Reporting continued strength in international travel, Air Canada plans to expand its Asia-Pacific service.

The carrier will redeploy capacity into the region, shifting some away from the North Atlantic in the fourth quarter (Q4) and in the first quarter (Q1) 2024.

“As we take advantage of this opportunity, we are increasing our capacity to Japan and Korea, adding frequency to our successful new route to Bangkok and adding an additional red-eye flight from Vancouver to Hong Kong,” EVP Revenue and Network Planning Mark Galardo told investors on an Oct. 30 third quarter (Q3) earnings call. “We’re assessing further opportunities to reallocate capacity in the region as we believe the demand and yield signals will continue to be favorable throughout the coming months,” he noted, “there’s still a lot more recovery left on the Pacific and ... [it] continues to be a very good opportunity for us to step into.”

Describing overall demand as stable and continuing to track above 2019 levels, the airline says it is in discussions with airports and government officials to support future growth.

“We’re spending a lot of time with our key partners at the airports, ensuring that they have enough capacity for us to grow in Vancouver, Montreal and Toronto—and those are very productive discussions that we’re having,” said President and CEO Michael Rousseau.

He said Air Canada is also engaging with the government of Canada to see if investments in airport infrastructure can be accelerated to allow for growth. Rousseau explained it was too early to tell whether the airline’s three hubs would be able to absorb the capacity it wants to deploy into the marketplace, especially on the international side, “but we’re certainly comfortable that we’re having productive discussions with all the stakeholders to make that happen.” 

In Q3, Air Canada reported revenues of C$6.3 billion (US$4.54 billion) up 19.2% year-over-year. The airline noted continued strength in its premium revenues, up 21% versus the year-ago quarter, while pointing to the density of its widebody cabin configurations as keeping it from being overly dependent on a premium revenue stream. In Q3 it recorded “similar and proportional gains” from its premium and economy cabins as well, executives noted. It currently expects two remaining Boeing 787-9s on order to be delivered in 2024, while deliveries of its 787-10s (18 plus 12 options) and Airbus A321XLRs (25) on order are slated to begin in 2025. The airline is content with its current orderbook but may consider additional widebodies toward the end of the decade.

Supporting capacity growth in the year ahead will be leased aircraft, along with better utilization of its existing fleet. “For the time being what’s on the table will satisfy our ambitions,” Rousseau said. “Certainly, in the back half of the decade we’re going to have to look again ... as we look for more growth, at—potentially—some other widebodies.”

Air Canada recorded $1.25 billion in net income for Q3, reversed from the year-ago quarter’s net loss of $508 million. Expenses for the quarter rose 5.4% year-over-year to $ 4.9 billion, including a 17% year-over-year jump in wages, salaries and benefits. The airline is currently negotiating with pilots on a new contract and though executives declined to comment on any timing or cost projections Rosseau told investors, “We’re obviously focused on the Canadian marketplace, and WestJet put together a deal earlier this year that was within our range of expectations.” The WestJet deal was ratified on June 9, and included “significant gains” in compensation and work-life-balance benefits, ALPA said in announcing the deal. Citing continued constraints of regional pilot availability and supply chain pressures in addition to the recent suspension of its Tel Aviv routes, Air Canada expects full year system ASM capacity to be 20% above 2022 levels. In Q4 it plans on increasing system ASM capacity by about 10%, year-over-year.

“Like most airlines, we continue to face challenges,” Rousseau said. “But our demonstrated adaptability over these last nine months combined with a continuing stable demand environment give us every assurance for the rest of the year and into 2024.”