FRIDAY,SEPTEMBER13,2019 | THEGLOBEANDMAIL O REPORTONBUSINESS| B
As the grounding of the Boeing 737 Max
airplane nears the eight-month mark,
Air Canadasays the busy summer travel
season just past was a test of its abilities
to replace much of the lost capacity.
Air Canada’s 24 737 Max planes, which
represent 10 per cent of its capacity, are
part of the global fleet that was ground-
ed in March by regulators after two
crashes in five months killed 346 people.
Michael Rousseau, Air Canada’s depu-
ty chief executive officer, said on Thurs-
day the third quarter “is a very big quar-
ter for us. We utilize all our planes so
there is not as much opportunity to miti-
gate.”
Air Canada and WestJet Airlines Ltd.
have dropped the 737 Max model from
their schedules until early January and
have replaced some of the lost capacity
by leasing planes, moving up the arrival
date of additional planes or using air-
craft already in their fleets. Still, many
routes and flights remain cancelled and
hundreds of Air Canada Max pilots are
idle.
Mr. Rousseau reaffirmed the compa-
ny’s guidance of 5-per-cent growth in the
third quarter’s earnings before interest,
taxes, depreciation and amortization.
Preliminary investigations link the
737 Max crashes in Indonesia and Ethio-
pia to erroneous readings from the angle
of attack indicators and the automated
control system, which is designed to pre-
vent a stall. In both crashes, the pilots
apparently fought – and lost – battles to
prevent steep nosedives.
Boeing Co. is working on changes to
the plane’s software and is expected to
submit final versions for certification to
the U.S. Federal Aviation Administration
this month. Other regulators, including
Transport Canada, are also studying the
changes and working with the company
and the FAA before lifting the flight bans.
Dennis Muilenburg, Boeing’s chair-
man and CEO, said on Wednesday the
company expects regulators will ap-
prove the plane’s software updates and
training materials in the fourth quarter.
But he added there is a possibility the
world’s aviation authorities won’t agree
on the suitability of all the changes, and
the plane’s return could occur at differ-
ent times in different countries.
Air Canada’s Mr. Rous-
seau said he hopes regula-
tors act in unison to lift the
flight bans, but “that may
not be the situation at this
point in time.”
“We hope it does come
back into service this year,”
he said. “It is an important
part of our fleet. The plane
was performing very well
before it was grounded
and it was an important
element to replace our ag-
ing [Airbus] A320s. So it’s
obviously very important to us.”
Mr. Rousseau said even if the ban was
lifted in 2019, it could take a year for Air
Canada’s entire Max fleet to return to
service, given the number of pilots that
need to be hired. Air Canada has 400 idle
pilots waiting to fly the 24 Max planes
parked at hangars across Canada.
But the company needs to hire and
train pilots to fly the 26 Max planes it ex-
pects to take delivery of by next year.Twelve of these planes are being stored
by Boeing, and another 14 are slated to
be delivered next year, Mr. Rousseau
said.
Air Canada’s $720-million takeover of
Montreal airline and vacation company
Transat A.T. Inc. is believed to be partly
driven by a desire to secure access to Air
Transat’s desirable fleet of
new Airbus A321 Neos, a
new fuel-efficient model
that competes with the
Max.
Transat has two A321s
and is adding another
three or four soon as it
moves to an all-Airbus
fleet. The company has no
737 Max planes.
Annick Guérard, chief
operating officer of Trans-
at, said the Max ground-
ings at its competitors
have not led to any decrease in overall
industry seat capacity for the winter. The
number of available seats is up by 5 per
cent, although prices competition re-
mains “aggressive,” she said on a confer-
ence call with analysts to discuss the
Montreal-based company’s financial re-
sults.AIRCANADA(AC)
CLOSE: $42.91, UP 21¢LackofMaxjetsforsummertravel
putAirCanadatothetest,officialsays
DeputyCEOreaffirms
guidanceof5%profit
growthinthirdquarter
ERICATKINS
TRANSPORTATIONREPORTER
AirCanadadeputyCEOMichaelRousseausaysevenifthebanonflyingBoeing
Maxplanes–seeninVancouverinMarch–wasliftedin2019,itmaytakeayearfor
theairline’sentireMaxfleettoresumeservice.BEN NELMS/THE GLOBE AND MAIL[The 737 Max] is
an important part of
our fleet. The plane
was performing very
well before it was
grounded.MICHAELROUSSEAU
DEPUTY CHIEF EXECUTIVE
OFFICER, AIR CANADAThe United States on Thursday wel-
comed China’s renewed purchases of
U.S. farm goods while maintaining the
threat of U.S. tariff hikes as the world’s
two largest economies prepared the
ground for talks aimed at breaking the
logjam in their trade war.
Lower-level U.S. and Chinese officials
are expected to meet within days in
Washington ahead of talks between top
trade negotiators in early October, seek-
ing to ease a dispute that for more than
a year has rattled financial markets and
fuelled fears of a global recession.
Top-level negotiators last met face to
face in China in July.
Washington is pressing China for an
end to policies and practices including
industrial subsidies and forced technol-
ogy transfer. Meeting those demands
would require structural change that it
is unclear China would be willing to un-
dertake.
The International Monetary Fund on
Thursday forecast the tit-for-tat tariffs
could reduce global GDP in 2020 by 0.
per cent and trigger more losses after-
ward. Global stocks rose on Thursday
after both sides made concessions
ahead of the talks. On Thursday, China
importers bought at least 10 cargoes, or
600,000 tonnes, of U.S. soybeans for Oc-
tober-December shipment, the coun-
try’s most significant purchases since at
least June, U.S. traders with direct
knowledge of the deals said.
That came after U.S. President Do-
nald Trump on Wednesday delayed an
increase in tariffs on Chinese goods by
two weeks and China exempted some
U.S. drugs and other goods from tariffs.
While welcoming China’s overtures,
U.S. Treasury Secretary Steven Mnuchin
sought to temper optimism in markets
that the gestures might lead to a trade
deal. He said Mr. Trump was prepared
to keep or raise tariffs on Chinese im-
ports and that Beijing had asked for
concessions beyond removal of tariffs.REUTERSWashington,
Beijinglay
groundworkfor
trade-dealtalks
STELLAQIU
CHRISPRENTICE