Sunday,  July 21, 2019  10:48 am

Transat posts loss in Q2; Air Canada talks continue

Transat posts loss in Q2; Air Canada talks continue

Increased fuel prices and an unfavourable exchange rate contributed to Transat’s second-quarter losses, the tour operator said today, after posting a year-over-year adjusted net loss of $6.31 million.

According to the latest statement, the result was down from a loss of $456,000 in the same quarter last year.

"The second quarter is similar to the first in terms of results,” said Jean-Marc Eustache, president and CEO of Transat. “We incurred a comparable increase in our costs resulting from fuel prices and exchange rates as well as fleet transition, and we ended the winter with a larger loss than last year. While the due diligence resulting from the letter of intent signed with Air Canada is also underway, we remain focused on achieving the improvements set out in our strategic plan. We remain confident about completing these initiatives if the transaction does not take place.”

READ MORE: What bidding war? Transat looks ahead to 2019-20 winter plans

Key numbers for the quarter include:

  • Revenues of $897.4 million, up 3.5 per cent from 2018
  • + 2.3 per cent of the number of travelers on the sun destinations market
  • Operating loss of $19.8 million
  • Adjusted operating profit of $3 million
  • Net income attributable to shareholders of $2.3 million
  • Adjusted net loss of $6.3 million

An impending sale

The results were posted following Transat’s April 30 announcement regarding discussions with more than one party on the potential sale of the company; on May 16, a letter of intent was signed with Air Canada for the potential acquisition of the company, with an exclusivity period extending until the end of a 30-day due diligence period, which began on May 27.

Transat said that in accordance with the commitment made in the letter of intent, investments in the hotel division have been slowed down. Work in this division is currently focused on preparing construction on the land in Puerto Morelos and reviewing future opportunities, Transat said, adding that “work on other aspects of the strategic plan continues as previously, moving forward at the expected pace.”

On June 4, Quebec-based real estate firm Groupe Mach said that it would buy Transat for $14 per share, a dollar more than Air Canada’s $13-per-share purchase offer and valued in excess of $1 billion. However, Transat said that as of today, it has not received any formal proposal in relation to Groupe Mach’s announcement.

Indicator...