The grounding of the Boeing 737 Max 8 jet involved in the Ethiopian Airlines crash that killed 157 will cost Canada’s two biggest airlines $3.7 million a day in revenues, according to an analyst.

In a note sent to clients Wednesday, Raymond James analyst Ben Cherniavsky calculated an approximate estimate of the revenue hit Air Canada and WestJet Airlines Ltd. will take as a result of Canada’s decision to ground the Boeing 737 Max 8 jet.

According to his analysis, the grounding of the aircraft will cost Air Canada $2.70 million in daily revenues, while the hit to WestJet will cost about $1.05 million a day.

Cherniavsky stressed that the calculation is “a rough estimate using a host of assumptions that will not reflect all of the real-life inputs 100 per cent accurately.”

“Nevertheless, we are confident that our numbers represent as close an approximation as we can get to the impact that the grounding of the Max will have on daily airline revenue this quarter,” he wrote.

For his analysis, Cherniavsky determined the Available Seat Miles (ASM), a measure of airline capacity, of daily Max 8 flights for each airline. Then, using available data, estimated the approximate load factor and revenue per available seat mile to calculate the total revenues up for grabs on Max 8 flights.

Air Canada’s stock was down 0.6 per cent shortly after 2 p.m. on Thursday, while WestJet’s was up slightly more than 1 per cent.

Transport Minister Marc Garneau issued the safety notice restricting commercial use of the aircraft on Wednesday, citing new information from satellite tracking data that suggested “a possible, although unproven” similarity to the deadly Lion Air crash involving the same aircraft in October 2018.

Both Air Canada and WestJet released statements shortly after Transport Canada issued the safety notice saying the airlines will comply with the decision, warning passengers that there may be delays in rebooking and impacts on travel plans.

Air Canada spokesperson Peter Fitzpatrick said the company was forced to cancel 52 flights on Thursday as a result of the grounding decision. The 24 Max 8s in its fleet carried between 10,000 and 12,000 passengers per day. The airline has made adjustments since the planes were grounded, including re-scheduling its larger, widebody aircrafts to serve different routes, such as flights to Hawaii.

“We continue adjusting our schedule to minimize the disruption to customers as much as possible, by optimizing the deployment of the rest of our fleet and looking at alternative options including accommodating customers on other airlines,” Fitzpatrick said in a statement.

WestJet said in a statement Thursday that the airline is in the process of reconfiguring its schedule to replace the Max 8 flights to other aircraft in its fleet, including Boeing 737 NG, 767, 787 and Bombardier Q400s. The updated schedule will go into effect on Monday. Until then, the airline said it is rebooking guests on a day-to-day basis.

On Thursday, WestJet cancelled 11 flights that were scheduled to use the Boeing 737 Max 8, all of them within Canada. The airline said there were approximately 1,200 guests impacted by the grounding.

• Flight 119 Calgary/Vancouver

• Flight 120 Vancouver/Calgary

• Flight 230 Calgary/Winnipeg

• Flight 435 Toronto/Edmonton

• Flight 442 Edmonton/Toronto

• Flight 546 Edmonton/Toronto

• Flight 653 Toronto/Calgary

• Flight 664 Calgary/Toronto

• Flight 665 Toronto/Calgary

• Flight 676 Calgary/Toronto

• Flight 706 Vancouver/Toronto

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