High Fuel Prices Take Toll On Transat Q3 Results

Bruce Parkinson, Open Jaw

Transat remains confident that it will meet long-term targets, despite a significant rise in fuel costs that hit Q3 results.

Operations during the quarter ended 31JUL generated adjusted operating income of $5.1 million compared with $59.1 million in 2017. Transat says the $53.9 million decrease was primarily due to a rise in fuel prices which, combined with the foreign exchange effect, increased operating expenses by $40.3 million.

"Like most of our competitors, we're affected by rising fuel prices, which impacted our summer results as we had forecasted in mid-June,” said Transat President and CEO Jean-Marc Eustache. “Prices always take a certain time to adjust. We are still confident that we will meet our long-term targets, while Air Transat was just named the world's best leisure airline by Skytrax," Eustache added.

"During the quarter, we opened our hotel division's headquarters in Miami and identified attractive opportunities, some of which should materialize soon."

Transat posted revenues of $696.6 million, compared with $733.2 million in 2017, a decrease of $36.6 million or 5.0%. The 2017 revenues included $77.0 million from the Jonview subsidiary, which was sold last November. The number of travellers was up 11.5% in the transatlantic market, the main market for the period, while capacity increased by 13.9%. The number of travellers was up 7.9% in the sun destinations market while capacity rose 7.0%. Average selling prices were similar to those of 2017 across all markets.

The net loss attributable to shareholders amounted to $4.0 million  compared with a net income of $26.6 million  in 2017. Excluding non-operating items, Transat reported an adjusted net loss of $3.0 million for the third quarter of 2018, compared with an adjusted net income of $26.9 million in 2017.

For the nine months of the fiscal year to date, Transat earned revenues of $2.3 billion, up 0.8% from 2017. Operations resulted in an adjusted operating loss of $19.4 million compared with an adjusted operating income of $23.5 million in 2017, a decrease of $42.9 million. 

As at July 31, 2018, cash and cash equivalents amounted to $867.2 million, compared with $580.7 million on the same date in 2017.

Looking ahead, Transat says that given the recent significant increase in aircraft fuel costs, it expects overall fourth quarter results to be lower than last year.

Bruce Parkinson

Bruce Parkinson Editor-in-Chief

An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.




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