Air Canada Extends 737 MAX Grounding into 2020

Air Canada has announced that it will be extending its 737 MAX cancellations until Jan. 8, 2020, now, despite turning a profit in the second quarter of 2019. The carrier is expecting the prolonged cancellations to impact its financials, with capacity declining by two percent during the third quarter of this year. “The 737 Max grounding will be felt more acutely during our busy summer period. Were it not for the grounding of the MAX, our expectation for Q3 would indeed be better,” said Calin Rovinescu, chief executive of Air Canada. Still, Air Canada has found ways to meet the needs of its flight schedule even with the MAX fleet being grounded. The carrier was able to maintain 97 percent of its schedule in the second quarter and is hoping to meet 95 percent of its planned flights during the third quarter. However, while the 737 MAX seems to have a minimal impact on flight schedules, the groundings have had a larger impact on the carrier’s pilot schedules according to executives during an earnings call. A large number of pilots who were exclusively trained to fly 737 MAX aircraft are unable to fly as they wait for the aircraft to re-enter service. “We have some 400-plus pilots that we’re carrying, who are waiting for the MAX to come back,” said Rovinescu on the earnings call. “Obviously, not exactly the most efficient use of their talent and their skill.” It is worth noting that the 737 MAX is Air Canada’s only narrow-body Boeing fleet type as the carrier has relied upon Airbus narrow-body aircraft in the past. At other North American carriers, especially ones that operate different 737 types, pilots are trained to operate multiple variants of the 737. Since the 737 MAX is new to Air Canada’s fleet, many pilots were taken off Airbus aircraft to operate the MAX and now the carrier does not want to invest in re-training the pilots on their previous fleet types. This is mainly due to the time and financial investment associated with training pilots on new aircraft. According to Air Canada’s chief financial officer, the carrier has paid $14 million Canadian dollars ($10.6 million USD) in salaries to grounded MAX pilots in the second quarter. Air Canada has not begun compensation discussions with Boeing yet and the carrier anticipates a full year before the MAX could return to its fleet for full service.

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