Air Canada has restored and reduced its full-year guidance to reflect a C$375 million ($270 million) hit to its third-quarter earnings due to industrial action by its flight attendants, which had led the carrier to suspend its outlook in August. Prior to suspending guidance last month, Air Canada had forecast that full-year capacity would increase by 1-3% and adjusted earnings before interest, tax, depreciation and amortisation would be C$3.2-3.6 billion. The airline now expects a capacity increase of 0.5-1.5% and adjusted EBITDA of C$2.9-3.1 billion. Air Canada and its Air Canada Rouge subsidiary were forced to cancel more than 3,200 flights in August after around 10,000 flight attendants, led by the Canadian Union of Public Employees (CUPE), went on strike. This caused capacity in the third quarter to decline by about 2%, compared with the same period in 2024, says Air Canada. The carrier expects its third-quarter operating income to fall to C$250-300 million from just over C$1 billion in the same period last year, and adjusted EBITDA to drop to between C$950 million and C$1 billion, compared with C$1.5 billion a year earlier. The income decline includes C$175 million related to one-time non-cash pension plan amendments and other labour charges. Air Canada and CUPE are proceeding to arbitration to finalise the wage portion of their four-year tentative agreement, says the carrier. It adds that "no labour disruption can be initiated by either party during the arbitration process or the term of the new agreement".

Gol parent Abra group has terminated discussions with Azul over a potential merger between the two carriers, as negotiations stalled due to Azul's focus on its Chapter 11 proceedings. Abra says the termination comes as both parties "have not meaningfully discussed or progressed a possible business combination transaction for several months", according to a 25 September statement. That is despite Abra stating that it has been "available to continue" discussions with indication that those could be done in parallel to Azul's Chapter 11 proceedings. Furthermore, Abra also notes Azul's comments that the prior memorandum of understanding and pre-filing with Brazil's economic regulator "occurred in another scenario and at another moment of the companies". Despite the termination of talks, Abra states a merger is still on the table: "We continue to believe in the merits of a business combination of Azul and GOL Linhas Aéreas Inteligentes S.A. and, as such, Abra is ready, willing and available to engage with the relevant stakeholders." At the same time, Abra has also terminated a codeshare it disclosed in May 2024, with Azul clarifying that it will "honour all tickets" issued under the commercial agreement.

Lufthansa has warned that unless the German government takes urgent action to reduce the costs of operating, it will further reduce the capacity allocated to its home country. In a policy brief, the airline group urges for immediate action to reverse rising aviation taxes and fees that it says have made Germany the most expensive country in Europe for air travel with one of the slowest recoveries from the pandemic. Without swift policy intervention, Lufthansa warns, flight offerings will continue to decline and regional economies will suffer. "If the federal government continues to hesitate, the current sobering finding does not even mark the bottom," it adds. "Lufthansa, Eurowings and other domestic and foreign airlines will further reduce their services." The group complains that the federal government has so far failed to deliver on its coalition pledge to reduce aviation-specific levies and reverse a hike in aviation taxes. It adds that Germany is now "at the forefront in the wrong disciplines". According to Lufthansa, charges at local airports have nearly doubled since 2019, while aircraft movements have stagnated. It presents data which indicates that Germany ranks 28th out of 31 European countries in terms of post-pandemic air traffic recovery. Domestic connectivity remains severely limited, with intra-German flight offerings stuck at just 20% of 2019 levels, or even lower with the factoring-in of feeder flights to major hubs such as Frankfurt and Munich. Schedule data for August showed that weekly departing seats from Germany were 10% lower than six years ago, while available seat-kilometers (ASKs) were down 3.1%. This suggests that airlines have cut shorter routes while maintaining or expanding longer ones. Weekly operations have fallen 15%, indicating a shift to larger aircraft on longer routes. Carriers operated over 2,000 fewer weekly internal flights this August compared with 2019, equating to 285,000 fewer seats, the data shows. Excluding domestic cuts, the decline in capacity since 2019 is just 1.9% by seats and 1.2% by ASKs, showing that internal services have borne the largest bulk of cuts. In the policy brief, Lufthansa warns that continued government inaction will lead to further service reductions by Lufthansa, Eurowings and other group carriers. Regions already affected or at risk include Baden-Wurttemberg, Bavaria, Berlin, Bremen, Hamburg, Hesse, Lower Saxony, North Rhine-Westphalia and Saxony. Lufthansa also seeks to challenge the notion that reduced domestic flying would benefit the environment. "Aviation has been part of the EU Emissions Trading System since 2012," it says. "A decline in German domestic traffic has no environmental impact – emissions are simply shifted to other regions within the EU's fixed framework." The group argues that rising domestic costs are making foreign hubs more attractive for connecting flights, undermining Germany's aviation infrastructure. "From Hamburg to Amsterdam, the distance is even shorter than to Frankfurt," it observes, presenting this as a risk to the nation's global competitiveness.