Nov 5 (Reuters) - Air Canada ( ACDVF ) is set to wrestle

with higher labor costs and sluggish U.S. leisure travel in

2026, as the country's largest carrier plans to bring 35 new

planes into its fleet, company executives told analysts on

Wednesday.

Canada's largest carrier reported late on Tuesday a lower

third-quarter profit, after striking cabin crew forced the

cancellation of thousands of flights and waning demand for

travel to and from the U.S. weighed on results. Shares were down

2.9% in early trading on Wednesday.

The airline said capacity would rise 0.75% in available seat

miles in 2025, compared with a year earlier.

Cross-border leisure travel between Canada and the U.S. has

slowed significantly this year after President Donald Trump's

steep tariffs on Canadian imports sparked a widespread backlash.

Quarterly revenues from transatlantic travel were flat on an

annual basis.

Air Canada ( ACDVF ) executives, however, see strength in consumer

demand for premium services, and anticipate continued

double-digit growth in overall corporate revenue during the last

three months of 2025.

Air Canada ( ACDVF ) CEO Mike Rousseau said the carrier is expecting

to receive 35 new aircraft in 2026, the most it has ever taken

in a single year, even as it retires some of its aging planes.

New Boeing 787 wide-body aircraft that can fly across the

Atlantic or to Asia will allow Air Canada ( ACDVF ) to take advantage of

Canadian government efforts to diversify trade away from the

U.S.

"You know Canada is diversifying trade around the world and

we think we can play a big part," Rousseau said.

Air Canada ( ACDVF ) is also working on fleet changes to enable its

leisure carrier Rouge to operate only Boeing 737 aircraft by the

end of 2026.