Mon Aug 18 04:30:00 UTC 2025: **Summary:**

Air Canada is facing significant financial headwinds. Weak profitability, declining demand on U.S.-Canada routes due to strained relations, and a major strike have severely impacted the airline. The strike, occurring during peak travel season, is projected to cause substantial revenue losses, flight cancellations affecting over a million passengers, and disruptions to cargo supply chains. Analysts point to Canada’s restrictive aviation policies limiting competition as a contributing factor, exacerbating the impact of the operational shutdown. The strike is also expected to negatively affect Canada’s tourism industry and related sectors.

**News Article:**

**Air Canada Reels Under Strike, Plunging Profits, and US Tensions**

**Beijing, August 18, 2025 (CCTV)** – Air Canada is facing a perfect storm of financial woes, exacerbated by a widespread strike that threatens to cripple the airline and impact the Canadian economy, reports CNBC. The airline’s latest earnings reveal a significant profit decline, falling over 50% from 410 million Canadian dollars to just 186 million Canadian dollars (approximately 967 million yuan) in the second quarter compared to last year.

A key driver is the strained relationship between the U.S. and Canada, leading to an 11% drop in passenger revenue on U.S.-Canada routes during the second quarter. CEO Michael Rousseau admitted to CNBC that bookings on these routes are projected to decline another 10% in the coming months.

“We fly to over 50 cities within the United States,” Rousseau stated. “Our traffic, our bookings going over the next six months are down…We’re down about 10%.”

The ongoing strike, crippling operations during the peak summer travel season, is estimated to cost Air Canada a staggering 50 to 60 million Canadian dollars in daily revenue, according to former executive John Gradek. With already thin profit margins, the company faces immense pressure to return to the negotiating table. The news sent Air Canada’s share price tumbling nearly 6% in the past month.

The strike is expected to cancel approximately 5,000 flights, impacting over a million passengers worldwide and disrupting major international routes to hubs like London Heathrow, Paris Charles de Gaulle, and Tokyo Haneda. Tourism, a vital economic driver for Canada, is also at risk. Destinations like Toronto, Montreal, and Vancouver rely heavily on Air Canada’s domestic and international flights, and the disruptions will ripple through hotels, restaurants, and transportation.

Beyond passengers, the strike threatens global cargo supply chains. Air Canada’s cargo unit operates in 50 countries with hubs in London and Frankfurt. Canada’s minister of labor has warned of potential disruptions to the transport of essential medicines and organ donations.

Analysts are pointing to the lack of competition in the Canadian airline industry, dominated by Air Canada and WestJet, as a contributing factor to the crisis. The Fraser Institute argues that Canada’s restrictive federal rules, preventing foreign airlines from operating domestic routes, limits options for travelers and weakens competition. They urge the government to loosen these restrictions to foster a more resilient and competitive aviation sector.

Read More