a 20% surge in the travel giant's stock price yesterday suggests investor
belief in the company's multi-year efforts to restructure towards greater
profitability is growing too.
was a confident and feisty CEO Jean-Marc Eustache leading a Q4 and full year
results conference call with investment analysts, who asked tough questions
about the impact of terror, market capacity and fierce competition.
whether he was worried about next summer's transatlantic market with big
capacity growth from both AC and WS, Eustache just laughed.
I worried about stuff like that I'd be in a cemetery. I've seen it all in 38
posting better than expected Q4 results for the period ending 31OCT and a
“reasonably good” full year profit despite a tough 2015/2015 winter, Transat
officials believe they’ve done the heavy lifting that has lowered the company’s
cost structure, optimized the TS fleet and better aligned the product to consumer
to Eustache, despite a plunging loonie and a volatile geopolitical scene, now
is the time to get growing again.
eager to grow the topline again. We needed to make the company more efficient
first. We are ready now for growth, both organic and by acquisition,” Eustache
will come in a number of ways, Transat officials say.
being conservative with capacity in the past few years, Transat is expanding
again, with 2015/2016 winter sun capacity up 7% and winter transatlantic seats
up 19%. Next summer will see transatlantic capacity growth of 9% and sun
capacity up 10%.
flexible fleet with more wide-body planes for transatlantic and narrow-bodies
for sun is making that possible. This winter, over 50% of Transat travellers
will head south on smaller, more efficient 737s, compared to just 28% three
years ago. “The flexible fleet changes a lot,” Eustache says.
growth will come in the hotel sphere, either through acquisition or an
expansion of the Transat joint venture with Ocean Hotels, which added $7
million net to the full year bottom line. With $336 million in cash at fiscal
year-end, Transat is in a position to acquire.
in the Caribbean and Mexico are making good money. It’s definitely more
profitable than distribution. We’re making good money in that part of the
business and with the experience we have we can grow in that business and make
profit,” Eustache says.
the hotel side, Transat is building on the Mayan Riviera, owns land in the D.R.
earmarked for hotel development and recently purchased land in Jamaica, where
it expects to start building next year. Eustache also suggested that the
acquisition of a hotel company that operates “5, 6 or 10 hotels” in Mexico or
the Caribbean is a real possibility.
also says Transat wants to expand its distribution, possibly through expansion
into the U.S. market.
a series of strong summers, making winter profitable again is a top priority.
After dealing with the fleet, Transat sees the right product mix as crucial to
winter success, and Eustache believes the company is in a much better position
than it has been for the past few years.
are seeing light in the tunnel for winter. Everything we have put in place,
we’re now in a position to harvest,” Eustache says.
offers and distinctive product are keys to winter success, and Transat is
achieving that through its ‘Collections’ and hotel partnerships. Supporting
hoteliers with more summer capacity – when they really need it – will help to
leverage more exclusivity.
also says stronger branding and marketing is having an impact.
marketing is right on target, better than it has been in years. And by giving
customers the right product, with something extra or different, that helps too.
Everything is now being promoted under one umbrella as ‘Transat’ and that’s the
type of move that is making the company better than it was before.”
a warm fall in much of the country, Eustache says winter sales are up by double
digits in all markets. While acknowledging the impact of a low dollar, anemic
Canadian economic growth and the traveller anxiety created by terror attacks,
Eustache remains confident – and unafraid.
cannot say what the future of the world will be. But I do know that this
organization is in much better shape than it was a few years ago.”