Transat achieved resurgent results in the second quarter of 2023, with highlights including revenues of $870.1 million and adjusted operating income of $56.1 million, nearly 40% higher than in the second quarter of pre-pandemic 2019.
"Several factors contributed to the Corporation's favourable results," said Transat President and CEO Annick Guérard. "Firstly, the demand for leisure travel, which is Transat's primary niche, is holding steady. This high volume of activity is driving prices up, resulting in 15% increases at the beginning of the quarter, and almost 24% at the end of the quarter, compared with the same period in 2019."
Guérard says the good news will continue: "With more than 60% of our capacity sold, the stage is set for a dynamic summer. Transat will deploy for the summer a capacity representing 89% of its 2019 level, with Europe comprising 80% of the activity, leveraging the most profitable routes for Transat."
Annick Guerard, Transat (Transat Media License)In winter 2023, Transat was able to deploy a capacity comparable to winter 2019, with 20 fewer aircraft in service. Guérard says better price management, thanks to improved practices and new tools, also helped to maximize revenues and seize market opportunities."
More Second Quarter Highlights
-- In Q2, Transat generated $870.1 million in revenues, up $512.0 million from $358.2 million for the corresponding period of 2022. In the 2022 second quarter, Transat had to cancel nearly 30% of flights scheduled as a result of the sharp decline in demand and massive booking cancellations following the emergence of the Omicron variant of COVID.
-- Transat recorded operating income of $18.7 million, an improvement of $106.3 million compared with the $87.5 million loss in 2022.
-- Adjusted operating income amounted to $56.1 million, an improvement of $107.2 million, compared with an adjusted operating loss1 of $51.0 million in 2022.
-- Net loss amounted to $29.2 million ($0.76 per share), compared with $98.3 million ($2.60 per share) for the corresponding quarter of last year.
-- Excluding non-operating items, Transat reported an adjusted net loss of $8.0 million ($0.21 per share) for the second quarter of 2023, compared with $111.6 million ($2.95 per share) in 2022.
A Stronger Financial Position
As at April 30, 2023, cash and cash equivalents amounted to $623.6 million, an increase of $112.4 million compared with $511.2 million at the same date in 2022. Customer deposits for future travel stood at $867.1 million, up 38% from pre-pandemic levels as at April 30, 2019, reflecting the rebound in demand and higher average selling prices.
Looking Ahead
To date, although load factors for this summer are 2.6 percentage points lower than in 2019, airline unit revenues, expressed in yield, are 29% higher than four years ago. Transat says the combination of strong demand and upward pricing will allow it to cope with a cost environment that remains generally higher and volatile.
In light of the mid-year indicators, Transat is raising the target for adjusted operating income margin from the initially set range of 4% to 6% to a target of 5.5% to 7% for fiscal 2023.
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