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Transat A.T. Inc., a holiday travel reference worldwide, particularly as an air carrier under the Air Transat brand, announces its results for the first quarter ended January 31, 2023.
“The momentum from the end of 2022 continues, confirming our financial scenarios,” stated Annick Guérard, President and Chief Executive Officer of Transat. “Transat is on an upswing and is headed for a return to profitability. In the first quarter of 2023, revenues more than tripled compared with the corresponding quarter in 2022. Across all programs, combining European and South destinations, Transat deployed capacity comparable to that of 2019; load factors were slightly lower, but the shortfall was largely offset by higher prices. In addition, airline unit revenues, expressed in yield, increased by more than 20% compared with the first quarter of 2019. As a result, we recorded an adjusted operating income of $3.3 million for the period, an improvement of $39.7 million compared with the first quarter of 2022. These results are especially encouraging since the first quarter, which falls in the shoulder period, is usually the lowest of the year.”
“Transat maintains the adjusted operating income margin target of 4% to 6% for the year. Resilient demand for travel is supporting prices and helps us deal with the pressure on operating costs. The context is therefore challenging but remains favourable to recovery in travel and Transat’s relaunch,” added Ms. Guérard.
During the first quarter, Transat deployed capacity equivalent to that of 2019 and recorded a satisfactory load factor of 84.5%. The Corporation acted prudently and rigorously to seize market opportunities, while minimizing operational risks. This balanced approach to capacity deployed served Transat and its travellers well. The Corporation successfully coped with numerous disruptions and delays caused by inclement weather and operational difficulties at several airports across North America between late December 2022 and early January 2023. Transat was thus able to record strong business volume, while maintaining its reputation for excellent customer service. This corporate culture is demonstrated every day by Transat employees, to whom the Corporation would like to express its appreciation.
First-quarter highlights
- For the first quarter, the Corporation generated $667.5 million in revenues, up $465.0 million from $202.4 million for the corresponding period of 2022. In 2022, the Corporation 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.
- Transat recorded an operating loss of $38.1 million, an improvement of $35.7 million compared with the $73.8 million loss in 2022. Driven by sustained demand, this improvement was nonetheless dampened by a 46% surge in fuel prices.
- Adjusted operating income1 amounted to $3.3 million, an improvement of $39.7 million, compared with a loss of $36.4 million in 2022.
- Net loss amounted to $56.6 million, or $1.49 per share (diluted), compared with $114.3 million, or $3.03 per share (diluted), for the corresponding quarter of last year.
- Excluding non-operating items, Transat reported an adjusted net loss1 of $61.6 million ($1.62 per share) for the first quarter of 2023, compared with $95.3 million ($2.53 per share) in 2022.
Financial position
As at January 31, 2023, cash and cash equivalents amounted to $467.7 million, an increase of $124.6 million compared with $343.1 million at the same date in 2022. Cash and cash equivalents in trust or otherwise reserved resulting from travel package sales also increased to $555.1 million as at January 31, 2023, compared with $172.4 million at the same date in 2022.
Customer deposits for future travel stood at $898.3 million, up 11% from pre-pandemic levels (as at January 31, 2020), reflecting the recovery in demand and higher average selling prices.
In total, available financing amounted to a maximum of $963.3 million, of which $863.2 million was drawn down ($678.0 million as at January 31, 2022), for unrestricted liquidity1 of $567.7 million.
Outlook
To date, for the second quarter of 2023, although load factors are 3 percentage points lower than in 2019, airline unit revenues, expressed in yield, are significantly higher and show a more than 25% increase. The combination of demand and higher prices will allow the Corporation to cope with higher costs. While it is too early to have a complete picture for the summer, the winter trends seem to be continuing into summer 2023.
For the full fiscal year 2023, the Corporation expects to deploy capacity equivalent to 90% of the 2019 level. This level is consistent with International Air Transport Association (IATA) projections for the Corporation’s main markets.
Bearing in mind the indicators to date, the Corporation maintains the target of an adjusted operating income1 margin of 4% to 6% for fiscal 2023. In making these forward-looking statements, the Corporation has relied on a number of assumptions, including moderate growth in Canada’s GDP taking into account the risk of a short recession, an exchange rate of C$1.34 to US$1 and an average price per gallon of jet fuel of C$4.50
This press release was prepared and distributed by Transat A.T. Inc.
