By Adriano Marchese

Air Canada is riding a rebound in premium and international travel to move past the fallout from its recent labor disruption that impacted third-quarter results.

Executives at the Canadian flagship airline said Wednesday on an earnings call that the return in demand is expected to carry through the U.S. Thanksgiving holiday, particularly to transatlantic destinations, while winter bookings for Latin America are tracking ahead of last year. The gains are being driven by network expansion and vacation package offerings.

"Booking patterns rebounded soon after the disruption ended, underscoring brand strength and consistency in customer behavior," Chief Commercial Officer Mark Galardo said.

Roughly 10,000 flight attendants walked off the job in August seeking better wages and compensation. The disruption lasted three days, despite calls from Canada's Industrial Relations Board to return to work, forcing the carrier to ground all flights and temporarily withdraw its financial targets.

On Tuesday, after the markets closed, Air Canada disclosed the financial impact to results, with a 5% drop in revenue, while profit fell to C$264 million, or the equivalent of $186.5 million.

The stock, which has traded about 4% lower since August, was recently down about 1.3% to C$18.52.

The company's business and premium cabins have been popular, and have led the recovery, outperforming economy offerings. Front cabin revenues have outpaced economy cabin by six percentage points, while corporate travel saw an 11% revenue growth in September alone, a trend that is expected to continue over the next few months.

"Our booking posture in premium cabins is strong going into the fourth and first quarter of next year," Galardo said.

Travel between the U.S. and Canada has been lower since trade tensions increased between the two countries, but Air Canada said that this has now stabilized, and that it has redirected its planes to more in-demand markets.

Looking ahead, the airline expects revenue for each seat flown to dip slightly in the fourth quarter. However, the company views this as a sequential improvement from earlier in the year, once the third-quarter strike's impact is excluded.

Despite the dip in revenue per seat, Air Canada expects to post strong revenue and adjusted earnings before interest, taxes, depreciation growth in the fourth quarter, largely thanks to the patterns it is seeing in premium and international travel.

Though Air Canada didn't give specifics for revenue, it is targeting an adjusted Ebitda range of C$2.95 billion to C$3.05 billion in 2025, free cash flow between breakeven and C$200 million, and a strong fourth quarter that should outperform the previous year's.

Capacity is expected to be about 0.75% higher than the year before, compared with a prior outlook of 0.5% to 1.5% growth.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

November 05, 2025 11:25 ET (16:25 GMT)

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