Air Canada’s Profits Drop CEO Blames Loss on Paris Olympics

Air Canada’s quarterly profit fell 47% due to decreasing demand in major regions and Canada’s record high taxes and airport fees. Air Canada’s net income fell to $410 million from $838 million a year earlier.

Canada’s largest airline recorded revenue of C$5.5 billion (US$4 billion) in the second quarter, up 2% from the same period in 2023. This year, the airline increased flights, resulting in a more than 4% decrease in passenger income per available seat mile.

Transatlantic lines were the weak point, with passenger revenue falling 6% in the quarter, Bloomberg reports.

While demand for flights to southern European nations such as Italy, Greece, and Portugal has been high, ticket sales in France and Germany have been lower, according to CEO Michael Rousseau during a conference call with analysts. Germany hosted the European Football Championship in June and July.

Rousseau also mentioned  they were stung by softening demand in key markets including France, which some travelers are avoiding this summer due to the 2024 Olympic Games in Paris.

Passenger revenue increased on Canadian, US, and Pacific routes. The airline has moved several planes to the latter region, adding new routes to South Korea and Japan, where executives anticipate further expansion.

Overall, the airline earned 98 Canadian cents per share on an adjusted basis, down from C$1.85 a year earlier. Analysts were unsurprised by the figure, as Air Canada had announced preliminary figures on July 22 that predicted reduced profitability.

Last month, the company cut its full-year financial projections, citing pricing constraints in international markets but maintaining strong demand. This summer, airlines across North America faced excess capacity, prompting them to offer discounted tickets in order to fill those seats with cost-conscious consumers.

While Air Canada’s margin was lower than that of big US airlines, it was higher than that of certain significant European carriers, and the Canadian carrier has a strong balance sheet, according to Raymond James analyst Savanthi Syth in a client note.

Rousseau informed analysts that competition “continues to intensify, with new entrants and lower-cost business models.”

Overall, Air Canada has reduced its flight capacity; it expects available seat miles to increase by up to 6.5% this year. Prior to the July profit warning, it stated that capacity will increase by up to 8%.

Air Canada shares had fallen around 20% this year and were down 1.3% as of 11:46 a.m. in Toronto.

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