Canadian Manufacturing

Air Canada, WestJet to take financial hit from 737 Max 8 ban

The carriers use the commuter planes daily on routes that include Vancouver-Calgary, Vancouver-Montreal and Montreal-Los Angeles


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MONTREAL – Canada’s two biggest airlines are poised to take a financial hit after Transport Minister Marc Garneau announced a ban on all Boeing 737 Max 8 aircraft from Canadian airspace over safety concerns.

Air Canada has 24 Max 8s in its fleet and WestJet Airlines Inc. has 13. The carriers use the commuter planes daily on routes that include Vancouver-Calgary, Vancouver-Montreal and Montreal-Los Angeles.

Marvin Ryder, an assistant professor of marketing at McMaster University, estimates the Max 8 ban would cost the two airlines $100 million collectively in the first 10 days.

Air Canada and WestJet shares reacted immediately to Garneau’s announcement, falling 1.06 per cent and 1.46 per cent, respectively. Prior to the announcement, their shares were down 3.4 per cent and 2.5 per cent, respectively, between Friday closing and Wednesday morning trading in the wake of the Ethiopian Airlines disaster that killed all 157 people on board on Sunday.

Boeing Co., which makes the 737 Max 8, has seen its share price drop by more than 11 per cent – a loss of more than US$26.6 billion.

More than 40 countries have grounded or banned the Max 8 from their airspace since the crash over safety concerns and possible parallels to an Oct. 29 incident which saw the same type of aircraft plunge into the Java Sea, killing 189 people.

News from © Canadian Press Enterprises Inc. 2019

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