WestJet and Air Canada suspend 2019 financial guidance in light of Max grounding

posted on 19th March 2019 by Justin Burns
WestJet and Air Canada suspend 2019 financial guidance in light of Max grounding

Canadian carriers WestJet and Air Canada have suspended all 2019 financial guidance in light of the grounding of all Boeing 737 Max aircraft.

WestJet operates 13 Max aircraft and said it made the move following Transport Canada’s safety notice closing Canadian airspace until further notice, the Federal Aviation Administration’s temporary grounding order and Boeing’s decision to suspend all Max deliveries to airline customers, and suspended guidance provided on 4 December, 2018 and 5 February, 2019.

WestJet said financial guidance provided with respect to earnings per share (EPS), return on invested capital (ROIC) and cumulative free-cash flow over the period of 2020-2022 remains in place until further information is known.

The carrier added: “Through proactive planning and preparation for a variety of scenarios, including grounding, WestJet enacted its contingency plan immediately and grounded all thirteen of its Max aircraft within 55 minutes of Transport Canada’s order with only three MAX aircraft outside of its Canadian jurisdiction.

“WestJet continues to implement and execute its contingency plan to minimize guest disruption and any financial impact. For the remainder of the first quarter WestJet expects it will be able to protect approximately 86 per cent of guests booked on MAX flights and cover approximately 75 per cent of the flights that were intended to operate on the MAX with other aircraft.”

Air Canada has suspended all financial guidance it provided in respect of the first quarter and full year 2019 and said: “In light of the current uncertainty, Air Canada is suspending all financial guidance it provided on February 15, 2019 and February 28, 2019 in respect of the 2019 financial year.

“The financial guidance provided for the years 2020 and 2021 with respect to annual EBITDA margin (earnings before interest, taxes, depreciation, amortization and impairment, as a percentage of operating revenue) and annual ROIC (return on invested capital) as well as the cumulative free cash flow over the 2019-2021 period remains in place.

“Air Canada continues to adapt a contingency plan to address the evolving situation and will provide updates as developments warrant.”