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Canadian airlines to suffer financial hit due to Hurricane Irma

A photo taken on Sept. 6, 2017, shows damage outside "Le flamboyant" hotel and resort in Marigot, on the Bay of Nettle, on the island of Saint-Martin in the northeast Caribbean, after the passage of Hurricane Irma.

LIONEL CHAMOISEAU/AFP/Getty Images

Canada's major airlines will sustain a financial hit because of Hurricane Irma, but the key question they face is how soon vacation spots that are immensely popular with snow-bound Canadians will recover from wind and water damage.

Some islands that have already been ravaged are awaiting another onslaught in the form of Hurricane Jose, which is closing in on them as people have barely begun picking up the pieces after the battering they took from Irma, which has Florida square in its sights.

That double blow and how much damage it causes will determine the medium-term impact on the airlines.

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Hurricane Irma: Where it's headed and what you need to know

Read more: Canadians in Florida brace for arrival of Hurricane Irma

"The bigger concern for any of the leisure divisions of these carriers – Transat, Air Canada Vacations, WestJet Vacations, Sunwing – is: What will the condition of the tourism infrastructure be after Irma goes," said airline industry consultant Robert Kokonis, president of AirTrav Inc. "It's going to be bad news for [some of] those islands for the better part of a year or more."

Air Canada, Air Transat, Sunwing Vacations and WestJet Airlines Ltd. sent empty planes to Caribbean islands earlier in the week to bring back travellers in the path of Irma, and have turned their attention to Florida.

Air Transat and WestJet Airlines Ltd., halted all flights to Florida this weekend as Irma barrelled toward the Sunshine State. Air Canada said on its website that flights between Toronto and Miami, Toronto and Fort Lauderdale and Montreal and Fort Lauderdale were cancelled Friday through Monday, and added late on Friday that it is monitoring the situation at other Florida airports such as Orlando and Fort Myers.

Florida ports that handle cargo and cruise ships, such as Miami, Port Everglades and Freeport, were closed to vessels on Friday.

Most of the other ports were either shut down or expected to close by Saturday.

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Container ship company Maersk Line said 10 vessels were delayed as of Friday morning and the arrivals of another four could be postponed. Ships that cannot call at a port could sail to the next one or wait out the storm in safe waters until ports reopen to dock and unload, Katherine Mosquera, a Maersk spokeswoman, said by phone.

"It's a port authority decision, as well as working with the U.S. Coast Guard," Ms. Mosquera said.

All passenger cruises from Florida were cancelled on Friday, and voyages in the next few days are either delayed or cancelled. The cruise operators, including Carnival Cruise Line and Royal Caribbean International, said they were shortening or rerouting next week's trips due to uncertainty over the state of ports in the region, including the Caribbean islands affected by Irma.

WestJet, which cancelled 45 flights to the Caribbean and Florida beginning Sept. 6, has begun checking with its people on the ground in Antigua, the Dominican Republic and elsewhere to make sure they and their families are okay and to start assessing damage to airports, hotels and other infrastructure, Tim Croyle, vice-president of WestJet Vacations, said on Friday from Calgary.

"We are currently going through the process of contacting all our hotels, understanding how did they fare, are they safe, what condition are they in, are they ready to receive guests," Mr. Croyle said. "Through all that, we make an assessment of: can you safely land a plane, is the destination ready and safe to receive guests and revive normal operations?"

Antigua fared better than expected, as did the Dominican Republic, he said, but Saint Martin has severe damage.

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WestJet sent a Boeing 737 to Antigua on Friday in what is known as a rescue flight, an unscheduled plane that goes out empty and takes travellers out of a danger zone. It took off to return to Toronto during a brief window at V.C. Bird International Airport before it closed in anticipation of Hurricane Jose blowing by Antigua and Barbuda on Saturday.

The carrier started watching Irma on Aug. 30 at its operations centre in Calgary, which monitors and manages the movement of aircraft 24 hours a day, seven days a week.

Sending empty planes to bring people home is a major cost for airlines. One senior industry executive estimated the hourly cost of operating an Airbus A320 at $10,500, including fuel, no revenue is generated when it is empty. Airlines also need to pay refunds to customers who don't want to fly at a later date or get a credit for a future flight.

Sending rescue flights caused a ripple effect on other WestJet flights because the airline needs to use crews and planes that are typically already scheduled.

"We've got to source the plane from somewhere, which inevitably means cancelling someone else's flight," Mr. Croyle said. "It creates more disruption in the rest of the network to source those aircraft."

Air Canada has cancelled all flights to Cuba through Sunday, and to the Bahamas through noon on Monday, spokesman Peter Fitzpatrick said. The airport in Turks and Caicos is closed through Monday, so a Toronto-Turks and Caicos flight scheduled for Sunday has been cancelled.

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Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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