Transat returned to profitability in July but is poised for more turmoil

Skies are clearing for tour operator Transat AT, which experienced its first month of profitability in more than two years in July, but the airline is preparing “if” the pandemic causes further turbulence, so it projects to turn profit annually.” at the latest” in 2024.

Posted at 7:36
Updated at 1:31 p.m

Michael Saba
The Canadian Press

“Our customers have made a clear decision to travel again, and the increase in travelers we’ve seen since the previous quarter is now well established,” said the company’s President and Chief Executive Officer, Annick Guérard, on Thursday a conference call with analysts to discuss third quarter results.

Mme Guérard noted that demand is particularly strong in European markets, but the pace of recovery is “slightly slower” in domestic and cross-border markets, where travelers book more “last minute” and there is more supply.

The seat belt order remains in place for the wearer, which is forecast for more turbulence in the coming quarters. “We’ve got a couple of bumpy quarters ahead of us,” said Chief Financial Officer Patrick Bui, adding that cash will no longer be written in red ink by 2024 at the latest.

That’s why Transat AT reached an agreement with Ottawa in July to access 100 million additional liquidity and pushed back deadlines with its creditors by a year.

These are “unprecedented” times that require “extra resilience,” Bui said, acknowledging that “we have scenarios going forward that may require the use of this line of credit.”

His boss then intervened to make sure the company didn’t think he had to use him. “We want to be careful,” she said. You never know what will happen with COVID. So we had him by our side just in case. »

losses at 3e trimester

Transat AT reported an operating loss of 93.2 million for the third quarter of 2022, compared to a loss of 98.4 million for the corresponding quarter of fiscal 2021.

On the other hand, Transat reported an adjusted net loss of $120.9 million, or $3.20 per diluted share, for the third quarter of 2022, compared to $115.6 million, or $3.06 per diluted share, in the Year 2021. Net loss attributable to shareholders was $106.5 million, or $2.82 per diluted share, compared to $138.1 million, or $3.66 per diluted share, in the corresponding quarter of the year.

In the same period, the company’s revenue increased by 495.8 million, but the airline recalls that the third quarter of 2021 was almost without activity. Compared to 2019, before the outbreak of the COVID-19 crisis, revenue for the quarter was down 27%, or $190.6 million.

Transat AT explains that the improvement in operating results for the third quarter of 2022 was held back by a significant increase in fuel prices of 112% compared to 2021. Adjusted operating loss was 57.8 million compared to 50.9 million in 2021, down from 6.9 million.

Regarding the upcoming winter season, Air Transat reports that its capacity is the same as 2019 and that load factors to date are similar to 2019 while prices are increasing.

Fuel prices remain “a major obstacle,” National Bank Financial analyst Cameron Doerksen said in a statement.

However, Mr. Doerksen noted that his “main concern” was the company’s ability to find financing. “The Company has delayed the maturities of major debt to April 2024, but these loans will eventually need to be refinanced and we believe additional equity will be required,” he wrote.

Midway through the session, Transat’s action was at the same point as when it opened, at $2.95 on the Toronto Stock Exchange.

Company named in this announcement: Transat AT (TSX: TRZ)

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