Transat Q3: Operating Income Nearly Quadruples In Strong Quarter
Bruce Parkinson, Open Jaw
Transat is celebrating a “very positive” Q3. The company posted revenues of $733.2 million for the quarter ended 31JUL, compared with $663.6 million for the same period in 2016, an increase of 10.5%. Adjusted operating income was $59.1 million, nearly four times the $16.0 million recorded in 2016.
"The third quarter was very positive," said Jean-Marc Eustache, President and Chief Executive Officer of Transat. "First, as we announced on 21AUG, our results are back up to the levels we saw in the years prior to 2016. Second, our projects have taken huge steps forward with the announcement that we will be leasing new A321neo LR aircraft and the news that we are selling our interest in Ocean Hotels."
Higher revenues were driven by an 8.7% rise in total travellers in the transatlantic market, Transat’s main market for the period, resulting from a 7.2% increase in its product offering in that market. The increase was accentuated by a 1.9% increase of the product offering in sun destinations market, resulting in a 2.9% rise in total travellers in that market. In addition, average selling prices increased across all markets.
On 19JUL Transat entered into an agreement with H10 Hotels to sell its 35% minority interest in Ocean Hotels for an anticipated amount of US$150.5 million ($183.6 million). Transat says it remains committed to becoming a full-fledged hotel operator and sold its minority interest in Ocean Hotels to accelerate the development of its own sun-destination hotel chain.
Transat’s Q3 revenues were superior to those of 2016, which offset the decrease recorded during the winter season. For the nine-month period ended 31JUL, Transat reported adjusted operating income of $23.5 million, compared with an adjusted operating loss of $20.7 million in 2016, an improvement of $44.2 million.
The increase in adjusted operating income was generated by the summer-season, driven primarily by higher average selling prices, combined with increases in total travellers and load factors across all markets, as well as to a decrease in air costs.
Bruce Parkinson Editor-in-Chief
An observer and analyst of the Canadian and international travel industries for over 25 years.