Transat's Revenues Slightly Down in Q3; Year to Date Still Positive

Demand remains healthy despite a small margin of decline in revenues and increased competition in the industry for Transat as the airline released its third quarter results Thursday and announced a new strategy with the objective to increase overall profitability.

For the three-month period ending July 31, 2024, revenues reached $736.2 million, down 1.4% from $746.3 million in July 2023.  That same month, an issue with Pratt & Whitney GTF engines that affected the Airbus 320 family was discovered, leading to issues with Transat's capacity deployment and contributing to the decline in revenues.

"Transat's third-quarter results reflect evolving market conditions and industry-wide pressure as recently indicated by other carriers. Demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty. Capacity increases throughout the industry also added to competitive pressure and negatively impacted yields," said Annick Guérard, President and Chief Executive Officer of Transat.

"We have launched a comprehensive plan, referred to as our Elevation Program, which is designed to accelerate our corporate strategy execution and drive long-term profitable growth. The program, initiated this summer, aims for a complete review of operations and business practices. Its objective is to accelerate the implementation of enhanced tools and processes for our teams, in order to optimize overall execution and efficiency. The program will be spearheaded by the newly created Elevation Management Office, which will strengthen governance and accountability for the initiatives undertaken. Our target is to achieve a $100 million improvement in annual adjusted EBITDAover the next 18 months," added Ms. Guérard.

"Profitability remains affected by costs related to capacity deployment and by the Pratt & Whitney GTF engine issue. We have agreed to a financial compensation from Pratt & Whitney relating to operational disruptions during the 2023-2024 period. Such financial compensation, which is mostly in the form of credits, will be applied to the purchase of additional spare engines, which we intend to monetize through a sale and leaseback transaction. Looking ahead, we are confident that the initiatives from our Elevation Program will gradually place us on the path to sustaining an improved financial performance. Nevertheless, it remains our top priority to complete a refinancing plan and strengthen our balance sheet. To that end, we are continuing our discussions with stakeholders and are reviewing a number of alternatives," added Jean-François Pruneau, Chief Financial Officer of Transat.

In fiscal year to date, revenues reached $2,494.9 million, up 9.2% from $2,283.9 million in the corresponding period a year ago. For the nine-month period, across the entire network, offered capacity increased by 12.9% compared with 2023. Overall, traffic was 10.0% higher than for the corresponding period in 2023.

Revenue growth was impacted by the same factors provided for the three-month period, along with strike threats during the winter season.

 

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