CALGARY - WestJet chief executive Ed Sims says the grounding of the Boeing 737 Max is having a "substantial negative impact" on the airline, even as the company reported robust earnings in its first full quarter without the fuel-efficient jetliner and on the cusp of its acquisition by Onex Corp.
In a phone interview, Sims said the grounding -- now expected to continue at least through November -- has forced WestJet to increase spending on fuel and cut its routes.
Sims declined to quantify the financial hit, saying he is in discussions with Boeing about the "substantial loss" of WestJet's 13 Max 8s, which comprise about 10 per cent of the carrier's seat capacity.
WestJet nonetheless beat analysts' expectations with a 380 per cent profit increase year over year to $44.3 million last quarter, as a boost in passengers bumped up revenue 11 per cent to $1.21 billion.
Analyst Cameron Doerksen of National Bank of Canada says in an investor note the grounding will hinder capacity growth and raise expenses for Canadian airlines, but that lower jet fuel costs and a stronger Canadian dollar may help offset those headwinds.
On Friday, Alberta's superior court approved the $3.5-billion deal between WestJet and Onex Corp., which expects to complete the buyout following further regulatory green lights later this year.
(TSX:WJA, TSX:AC)
