"With regard to the Sun destinations market, this was a winter best forgotten," said Transat CEO Jean-Marc Eustache, while reporting widened losses for the 2nd quarter.
Before non-operating items, Transat reported an adjusted net loss of $11.9 million, compared with $2.7 million in 2015.
The company posted revenues of $888.2 million, compared with $875.2 million in 2015, an increase of $13.1 million, or 1.5%. However, Transat recorded an adjusted operating loss of $36.7 million, compared with $15.0 million in 2015 and an adjusted net loss of $42.2 million, compared with $25.6 million in 2015.
"The fears prompted by the Zika virus, a threat of strike action by our pilots, the low Canadian dollar, and a dip in demand in Western Canada kept us from improving our profitability, and hid the fact that our change initiatives in line with our strategic plan - including the planned sale of assets in France and Greece - are progressing well," Eustache said in a statement.
"As far as summer is concerned, the steep 15% increase in capacity on the transatlantic market is affecting prices and load factors. Demand is relatively firm, but does not rise at such rates. We expect to report results inferior to those of the record summer seasons we have seen in recent years."
Transat says the higher operating loss stemmed mainly from the depreciation of the CAD dollar vs. the USD, which, net of the decrease in aircraft fuel costs, resulted in a Q2 increase in operating costs of $25.0 million on Sun destinations packages. Nearly ½ of that increase was offset by higher average selling prices.
Ocean Hotels, 35% owned by Transat, accounted for $6.3 million of the corporation's net income for the quarter, compared with $3.7 million in 2015. The increase was due to the strength of the USD vs. other currencies.
Transat posted revenues of $1.6 billion for the 1st 6 months of the year, the same as in 2015, and an adjusted operating loss of $36.7 million, compared with $15.0 million in 2015.
"As demonstrated by the progress in the planned sale of our operations in France and Greece, we are actively pressing forward with implementation of our strategic plan," Eustache said. "One of our objectives is to make acquisitions on the distribution side, on a new source market that would deliver synergies with our Canada-based operations - in the U.S., for example, or on the Sun destinations hotel market."
On 11MAY, Transat announced that it had received a firm offer from TUI AG to purchase its France and Greece-based tour operating business units for an enterprise value of $79.7 million. The contemplated transaction is subject to approval from European anti-trust authorities.