Air Canada sees decline in U.S.-bound seat sales amid tariff tension

Air Canada AC-T -10.62%decrease saw an 11-per-cent decline in U.S-bound seat sales in the second quarter amid trade and sovereignty tensions spurred by U.S. President Donald Trump.

Canada’s largest airline posted a 2-per-cent per cent rise in overall operating revenue as travellers chose domestic or overseas destinations.

“In the transborder market, we continue to see less demand for trips to the U.S.,” said Mark Galardo, Air Canada’s chief commercial officer.

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Air Canada on Tuesday reported profit of $186-million for the three months ending on June 30, compared with $410-million in the year-earlier period. Adjusted for a tax settlement, profit was $207-million, or 60 cents a share, compared with $369-million (98 cents) in the same period a year ago.

Analysts had expected adjusted profit of 72 cents a share.

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“This second quarter was not business as usual,” Mr. Galardo told analysts on an earnings conference call on Tuesday morning. “We navigated through a period of significant economic and geopolitical uncertainty and we contended with reduced demand for transborder travel.”

Other headwinds included reduced demand for travel to the Middle East and India amid geopolitical turmoil, increased competition in China and Hong Kong, and currency fluctuations, he said.

Mr. Galardo said the drop in U.S. travel was expected and accompanied by an 8-per-cent decline in seat capacity and better per-seat yields.

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Canadians have adopted an elbows-up stance against Mr. Trump’s threats to make Canada the 51st state and crush its industries with tariffs. They have shunned U.S. visits and products and lauded campaigns to spend their money at home.

According to Statistics Canada, the number of Canadians crossing the border by plane has fallen through the first five months of the year, and is down in April and May by 14 per cent and 24 per cent, respectively, compared to a year ago. Trips by car, which comprise three-quarters of travel to the U.S., fell by more than 35 per cent for these months.

The diminished U.S. market is significant for Canada’s airlines because it was the destination for 75 per cent of all trips abroad by Canadians in 2024.