Transat returning to profitability with best third quarter ever

Transat returning to profitability with best third quarter everMONTREAL — Transat A.T. Inc. recorded its best third quarter ever with revenues of $927.0 million for the quarter ended July 31, 2013, compared with $909.1 million for the same period of 2012, an increase of $17.9 million or 2.0%.

The company recorded net income of $41.1 million compared with $9.4 million in 2012 and adjusted after-tax income of $30.8 million compared with $10.5 million in 2012.

“We are very satisfied with the results, as this is our best third quarter ever,” said Jean-Marc Eustache, President and Chief Executive Officer of Transat. “We performed very well on the transatlantic market, and the implementation of our cost-reduction and margin-improvement program is unfolding as planned. And as the numbers indicate, we are on our way to a profitable year.”

The increase in revenues stems mainly from higher average selling prices, which have more than offset the impact of the company’s decision to reduce capacity on all its markets (sun, transatlantic and France), hence a 7.3% reduction in the number of travellers. Across all markets, selling prices and margins were higher than in 2012.

Revenues of North American business units, which are generated by sales in Canada and abroad, increased by $79.3 million (13.0%) compared with the same period in 2012. The increase is partly attributable to the company’s decision to account for all sales of flights between Canada and United Kingdom in North America, whereas a significant portion of said sales were until now accounted for in Europe.

For the quarter, capacity on the transatlantic market was down 10.9% compared with 2012. Capacity on sun destinations was similar. North American business units recorded a margin before amortization and depreciation of $28.1 million, compared with $2.5 million in 2012. Before restructuring charges, Transat posted a margin before amortization and depreciation of $29.4 million, compared with $2.5 million in 2012. The improvement in margin is mainly attributable to higher selling prices during the quarter, as well as cost-reduction initiatives.