Transat AT released its first quarter results for 2021 on Thursday (March 11), revealing massive losses reflective of the challenges associated with the COVID-19 pandemic.
The company reported a loss attributable to shareholders of $60.5 million in this latest quarter (compared with a loss of $33.8 million last year).
"These results are for a quarter where it was once again impossible to operate our business in a sustainable manner. With the arrival of vaccines, we're now preparing ourselves for a resumption of operations in the summer and particularly next winter,” said Jean-Marc Eustache, President and CEO of Transat, in a release. “Our priority for the current quarter, while continuing to work on obtaining EU approval, is to secure financing, finalize our recovery plan and review all our options in the event the transaction with Air Canada will not take place.”
Transat’s revenue totalled $41.9 million, down from $692.8 million last year, before the COVID-19 pandemic closed global borders and grounded airplanes, bringing the travel industry to a halt.
The Montreal-based company also lost $2.89 per share for its most recent quarter compared with a loss of 54 cents per share last year.
Travel restrictions, uncertainty about when borders will reopen, mandatory quarantine measures and testing requirements, as well as concerns related to the pandemic and its economic impacts are “creating significant demand uncertainty, at least for fiscal 2021,” Transat stated.
Eyeing a June restart
For the first half of winter 2021, Transat rolled out a reduced winter program.
But by Jan. 29, Transat had suspended of all its regular flights and the repatriation of its clients to Canada in response to the Canadian government's request to not travel to Mexico and the Caribbean.
Ottawa's introduction of new quarantine measures, such as a three-night hotel stay for international arrivals, as well as COVID-19 testing requirements, also presented barriers.
Transat said it expects to resume its operations during the high summer season in mid-June.
The company added that it has implemented a series of “operational, commercial and financial measures,” including cost reduction, aimed at preserving its cash.
While the availability of a vaccine offers hope, Transat said it does not expect travel to return to pre-pandemic levels before 2023 – “in the best-case scenario.”
“In the current situation, it is impossible for the moment to predict the impact of the COVID-19 pandemic on future bookings, the partial resumption of flight operations and financial results,” said the company.
Deal with Air Canada “uncertain”
As noted by Mr. Eustache, Transat's deal to be acquired by Air Canada remains uncertain as the Feb. 15 deadline for it to be completed passed last month.
As of now, both Air Canada and Transat have the option to walk away from the transaction, if they choose to.
Even though the Canadian government has approved the $190 million dollar deal, it still has to receive a green light from the European Commission (EC), which is studying the deal to determine if it will impact competition, increase prices and lead to fewer choices for consumers.
EU antitrust regulators have been delaying their decision for several months now. However, in February, it was revealed that the EC will make an announcement in June.
Transat, meanwhile, continues to preserve cash and maintain financing as it weathers the COVID-19 storm.
Last month, the company extended the termination date of its $250-million short-term loan facility by three months, providing what it said will be "additional room" to as it awaits the EU’s decision.
The loan facility will terminate at the earliest date between June 30 and the closing of the arrangement with Air Canada.
Other contenders, at the same time, have also stepped into the bidding ring to acquire Transat.
Quebecor President and CEO Pierre Karl Péladeau has, for one, publicly expressed his interest in purchasing Transat through his investment firm Gestion MTRHP for several months now.
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