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Air Canada reports surprising 1st quarter profit despite 737 Max groundings

Air Canada reports surprising 1st quarter profit despite 737 Max groundings

Air Canada topped expectations in its latest quarter, but said Monday the Boeing 737 Max grounding and political tensions between Canada and China weighed on its results.

“The impact on our unit cost is expected to increase the longer the grounding persists, particularly heading towards the busy summer season,” chief financial officer Michael Rousseau said.

He cited a reduction of seat capacity of between three per cent and four cent due to the grounding, which continues across the globe as the Max jetliner’s flight control system remains under scrutiny following two deadly crashes.

Less fuel-efficient replacement aircraft and the cost of extended plane leases will also hurt the bottom line, Rousseau said.

Chief commercial officer Lucie Guillemette said Canada’s ongoing dispute with China stemming from the arrest of Huawei CFO Meng Wanzhou last year has hurt travel demand between the two countries.