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Report on Business Air Canada says it will reassign Max pilots as grounding of Boeing plane drags on

Air Canada says it will redeploy some of its idled 420-odd 737 Max pilots to fly other planes as the grounding of the Boeing plane drags on.

The global fleet of the 737 Max narrow-body planes remains parked as Boeing and aviation authorities work on a software fix and pilot training procedures after two fatal crashes of the aircraft since October. Boeing has halted deliveries of the planes and slowed production as it makes changes to the automated controls allegedly linked to the crashes in Ethiopia and Indonesia that killed a total of 346 people.

Air Canada owns 24 of the 737 Max planes and was due to take delivery of another 12 by June.

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Transport Canada grounded the model domestically on March 13, forcing Air Canada and WestJet Airlines Ltd. to scramble to replace much of the lost capacity. Air Canada said on Monday the loss of 20 per cent of its narrow-body fleet that flew as many as 12,000 customers a day meant it had to cancel 1,600 mainline flights, but was able to retain 98-per-cent of its schedule.

Calin Rovinescu, Air Canada’s chief executive officer, said the company has about 425 Max pilots who are spending their days training on a 737 Max simulator, but not flying customers. Some pilots who flew other planes in the past year – narrow-body Airbus or the Embraer 190 – will return to flying those models, Mr. Rovinescu said.

Boeing has said the global groundings cost it US$1-billion so far but has not provided any timeline on when regulators will approve the 737 Max’s return. Air Canada and WestJet have retooled their schedules without the planes well into the busy summer travel season.

Mr. Rovinescu said it could take several weeks to fully deploy the 737 Max once it is cleared by regulators. But because Air Canada is the only airline in Canada or the United States with a 737 Max simulator (it has two in Toronto), its pilots are “modelling some of the scenarios that occurred in the two accidents. So that has given us a leg up in terms of the readiness for the pilots to go back into flying these aircraft.”

In the first quarter, Air Canada said it paid $920-million for six Boeing 737 Max 8 planes and one 787-9.

“Our final decision on returning the Max to service will be based on our own safety assessment following the lifting of government safety notices and the approval of the software modification and training protocol,” Mr. Rovinescu said on a first-quarter earnings conference call with analysts on Monday.

For the three months ending March 31, Air Canada beat market expectations and posted a profit of $345-million, or $1.26 a diluted share, compared with a loss of $203-million (74 cents) in the same period a year earlier.

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Air Canada’s share price rose 4 per cent on the Toronto Stock Exchange on Monday.

Profit on an adjusted basis was $17-million (6 cents), up from a loss of $26-million (10 cents) in the first quarter of 2018. Analysts expected an adjusted loss of 17 cents a share.

The results were lifted by the recent purchase of the Aeroplan loyalty card company and a new agreement with Chorus Aviation for additional flight capacity. Air Canada’s cash liquidity hit a record of $6.9-billion at the quarter’s end.

Passenger revenues rose by 9.4 per cent to $3.8-billion.

“We achieved these results in a quarter where we faced extremely severe weather events early in the quarter, literally from coast to coast, and the first 18 days of the Max grounding at the end of the quarter,” Mr. Rovinescu said.

Walter Spracklin, a stock analyst with Royal Bank of Canada, noted Air Canada provided no update to its 2019 guidance, which it suspended in March due to the 737 Max groundings. For his outlook purposes, he is assuming the planes will not return in 2019.

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But he said the good financial results despite the first quarter’s bad weather and 737 Max loss highlighted Air Canada’s operational and financial resiliency. The stock is rising as markets express relief the 737 Max problems are not “overly severe” and measures to mitigate the challenges are in place, he said in a note to clients.

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