Guidance Suspended Amid Labor Disruption
Air Canada has made the dramatic decision to suspend its financial guidance for both the third quarter and the full year of 2025. This move comes in direct response to a major labor disruption, as a strike by its flight attendants has caused the airline to completely halt its flying schedule. Approximately 10,000 flight attendants, represented by the Canadian Union of Public Employees (CUPE), walked off the job on Saturday, grounding the carrier and creating chaos for an estimated 130,000 passengers each day during the peak summer travel season. The union is engaged in a dispute over key issues, primarily seeking higher wages and compensation for the work performed by flight attendants when the aircraft is not in motion, such as during the crucial boarding process, a practice currently not covered by their pay structure.
Strike’s Broad Impact and Defiant Union Stance
The strike’s repercussions are extending far beyond the airline itself, causing widespread disruption across Canada’s travel and transportation network. Air Canada, along with its low-cost unit Rouge, has been forced to cancel hundreds of flights, as ticket prices on other airlines have soared dramatically due to limited capacity. The situation has been further complicated by the union’s defiant stance against a government-backed back-to-work order from the Canadian Industrial Relations Board, which also ordered both sides to enter binding arbitration. In a video message, Wesley Lesosky, the president of the Air Canada Component of CUPE, stated that the union’s goal is to “dismantle” the legal process being used to end the strike. This outright defiance has prolonged the standoff, creating significant challenges for travelers and highlighting the deep-seated nature of the labor dispute.
Financial Outlook and Strategic Projections
The suspension of the company’s financial guidance is a stark indication of the significant economic impact of the strike on its operations and future profitability. Just a few weeks prior, on July 28, the airline had provided a positive outlook for the year. The company had expected to report adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the range of C$3.2 billion to C$3.6 billion for 2025. Air Canada had also planned to increase its capacity by 1% to 3% compared to 2024 levels, reflecting its confidence in a robust travel market. The current suspension of these projections underscores how rapidly a labor dispute can alter a company’s financial trajectory, transforming a previously optimistic forecast into an environment of considerable uncertainty.
