Canada’s revenge could leave U.S. airlines spiraling

U.S. airline stocks have already tanked in 2025, and things could get a whole lot worse as Canada turns a cold shoulder to cross-border travel.

Passenger bookings between the U.S. and Canada have “collapsed” by more than 70% every month through September, according to flight data firm OAG Aviation Worldwide.

Separate figures from FlightHub.com show bookings from Canada to the U.S. fell 13% from February to March compared to last year.

“This sharp drop suggests that travelers are holding off on making reservations, likely due to ongoing uncertainty surrounding the broader trade dispute,” OAG said.

But the trade war is just the tip of the iceberg. Many Canadians are furious with President Trump, who recently declared Canada would be better off as America’s “51st state.”

In protest, Canadians are ditching U.S. vacations and boycotting American-made products. Even Canadian sunbirds are weighing selling their vacation properties in places like Florida and permanently returning home.

With Trump’s policies driving a wedge between the two countries, airlines could be left holding the bag.

OAG data shows carriers have already slashed 320,000 seats on cross-border routes between March and October, potentially costing hundreds of millions in lost revenue.

U.S. airline stocks take a beating

Canada’s cold shoulder couldn’t have come at a worse time for U.S. airline stocks, which are reeling from Trump’s tariff agenda and travelers tightening their belts.

As Deutsche Bank recently noted, the soft patch in the U.S. economy “will likely weigh on demand for air travel, particularly the domestic discretionary segment.”

Airline stocks’ losses have far exceeded the broader market.

Since the start of 2025, United Airlines (UAL) is down 27.6%, Delta Air Lines (DAL) has collapsed 26.2%, JetBlue Airways (JBLU) has shed 35.6%, and American Airlines (AAL) is down a staggering 37.9%.

It’s no surprise that the major air carriers have slashed their earnings estimates, forecasting a rocky period ahead.

“Economic uncertainty is a big deal,” said Rober Isom, American Airlines’ CEO.

United Airlines said it has reduced capacity in “transborder” and government markets and plans to cancel overnight hauls. It also plans to retire 21 planes ahead of schedule to save on maintenance.

Although the U.S. carriers didn’t mention Canada specifically, it’s clear that Canadians looking to escape the cold weather are opting for destinations beyond the United States, potentially hurting the airlines’ bottom lines.

“We have observed a shift in bookings from the U.S. to other sun destinations such as Mexico and the Caribbean among Canadian travelers,” Julia Kaiser, a spokesperson for the Calgary-based WestJet Airlines, told the Financial Post.