Air Canada's Earnings: A Tale of Two Airlines

Earlier this week, Air Canada released its earnings report for the third quarter of 2023. And let me tell you, folks, it was a mixed bag. I mean, on the one hand, the airline's mainline division did pretty well. They had a ton of traffic and their planes were packed. But on the other hand, their Rouge division—which operates those discounted, no-frills flights—lost a lot of money.

What gives?

Well, here's my theory: Air Canada's Rouge division is trying to be something it's not. It's trying to be a low-cost carrier, but it doesn't have the structure or the mindset to pull it off. And I think that's because Air Canada is at heart a legacy airline. They're used to a certain level of comfort and service, and they're not willing to give that up.

Now, I'm not saying there's no market for discount airlines in Canada. There totally is. But I think Air Canada needs to figure out what kind of airline it wants to be. Does it want to be a legacy carrier, with all the bells and whistles that come with it? Or does it want to be a low-cost carrier, with a focus on price?

I don't know the answer to that question. But I do know that Air Canada needs to figure it out soon. Because the current situation is not sustainable. They can't keep losing money on their Rouge division. And they can't keep offering the same level of service on their mainline division while also trying to compete on price.

So, what's the future of Air Canada? I don't know. But I'm sure it's going to be interesting to watch.

In the meantime, I'm going to keep flying on Air Canada. Because even though they may not be the cheapest airline, they're still the most reliable. And when I'm traveling, that's what I value most.