Air Canada on Monday reported a surprise quarterly profit that sent shares up more than five per cent in earlier trading, helped by flying more passengers and its purchase of a loyalty program, despite pressures from the grounding of Boeing’s 737 MAX jets.
Canada’s largest carrier said it sees strong demand ahead of summer, and expects second-quarter results in line with forecasts made before the global grounding of Boeing Co.’s 737 MAX in March, following two fatal crashes involving the aircraft model.
The grounding, which hit 20 per cent of the carrier’s mainline narrow body fleet “stress tested us and we passed,” Air Canada CEO Calin Rovinescu told analysts.
North American operators of the MAX wrestled during the first quarter with harsh weather and the plane’s grounding,while facing pressure from rising jet fuel costs.
Air Canada is awaiting the green light from regulators, but will also conduct its own safety assessment before returning the plane to service, Rovinescu said.
He said Air Canada's training requirements may exceed those of Boeing and the U.S. Federal Aviation Administration (FAA).
Boeing was not immediately available for comment.
Canada has said the country's pilots must receive simulatortraining for Boeing's new 737 MAX software fix, going beyond anFAA-appointed board which has proposed additional trainingwithout requiring a simulator.
Air Canada, currently the only North American carrier withthe MAX simulator, has trained its pilots on “some of thescenarios” that occurred during recent Lion Air and EthiopianAirlines crashes, Rovinescu said.
“By having a MAX simulator we are in a better position toactually see what went on with the other accidents,” Rovinescutold Reuters on the sidelines of the company's annual generalmeeting in Toronto.
He did not specify the differences between simulators forthe MAX and the older 737 NG model.
Southwest Airlines has one MAX simulator on orderand expects it to be operational sometime in the third quarter.
American Airlines expects delivery of the MAXsimulator during the last three months of the year.
U.S. airlines have said they expect the MAX to return toservice this summer, although a date is unclear.
Travel demand between Canada and China was also hit duringthe quarter amid trade tensions between the two countries aswell as the December arrest of a Huawei Technologies Coexecutive.
Rovinescu said demand was “stable now.”
Revenue from Air Canada's acquisition of the Aeroplanloyalty program, along with a 4.2 percent rise in traffic, drovea nearly 5 percent increase in passenger yield, the companysaid. Cost per available seat mile (CASM) - a measure of howmuch an airline spends to fly a passenger - climbed 3.8 percent.
Air Canada reported adjusted net income of C$17 million, or6 Canadian cents per share, in the first quarter ended March 31,compared to a loss of C$26 million, or 10 Canadian cents pershare, a year earlier.
Analysts' on average had expected a loss of 18 Canadiancents, according to IBES data from Refinitiv.