Air Canada flags softer Q3 on strike impact, cuts 2025 outlook

Air Canada has provided an early look at its third-quarter 2025 performance, signalling a significant hit from August’s cabin-crew strike and trimming full-year guidance as a result. For the quarter ending September 30, 2025, the airline now anticipates operating income of CA$250–300 million and adjusted EBITDA of CA$950 million–CA$1.0 billion, well below last year’s third-quarter base of operating income at CA$1.040 billion and adjusted EBITDA of CA$1.523 billion. Operated capacity is expected to decline by about 2% year on year after more than 3,200 flight cancellations.

The strike’s financial toll is estimated at a CA$375 million reduction to both operating income and adjusted EBITDA. This was driven mainly by a revenue impact of CA$430 million, partially offset by CA$145 million in avoided costs, largely fuel, and about CA$90 million in incremental customer reimbursements and labour-related expenses. Management noted that claims processing is ongoing, while wage matters with cabin crew are proceeding to arbitration, ensuring no further disruption during that process.

Reflecting this disruption and softer bookings, Air Canada has reinstated and lowered its 2025 guidance. It now expects adjusted EBITDA of CA$2.9–3.1 billion, down from the earlier forecast of CA$3.2–3.6 billion. Available seat mile capacity growth is revised to 0.5–1.5%, compared with 1–3% previously. Adjusted CASM is projected at 14.60–14.70 cents, and free cash flow between minus CA$50 million and plus CA$150 million, narrower than the prior breakeven guidance of plus or minus CA$200 million. The airline also plans to record roughly CA$175 million of one-time non-cash pension and other labour-related charges in the third quarter, which are excluded from adjusted measures.

The update follows a four-day national strike in mid-August, the first of its kind at Air Canada in decades, which forced a temporary grounding and suspension of earlier guidance. Although operations have since stabilised, demand weakness lingered into September as travellers responded cautiously after the disruption. Reports at the time underlined the expected CA$375 million hit and the scaled-back growth plans for the remainder of the year.