Air Canada is bracing for a demanding 2026 as rising labour expenses and a pullback in U.S. leisure travel threaten near-term results. The carrier plans to take delivery of 35 new aircraft as part of a broader strategy to strengthen its future position.

Speaking to analysts on Wednesday, executives acknowledged the year ahead will present financial headwinds but highlighted the airline’s commitment to renewing its fleet and building operational resilience. The incoming jets are expected to deliver better fuel efficiency and a refreshed experience for passengers across domestic and international routes.

The airline remains in recovery mode after recent disruption. In the third quarter, profits dipped following a cabin crew strike that forced the cancellation of thousands of flights, significantly harming passenger numbers and revenue during a key travel period.

Adding to the pressure, leisure demand between Canada and the United States — a vital market for Air Canada — has softened. Travellers have grown more cautious, and aggressive pricing from U.S. carriers has eroded the airline’s transborder performance versus earlier quarters.

Executives said targeted cost-control measures and smarter scheduling will be deployed to help blunt the impact of these headwinds. They also stressed that the gradual integration of new aircraft should improve unit economics and operational flexibility.

Management is exploring opportunities in other international markets to help offset the weaker U.S. demand, seeking routes and partnerships that could diversify revenue streams while the transborder market stabilizes.

Shares fell nearly 3% in early trading on Wednesday after the earnings release, reflecting investor concern over short-term profitability. Nevertheless, analysts believe the fleet renewal and a sharpened focus on efficiency could support a stronger recovery by 2027.