MONTREAL — Transat’s summer fares remain up 4.5% on average from last year, as the company works to maintain the delicate balance of getting more revenue coming in amid soaring fuel costs – without scaring off price-skittish consumers.
On a conference call yesterday to review Transat’s Q2 2026 results, CEO Annick Guérard said Transat took steps to mitigate the fallout when fuel costs started to climb, including surcharges on new bookings, higher fares and shuffled flight schedules.
At first, customers could take the increased cost, which virtually offset the spike in fuel expenses, she said.
“But more recent increases resulted in a slowdown in the booking momentum … the demand went down,” prompting the airline to tamp down fares and remove some fees, Guérard said.
As reported yesterday, Transat reported a $79 million loss in the quarter ended April 30, more than 240% below its more modest earnings loss of $23 million a year earlier.
The increase in aviation fuel costs and the suspension of trips to Cuba took a $95 million bite out of Transat’s adjusted earnings, said Guérard.
The jump in jet fuel prices, which in March reached roughly double their levels from before the Iran war, accounted for about $70 million of that total.
Jean-François Pruneau, Transat’s CFO, said Transat aims to receive the full amount of the federal government’s LASR financial aid lifeline. LASR will allow carriers to borrow up to $150 million each.
Leisure and low-cost carriers such as Air Transat and Flair remain more vulnerable to fuel price swings than their larger competitors. Fuel often represents a bigger proportion of their costs, and they have fewer buffers in the form of higher-margin business passengers, myriad route options and a clientele less reactive to rising fares.
“We have less of a premium class, we’re more leisure-focused. So when we compare ourselves to our legacy carriers on the Atlantic market, for instance, they benefit from customers that are less price-sensitive,” said Guérard.
The company continues to deploy a hedging strategy that relies on options rather than forward contracts, said Pruneau.
Options allow companies to cap the maximum cost while also paying lower rates if prices fall. Forwards lock in the price of future purchases, shielding buyers from big increases but working against them if rates decrease.
Transat along with Canada’s other airlines have suspended Cuba operations indefinitely. About 861,000 Canadians visited Cuba in 2024, according to the country’s statistics office. Trips there accounted for 9% of Transat’s flights in the first half of 2025, with Cuba particularly popular among vacationers in Quebec, Transat’s home base.
The airline first halted Cuba voyages in mid-February.
Barely two weeks later, the closure of the Strait of Hormuz caused by the Middle East war — now in its fourth month — began to choke off nearly a fifth of global oil supply and send jet fuel prices skyward.
As a result, profits among major North American airlines this year will shrink by US$3 billion or nearly a quarter, according to IATA.
While overall travel demand in Canada remains solid, airlines have cut less profitable flights from their schedules, raised fares and tacked on fuel surcharges to keep profit margins from shrinking too far.
At Air Transat, surcharges offset only a “marginal portion” of the ballooning fuel expense, partly because most bookings for the quarter were made before the charges took effect in April.
The company’s fuel costs for the quarter rose 46% year-over-year, according to regulatory filings.
The airline also remained down five planes — 12% of its 42-plane fleet, Guérard said. The carrier is one of many hit by a recall of turbofans from aircraft engine giant Pratt & Whitney that has diminished fleets across the globe.
“This ongoing problem continues to drive operating inefficiencies, increased scheduling variability and negatively impact revenues,” she said.
Three aircraft will likely stay grounded this summer, with full resolution not expected until early 2028.