Both Air Canada and WestJet announced that, following Transport Canada’s safety notice closing Canadian airspace to Boeing 737 MAX aircraft until further notice, the Federal Aviation Administration’s temporary grounding order and Boeing’s decision to suspend MAX deliveries to airline customers, they are suspending all financial guidance for first quarter 2019 and full year 2019.
Air Canada press release
Air Canada announced today that, following Transport Canada’s safety notice closing Canadian airspace to Boeing 737 MAX aircraft until further notice, the Federal Aviation Administration’s temporary grounding order and Boeing’s decision to suspend MAX deliveries to airline customers, it is suspending all financial guidance it provided in respect of the first quarter and full year 2019.
In light of the current uncertainty, Air Canada is suspending all financial guidance it provided on February 15, 2019 and February 28, 2019 in respect of the 2019 financial year. The financial guidance provided for the years 2020 and 2021 with respect to annual EBITDA margin (earnings before interest, taxes, depreciation, amortization and impairment, as a percentage of operating revenue) and annual ROIC (return on invested capital) as well as the cumulative free cash flow over the 2019-2021 period remains in place.
Air Canada continues to adapt a contingency plan to address the evolving situation and will provide updates as developments warrant.
WestJet suspending all 2019 financial guidance
WestJet announced that following Transport Canada’s safety notice closing Canadian airspace to Boeing 737 MAX aircraft until further notice, the Federal Aviation Administration’s temporary grounding order and Boeing’s decision to suspend all MAX deliveries to airline customers, it is suspending all 2019 financial guidance provided on December 4, 2018 and February 5, 2019. The financial guidance provided with respect to earnings per share (EPS), return on invested capital (ROIC) and cumulative free-cash flow over the period of 2020-2022 remains in place until further information is known.
Through proactive planning and preparation for a variety of scenarios, including grounding, WestJet enacted its contingency plan immediately and grounded all thirteen of its MAX aircraft within 55 minutes of Transport Canada’s order with only three MAX aircraft outside of its Canadian jurisdiction.
WestJet continues to implement and execute its contingency plan to minimize guest disruption and any financial impact. For the remainder of the first quarter WestJet expects it will be able to protect approximately 86 per cent of guests booked on MAX flights and cover approximately 75 per cent of the flights that were intended to operate on the MAX with other aircraft.
Caution regarding forward-looking information
Certain information set forth in this news release, including, without limitation, information underlying all of WestJet’s 2019 guidance and guidance over the period of 2020 to 2022 with respect to earnings per share, return on invested capital and cumulative free cash flow, the continued implementation, execution and effect of WestJet’s contingency plan and our expectations around ability and impact to guests and flights, is forward-looking information within the meaning of applicable securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond WestJet’s control. The forward-looking information contained in this news release is based on assumptions regarding the terms of agreements which WestJet has entered into, WestJet’s current forecasts and strategy, the timing and impact of WestJet’s initiatives, the expected demand environment, access to financing and to infrastructure, the fleet and its utilization and operational performance, aircraft deliveries and option exercises, the forward-curve for jet fuel price, the expected exchange rate of the Canadian dollar to the U.S. dollar, expected tax rates, agreements and bookings, assessment of labour and infrastructure requirements, expectations around legislation and legislative changes, assessment of collective bargaining, assessment of legal proceedings, and other information underlying the targets contained herein, but may vary due to factors including, but not limited to, length of time of, and/or any changes to the decisions, parameters and/or applicability of, the decisions of Transport Canada, the Federal Aviation Administration and/or Boeing, changes in guest demand, changes in fuel prices, delays in aircraft delivery, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems, material adverse regulatory changes, and other factors and risks described in WestJet’s public reports and filings which are available under WestJet’s profile at sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking information as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.