“Industry-wide pressure”: Transat reports Q3 loss, launches review of business

Transat A.T reported a third-quarter loss on Thursday (Sept. 12) as revenues declined and missed targets.

For the three-month period ended July 31, 2024, the Montreal-based airline and tour operator reported a net loss of $39.9 million, while revenue reached $736.2 million, which is down 1.4 per cent from this time last year.

In a statement, Annick Guérard, president and CEO of Transat, said the results reflect “evolving market conditions and industry-wide pressure.”

“Demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty,” Guérard said in a press release. “Capacity increases throughout the industry also added to competitive pressure and negatively impacted yields.”

Transat launches business review

As a result, Transat has launched comprehensive review – referred to the “Elevation Program” – that aims to accelerate its strategy and drive long-term profitable growth.

The program, initiated this summer, will review the company’s operations and business practices, and further implement tools and processes for its teams to optimize its overall execution and efficiency.

The program will be spearheaded by the newly created Elevation Management Office, Transat says.

The company’s target is to achieve a $100 million improvement in annual adjusted EBITDA over the next 18 months, added Ms. Guérard.

"Profitability remains affected by costs related to capacity deployment and by the Pratt & Whitney GTF² engine issue,” added Jean-François Pruneau, Transat’s CFO.

Pruneau says Transat has agreed to a financial compensation from Pratt & Whitney relating to operational disruptions during the 2023-2024 period.

The financial compensation, which is mostly in the form of credits, will be applied to the purchase of additional spare engines, which Transat will monetize through a sale and leaseback transaction.

“Looking ahead, we are confident that the initiatives from our Elevation Program will gradually place us on the path to sustaining an improved financial performance,”  Pruneau said. “Nevertheless, it remains our top priority to complete a refinancing plan and strengthen our balance sheet.”

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