Transat reports Q3 loss; cites “industry-wide pressure”
Transat A.T. Inc., a leisure travel reference worldwide, operating as an air carrier under the Air Transat brand, has posted the results for the third quarter ended July 31, 2024.
Citing “evolving market conditions and industry-wide pressure recently indicated by other carriers”, Annick Guérard, president and CEO of Transat confirmed revenues of $736.2 million, down 1.4 per cent from $746.3 million last year.
“Demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty,”Guérard said. “Capacity increases throughout the industry also added to competitive pressure and negatively impacted yields.”
Elevation Program coming soon
According to Guérard, a comprehensive plan is in place, called the 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,” Guérard said.
The overall objective of the Elevation Program is to accelerate the implementation of enhanced tools and processes for Transat’s 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 EBITDA over the next 18 months,” added Guérard.
Financial compensation at play
An operational disruption by the Pratt & Whitney GTF2 engine is largely behind the drop in revenue, with Jean-François Pruneau, chief financial officer of Transat, stating: “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, Transat is confident that the initiatives from its new Elevation Program will gradually sustain 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,” Pruneau concluded.
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