Transat moving ahead with hotel plans as it posts Q4 results

Transat moving ahead with hotel plans as it posts Q4 results

MONTREAL — Transat A.T. Inc. has announced its results for the fourth quarter ended Oct. 31, 2018, including revenues totaling $668.3 million.

Excluding the operations of the Jonview subsidiary sold in November 2017, Transat’s revenues were up 8.7% for the quarter.

The number of travellers was up 14.8% in the transatlantic market, Transat’s main market for the period, while average selling prices were down 1.5%. In this market Transat increased capacity by 13.6% compared with 2017, while overall capacity was up nearly 9%.

Operations generated adjusted operating income of $35.9 million, compared with $78.5 million in 2017.

Operating income for 2017 included $8 million from the operations of businesses sold since then.

The deterioration in operating income also resulted from higher fuel prices which, combined with the foreign exchange effect, resulted in a $35.3 million increase in operating expenses.

On a comparable basis, excluding the businesses sold recently (Ocean Hotels and Jonview), adjusted operating income decreased by $34.6 million compared with the previous year.

Transat says Q4 margins were affected by fuel prices in a year of strong growth.

“We are very pleased to have completed the acquisition of our first parcel of land in Puerto Morelos, Mexico. This is a major step in the development of our hotel division,” says Jean-Marc Eustache, President and Chief Executive Officer of Transat.

“In 2018, we also moved forward on all the initiatives in our strategic plan. This will allow us to achieve our long-term financial objectives, despite a disappointing quarter and year, particularly due to the sharp increase in aircraft fuel prices in the spring. We are also satisfied with the strong growth in our comparable revenues, despite the sale of Jonview, which had annual revenue of $182.0 million last year.”

Transat posted revenues of $3 billion for the year. Excluding the operations of the Jonview subsidiary sold in November 2017, the Corporation’s revenues were up 6% for the year.

During the winter, the number of travellers was up 5.4% in the sun destinations market, with a 7.7% capacity increase.

The increase in revenues for the winter season was also accentuated by an 18.1% addition to capacity in the transatlantic market, resulting in a 14.8% rise in the number of travellers in that market.

Average selling prices slightly increased across all markets during the winter season.

During the summer, the number of travellers increased by 13.2% in the transatlantic market, with a 13.8% capacity increase in this market, while average selling prices were slightly down.

For the 2018-2019 winter season now underway, Transat’s Sun capacity is up by 2% and to date 52% of that capacity has been sold. Bookings are ahead by 5.6%, and load factors are 3.8% higher compared with 2018. 

In the transatlantic market, where it is low season, load factors are tracking 9% higher than last winter. Prices are currently down 3.3% from the same date last year.

Fiscal 2018 was the first year of Transat’s 2018–2022 strategic plan.

In September 2018 Transat announced it had purchased land in Riviera Maya where it will build its first hotel complex. The stretch of land is in Puerto Morelos on Mexico’s Yucatan Peninsula, ideally situated midway between Cancun and Playa del Carmen, some 20 kilometres from Cancun International Airport.

Transat is also transitioning to an all-Airbus fleet, initiated by the introduction of the first A321s and the ordering of additional A321neo LRs.

Transat says it has also made progress in its cost reduction and margin improvement initiatives, in particular through rent reductions on the Airbus A330s and the development of ancillary revenues. A no‑luggage fare (Eco Budget) has been introduced for departures as of April 1, 2019.