Transat reports heavy net losses, but slows cash burn as bookings ramp up
December 9, 2021 By Christopher Reynolds, The Canadian Press
MONTREAL — Transat A.T. lost more than $1 million per day last quarter as it began to ramp up operations, but says business is growing steadily despite a persistent pandemic.
The three-month period ended Oct. 31 marked Transat’s eighth straight quarter of losses as the travel company struggled to recover from the COVID-19 crisis, which has hobbled the global airline sector amid travel restrictions and lockdowns.
Chief executive Annick Guerard said winter “will see the continuation of our return to more significant volumes,” but that she remains “cautious” amid evolving coronavirus variants.
The impact of the Omicron strain of COVID-19 “will not last long,” she said, noting that bookings have picked up in the last few days as preliminary data suggests it may not be as severe as initially feared.
Transat halted operations on Jan. 29 after Ottawa requested a suspension of travel to Mexico and the Caribbean as well as the adoption of new quarantine measures and testing requirements. It resumed flights on July 30, letting go of older aircraft including Boeing 737s and Airbus 310s in an effort to streamline its fleet around fuel-efficient A330s and A321s.
Guerard said the Montreal-based company is gunning for competitive advantage through leaner operations that revolve around Eastern Canada after the company announced in May it would sell off its hotel properties to boost liquidity.
“We have great market share but we didn’t have the right cost structure. And I could say as well that the revenue management was lacking behind,” she said on a conference call with financial analysts to discuss the company’s results Thursday.
“2022 will be a demanding year, no doubt, and we have a lot on our plate.”
Transat is flying this winter to 22 destinations in Mexico and the Caribbean, eight in Europe and five in the United States. It aims to grow capacity to three-quarters of pre-pandemic levels as the season progresses, and tack on a pair of new routes to Europe and two more to the U.S. this summer, Guerard said.
The company is well-positioned to take advantage of the recovering markets for leisure travel and visiting friends and family, she added.
“This is our target customer, and in the long run we will be less impacted than the average market by the loss of business traffic revenues, which I think represent 20 per cent of the legacy carriers’ customers but count for 80 per cent of their revenue.”
Transat’s payroll dipped to 750 employees at the height of the pandemic, but now stands at 2,000. Guerard said she expects the workforce to reach 3,500 within a year.
Higher bookings meant cash burn decreased to $15 million per month last quarter from $20 million per month in the previous quarter, said chief financial officer Patrick Bui.
Net lossattributable to shareholders fell by half in Transat’s fourth quarter, totalling $121.3 million or $3.21 per diluted share, compared with a loss of $238.1 million or $6.31 per diluted share a year ago.
Quarterly revenue more than doubled to $62.8 million from $28.4 million in the same period last year.
On an adjusted basis, Transat said it lost $3.14 per share in its latest quarter compared with a loss of $4.14 per share a year ago. The figure fell short of the average analyst estimate of a loss of $2.47 per share, according to financial markets data firm Refinitiv.
For the year, revenues tumbled to $124.8 million, less than 10 per cent of last year’s $1.30 billion. Net loss in 2021 amounted to $389.6 million, a 22 per cent improvement over losses of $496.5 million the year before.
Transat also announced Jean-Yves Leblanc and Louis-Marie Beaulieu have said they will step down from the company’s board of directors at the end of this year.
Former TVA Group and Quebecor Media Group CEO Julie Tremblay and former Bombardier executive Daniel Desjardins have been appointed to fill the vacancies, effective Jan. 1.