While Transat awaits a decision from regulators on its proposed acquisition by Air Canada, the integrated tourism operator has revealed fourth quarter and full-year results.
For Q4, adjusted operating income was $23.5 million, compared with $6.9 million in 2018, an improvement of $16.6 million. Transat says the increase resulted primarily from higher average selling prices across all programs, and growth in ancillary revenues, partially offset by the costs associated with the transaction with Air Canada and by higher aircraft maintenance costs due to a larger number of maintenance events than last year.
Adjusted operating income amounted to $50.9 million, compared with $31.5 million in 2018, an improvement of $19.4 million.
"We're working to obtain the required approvals to complete our transaction, while focusing significant efforts on serving our customers and improving our results," stated Jean-Marc Eustache, President and CEO. "I salute our employees' professionalism which has allowed us to achieve these last two objectives this year."
Transat posted revenues of $693.2 million for the quarter, up $24.4 million compared with 2018. This increase resulted from higher average selling prices across all programs, as well as growth in ancillary revenues.
For the full year, Transat earned revenues of $2.9 billion, up $88.2 million or 3.1% from 2018. The company posted an operating loss for the winter season amounting to $65.7 million compared with $46.7 million in 2018.
The increase in operating loss resulted primarily from higher fuel prices, combined with the weakening of the dollar against the U.S. dollar and from the additional costs incurred for the transition and optimization of the Air Transat fleet, which in total exceeded the increase in the average selling prices of packages.
Summer showed much better results, with operating income totalling $15.9 million compared with an operating loss of $3.9 million for the previous year. This improvement was driven by higher average selling prices and load factors across all programs, and growth in ancillary revenues.
The increase in operating income was partially offset by the costs associated with the transaction with Air Canada, amounting to $23.9 million, and by higher aircraft maintenance costs due to a larger number of maintenance events than last year.
For the full year, operations resulted in an adjusted operating income of $38.0 million compared with $17.2 million in 2018, an increase of $20.8 million. Net loss attributable to shareholders amounted to $33.2 million compared with net income of $6.5 million for the previous year.
However, net income for 2019 included after tax expenses of $17.5 million related to the transaction with Air Canada, while net income for 2018 included a $31.3 million gain on the sale of the Corporation's subsidiary Jonview.
Excluding non-operating items, Transat reported an adjusted net loss of $9.4 million for the period ended 31OCT, compared with $24.0 million in 2018.
Looking ahead to winter, Transat's capacity is higher by 6.7%. To date, 56% of that capacity has been sold, bookings are ahead by 13.1%, and load factors are 3.4% higher compared with 2019.
Transat says the impact of fluctuations in the Canadian dollar, combined with decreased fuel costs, will result in a nil increase in operating expenses if the dollar against the U.S. dollar and aircraft fuel prices remain stable. Margins are currently at slightly higher levels compared with the same date last year.
In the transatlantic program, where it is low season, load factors are tracking 1.6% higher than last winter. Prices are currently up 4.2% from the same date last year.
If the current trends hold, Transat says it expects its results for the winter season to be slightly higher than those of last year.
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.