Transat A.T. Inc. is blaming the “significant" drop in
the CAD for weaker Q1 results.
The integrated tourism company posted an adjusted net
loss of $32.4 million, compared with $23.3 million in 2014. The
adjusted operating loss was $35.8 million, compared with $23.9 million the
year before. Revenues for the quarter were down by 6.9% or $58.6 million to
$788.6 million, compared with $847.2 million in 2014.
"On the Sun destinations market, higher selling
prices, our cost-control initiatives and our currency-hedging program were not
sufficient to offset the increase in our operating expenses, which was mainly
caused by the significant, recent drop in the value of the Canadian dollar against
the U.S. currency," said Jean-Marc Eustache, President & Chief Executive
Officer. “That, combined with a deterioration in results in France and reduced
revenues from aircraft subleasing, kept us from posting improved results for
the quarter compared with last year."
While announcing its results, Transat introduced a 3 yr.
2015–2017 strategic plan, aimed at continuing efforts to improve efficiency and
margins as well as develop markets and foster growth.
The plan has 4 major components:
A program to reduce costs and improve margins totalling
$100 million over 3 years, specifically $45 million in 2015 (including the
impact of narrow-body aircraft), $30 million in 2016
and $25 million in 2017.
A program to improve the offering, focused on
growth in existing source markets. The main efforts in this respect will be to
introduce new destinations in Europe and to fine-tune Sun destinations
offerings through exclusive partnerships with hotels and the continued
improvement of collections, based on customer expectations.
A program to significantly transform the
Corporation's distribution ecosystem in a fully integrated fashion. Among
the actions in this area, Transat says it will: continue developing the Transat
Travel brand, and in particular complete its implementation in its own
agencies; develop a new distribution website as part of a strategy for
transparently integrating customer relations centres and travel agencies.
A program to develop markets and continue the
integration strategy, with the aim of ensuring growth,
namely to penetrate new source markets through acquisitions, put more
focus on its destination presence as an incoming tour operator and to develop
and grow Ocean Hotels, increasing the number of rooms from the current 2,200 to
potentially 5,000 over the duration of the plan.
"We are on the offensive," Eustache said.
As of 31JAN, Transat A.T.'s free cash totalled
$393.6 million, compared with $359.6 million at the same date in
2014, putting it in a strong position to make acquisitions.
Looking ahead, Transat warned about “particularly slim
and volatile margins" in the Sun destinations market outbound from Canada that
makes up the lion's share of winter business. “Given the significant, recent
decline in the value of the Canadian currency, the Corporation believes that
its 2nd quarter results may be lower than those posted for the same
quarter last winter," Transat said.
For summer 2015, Transat says it remains too soon to draw