The Summer of 2025 May Not Bring Much Joy for Canadian Airlines

Canadian travellers are shifting away from U.S. destinations for their discretionary leisure travel in response to the threat of tariffs from the Trump Administration and the strained relationship between the two countries. We assessed how changing consumer travel patterns could affect the credit risk profiles of Canadian airlines.

-- Canada-U.S. air travel activity has slowed, and this trend could be exacerbated over the summer months as forward bookings appear to have dropped considerably.

-- Airlines have been adjusting their capacity in recent months away from Canada-U.S. routes. However, they will be challenged by the limited availability of landing slots and the time needed for new routes to become profitable.

-- Canadian airlines are more exposed to Canada-U.S. transborder market and therefore could see their credit risk profiles affected in the near-term if the trend persists.

"The credit risk profiles of Canadian airlines could worsen as a result of weaker profitability in the near term if the strain on Canada-U.S. relations persists or deteriorates further," said Rohit Kumar, Assistant Vice President, Corporate Ratings. "The medium- to long-term implications for credit risk profiles will depend on the economic impact of the trade conflict and how efficiently and quickly airlines adapt to changing consumer travel patterns."