Air Canada (TSE: AC) reported Q4 2019 earnings missing analyst estimates and the company’s outlook for 2020 is weighed down by the ongoing 737 MAX and corona virus impacts.

Operating revenues for Canada’s biggest airline came in at $4.492 billion which missed consensus estimates of $4.513 billion. Revenues were up 4.7% compared to the same quarter last year.

Bottom line earnings for the company were $0.17 per share badly missing analyst expectations of $0.37 per share. Operating costs for the airline were up 6% compared to the same quarter last year and were impacted by one-time impacts due to a new passenger service system and higher stock based compensation expenses.

I am very pleased to report strong fourth quarter and full year results for 2019, a year in which we generated record revenues in excess of $19 billion and reached record levels of unrestricted liquidity, despite the loss to Air Canada of approximately 25 per cent of our narrow-body fleet for most of the year following the worldwide grounding of the Boeing 737 MAX.Air Canada President and CEO, Calin Rovinescu

The ongoing saga that is the Boeing 737 MAX grounding has continued to impact Air Canada and other airlines yields as they struggle to re-adjust operating plans to account for the grounded planes.

The company also provided guidance for 2020 indicating that not only will the impacts of the 737 MAX continue to interfere with the airlines plans but another headwind is brewing. All flights to mainland China and from Toronto to Hong Kong are currently suspended in order to help prevent the spread of the corona virus. Based on these impacts as well as higher maintenance and benefits expenses the company expects EBITDA for the first quarter of 2020 to be $200 million below Q1 2019.

Air Canada wasn’t the only airline with operating and financial challenges in the fourth quarter of 2019 as both American Airlines and United had a bumpy ride when they recently reported earnings.

The disappointing earnings for Air Canada come after an amazing run in the stock which grew more than 86% over the course of 2019. While Air Canada stock is down nearly 5% in 2020 thus far, it is likely to give back even more of the 2019 gains when the markets open for trading after missing expectations and providing a gloomy outlook.

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