Air Canada has lowered its earnings forecast for 2024, saying its planes did not fly at full capacity as expected this summer, partly due to intense competition in international markets.

The Montreal-based carrier said on Monday that it now expects its adjusted earnings before interest, taxes, depreciation, and amortization for this year to be in the range of $3.1 billion to $3.4 billion, down from its previous forecast of $3.7 billion to $4.2 billion.

The new forecast comes as the company announced preliminary results for the second quarter ahead of its next earnings date on August 7.

Air Canada said it expects operating revenue of about $5.5 billion for the second quarter, compared to $5.4 billion in the same quarter last year.

It also anticipates operating income of $466 million, down from $802 million in the second quarter of 2023.

In addition to increasing competition, the airline said it has faced challenges from ongoing supply chain pressures, evolving market conditions, and "ongoing geopolitical issues."

The North American aviation industry is currently facing a range of challenges, including an oversupply of seats for sale that exceeds overall demand.

Airlines are also grappling with rising labor and fuel costs, along with ongoing supply chain challenges.

Several Canadian airlines – including WestJet, a competitor to Air Canada – have faced delays in aircraft deliveries due to production issues at Boeing Co., limiting their ability to grow their fleets.

Air Canada, along with Transat A.T., is among the airlines facing indirect impacts due to the Pratt & Whitney helicopter engine recall for inspection and repair.

The prospect of a labor dispute presents another cloud on Air Canada's horizon. Last month, the union representing the airline's pilots applied for federal assistance in mediation for its negotiations with Air Canada, which have lasted more than a year.

The airline's current collective agreement with its pilots expires on September 29.

James MacGarragle, an analyst at RBC Capital Markets, noted in a memo that while Air Canada's updated earnings outlook may not be well received by investors, "indicators from Transat and U.S. peers in the quarter point to some weakness across the industry."

Air Canada stated that despite the challenges, it continues to see a healthy demand environment. The airline noted that its preliminary operating revenue for the second quarter will represent a record for that quarter, with load factors remaining above historical averages.

The carrier said it is effectively managing its costs through productivity, cost reductions, and other cost discipline issues.