June 9, 2022 By Christopher Reynolds, The Canadian Press
MONTREAL — Skyrocketing jet fuel prices and COVID-19 measures ate into the profits of Transat A.T. Inc. in its second quarter, despite higher revenues as air travel began to rebound.
The tour operator saw its net loss attributable to shareholders swell 41 per cent for the quarter ended April 30, even as revenues were more than 47 times higher than a year earlier.
“The cost of fuel rose sharply, without which we would have reported positive adjusted operating results in April. Nonetheless, we observe that consumers are ready to accept price hikes and we have implemented a fuel hedging program to protect us against significant increases during the summer,” chief executive Annick Guerard said in a statement Thursday.
Jet fuel prices in North America rose 124 per cent year over year to US$174 per barrel as of June 3, according to the International Air Transport Association. Spiking in March amid Russia’s invasion of Ukraine, the price has nudged down by 14 per cent over the past month.
Months earlier, the highly infectious Omicron strain prompted further border restrictions and another drop in travel bookings.
“Revenue growth in the quarter was dampened by the sharp decline in demand and massive booking cancellations following the emergence of the Omicron variant during the first quarter and the new restrictive measures put in place by the federal government on Dec. 15, 2021,” Guerard said.
Transat cancelled nearly 30 per cent of its scheduled flights in January and February as a result.
However, the CEO said a recovery is now fully underway, with sales progressing in a “very satisfactory manner” for the summer.
In April, seating capacity hit two-thirds of pre-pandemic levels, with more than 80 per cent of those seats filled, Guerard said on a conference call with analysts.
“Our capacity for the summer is at about 90 per cent of 2019 levels. If this trend holds, we expect to see good volumes in the months ahead.”
On Thursday, the company reported a net loss attributable to shareholders of $98.3 million or $2.60 per diluted share for the quarter ended April 30. The result compared with a loss of $69.6 million or $1.84 per diluted share a year earlier.
Revenue totalled $358.2 million compared with $7.6 million in the same quarter last year when Air Transat, the company’s airline, suspended operations after Ottawa requested a suspension of travel to Mexico and the Caribbean as well as the adoption of new quarantine measures and testing requirements.
On an adjusted basis, Transat said it lost $2.95 per diluted share compared with an adjusted loss of $2.74 per diluted share in the same quarter last year.
The first figure fell 22 per cent below analysts’ expectations of $2.42 per diluted share, according to market data firm Refinitiv.