Air Canada posts surprise profit despite MAX grounding; shares jump

Air Canada Monday reported a surprise quarterly profit that sent shares up more than 5% 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% of the carrier’s mainline narrowbody 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 US FAA. Canada has said the country’s pilots must receive simulator training for Boeing’s new 737 MAX software fix, going beyond an FAA-appointed board which has proposed additional training without requiring a simulator. Air Canada, currently the only North American carrier with the MAX simulator, has trained its pilots on “some of the scenarios” that occurred during recent Lion Air and Ethiopian Airlines crashes, Rovinescu said. Revenue from Air Canada’s acquisition of the Aeroplan loyalty program, along with a 4.2% rise in traffic, drove a nearly 5% increase in passenger yield, the company said. Cost per available seat mile (CASM) - a measure of how much an airline spends to fly a passenger - climbed 3.8%. Air Canada reported adjusted net income of C$17m, or 6 Canadian cents per share, in Q1 ended March 31, compared to a loss of C$26m, or 10 Canadian cents per share, a year earlier.<br/>