Transat reports strong Q4 results
It was a good day for Transat A.T., as Air Transat and its flight attendants union reached an agreement in principle for the renewal of their collective agreement and the company reported strong 2023 fourth quarter results.
“Driven by a strong execution of its strategic plan, Transat has solidified its positioning in the Canadian leisure travel industry,” said Annick Guérard, president and CEO of Transat, in announcing the results.
“As industry dynamics gathered momentum throughout the year, our team focused on meeting growing demand and improving operating efficiency, allowing us to end fiscal 2023 with financial results that exceeded the upper range of our profitability target,” Guérard added.
Driven by robust yields, the airline saw a strong fourth-quarter performance with revenues of $764.5 million, which was 10 per cent above 2019 levels on seven per cent less capacity and with similar load factors. The airline also generated free cash flow1 of $162.4 million in fiscal 2023, enabling the company “to reduce debt and conclude the year with an improved cash position.”
Highlights of the 2023 fourth quarter results include:
- Revenues of $764.5 million
- Adjusted EBITDA1 of $89.0 million
- Operating income of $44.7 million
- Net income of $3.2 million
Highlight for the year include:
- Revenues of $3,048.4 million
- Adjusted EBITDA1 of $263.3 million
- Operating income of $89.7 million
- Net loss of $25.3 million
Cash flow and financial position:
- Cash flow from operating activities of $321.8 million and free cash flow1 of $162.4 million for the year, partially used to reimburse $53.0 million in long-term debt
- Cash and cash equivalents of $435.6 million as at Oct. 31, 2023, up from $322.5 million last year
- * Customer deposits for future travel of $754.2 million, up 25% from Oct. 31, 2022
“Looking ahead to the new fiscal year, Transat will continue executing on its strategic plan,” said Guérard. “Our recently announced joint venture with Porter Airlines will be a key element in accelerating growth, as we expect this agreement to gradually increase passenger traffic.”
Looking ahead
Looking ahead, the company reported that to date, load factors for the winter season are 1.3 percentage points lower than in fiscal 2023, while airline unit revenues, expressed in yield, remain 2.4% higher.
Current demand and pricing conditions should allow the Corporation to cope with a cost environment that remains volatile and subject to inflationary pressures.
” A greater frequency on leading routes, the launch of new destinations and ongoing efforts to optimize fleet utilization will raise our capacity by approximately 19% in 2024,” said Guérard. “Given the current operating environment, we expect our adjusted EBITDA1 margin to be in the range of 7.5% to 9% in fiscal 2024, which would exceed Transat’s historical levels. In addition, we intend to further improve our capital structure through sustained free cash flow generation.”
Considering the current operating environment, the Corporation is setting a fiscal 2024 adjusted EBITDA1 margin target range of 7.5% to 9%, which would exceed Transat’s historical levels.
For fiscal 2024, the Corporation intends to increase available capacity by 19% through recent and planned aircraft additions, as well as further improvements in fleet utilization.
This capacity will mainly be deployed to expand frequency and annualize best performing routes and to service recently announced new destinations.
