April 24th, 2024

Strike fears gnaw at Transat earnings, as emptier planes yield bigger loss

By The Canadian Press on March 14, 2024.

Air Transat aircraft are seen on the tarmac at Montreal-Trudeau International Airport in Montreal, on Wednesday, April 8, 2020. THE CANADIAN PRESS/Paul Chiasson

MONTREAL – Transat A.T. Inc. reported earnings well below expectations on Thursday, as fears of a possible strike by flight attendants ate away at bookings throughout the quarter, the tour operator said.

The company swung to a loss of $61 million in the three months ended Jan. 31, worse than the $56.7-million loss of the same period a year earlier and despite a revenue boost of nearly 18 per cent.

“Transat’s first-quarter results reflect sustained demand for leisure travel,” said CEO Annick Guérard in a release, noting a “solid” uptick in traffic to sun destinations.

“However, the persisting speculation of a strike by flight attendants starting last November clearly affected bookings and yield for the winter season.”

The Montreal-based company’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate that month and twice rejected tentative deals before approving a new collective agreement in late February.

Guérard also said that costs related to temporary plane leases due to engine issues and lower profit margins caused by “heightened consumer price sensitivity … as well as fierce competition” in Toronto further hurt earnings. Air Transat’s seat capacity ramp-up of 25 per cent exceeded its passenger increase of 20 per cent.

As a result, the company is scaling back plans to bolster capacity by 19 per cent, opting for a more modest 13 per cent increase.

The travel company said revenue amounted to $785.5 million in its first quarter, up from $667.5 million a year prior.

On an adjusted basis, Transat lost $2.11 per share compared with an adjusted loss of $1.62 per share a year ago. The result fell below analysts’ expectations of an adjusted loss of $1.22 per share, according to financial markets data firm Refinitiv.

This report by The Canadian Press was first published March 14, 2023.

Companies in this story: (TSX:TRZ)

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