IT JUST GETS BETTER
Transat A.T. Inc. expects to return to profitability this year after reporting reduced second-quarter losses. Transat posted revenues of $1.1 billion for the quarter ended April 30, 2013, compared with $1.2 billion in 2012, a decrease of $105.6 million, or 8.7%. The Corporation recorded an operating loss before amortization and depreciation of $1.2 million, compared with $26.2 million in 2012 and a net loss of $22.8 million ($0.59 per share on a diluted basis), compared with $13.2 million ($0.35 per share on a diluted basis) in 2012. Before non-operating items, amortization and depreciation, and restructuring charges, Transat reported a margin of $2.7 million, compared with an operating loss before amortization and depreciation of $26.2 million; and an adjusted after-tax loss of $1.4 million ($0.04 per share on a diluted basis) in 2013, compared with $24.5 million ($0.64 per share on a diluted basis) in 2012. For the quarter, the net loss includes a non-realized charge (excluding taxes) of $18.5 million that stems from the mark-to-market accounting of fuel-hedging contracts, compared with a favourable variance of $3.1 million in 2012. “We reached our cost-reduction targets, and despite a challenging winter selling prices were higher than last year, hence the improvement in our results. The summer is looking fairly good and we expect to be back to profitability this year,”said Jean-Marc Eustache, president and chief executive officer of Transat. Second quarter highlights include posted revenues of $1.1 billion, compared with $1.2 billion in 2012, and an operating loss before amortization and depreciation of $1.2 million (margin of $2.7 million before amortization and depreciation, and restructuring charges), compared with $26.2 million in 2012 ($26.2 million before restructuring charges). The decrease in revenues is mainly attributable to the Corporation’s decision to reduce capacity on its markets (Sun, transatlantic and France), hence a 13.7% reduction in the number of travellers. Across all markets, selling prices and margins were higher than in 2012. Outlook for the summer: The transatlantic market, outbound from Canada and Europe, accounts for a very significant portion of Transat’s business in the summer. From May to October 2013, Transat’s capacity on that market is 12% lower than that for the previous year. To date, 66% of that capacity has been sold, load factors are 2% lower and selling prices are approximately 5% higher compared to 2012. On the Sun destinations market, outbound from Canada, Transat’s capacity is lower by 3% than that for the previous year. To date, 46% of that capacity has been sold, load factors and selling prices are similar. In France, compared with 2012, medium-haul bookings are slightly ahead, and long-haul bookings are slightly behind. Selling prices are slightly higher. To the extent the aforementioned trends hold, Transat expects to record better results than last year for the second half, and an after-tax adjusted income for the year.