(Reuters) – Air Canada on Friday became the first major airline to announce a financial impact from the grounding of Boeing Co’s 737 MAX planes on safety concerns, after the carrier suspended its previously-stated financial forecasts for 2019.

FILE PHOTO: An Air Canada Boeing 737 MAX 8 from San Francisco approaches for landing at Toronto Pearson International Airport over a parked Air Canada Boeing 737 MAX 8 aircraft in Toronto, Ontario, Canada, March 13, 2019. REUTERS/Chris Helgren/File Photo

Canada and the United States on Wednesday joined other countries around the world in grounding the planes, after a deadly Ethiopian Airlines plane crash killed all 157 people on board. This was the second disaster involving the Boeing plane in the last five months.

Boeing suspended deliveries of its 737 MAX aircraft on Thursday but continues to produce its single-aisle jets at full speed.

The U.S. planemaker’s suspension of deliveries came as Air Canada was renewing its narrowbody fleet, by using the more fuel-efficient MAX aircraft to replace existing Airbus A320 narrowbodies.

Canada’s largest carrier had expected to grow its fleet of 24 MAX jets to 36 of the Boeing planes by the end of 2019.

Montreal-based Air Canada has said it operated 75 737 MAX flights daily out of a total schedule of approximately 1,600 daily flights system-wide.

Air Canada would face the costs of re-booking passengers after the planes were grounded, and other costs from not having scheduled access to the more efficient MAXes, said AltaCorp analyst Chris Murray.

Compared with its existing Airbus A320s, the airline had estimated that the MAX 8 aircraft would deliver 11-percent lower cost per available seat mile (CASM), a closely-watched industry metric, driven by savings on fuel and maintenance costs.

But Murray said he expected Air Canada would find a way to “mitigate” the impact of higher costs, and noted the company’s forecast for annual profit margin remained in place for 2020 and 2021, suggesting this would be “a short term disruption.”

The carrier had projected annual core profit margin of between 19 percent and 22 percent from 2019 until 2021.

Air Canada was expecting full-year 2019 adjusted cost per available seat mile (CASM), a key industry metric, to increase between 2 percent and 3 percent compared with 2018.

The grounding of planes has left U.S. and Canadian carriers wrestling with customer calls and flight cancellations. [

Southwest Airlines, the world’s largest MAX operator with 34 MAXes, and American Airlines with 24 MAX jets in its fleet, both declined to comment on Friday. United Airlines, with 14 MAXes and Canada’s WestJet Airlines, which operates 13 of the jets could not be immediately reached for comment.

Reporting by Debroop Roy in Bengaluru and Allison Lampert in Montreal; Additional reporting by Sweta Singh in Bengaluru and Tracy Rucinski in Chicago; Editing by Arun Koyyur and Nick Zieminski


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