News
Transat A.T. drops to Q1 $10.1 million loss on ABCP charge

March 12, 2008, Montreal – Tour operator Transat A.T. Inc. swung from
a small profit to a $10.1 million loss in the first quarter due to
intense competition and a further writedown for asset-backed
commercial paper.

Revenues amounted to $787.4 million for the quarter ended Jan.
31, up 10.5 per cent from $712.3 million in the same period last
year. On a per-share basis, the loss amounted to 30 cents per share,
compared with earnings of six cents per share in 2007.

But Transat president and CEO Jean-Marc Eustache told
shareholders Wednesday that the company's 2007 results were good,
considering the many challenges faced.

“With the price of crude at $100 a barrel, and our retail prices
at rock bottom because of extremely fierce competition, to my eyes
our performance is in fact quite satisfactory,'' he said at
Transat's annual meeting.

The leading Canadian tour operator posted a record $80.5 million
net income last year, representing only 2.6 per cent of revenues.

“Obviously, the main engine of our growth has not been increased
sale prices. Far from it. Our growth is entirely due to the fact
that we have worked tirelessly to win new customers on both sides of
the Atlantic.''

The first-quarter revenue increase was primarily due to expanded
business activity in both North America and Europe, as well as to
the additional revenue generated by the July acquisition of
Amplitude Internationale.

The Montreal-based company recorded a 23 per cent quarter over
quarter increase in travellers, boosted by North American and
European travel.

Without the $14 million ($10.1 million after-tax) non-cash ABCP
write-down and hedge accounting standards, net income would have
amounted to $1.2 million or four cents per share, compared with $8.5
million or 25 cents per share the previous year.

Transat announced in August it had $154.5 million invested in 10
different ABCP trusts.

Asset-backed commercial paper, or ABCP securities, are short-term
corporate loans that have been entangled in the global credit crunch
traced back to the collapse of the U.S. subprime mortgage market.

In December, Transat said it had been repaid $10.8 million out of
$11 million face value that it held in the Skeena Capital Trust, one
of several conduits for non-bank asset-backed commercial paper that
froze up in August. At the time, the company said it has $143.5
million blocked in ABCP securities after the Skeena Capital payout.

On Wednesday, Transat's board also approved a nine-cent quarterly
dividend payable April 15.

Eustache said the operator continues to seek opportunities to
increase its presence in the U.S.

But the lack of suitable acquisition targets has prompted it to
seek smaller companies with a strong Internet presence.

Transat is an international tour operator with more than 60
destination countries and that distributes products in over 50
countries. The company operates mainly in Canada and Europe, as well
as in the Caribbean, Mexico and the Mediterranean Basin.

On the TSX Wednesday, Transat shares fell $1.74 or 6.7 per cent
to trade at $24.33.

THE CANADIAN PRESS