Companies

Air Canada shares jump 12% as airline reinstates a lower 2026 outlook

Record Q2 revenue of $6.3 billion and a restored, trimmed profit forecast sent the stock to $30.61, even as fuel costs rose 49% and the quarter ended in an operating loss.

By John Wilson · August 12, 2026

Air Canada shares rose 12.25 per cent on Wednesday to close at $30.61 on the Toronto Stock Exchange, after the airline reported record second-quarter revenue and brought back a full-year profit forecast it had suspended in the spring.

The new outlook is lower than the one it replaced, but investors appeared relieved to have any guidance at all. The airline had pulled its forecast on April 30, after the outbreak of war involving Iran sent jet fuel prices sharply higher.

The numbers

In results released late Tuesday, Air Canada reported second-quarter operating revenue of $6.266 billion, up about 11 per cent from a year earlier and a record for the period.

Adjusted EBITDA was $719 million, at the top of the company's guidance range, for a margin of 11.5 per cent.
The airline posted an operating loss of $215 million, which included $388 million of labour-related and other charges.
The net loss was $178 million, or 63 cents per diluted share; adjusted net income was $114 million, or 40 cents a share.
Fuel expense climbed about 49 per cent; fuel cost 132.7 cents per litre, compared with 88.0 cents a year earlier.
Free cash flow was $174 million and total liquidity stood at $8.91 billion.

The reinstated guidance

Air Canada now expects 2026 adjusted EBITDA of $2.9 billion to $3.2 billion, compared with the $3.35 billion to $3.75 billion it forecast before suspending guidance. It cut planned capacity growth to 2.25 to 3.25 per cent, from 3.5 to 5.5 per cent, and lowered its free cash flow target to $200 million to $500 million.

The company said it expects to offset about 60 per cent of incremental fuel costs in the third quarter and all of them in the fourth, through fares, capacity management and hedging.

Alongside the results, Air Canada confirmed reports that it will sell a 25 per cent stake in its Aeroplan loyalty program for $2.5 billion to a group led by funds managed by Blackstone, with the Caisse de dépôt et placement du Québec, PSP Investments and BCI also participating. Travel Market Report said proceeds are earmarked for an upcoming $1.2-billion bond maturity. CEO Michael Rousseau, who will be succeeded by Anko van der Werff, said an investment-grade credit rating is achievable in the medium term.

The risks

The guidance rests on assumptions that could move quickly: jet fuel averaging about $1.38 a litre in the third quarter and $1.29 in the fourth, and an exchange rate of $1.41 per U.S. dollar. A renewed spike in oil, or a weaker loonie, would squeeze margins again. Adjusted unit costs are also expected to rise 5 to 6 per cent this year, and selling part of Aeroplan means sharing future loyalty-program profits with outside owners.

What it means for travellers and investors

For travellers, the airline's plan to recover fuel costs through pricing and tighter capacity suggests fares are unlikely to fall soon. For investors, the share-price surge shows how much an airline stock can react to the removal of uncertainty, rather than to strong profits. Airlines remain highly cyclical and sensitive to fuel, labour and currency swings, which is why many long-term investors limit how much of a portfolio they put in any single stock in the sector. This is general information, not personal advice.

Sources

General news and information, not individualized financial advice. Figures reflect the publication date.