For the second quarter:
- Revenues of $870.1 million
- Adjusted operating income1 (adjusted EBITDA) of $56.1 million
- Operating income (EBIT) of $18.7 million
Financial position:
- Unrestricted liquidity1 of $723.6 million as at April 30, following strong cash flow generation of $155.9 million
- Customer deposits for future travel of $867.1 million, a 38% increase compared with April 30, 2019
- Maturities for secured loans totalling $198.0 million extended from April 2024 to April 2025
Transat A.T. Inc., (Air Transat) a holiday travel reference worldwide, particularly as an air carrier under the Air Transat brand, announces its results for the second quarter ended April 30, 2023.
“For the second quarter of 2023, Transat reported a solid performance, with an adjusted operating income of $56.1 million, nearly 40% higher than in the same quarter of 2019. At mid-year, and based on current booking trends, we are raising the target for the adjusted operating income margin from the initially set range of 4% to 6% to a target of 5.5% to 7% for the fiscal year.”+
“Several factors contributed to the Corporation’s favourable results. Firstly, the demand for leisure travel, which is Transat’s primary niche, is holding steady. This high volume of activity is driving prices up, resulting in 15% increases at the beginning of the quarter, and almost 24% at the end of the quarter, compared with the same period in 2019. In addition, Transat actively continued its fleet optimization plan, deploying in winter 2023 a capacity comparable to winter 2019 with 20 fewer aircraft in service. Better price management, thanks to improved practices and new tools, has also helped to maximize revenues and seize market opportunities. Transat also relied on continuous improvement in its operational efficiency throughout the quarter.”
“With more than 60% of our capacity sold, the stage is set for a dynamic summer. Transat will deploy for the summer a capacity representing 89% of its 2019 level, with Europe comprising 80% of the activity, leveraging the most profitable routes for Transat,” stated Annick Guérard, President and Chief Executive Officer of Transat.
Second-quarter highlights
- For the second quarter, the Corporation generated $870.1 million in revenues, up $512.0 million from $358.2 million for the corresponding period of 2022. In 2022, the Corporation had to cancel nearly 30% of flights scheduled as a result of the sharp decline in demand and massive booking cancellations following the emergence of the Omicron variant.
- Transat recorded operating income of $18.7 million, an improvement of $106.3 million compared with the $87.5 million loss in 2022.
- Adjusted operating income1 amounted to $56.1 million, an improvement of $107.2 million, compared with an adjusted operating loss1 of $51.0 million in 2022.
- Net loss amounted to $29.2 million ($0.76 per share), compared with $98.3 million ($2.60 per share) for the corresponding quarter of last year.
- Excluding non-operating items, Transat reported an adjusted net loss1 of $8.0 million ($0.21 per share) for the second quarter of 2023, compared with $111.6 million ($2.95 per share) in 2022.
Financial position
As at April 30, 2023, cash and cash equivalents amounted to $623.6 million, an increase of $112.4 million compared with $511.2 million at the same date in 2022. Cash and cash equivalents in trust or otherwise reserved resulting from travel package sales also increased; the balance stood at $262.2 million as at April 30, 2023, compared with $191.9 million at the same date in 2022.
Customer deposits for future travel stood at $867.1 million, up 38% from pre-pandemic levels as at April 30, 2019, reflecting the rebound in demand and higher average selling prices.
During the second quarter, Transat renegotiated secured loans totalling $198.0 million, extending the maturity dates from April 2024 to April 2025. “These amendments provide us greater flexibility in repaying debt and attest to our financial partners’ trust in our recovery plan,” stated Patrick Bui, Chief Financial Officer of Transat.
In total, available financing amounted to a maximum of $963.3 million, of which $863.2 million was drawn down ($858.6 million as at April 30, 2022), for unrestricted liquidity1 of $723.6 million.
Outlook
To date, although load factors for this summer are 2.6 percentage points lower than in 2019, airline unit revenues, expressed in yield, are 29% higher than four years ago. The combination of strong demand and upward pricing will allow the Corporation to cope with a cost environment that remains generally higher and volatile.
In light of the mid-year indicators, the Corporation is raising the target for adjusted operating income1 margin from the initially set range of 4% to 6% to a target of 5.5% to 7% for fiscal 2023. In making these forward-looking statements, the Corporation adjusted its assumptions for the full year, including moderate growth in Canada’s GDP, an exchange rate of C$1.35 to US$1 and an average price per gallon of jet fuel of C$4.25.
Additional Information
The results were affected by non-operating items, as summarized in the following table:
| Highlights and non-IFRS financial measures | ||||
| (In thousands of Canadian dollars) | Second quarter | First six-month period | ||
| 2023 | 2022 | 2023 | 2022 | |
| Revenues | 870,111 | 358,157 | 1,537,568 | 560,595 |
| Operating income (loss) | 18,740 | (87,513) | (19,363) | (161,354) |
| Restructuring costs (reversal) | (557) | — | 2,343 | — |
| Depreciation and amortization | 42,763 | 36,499 | 83,871 | 73,971 |
| Premiums related to derivatives that matured during the period | (4,802) | — | (7,376) | — |
| Adjusted operating income (loss)1 | 56,144 | (51,014) | 59,475 | (87,383) |
| Net loss | (29,180) | (98,276) | (85,790) | (212,621) |
| Restructuring costs (reversal) | (557) | — | 2,343 | — |
| Change in fair value of derivatives | 13,949 | 1,192 | 23,870 | 1,720 |
| Revaluation of liability related to warrants | (3,234) | 353 | 6,905 | 809 |
| Gain on long-term debt modification | — | (22,191) | — | (22,191) |
| Gain on asset disposals | — | (66) | (2,511) | (4,018) |
| Foreign exchange (gain) loss | 15,867 | 7,425 | (6,962) | 29,421 |
| Premiums related to derivatives that matured during the period | (4,802) | — | (7,376) | — |
| Adjusted net loss1 | (7,957) | (111,563) | (69,521) | (206,880) |
| Diluted loss per share | (0.76) | (2.60) | (2.25) | (5.63) |
| Restructuring costs (reversal) | (0.01) | — | 0.06 | — |
| Change in fair value of derivatives | 0.36 | 0.03 | 0.63 | 0.05 |
| Revaluation of liability related to warrants | (0.08) | 0.01 | 0.18 | 0.02 |
| Gain on long-term debt modification | — | (0.59) | — | (0.59) |
| Gain on asset disposals | — | — | (0.07) | (0.11) |
| Foreign exchange (gain) loss | 0.41 | 0.20 | (0.18) | 0.78 |
| Premiums related to derivatives that matured during the period | (0.13) | — | (0.19) | — |
| Adjusted net loss per share1 | (0.21) | (2.95) | (1.82) | (5.48) |
| As at April 30, 2023 | As at October 31, 2022 | |||
| Cash and cash equivalents | 623,562 | 322,535 | ||
| Undrawn funds from credit facilities | 100,000 | 100,000 | ||
| Unrestricted liquidity1 | 723,562 | 422,535 |