Strike Speculation Results in $61 Million Q1 Loss for Transat
Talk of a potential flight attendant strike, fierce competition, and other issues led to a quarterly loss of $61 million for Transat, the company says.
Transat A.T. Inc. has announced its results for the first quarter ended 31JAN, 2024, and it’s not all rosy. Airline officials said travel demand led to revenues of $785.5 million for the first quarter, an increase of 17.7% compared to last year. But net losses increased from $56.6 million last year to $61 million in the first quarter of this fiscal year, and the company said it's substantially trimming its fiscal 2024 capacity expansion plans.
"Transat's first-quarter results reflect sustained demand for leisure travel,” said Annick Guérard, President and Chief Executive Officer of Transat. “Revenues grew 17.7% year-over-year, driven by a solid traffic increase. However, the persisting speculation of a strike by flight attendants starting last November clearly affected bookings and yield for the winter season, and we are pleased that the adoption of a new collective agreement in late February removed this uncertainty.
“As for the operating challenges related to the Pratt & Whitney GTF engine issue, costs incurred, including those related to the temporary leasing of additional aircraft, applied pressure on profitability. Finally, while demand remains sound, softer yields indicate heightened consumer price sensitivity in the current macro-economic environment as well as fierce price competition, especially in the Toronto market," Guerard said.
Airline officials said they expect an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the full year 2024 “to be at the lower end” of the 7.5 to 9% figure announced last December.
Given the current operating environment, Transat revised its fiscal 2024 capacity expansion plans to 13%, versus 19% previously.
"Early trends for the summer season indicate bookings and pricing conditions that are largely in line with the same period last year,” Transat said. “However, as the Corporation does not foresee the same uplift in yields that was exhibited throughout the summer season last year, it will remain proactive in managing costs under its control, while actively seeking to mitigate the structural cost increases affecting the industry.”
Jean-François Pruneau, Chief Financial Officer of Transat, said the company’s refinancing plan remains the organization's top priority and that discussions with stakeholders continue.
