Air Canada is lowering its 2024 forecast as it grapples with tough competition in international markets and its planes aren’t as full as it anticipated during the second half of the year. The airline says it now expects its adjusted earnings before interest, taxes, depreciation and amortization for the year to be within $3.1 billion to $3.4 billion, down from its previous outlook of $3.7 billion to $4.2 billion.

The new outlook comes as the company reported preliminary results for the second quarter ahead of its next earnings date of Aug. 7.

Air Canada says it expects operating revenues of around $5.5 billion for its second quarter, compared with $5.4 billion in the same quarter last year.

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

In addition to increased competition, the airline said it has seen challenges stemming from sustained supply chain pressures, evolving market conditions and “ongoing geopolitical issues.”

The North American airline industry is grappling with a host of challenges right now, including an over-supply of seats for sale that is exceeding overall demand.

Airlines are also facing high labour and fuel costs, as well as continued supply chain challenges.

Air Canada is among the airlines facing knock-on effects from the recall of Pratt & Whitney turbofan jet engines for inspection and repair.

The potential for labour strife is another cloud on Air Canada’s horizon. Last month, the union representing the airline’s pilots filed for federal conciliation assistance with its negotiations with Air Canada, which have been ongoing for more than a year.

Air Canada said in spite of the challenges, it continues to see a healthy demand environment. The airline said its preliminary second quarter operating revenues would represent a record for a second 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.