TORONTO, May 25, 2026, 11:11 EDT
Air Canada shares rose almost 3% Monday in Toronto, trading stronger as the Canadian market firmed and oil prices dropped. A tentative deal with thousands of front-line staff also supported the stock. The shares changed hands near C$20.9, up from a previous close of C$20.30, moving between C$20.62 and C$20.98 during the day.
Airlines are moving now as fuel-price headlines keep pressure on the sector. The S&P/TSX composite in Canada hit a record intraday high, up 0.7% to 34,778.98 at 10:21 a.m. ET, after oil dropped around 5%. The drop followed reports of U.S. and Iran talks to end their conflict. Brian Madden, chief investment officer at First Avenue Investment Counsel, said even a “non-zero chance” at peace could pull oil down and stocks up. Madden also said he wasn’t “100% convinced” the discussions would last. Reuters
Air Canada is a way for Canadian equity investors to get exposure to that move. Fuel costs are a major line in any airline’s budget, and when oil drops, it can take some weight off fares, margins, and flight capacity—how many seats and departures the carrier puts out.
Air Canada shares moved after the airline said late last week it reached a tentative contract deal with Unifor. Air Canada said details stay private until a ratification vote and board sign-off.
Unifor says its tentative deal will cover about 6,000 Local 2002 members working for Air Canada at airports, call centers, Aeroplan, and customer support around the country. The union plans ratification meetings from June 1 to June 12. The group’s last collective agreement ran out on Feb. 28.
That gives the shares some room heading into the summer travel season. But it doesn’t answer the big question that’s hung over the stock since April: fuel.
Air Canada dropped its full-year 2026 financial outlook April 30, blaming jet-fuel swings for unreliable second-half forecasts. First-quarter operating revenue came in at C$5.785 billion. Operating income was C$117 million. Adjusted EBITDA was C$623 million; that strips out interest, taxes, depreciation and other charges Air Canada says can muddy operating trends.
Air Canada CEO Michael Rousseau said the carrier plans to offset about 50% to 60% of the extra fuel costs for the second quarter using commercial and cost measures. He highlighted “strong demand across the network.” Reuters reported Air Canada paused near-term share buybacks and is reviewing less-profitable routes after fuel costs almost doubled since the Iran conflict broke out in late February.
Pressure on airlines isn’t just hitting Air Canada. Alaska Airlines also dropped its full-year outlook. British Airways parent IAG flagged this month that profit, cash flow, and capacity would miss earlier targets due to higher fuel costs and supply issues. CEO Luis Gallego said IAG was now focused on “yields, costs and capacity.” Reuters
Canadian markets traded Monday while U.S. exchanges closed for Memorial Day, so there was no direct real-time comparison for U.S.-listed airline stocks. CDS confirmed that Memorial Day was a trading day in Canada but not in the U.S.
The rally hangs on a few things that could change fast. Unifor members haven’t voted on the labor deal yet, and the price tag is still private. If jet fuel spikes again, fares could rise more, cuts to routes could follow, or margins might take another hit.
Investors are sticking with the short-term story for now: a pending labour deal, oil prices slipping from recent highs, and Canadian stocks at new levels. Air Canada still must show that any lower fuel prices make it to the bottom line instead of just helping it through another choppy quarter.
