Transat Calls Q2 Results ‘Better Than Expected’

Open Jaw

Transat A.T. Inc. saw its revenues decline by 9% in Q2, but that was just one factor in a quarter that saw adjusted operating income rise to $3.4 million from $0.0 million in 2014 and net income jump to $24.7 million compared with a loss of $7.9 million in 2014.

Before non-operating items, Transat reported a quarterly adjusted net loss of $6.6 million this year compared with $7.6 million in 2014.

"These better than expected results point to an improvement of our performance on sun destinations, masked by the weak demand in France and a strong U.S. dollar, and owe much to the implementation of our strategic plan,” said Jean-Marc Eustache, President & Chief Executive Officer of Transat.

“The internalization of narrow-body aircraft, in itself, induced a favourable variance of $22 million for the winter. For the summer,” Eustache continued, “early signs on the transatlantic market are positive, as global market capacity is up 7%. Sales volumes are in line and margins are up. If the current trends hold, the Corporation expects its global summer results to be similar to those of last year, which were the 2nd best of the company's history."

For the 1st 6 months of the year, Transat earned revenues of $1.8 billion, compared with $2.0 billion in 2014. The company’s adjusted operating loss totalled $32.4 million, compared with $23.9 million in 2014. Eustache says the $8.5 million operating loss increase is attributable in part to higher operating expenses stemming from the combined impact of the USD and fuel prices. The net loss for the 1st 6 months was $39.6 million, compared with a net loss of $33.6 million in 2014.

Revenues of North American business units, which are generated by sales in Canada and abroad, decreased by $70.7 million (7.5%) during the 2nd quarter compared with the same period in 2014. Transat says the decrease stemmed from the decision to reduce supply by 6.2% on the Sun destinations market, and by 5.9% on the transatlantic market. Average selling prices were slightly higher.

During the quarter, Transat recorded an operating loss of $0.9 million (0.1%), compared with one of $11.7 million (1.2%) for the same quarter last year. It says the favourable variance in operating loss stemmed from lower operating expenses, due to cost-control measures and to higher selling prices.

However, the improvement was offset in part by the depreciation of the CAD vs. the USD, which, even in light of lower aircraft fuel prices, led to an increase in operating expenses on sun destinations, especially for packages.

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