Things are looking up – way up – for Transat A.T. Inc. In the company’s third quarter ended July 31, Transat generated record net income for a third quarter -- and its first net profit since the end of 2019.
“These results demonstrate strong overall execution and our ability to meet sustained customer demand in a cost-efficient way,” said President & CEO Annick Guérard.
Guérard added that Transat will conclude fiscal 2023 with “solid momentum” and, as a result, will raise its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin target from 5.5-7% to 7.5-8% for the year.
“Looking ahead to the winter season, the addition of three new A321LR and one A321ceo will contribute to increasing available capacity by 23% to be deployed on our best performing routes and promising new destinations. Early bookings are ahead of last year which, combined with firm pricing, bode well for the start of the new fiscal year," concluded Guérard.
Transat has posted its first quarterly profit since 2019. (Photo Credit: Transat)
Transat’s third-quarter revenues of $746.3 million were 6.8% above 2019 levels despite capacity being 14% less, while record adjusted EBITDA of $114.8 million was nearly 85% higher. Robust demand for leisure travel produced yields 29% above those of 2019.
"From a financial perspective, our focus remains on debt reduction,” Guérard said. “In this regard, net proceeds from our recent land sale in Mexico of approximately C$50 million will be used to reduce our secured facilities. Although the second half usually produces negative free cash flows, our third-quarter performance improved by $45 million compared to last year, bringing our free cash flows generated by operations for the last twelve months to $153 million.”
For the third quarter, Transat recorded operating income of $64.4 million, an improvement of $157.6 million from a $93.2 million loss in 2022. The company generated $746.3 million in revenues, up $238.0 million from $508.3 million for the corresponding period of 2022. Net income amounted to $57.3 million ($1.49 per share), compared with a net loss of $106.5 million ($2.82 per share) for the corresponding quarter of last year.
To date, load factors for the fourth quarter are 2.2 percentage points lower than in 2019, while airline unit revenues, expressed in yield, remain 26% higher. Transat says the combination of sustained demand and firm pricing will allow it to cope with a cost environment that remains generally higher and volatile.
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