Air Canada, WestJet face financial pressure, travel snarls

More than 10,000 passengers on Canada’s two largest airlines had their travel plans disrupted Friday as Boeing Co.’s 737 Max jetliners remain grounded pending an investigation into the Ethiopian Airlines fatal crash last weekend.

Even though the Boeing model involved in two deadly accidents within five months makes up a small percentage of their fleets — 24 planes out of 400 (six per cent) for Air Canada and 13 out of 175 (about seven per cent) for WestJet Airlines Ltd. — travel snarls are expected to continue over the weekend until the airlines are able to reconfigure their schedules to replace the 737 Max aircraft with other planes.

While the scheduling is expected to improve by Monday, the overall financial impact is impossible to predict given the uncertainty over how long the 737 Max fleet will remain on the ground.

Air Canada, which suspended its annual financial guidance on Friday to account for the grounding and Boeing’s decision to suspend deliveries of the upgraded 737s, typically carries 9,000 to 12,000 people daily on about 75 Boeing 737 Max flights to places including spring break destinations in the Caribbean and Hawaii.

WestJet said 1,800 of its passengers were affected Friday after the Calgary-based airline cancelled 18 flights. More than half were rebooked on same-day flights, while the rest had to wait for the weekend.

Between the two airlines, that means last-minute adjustments for at least 10,800 and as many as 13,800 people. Passengers with upcoming flights on 737 Max aircraft can rebook or cancel their flights without fees. However, they will not be compensated for accommodation at their destinations because the groundings classify as a non-controllable irregular event, as per government policy.

In the meantime, Boeing has stopped delivering the jet to customers, but it continues to manufacture the plane. It has already delivered 376 jets, with an additional 4,636 orders awaiting delivery.

WestJet has ordered 37 more of the aircraft, which it started operating in 2017.

Air Canada has a firm order for 26 more 737 aircraft. Eighteen of these were scheduled for delivery in 2019.

Fleet expansion was a major part of Air Canada’s blue-sky forecast at an investor day in February, where executives predicted its big investments in new planes and more routes would pay off in 2019. In recent years, it invested $12 billion in the expansion.

But the current uncertainty prompted it to suspend all financial guidance for 2019, although its annual margin, revenue and return on invested capital estimates for the three years between 2019 and 2021 remain in place.

WestJet has not yet updated its financial guidance.