Air Canada Shifts Flying Beyond the US as Demand Cools

Air Canada told investors that demand for travel between Canada and the US has weakened, but the airline says it is offsetting that drop by shifting flights into other markets where bookings are stronger.

On the company’s latest earnings update, chief commercial officer Mark Galardo said the airline expects Canada–US demand to stay about the same this year, meaning it does not expect it to get worse, but it also does not expect a rebound. The airline says it is already moving capacity toward domestic travel and international routes such as Europe, the Caribbean, and Latin America to protect revenue and keep planes full.

Why the airline is diversifying its network

Air Canada’s strategy is to reduce its reliance on a single large corridor (Canada–US) by expanding into markets that are performing better. Management said the early 2026 is showing strong bookings for international travel, and the airline is adding new summer destinations while rebuilding parts of its long-haul schedule, including renewed nonstop flying to China from Toronto and year-round service to Bangkok.

Air Canada also said corporate travel is shifting: it cited a close to 30 percent increase in corporate traffic to Europe and the Pacific, linking it to Canadian businesses expanding trade relationships beyond the US.

Cuba disruption shows why flexibility matters

Diversification is not only about demand—it is also about operational risk.

On February 9, 2026, Air Canada suspended service to Cuba because of an aviation fuel shortage on the island. The airline said it would operate empty southbound flights to pick up and return approximately 3,000 customers, then redeploy capacity to other warm-weather destinations, with minimal expected financial impact.

Steady growth and bigger long-haul capability

Air Canada paired this strategy with a strong financial update. For the fourth quarter, it reported net income of C$296 million (US$218 million), versus a loss of C$644 million (US$474 million) a year earlier, alongside quarterly operating revenue of C$5.770 billion (US$4.24 billion).

The airline also guided to 2026 capacity growth of 3.5–5.5 percent and continued investment in long-haul capability, including an order for eight Airbus A350-1000 aircraft with deliveries expected to begin in 2030.

Photo by David Vincent Villavicencio on Unsplash