More than half of Canadians may avoid US travel in 2025, prompting Air Canada to adjust its strategy
Air Canada may cut flights to certain US destinations later this year if traveller demand declines, as the airline adapts to economic uncertainty, including the possibility of tariffs, according to BNN Bloomberg.
Executive vice-president of revenue and network planning Mark Galardo said the Montreal-based airline is preparing for the possibility that Canadian travellers may fly to the US less frequently in 2025.
However, he noted that current booking trends remain in line with expectations.
“We are anticipating proactively that there could be a slowdown,” Galardo told analysts during a conference call discussing Air Canada’s fourth-quarter earnings.
He added that the airline does not currently see a major slowdown in US travel demand but is taking steps to reduce risks by reallocating capacity to stronger-performing sectors.
Leisure destinations such as Florida, Las Vegas, and Arizona could be affected if demand weakens. In that case, Air Canada may shift aircraft to domestic Canadian leisure markets instead.
“It’s still premature to discuss the potential impact, if any, of actual or potential regulatory tariffs or possible retaliations,” Galardo said.
"We're diligently and continuously monitoring customer behaviour and market dynamics. If these shift in the future, we have ample flexibility to respond by moving capacity around as we've always done.”
According to a Leger survey conducted between February 7 and February 10, 56 percent of Canadians say they are ready to cancel or avoid travel to the US in response to tariff threats and other economic tensions.
The survey, which polled 1,590 Canadians, found that nearly two in three respondents over 55 and almost half of those aged 18 to 34 planned to avoid or cancel US travel.
Despite these preparations, Air Canada maintained its 2025 guidance. The airline expects available seat miles to increase between three and five percent from 2024.
It projects an adjusted cost per available seat mile ranging from 14.25 to 14.50 cents, up from 13.80 cents in 2024—a 2.3 percent increase from 2023.
For its fourth quarter, Air Canada reported a loss of $644m, compared with a $184m profit in the same quarter a year earlier. Operating revenue rose to $5.4bn from $5.2bn in the previous year.
The company posted a diluted loss of $1.81 per share, compared with earnings of 41 cents per share in the same quarter last year.
On an adjusted basis, it reported earnings of 25 cents per diluted share, compared with an adjusted loss of 12 cents per share a year earlier.
Analysts had expected an adjusted profit of 26 cents per share, according to LSEG Data & Analytics.
RBC analyst James McGarragle stated that while the maintained 2025 guidance is positive, market sentiment will likely be influenced by uncertainty around travel and tariffs.
Chief executive Michael Rousseau said Air Canada will “continue to navigate uncertainty and external pressures with prudence and decisiveness,” emphasizing that the airline remains ready to “adapt promptly to any changes or challenges that may arise.”
As of mid-morning, Air Canada shares traded at $17.89 on the Toronto Stock Exchange, down 33 cents, or about 1.8 percent.
