Transat Reports $355 Million Net Loss In Fiscal 2020; AC Deal Expected To Close In FEB 2021
Anna Kroupina, Open Jaw
As the coronavirus pandemic continued to batter travel demand, Transat A.T. Inc reported a fourth quarter net loss of $156.4 million and a $355.3 million loss for the fiscal year ended 31OCT, 2020. Considering travel having come to a standstill due to COVID-19, Transat revenues for 2020 dipped by less than 60 per cent to $1.6 billion for fiscal 2020 compared with 2019.
"Our results reflect COVID-19's devastating impact across the travel industry," stated Jean-Marc Eustache, President and Chief Executive Officer of Transat.
"During the year, we took all necessary actions to limit the damage and preserve our cash. The upcoming completion of the transaction with Air Canada should give us the solidity to face the crisis and capitalize on the recovery that should be sparked by the arrival of a vaccine. We have put in place a $250 million short-term financing facility and are currently working on replacing it, should the transaction not take place, with an overall financing covering our needs for the year 2021. This financing could also be obtained as part of a support program for the industry, as announced by the government."
Travel restrictions, quarantine measures, uncertainty about when borders will reopen, both in Canada and abroad, continued to affect travel sales and demand. The impact of the pandemic annihilated a strong start to the fiscal year, Transat says, as the adjusted operating income up to the beginning of March was up $63.3 million compared with 2019. The company credits this positive position to a significant improvement in the profitability of the sun destinations program, its main program during the winter season.
Transat partially resumed airline operations in Q3 which continued into Q4. A reduced summer program launched on 23JUL, 2020 following almost four months of inactivity. Its current reduced winter program – running from NOV 2020 to APR 2021 -- includes international flights departing from Montreal, Toronto and Quebec City. Transat made $28.4 million in revenue during the quarter. While that's a decrease of $664.8 million (96 per cent) when compared with 2019, revenue is up significantly over Q3 2020, when it made $9.5 million.
Despite successful vaccines beginning to roll out in countries around the world, significant demand uncertainty will continue at least for fiscal 2021, Transat stated in a release.
"While the likelihood of the availability of a vaccine in the near future makes it possible to hope for the resumption of operations at a certain level during 2021, the Corporation does not expect such level to reach the pre-pandemic level before 2023," Transat notes in its Q4 report.
Decision on Acquisition By Air Canada Expected In FEB.
A regulatory decision on Air Canada's proposed acquisition of Transat is expected on 15FEB, 2021.
The two companies agreed to a revised price of $5 per share in OCT, a drastic decrease from Air Canada's $18 per share originally pledged in its takeover bid. The approval process is still underway in Canada, while a decision from the European Commission is expected on 09FEB, 2021.
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.