People look on as an Air Transat plane takes off at Trudeau in Montreal, Sunday, June 11, 2023. Transat AT Inc. reported a third-quarter profit of $57.3 million compared with a loss of $106.5 million in the same quarter last year. THE CANADIAN PRESS/Graham Hughes
MONTREAL – Transat AT Inc. reported its highest net income ever for a third quarter, as it turned a profit for the first time since 2019, prompting a sunnier financial forecast for the year.
The travel company, which owns Air Transat, said revenue in the three months ended July 31 were nearly seven per cent above 2019 levels despite seat capacity sitting 14 per cent below – an indication of price hikes on tickets to Europe across airlines.
Chief executive Annick Guérard said healthy demand for leisure travel boosted revenue per passenger by 29 per cent compared with 2019.
As a result, Transat raised its margin target on adjusted earnings for the year to between 7.5 and eight per cent from a previous guidance of 5.5 to seven per cent.
“Early bookings are ahead of last year which, combined with firm pricing, bode well for the start of the new fiscal year,” Guérard said in a release.
The tour package company also plans to expand capacity by nearly a quarter next year.
“So far, booking trends for demand and pricing look positive for the early part of the season,” National Bank analyst Cameron Doerksen said in a note to investors.
Meanwhile, Transat closed the sale of a piece of land in Mexico to resort company Finest Resorts last month, putting the $50-million proceeds toward reduction of debt, which stands at $2 billion, or $1.5 billion in net debt, following a financially devastating pandemic period.
On Thursday, Transat reported net income of $57.3 million in its third quarter – its highest quarterly profit since late 2017 – versus a loss of $106.5 million a year earlier
Revenues rose 47 per cent to $746.3 million from $508.3 in the same three months last year.
On an adjusted basis, Transat said it earned $1.10 per share in its most recent quarter, up from an adjusted loss of $3.20 per share the year before.
The average analyst estimate had been for an adjusted loss of nine cents per share, according to estimates compiled by financial markets data firm Refinitiv.
This report by The Canadian Press was first published Sept. 14, 2023.
Companies in this story: (TSX:TRZ)
