Transat Ends Winter With Larger Loss Than Last Year
Bruce Parkinson, Open Jaw
Transat has released its second quarter 2019 results – and they’re a lot like the first quarter.
The company posted revenues of $897.4 million for the quarter, up $30.3 million or 3.5% compared with 2018. Operations generated adjusted operating income of $3.0 million, compared with $12.1 million in 2018, a decrease of $9.1 million.
Transat blames the decline primarily on an increase in fuel prices, combined with the weakening of the dollar against the U.S. dollar and the additional costs incurred for the transition and optimization of its fleet, which in total exceeded an increase in the average selling prices of packages.
"The second quarter is similar to the first in terms of results. We incurred a comparable increase in our costs resulting from fuel prices and exchange rates as well as fleet transition, and we ended the winter with a larger loss than last year,” said Jean-Marc Eustache, President and Chief Executive Officer of Transat.
“While the due diligence resulting from the letter of intent signed with Air Canada is also underway, we remain focused on achieving the improvements set out in our strategic plan. We remain confident about completing these initiatives if the transaction does not take place," he added.
During the first six months of Transat’s 2019 fiscal year, the company recognized revenues of $1.5 billion, up $29.4 million or 1.9% from 2018. The higher revenues are mainly attributable to an increase in average selling prices across all markets, combined with a 2.8% rise in the number of travellers in the sun destinations market.
For the six-month winter season, operations generated an adjusted operating loss of $34.7 million compared with $16.6 million in 2018, a deterioration of $18.1 million.
Looking ahead to summer, capacity on transatlantic is up 1% over last year. To date, 64% of the capacity has been sold, the load factors are higher by 0.7% compared with summer 2018 and selling prices of bookings taken are similar to those recorded at the same date in 2018.
On the sun destinations market outbound from Canada, for which summer is low season, Transat's capacity is similar to the one deployed on the same date last year. To date, 60% of the capacity has been sold and load factors are comparable to those of 2018. Unit margins are currently higher compared with those recorded on the same date last year.
If the current trends hold, Transat expects its results for the third quarter to be slightly higher than those of last year. However, the company says it is too early to draw conclusions.
Concerning its potential sale, Transat says the exclusivity period for the offer from Air Canada will end on 26JUN.
It also says it has “taken note” of the press release issued by Group Mach Inc. on 4JUN concerning its expressed interest to privatize Transat.
“Nevertheless, as of this date, the Corporation has not received any formal proposal in relation to Group Mach Inc.'s June 4 press release,” Transat says.
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.