Transat Results: Q1 Satisfactory, Rest Of Year Uncertain
Bruce Parkinson, Open Jaw
Transat posted higher revenues and improved results for the first quarter of 2020. But the rapidly evolving COVID-19 pandemic is casting a big shadow over the rest of the year.
Revenues of $692.8 million for the quarter ended 31JAN were up $45.2 million (7.0%) compared with 2019. Adjusted operating income of $27.4 million compared with an adjusted operating loss of $7.6 million in 2019, an improvement of $34.9 million. Operations generated an operating loss of $25.1 million, compared with $48.6 million in 2019, an improvement of $23.6 million.
The company say the improvements are attributable to a 10.8% increase in the number of travellers in the sun destinations program, resulting from a decision to increase capacity.
"We're satisfied with the improvement in results for the first quarter, even though the coronavirus epidemic makes the rest of the year difficult to predict," stated Jean-Marc Eustache, President and Chief Executive Officer of Transat.
"But Transat has already faced several epidemiological threats in the past, including SARS and H1N1, and I firmly believe that the resilience of our teams and our solid balance sheet will enable us to deal with risks and difficulties once again. We're taking all the necessary measures to allow our clients to travel with peace of mind."
As of 31JAN, 2020, cash and cash equivalents amounted to $682.2 million, compared with $620.4 million on the same date in 2019. This change was mainly attributable to positive cash flows generated by operations, partially offset by the acquisition of two replacement engines for the A321neoLR fleet ($33.4 million) and the costs related to the transaction with Air Canada ($11.5 million).
Looking ahead to the important summer transatlantic market, Transat's capacity is up 3% compared with 2019. Currently, Transat says, 34% of seats have been sold. Load factors are 1.7% lower and selling prices are down 5.7% compared with the same date last year.
However, Transat reports that since 24FEB, “daily bookings are lower than last year's and the difference has increased significantly in recent days. In the current situation, it is impossible to predict the effect on future bookings.” As a result, Transat says it cannot provide an outlook for the second quarter or for the summer.
The company says it has implemented a series of operational, commercial and financial measures, including cost reduction, aimed both at ensuring the security and peace of mind of its customers and at preserving its cash flow.
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.