Amid “high economic uncertainty,” Transat posts Q4 profit & revenue up from year ago

Sharing its fourth quarter results on Thursday (Dec. 12), Transat A.T. has reported a profit of $41.2 million, up from $3.2 million in the same quarter last year.

The company says the profit amounted to $1.05 per diluted share for the quarter ended Oct. 31, up from a profit of eight cents per diluted share a year earlier.

On an adjusted basis, Transat says it earned 67 cents per share in its latest quarter compared with an adjusted profit of 41 cents per share in the same quarter last year.

In a statement, Annick Guérard, president and CEO of Transat, said Transat is closing fiscal 2024 “on a positive note.”

Adjusted EBITDA of $123.3 million during Q4 was driven by higher traffic, lower fuel costs, and financial compensation from Pratt & Whitney related to grounded aircraft over the past two years, Guérard said.

Transat’s results also point to a “more disciplined competitive environment as reflected by slightly better yields on a sequential basis,” she added.

“Looking ahead to fiscal 2025, we expect the industry to continue to favour a measured approach while maintaining relatively stable capacity,” the CEO said. “The decline in inflation and interest rates also suggests an increase in consumers' discretionary spending. This situation should provide a suitable backdrop to deliver further yield improvements.”

Still, Transat remains in a period of “high economic uncertainty, leading us to exercise caution," Guérard said.

The results come after Transat, during the third quarter, announced its “Elevation Program,” a business review and recovery plan that aims to generate $100 million in annualized margin within 18 months.

In recent months, Transat has undergone some restructuring, from laying off flight attendants to consolidating its tour operator commercial activities, which has resulted in staffing changes, including the exit of Nicole Bursey, who worked at Transat for almost 15 years.

Transat was initially planning for a 19 per cent increase in its capacity in 2024. However, this target was lowered and now sits at around the 10 per cent mark.

Regarding the Elevation Program, the initiatives will contribute $25 million toward a goal of an annualized adjusted EBITDA improvement of $100 million, noted Guérard.

“Initial significant impacts on our results are expected beginning in the second half of fiscal 2025," she said.

Transat also improved its liquidity position through the sale and leaseback of four GTF2 engines from Pratt & Whitney, including three agreements that closed before the end of fiscal 2024, noted Jean-François Pruneau, chief financial officer of Transat.

“These transactions generated approximately $118 million in cash to strengthen our balance sheet,” Pruneau said in a statement. 

“Discussions with stakeholders and the review of all solutions to improve our capital structure continue and remain a priority for the organization.”

Transat’s net loss for Q4 was $114.0 million ($2.94 per share), compared to $25.3 million ($0.66 per share) in 2023.

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