Air Canada Defies Trade War Headwinds: Record Q4 Profits Amid Shifting Travel Trends

Published on February 14, 2026

In the world of aviation, “turbulence” is usually something you experience at 30,000 feet. But for Air Canada, the most significant turbulence of 2025 came from the ground—specifically, from the halls of power in Washington D.C. and the shifting sentiments of Canadian travelers.

Despite a year defined by aggressive trade tensions, tariff threats, and a notable chill in Canada-U.S. relations, the country’s flagship carrier managed a remarkable feat: it soared back into the black. In its latest earnings report released on February 13, 2026, Air Canada announced a staggering $296 million net income for the fourth quarter of 2025, a complete reversal from the $644 million loss recorded during the same period a year earlier.

The story of this profit isn’t just about balance sheets; it’s about a strategic pivot that reveals a changing Canadian identity and a new map of global travel.

The “Soured Sentiment” Effect

For decades, the United States has been the primary playground for Canadian travelers. However, 2025 saw a dramatic cooling of that relationship. Driven by U.S. President Donald Trump’s tariff policies on steel, aluminum, and lumber—and his provocative suggestion that Canada should consider becoming the “51st state”—Canadians began voting with their passports.

According to Statistics Canada, return trips to the U.S. by Canadian residents fell by an average of 23.6% in November 2025 compared to the previous year. This wasn’t just a one-month fluke; it was the ninth consecutive month of declining passenger volumes bound for the U.S.

This “Buy Canadian” movement extended beyond the grocery aisle and into the travel sector. Canadians, feeling slighted by the political rhetoric south of the border, began looking elsewhere for their vacations and business trips.

The Great Atlantic Pivot

So, how does an airline make record profits when its most popular international corridor is shrinking? The answer lies in agility.

“We leveraged our diversified geographic exposure to pivot capacity to areas of strength,” explained Mark Galardo, Air Canada’s Chief Commercial Officer. As demand for Florida beaches and Vegas lights dimmed, Air Canada shifted its fleet toward the North Atlantic and domestic routes.

While the U.S. market softened, demand for European and Pacific destinations surged. Canadians didn’t stop traveling; they simply changed their destination. By increasing flights to London, Paris, and Tokyo, Air Canada captured a traveler who was willing to spend more on a long-haul “experience” rather than a short-haul “shopping trip.”

Corporate Travel and the “Diversification Drive”

One of the most surprising takeaways from the earnings call was the robust growth in corporate travel. Typically, business travel is the first thing to be cut during economic uncertainty. However, the trade war with the U.S. actually forced Canadian businesses to find new partners.

Galardo noted a 30% increase in corporate traffic to Europe and the Pacific. “Canada is looking to diversify trade corridors,” he said. As Canadian CEOs fly to Brussels or Singapore to sign the deals they once signed in Chicago or New York, Air Canada is the one providing the wings.

Cargo: The Silent Profit Engine

In the background of the passenger surge, Air Canada’s cargo division has been quietly diversifying its lanes. As tariffs disrupt traditional supply chains between the U.S. and Canada, businesses are increasingly using air freight to bring in specialized parts and luxury goods from Europe and Asia. While it’s still early days for some of these new markets, the airline sees cargo as a vital hedge against future political instability.

Humanizing the Numbers

Behind every “23.6% drop” is a family that chose to explore the rocky shores of Newfoundland or the historic streets of Lisbon instead of a theme park in Orlando. Behind the “$296 million profit” are thousands of Air Canada employees who navigated a major labor strike and geopolitical uncertainty to keep the planes flying.

The 2025-2026 period will likely be remembered as the year Air Canada proved it could survive—and thrive—without its biggest neighbor. It’s a story of resilience that mirrors the broader Canadian economy’s attempt to stand on its own two feet in a fractured global landscape.

What’s Next for Travelers?

As we move further into 2026, travelers can expect Air Canada to continue its focus on “The New Frontier” of destinations. Expect more direct routes to secondary European cities and increased capacity in the Pacific. For the Canadian traveler, the world just got a little bit larger, and the “south of the border” habit might be a thing of the past.