Air Canada reports record revenue despite Max grounding

Air Canada has removed 737 Max aircraft from its schedule through early January.
Air Canada has removed 737 Max aircraft from its schedule through early January.

Air Canada's second-quarter passenger revenue hit a quarterly record of $4.34 billion Canadian, up 10.7% year over year, despite cancellations and a capacity decline due to the grounding of Boeing 737 Max aircraft.

Just as Southwest Airlines did last week, Air Canada has now removed the Max aircraft from its schedule through early January. Counting aircraft that were supposed to enter the fleet since the March grounding, Air Canada should have had 36 Max aircraft operating as of the end of June, and the planes' absence is resulting in about 100 canceled flights per day, president and CEO Calin Rovinescu said. 

"At present, we have no visibility on reliable timing for the return to service of the Boeing 737 Max as we await regulatory approvals," Rovinescu said. "If the aircraft are returned to service earlier, we would look for opportunities to have some enter the fleet for either replacement flying or as back-ups."

The grounding is hitting the carrier harder in the summer season. Air Canada now projects capacity to decline 2% in the third quarter, compared with previous plans to increase capacity 3%.

Capacity rose 2.3% in the second quarter as traffic increased 3.6% and load factor increased a percentage point to 84.1%. Yield increased 6.8% amid a "generally improved pricing environment" and Max-related capacity constraints, according to the carrier.

Business class revenue rose $83 million Canadian, or 10.2%, as traffic and yield in the premium cabin each increased 5%, according to chief commercial officer and executive vice president Lucie Guillemette. Some of the growth owes to the Signature Service offering the carrier introduced last year, she said.

Air Canada reported a net income of $343 million Canadian in the second quarter, compared with a $102 million loss in the second quarter of 2018.

Source: Business Travel News

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