S.-bound travel weakened significantly. Despite the slump, the airline reaffirmed its full-year profit outlook, pointing to strength in international and domestic markets.

The flag carrier posted earnings per share of C$0.60 for the quarter ended June 30, down from C$0.98 a year earlier. Operating revenue rose 2% year-on-year to C$5.63 billion, driven by gains outside the U.S., but passenger revenue on Canada–U.S. routes tumbled 11% amid soft travel demand and ongoing cross-border trade tensions.

“While U.S. markets remain challenging, we are successfully reallocating capacity to international and domestic routes where demand remains strong,” the airline said in a statement.

Air Canada’s operating income stood at C$418 million, with adjusted EBITDA of C$909 million (16.1% margin). The results narrowly missed earnings forecasts but surpassed revenue expectations.

Outlook Remains Unchanged

The airline maintained its full-year adjusted EBITDA forecast of C$3.2–3.6 billion and expects available seat mile (ASM) capacity to rise 3.25–3.75% in the third quarter. Management also reiterated its longer-term goals of achieving C$30 billion in annual revenue by 2028 and sustaining at least a 17% EBITDA margin.

“Despite geopolitical and economic headwinds affecting transborder traffic, our network diversity gives us confidence in delivering on our financial targets,” Air Canada said.

The carrier plans to continue shifting aircraft from underperforming U.S. routes to higher-yielding international destinations in a bid to offset lost revenue.

Key Figures (Q2 2025 vs Q2 2024)

Metric Q2 2025 Q2 2024 Change

Adjusted EPS C$0.60 C$0.98 ▼ 39%
Operating Revenue C$5.63 b C$5.52 b ▲ 2%
Canada‑U.S. Passenger Revenue — — ▼ 11%
Operating Income C$418 m C$514 m ▼ 19%

Bottom line: Air Canada is facing a pronounced slowdown in U.S. travel but remains confident its diversified network will protect profitability through the rest of 2025.