Air Canada (AC) Stock: A Rising Tide of International Demand

Air Canada (AC) is experiencing a significant boost in corporate travel, particularly on international routes, signaling a positive outlook for the company’s performance. A recent report indicates a near 30% surge in corporate traffic flowing overseas as Canada actively seeks to diversify its trade relationships beyond the United States. This shift is directly fueling demand for international travel and bolstering Air Canada’s position in the global market.

Image: Air Canada Boeing 737 MAX 8 aircraft at Vancouver International Airport.

Diversifying Trade Corridors Drive Growth

Mark Galardo, Air Canada’s Chief Commercial Officer, highlighted the connection between Canada’s trade diversification efforts and the increase in corporate travel. “We’re seeing a lot of corporate demand growth on the North Atlantic, seeing almost a 30% increase in the amount of corporate traffic going to Europe and the Pacific and we attribute part of that to the fact that Canada can diversify trade corridors,” he stated to analysts. This strategic move to strengthen ties with countries like China and pursue smaller trade deals is proving beneficial for Air Canada.

Strong Financial Forecasts for 2026

Air Canada’s fourth-quarter results statement revealed a forecast for core profit in 2026 that marginally exceeds Wall Street estimates. This optimistic projection is based on continued strong demand for international routes – excluding the U.S. – and a notable increase in premium travel. Currently, premium travel accounts for approximately 30% of the airline’s total passenger revenue.

Navigating Economic Dependencies and Labor Costs

While Canada aims for a more global trading order, the country remains significantly reliant on the United States economically. However, Air Canada is successfully mitigating some of the challenges posed by this dependency. The airline has observed that Canadians are increasingly opting for international destinations in Europe and Latin America, potentially influenced by trade tensions with the U.S. This shift in travel preferences has helped offset softness in U.S.-Canada routes.

Despite the positive outlook, Air Canada faces cost pressures stemming from recent labor agreements reached with its unions. The airline anticipates higher revenue in 2026 due to increased seat capacity and sustained demand for premium travel. Available seat miles capacity is projected to rise between 3.5% and 5.5% in 2026.

Premium Travel: A Key Revenue Driver

Similar to U.S. airlines, Air Canada is experiencing a surge in premium travel revenue. Strong demand in premium cabins and robust long-haul bookings are contributing significantly to the airline’s financial performance. This trend suggests a growing segment of travelers willing to pay for enhanced comfort and services.

For more information on financial data and market analysis, visit The Globe and Mail.