Air Canada Profit Falls as U.S. Travel Demand Weakens Amid Trade Tensions

Air Canada reported a significant drop in second-quarter profit as strained trade relations with the United States hurt travel demand on key routes. The airline’s earnings declined to C$0.60 ($0.44) per share from C$0.98 a year earlier, despite a modest rise in operating revenue to C$5.63 billion from C$5.52 billion.

The downturn comes amid growing Canadian boycotts of U.S. goods and travel following President Donald Trump’s tariffs on Canada and controversial remarks suggesting the country should be annexed. This backlash has led to fewer passengers flying to the U.S., with the slowdown becoming especially visible during the summer travel season, historically the most profitable period for airlines.

Despite weaker traffic, Air Canada remains focused on growth for the second half of 2025. The carrier plans to boost available seat miles (ASM) capacity by 3.25% to 3.75% in the third quarter compared to last year. The move aims to capture demand in other markets and offset losses in cross-border travel.

As Canada’s largest airline, Air Canada faces mounting pressure to adapt to shifting consumer sentiment and geopolitical headwinds. Analysts note that trade disputes and political rhetoric are increasingly influencing travel behavior, creating challenges for carriers dependent on U.S.-bound traffic.

The results underscore the broader impact of international tensions on the aviation industry, as airlines navigate fluctuating demand and evolving market dynamics. Investors will be closely watching whether Air Canada’s strategic capacity increases and diversified route network can stabilize earnings in the coming quarters.