Air Canada, WestJet suspend 2019 financial guidance following 737 MAX 8 groundings

Air
03-18-2019 1:29 pm

Following Transport Canada's safety notice closing Canadian airspace to Boeing 737 MAX aircraft, the Federal Aviation Administration's temporary grounding order and Boeing's decision to suspend MAX deliveries to airline customers, Air Canada and WestJet have suspended financial guidance for 2019.

Air Canada

Air Canada has announced that it will suspend all financial guidance it provided in respect of the first quarter and full year 2019.

The airline is suspending all financial guidance it provided on February 15, 2019 and February 28, 2019 in respect of the 2019 financial year, citing the “current uncertainty.”

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.

In a release, the airline stated that it will continue to adapt a contingency plan to address the evolving situation and will provide updates as developments warrant.

WestJet

WestJet is suspending all 2019 financial guidance provided on December 4, 2018 and February 5, 2019. The 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.

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.