Transat posts ‘better than expected’ second quarter results, summer looks good

Transat posts ‘better than expected’ second quarter results, summer looks good

MONTREAL — The summer looks good and second quarter results were better than expected as Transat A.T. Inc., posted revenues of $1.0 billion for the quarter ended April 30, 2015, compared with $1.1 billion in 2014, a decrease of $100.1 million, or 9.0%.

The company recorded an adjusted operating income of $3.4 million, compared with $0.0 million in 2014; Before non-operating items, Transat reported a quarterly adjusted net loss of $6.6 million in 2015 compared with $7.6 million in 2014.

“These better than expected results point to an improvement of our performance on sun destinations, masked by the weak demand in France and a strong U.S. dollar, and owe much to the implementation of our strategic plan. The internalization of narrow-body aircraft, in itself, induced a favorable variance of $22 million for the winter,” said Jean-Marc Eustache, President and Chief Executive Officer of Transat.

“For the summer, early signs on the transatlantic market are positive, as global market capacity is up 7%. Sales volumes are in line and margins are up. If the current trends hold, the corporation expects its global summer results to be similar to those of last year, which were the second-best of the company’s history.”

During the quarter, the company’s capacity on the Sun destinations market was down 6.2% from the previous year and its overall number of travellers declined by 6.9% (all market segments). Average selling prices were higher than in 2014.

Revenues of North American business units, which are generated by sales in Canada and abroad, decreased by $70.7 million (7.5%) during the second quarter compared with the same period in 2014. The decrease stemmed from the decision to reduce supply by 6.2% on the Sun destinations market, and by 5.9% on the transatlantic market, hence the overall 6.3% decrease in the number of travellers. Average selling prices were slightly higher.

During the quarter, the company recorded an operating loss of $0.9 million (0.1%), compared with one of $11.7 million (1.2%) for the same quarter last year. The favorable variance in operating loss stemmed from lower operating expenses, due to cost-control measures, and to higher selling prices. The improvement was offset in part by the depreciation of the Canadian dollar versus the U.S. dollar, which, even in light of lower aircraft fuel prices, led to an increase in operating expenses on sun destinations, especially for packages.