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Saturday,  May 18, 2024 6:31 PM 

Transat AT posts $238.1M Q4 loss, capping a devastating year


Transat AT posts $238.1M Q4 loss, capping a devastating year

"Our results reflect COVID-19's devastating impact across the travel industry," said Jean-Marc Eustache, President and CEO of Transat AT, on Friday (Dec. 11), presenting the results of the fourth quarter and year ended October 31, 2020.

For the fourth quarter, Transat reports revenues of $28.4 million, down $664.8 million (-95.9%) compared to 2019. 

Net loss attributable to shareholders amounted to $238.1 million, or $6.31 per share, compared with net income of $23.0 million or $0.61 per share in 2019.

For the year, we are talking about revenues of 1.3 billion $ 1.6 billion (-55.7%) compared to 2019. Adjusted net loss reached $156.4 million in the fourth quarter and $355.3 million for the year.

"During the year, we took all necessary actions to limit the damage and preserve our cash. The upcoming completion of the transaction with Air Canada should give us the solidity to face the crisis and capitalize on the recovery that should be sparked by the arrival of a vaccine. We have put in place a $250.0 million short-term financing facility and are currently working on replacing it, should the transaction not take place, with an overall financing covering our needs for the year 2021. This financing could also be obtained as part of a support program for the industry, as announced by the government." stated Mr. Eustache.

The transaction with Air Canada

With regard to the transaction with Air Canada, Transat reminds that shareholders will be invited to approve, at the meeting on December 15, the new arrangement agreement signed on October 9. This provides for a price of $ 5 per share (or 0.2862 Air Canada share) for one Transat share.

Jean-Marc Eustache, President and Chief Executive Officer of Transat AT

In addition, the European Commission decision is expected on February 9, 2021. If the required approvals are obtained and the conditions are met, the arrangement is now expected to close before February 15, 2021.

In addition, Mr. said that Transat has set up short-term financing of $250 million to deal with the crisis (this credit facility is applicable until March 31, 2021).

“We have put in place a $250.0 million short-term financing facility and are currently working on replacing it, should the transaction not take place, with an overall financing covering our needs for the year 2021. This financing could also be obtained as part of a support program for the industry, as announced by the government," he said. 

The company will have to put in place overall financing totalling approximately $500.0 million in 2021 to ensure continuity of operations. 

Great uncertainty for 2021

Transat anticipates that fiscal 2021 will take place in a context of great uncertainty.

"Travel restrictions, uncertainty about when borders will reopen, both in Canada and at certain destinations the Corporation flies to, the imposition of quarantine measures both in Canada and other countries, as well as concerns related to the pandemic and its economic impacts are creating significant demand uncertainty, at least for fiscal 2021," the company stated. 

Transat suspended its flight operations from April 1 to July 22. It then unveiled a reduced summer and winter schedule, which the company said it is continuously making adjustments to based on "the level of demand and decisions made by health and state authorities."

“The Company cannot predict at this time the full impact of COVID-19 on its business and results, or when the situation will improve. "

Transat recalls that it has implemented a series of operational, commercial and financial measures, in particular cost reduction, aimed at preserving its cash flow. It ensures daily monitoring of the situation in order to adjust these measures according to its evolution.

However, until the Corporation is able to resume operations at a sufficient level, the COVID-19 pandemic will have significant negative impacts on its revenues, cash flows from operations and operating results," it said. 

Return to normal in 2023?

Due to all the risks and uncertainties it faces, Transat refrained from presenting any outlook for winter 2021.

"While the likelihood of the availability of a vaccine in the near future makes it possible to hope for the resumption of operations at a certain level during 2021, the Corporation does not expect such level to reach the pre-pandemic level before 2023."


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