Transat was starting to see some daylight late in 2021, with demand approaching pre-pandemic levels. Then the Omicron variant hit, causing a surge of cancellations and lost potential bookings that drove a $114.3 million loss in the first quarter of 2020.
"In November and the first half of December, we were very much in line with what we were expecting," said CEO Annick Guérard on a conference call with analysts following the release of Q1 results.
"In November, our net bookings were about 70 per cent of 2019 levels," Guérard said. "However, from mid-December to mid-January, cancellations exceeded bookings and net bookings became negative."
Transat says it is back in discussions with the federal government for additional funding. It has also negotiated amendments to the existing loan agreement with Ottawa, including a postponement of interest rate hikes scheduled for April. The company has also received an additional $43.3 million in financing from the government to refund travellers.
Barring further surprises, Transat is expecting better days ahead. Planned peak summer capacity represents over 90% of 2019 pre-pandemic numbers. Beginning in April, Transat will ramp up its European offering, gradually building up to 25 destinations.
The Russian invasion of Ukraine is the latest obstacle, resulting in higher fuel prices that Transat says will see its customers pay more too.
Guérard weighed in on WestJet's proposed acquisition of Sunwing Vacations and its airline division, a major competitor to Transat's tour business. She says the consolidation would be anti-competitive.
"We expect a thorough analysis of the file by the Competition Bureau and the Ministry of Transport, given the important competition issues that this raises," Guérard said.
"We certainly do not see this as being good news for customers, as it will significantly reduce competition in the market, especially in key markets such as Western Canada where concentration would be very high."
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