WestJet suspends financial outlook amid Boeing 737 Max groundings
CALGARY -- WestJet Airlines is suspending its 2019 financial guidance following the grounding of its 13 Boeing 737 Max 8 aircraft by regulators in Canada and the United States due to safety concerns.
The Calgary-based airline says its financial outlook provided as late as a month ago are being put on hold except for earnings per share, return on invested capital and cumulative free cash flow between 2020 and 2022 until more information is known.
The move follows a similar decision last week by Air Canada, which operates 24 of the narrowbody aircraft.
WestJet says it grounded all Max aircraft within 55 minutes of Transport Canada's order last Wednesday, with only three planes outside of Canada. The action was taken after aviation authorities across the globe grounded the aircraft in the wake of the Ethiopian Airlines crash March 10 that killed 157 aboard the plane, including 18 Canadians.
The airline says through its contingency plan it expects to preserve about 86 per cent of passengers bookings on Max flights and find alternative planes for about 75 per cent of Max flights.
Walter Spracklin of RBC Capital Markets described the challenge as a temporary issue for both airlines.
"Overall, we see the impact as limited and short-term," he wrote in a research note.