Air Canada posts profit despite 737 Max grounding

Air Canada has reported an increase in its first quarter 2019 operating income despite facing pressures surrounding Transport Canada's decision to ground Boeing’s 737 Max jets.

The grounding hit 20% of Air Canada's narrowbody fleet.

However, the group's purchase of the Aeroplan loyalty program paired with more passengers meant a 5% rise in passenger yield.

The airline posted operating income of C$127 million in the first three months of 2019, compared to C$86 million profit experienced in the same period last year.

Meanwhile, operating revenue rose to a first quarter record of C$4.45 billion compared with C$4.07 billion in the first three months of 2018.

On a GAAP basis, the airline reported net income of C$345 million in the first quarter of 2019 compared to a net loss of C$203 million in the first quarter of 2018.

“I am pleased to report excellent first quarter results for Air Canada, despite several challenges in the quarter. We set records of $4.453 billion in operating revenue and $6.877 billion in liquidity for the period and delivered on a system yield improvement of 5% over last year’s first quarter. Contributing to our performance was the completion of two key strategic initiatives early in the quarter with better than expected results - our acquisition of the Aeroplan loyalty program and our conclusion of a new capacity purchase agreement with Chorus Aviation for flying by Jazz.  We are further encouraged by strong booking trends entering the busy summer peak,” said Calin Rovinescu, president and chief executive officer of Air Canada.

“The grounding of the Boeing 737 Max aircraft following Transport Canada's and other regulators’ decisions resulted in the unexpected removal of 24 aircraft from our fleet during the last 18 days of the quarter, with the associated cost and revenue impact.