Did FAA's deference to Boeing compromise safety of 737 MAX?

Cornelia Mascio
Luglio 31, 2019

Air Canada plans to keep its Boeing 737 Max aircraft parked until next year while the USA manufacturer seeks fixes for the jet following two fatal crashes. "Clearly, much uncertainty remains with respect to our MAX fleet".

Dickson also said that the company pressured engineers to downplay new features on the 737 Max - describing new changes to the jet as minor rather than major changes - to avoid FAA scrutiny.

Despite the forecasted two per cent year-over-year decline in capacity - the number of passengers it can fly - the company expects to boost adjusted core earnings by five per cent next quarter.

"We are hopeful that this is a short-to-medium term issue that will not meaningfully impact our strategic direction, capital allocation practices or any other element of our plan", Air Canada's chief financial officer Michael Rousseau said on a conference call with analysts Tuesday morning following the release of second quarter results.

Air Canada responded to the loss of its Max planes by cancelling routes, leasing aircraft and relying on its Rouge subsidiary's planes.

Those pilots will be ready go soon after regulators clear the airplane, executives said.

Air Canada now assumes the remaining 26 Max aircraft will be delivered in 2020.

Chief executive Michael O'Leary said: "The two weakest markets were Germany, where Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices, and the United Kingdom, where Brexit concerns weigh negatively on consumer confidence and spending".

Prior to the grounding in mid-March, the company was expecting 12 more of the fuel-efficient Max 8s by the end of June and another 14 in the first half of 2020, none of which have arrived due to concerns with the aircraft's software and sensors following two fatal crashes.

"As a result of this.it will take up to a year from the time the decision is made to reintegrate them into our fleet after the ungrounding for all 50 planes to fly", Rousseau said.

The pilot training issue is more of a long-term problem.

Like most airlines, Air Canada is doing more with less, deferring non-essential maintenance, extending leases, taking other aircraft earlier than expected and using wet-leased aircraft.

The Montreal-based airline will only be able to cover 95 per cent of its planned capacity in the third quarter, with overall capacity slated to dip 2 per cent instead of a previously expected rise of 3 per cent. The move "reflects our prudent approach to scheduling", Air Canada said in a statement.

Southwest Airlines announced in its second-quarter earnings that it would "proactively extend the MAX-related flight schedule adjustments through January 5, 2020, to provide reliability of our operation and dependability for our customers booking their fall and holiday travel".

Air Canada reported an adjusted net income in the three month period ending June 30 of $240 million, or 88 cents per diluted share, up from $129 million at the same time previous year, or 47 cents per diluted share.

The airline was also hit by higher costs for fuel and staff.

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