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Thursday,  June 13, 2024 10:42 PM 

“Solid momentum”: Transat posts Q3 profit as demand for leisure travel jumps

  • Air
  •   09-14-2023  8:18 am
  •   Pax Global Media

“Solid momentum”: Transat posts Q3 profit as demand for leisure travel jumps
Annick Guérard, president and CEO of Transat A.T. (Supplied/Pax Global Media)
Pax Global Media

Transat A.T. Inc. has achieved its first profit since the end of 2019, said Annick Guérard, president and CEO, commenting on the company’s Q3 results on Thursday (Sept. 14).

The rebound comes after the airline and tour operator's sales slumped during the COVID-19 pandemic amid weakened demand and mass booking cancellations.

Transat’s third-quarter revenue amounted to $746.3 million CAD, which is up 47 per cent from a year earlier.

“These results demonstrate strong overall execution and our ability to meet sustained customer demand in a cost-efficient way,” Guérard said.

The third-quarter revenues were 6.8 per cent above 2019 levels despite capacity being 14 per cent less, while record adjusted EBITDA of $114.8 million was nearly 85 per cent higher.  

“Robust demand for leisure travel produced yields 29 per cent above those of 2019," Guérard pointed out.

The company swung to a net income of $57.3 million CAD, or $1.49 a share, for the three months ended July 31 from a loss last year of $106.5 million, or C$2.82 a share.

On an adjusted basis, Transat recorded per-share earnings of $1.10 CAD.

Transat says it will conclude fiscal 2023 with “solid momentum” and, as a result, the company is raising its adjusted EBITDA margin target from 5.5-7 per cent to 7.5-8 per cent for the year.

Looking ahead to the winter season, the addition of three new A321LR and one A321ceo will contribute to increasing available capacity by 23 per cent to be deployed on best performing routes and “promising new destinations,” Guérard said.

Early bookings are also ahead of last year which, which bodes well for the start of the new fiscal year, Guérard said.

"Our focus remains on debt reduction"

"From a financial perspective, our focus remains on debt reduction,” added Patrick Bui, Transat’s chief financial officer of Transat.

The net proceeds from a recent land sale in Mexico, valued at approximately $50 million, will be used to reduce secured facilities, he said.

The property was sold to Finest Resorts, a luxury resort group that is part of the Excellence Collection.

Initially announced on July 10, the transaction was part of Transat’s plan to focus on its airline activities.

Transat’s third-quarter performance improved by $45 million compared to last year, bringing free cash flows generated by operations for the last twelve months to $153 million, Bui noted.

The solid momentum raised unrestricted liquidity 31 per cent above last year's level, while “record customer deposits” for a third quarter are a strong indicator of resilient demand, which should allow Transat to improve its financial position, Bui noted.

To date, load factors for the fourth quarter are 2.2 percentage points lower than in 2019, while airline unit revenues, expressed in yield, remain 26 per cent higher.

The combination of sustained demand and firm pricing will allow Transat to cope with a cost environment that remains generally higher and volatile, the company said.

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