Air Transat Reports Second Quarter Net Loss of $179.6 Million, Will Resume Flights on July 23, 2020
Air Transat announced on Thursday a second quarter net loss of $179.6 million or $4.76 per diluted share on a 36.3 percent revenue decline to $571.3 million. The carrier ended the quarter with cash and equivalents of $733.7 million and will resume operations on July 23rd.
Today, Transat A.T. Inc. (Transat) announced a second quarter loss of $179.6 million or a negative earnings per share of ($4.76) on a 36.3 percent year-over-year revenue decline to $571.3 million. The carrier’s net loss includes an $89.1 million charge for changes of fair value of fuel-related and other derivatives, a $32.5 million foreign exchange loss related to lease liabilities and a $21.7 million charge to reduce carrying value of deferred tax assets. With non-operating items excluded, Transat reported an adjusted net loss of $38.8 million or ($1.03) per share versus an adjusted net loss of $6.4 million or ($0.17) per share in Q2 2019. Transat ended the second quarter with cash and equivalents of $733.7 million and the Canadian integrated tourism company will resume flights and tour operations from July 23, 2020, with 23 international and domestic destinations. In Thursday’s announcement, Transat’s President and Chief Executive Officer, Jean-Marc Eustache said,
“The coronavirus pandemic and resulting border closures have hit the airline industry in ways that are without precedent. It has caused all Transat flights to be suspended since April 1. This has led to a steep decline in our results, although we are seeing a clear improvement over the first four months of the year. The extraordinary measures we are obliged to take, including the temporary layoff of 85% of our workforce, are aimed at preserving our cash flow to weather this period. Like all airline and travel industry players, we continue to explore other opportunities to enhance our cash flow. We are deeply pleased to announce today the gradual resumption of our flights beginning July 23. We will reopen 23 international routes over the summer, as well as some domestic ones. With our Traveller Care program, we are implementing all the necessary protocols to safeguard our clients’ health. This is the first step towards getting healthy operations back on track, from both a business and financial perspective.”
Air Transat has suspended all flights from April 1st through July 22, 2020, as the company monitors a return of demand and easing of destination travel restrictions. The carrier drew down a $50 million credit facility in March as a precautionary measure to boost liquidity and as of April 30, 2020 has cash and equivalents totaling $733.7 million. Senior company executives and Board Members have also taken a voluntary 10-20 percent pay reduction and the company has retired their fleet of Airbus A310s early. To further preserve liquidity, the company has issued travel credits valid for 24 months for cancelled flights. Additionally, Air Transat has been renegotiating with aircraft and facility lessors as well as suppliers to achieve cost reductions and changes in payment terms as the company prioritizes the preservation of cash. Since April, Transat has also been participating in the ‘Canada Emergency Wage Subsidy’ (CEWS) scheme which finances a portion of salaries for remaining workers as well as employees who have been furloughed. By the end of March, more than 85 percent of Transat’s employees had been subject to temporary layoffs.
Regarding Transat’s acquisition by Air Canada, the European Commission opened an in-depth “Phase II” evaluation of the transaction on May 25, 2020, with the results expected between September 30th and November 19, 2020. The Canadian approval process is still underway and awaiting a decision from the Minister of Transport. If all regulatory approvals and conditions are met, the company hopes to close the transaction during the fourth quarter of 2020.
In a separate announcement today (June 11, 2020) Air Transat announced the resumption of operations from July 23, 2020. Transat’s flight schedule will offer 23 destinations in Europe, the South, The U.S. and Canada through October 31, 2020. The company will also gradually reopen travel agencies in its network starting June 15, 2020. In the press release, Transat’s Chief Operating Officer, Annick Guérard said,
“After these long months that put the entire tourism industry to the test, we are very happy to announce today the resumption of our operations. We will gradually operate a flight schedule with 23 international routes to Europe, the South and the United States, in addition to a domestic flight schedule between major Canadian cities. To address the concerns caused by COVID-19 and to prioritize the safety of our customers and employees, we will be implementing new health measures as part of our Traveller Care program. In compliance with the recommendations and requirements of regulatory authorities, these measures will accompany our travellers throughout their travel experience from the travel agency to the airport and onboard to the destination. We look forward to welcoming travellers again and share the passion that unites us.”
Air Transat will gradually offer service from Montreal with direct flights to Athens, Bordeaux, Lisbon, Lyon, Nantes, Marseille, Paris and Toulouse. From Toronto, guests will enjoy service to Athens, Glasgow, London, Manchester, Porto and Rome. Customers wishing to fly south from Montreal or Toronto can choose to visit Cayo Coco in Cuba, Cancun, Fort Lauderdale or Punta Cana in the Dominican Republic. The carrier will also offer one weekly flight from Montreal to Port-au-Prince, Haiti. Additionally, Transat will offer domestic flights between Montreal, Toronto, Calgary and Vancouver.
Based in Montreal, Transat A.T. Inc. (Air Transat) is the third largest airline in Canada and leading integrated tourism company specializing in holiday travel. The company offers vacation packages, hotel accommodations and air service to more than 60 destinations over 25 countries in the Americas and Europe.
Source: Air Transat