March 19, 2019 / 7:20 AM / 2 months ago

BUZZ-Air Canada & WestJet: Boeing groundings will have short-term negative impact - analyst

** Analyst David Ocampo from Cormark Securities says the grounding of Boeing’s 737 Max operations will have a short-term negative impact on Air Canada and WestJet Airlines

** “We believe there will be a negative impact in Q1 and Q2 from the cost associated with rebooking delays and the lost capacity,” says Ocampo on Boeing groundings

** So far, WestJet Airlines and Air Canada have suspended 2019 forecasts after Boeing groundings

** Ocampo resumes coverage on Air Canada with ‘Buy’ rating and C$47 target and WestJet with ‘Market Perform’ rating and C$21 target

** Ocampo says conditions look favourable for airlines operating in Canada and expects market to remain balanced till 2020

** Broker believes Air Canada provides “best value” in the Canadian airline space as all the drivers are in place for a strong 2019 and beyond

** Ocampo adds that WJA is likely going to have below-market fares, putting further pressure on already depressed results

** Expect more balanced supply-demand environment should allow both airlines to increase ticket prices in 2019 - Ocampo

** So far, this year, AC shares gained ~22 pct, much more than the 8 pct gain by WJA

Reporting by Karina Dsouza in Bengaluru

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