"We're Ready For The Recovery," Says Transat CEO As Q3 Yields $139M Loss
Anna Kroupina, Open Jaw
Transat reported a net loss of CA$139.8 million in the third-quarter ended 31JUL, 2020, while net revenues stood at $9.5 million, a decrease of $689.4 million (98.6%) compared with 2019.
This latest quarter included one week of operations, as Transat partially resumed flights and tour operations on 23JUL, 2020 after suspending activities on 01APR due to the growing pandemic.
"The reduction of operations to just one week for this quarter is unprecedented for Transat and for the industry as a whole. Given the dynamic measures we took to protect the corporation and its cash flow, we're ready for the recovery," stated Jean-Marc Eustache, President and Chief Executive Officer, Transat, in the company's latest earnings report.
"However, with Canada maintaining some of the most stringent border restrictions and still requiring quarantine for people returning from abroad, it's time for the government to provide targeted support for the airline sector to ensure the existence of a competitive industry in Canada over the long term."
The pandemic derailed what started out as a good year for Transat. Adjusted operating income for the first four months of the year was up $63.3 million compared with 2019, which Transat attributes to "a significant improvement in the profitability of the sun destinations program," its main program during the winter season.
Restrictions on international travel and government-imposed quarantine measures, which have been in place since mid-MAR, have made travel sales "very difficult", says Transat, and these barriers continue to hamper its recovery efforts.
Given the current uncertainty as to when and how travel will resume, Transat says it cannot predict the impact of the COVID-19 pandemic on future bookings, flight operations or finances, and did not provide an outlook for summer 2020 or winter 2021.
"As it is impossible to assess the pace of recovery or the possible evolution of the pandemic and its effects, the corporation, similarly to the vast majority of air carriers and other travel industry players in the normal course of their operations following the impacts of COVID-19, is currently reviewing various opportunities to increase its cash flow," Transat says.
Since the start of the pandemic, Transat has implemented a series of operational, commercial and cost-cutting measures aimed at preserving its cash flow. These include securing additional financing, reducing the compensation of senior executives and the Board of Directors, tapping into federal financial support programs, early retirement of the Airbus A310s from its fleet and temporarily laying off 85% of its staff.
Transat says it has since recalled to work approximately 1,000 employees, but two thirds of its personnel remains laid off. It says it anticipates that it will be forced to lay off at least 2,000 employees or 40% of its workforce in the future.
Transat "Firmly Committed" To AC Transaction
Transat says it remains "firmly committed" to its acquisition by Air Canada, for which the approval process is still underway. A decision is expected by 11DEC.
If the required regulatory approvals are obtained and conditions are met, Transat says the arrangement will be completed during the fourth quarter of the 2020.
Transat shareholders approved the $720-million acquisition offer from Air Canada on 23AUG, 2019.
Anna Kroupina Journalist
Anna is OJ's newest member and she joins the team as a writer/reporter. She co-writes the daily news and covers events. Although she's new to the industry, pursuing a career path in travel/tourism has been a goal since her first family road trip to the Florida Keys sparked a desire to discover the world and this exhilarating, fast-paced industry.