Transat Rolls Out Three Year Plan
Transat A.T. Inc. posted revenues of $788.6 million for the quarter ended Jan. 31, 2015, compared with $847.2 million in 2014 — a decrease of $58.6 million, or 6.9%. The company recorded an adjusted operating loss of $35.8 million, compared with $23.9 million in 2014; and a net loss attributable to shareholders of $64.3 million ($1.66 per share on a diluted basis), compared with $25.6 million ($0.67 per share on a diluted basis) in 2014. Before non-operating items, Transat reported an adjusted net loss of $32.4 million in 2015 ($0.84 per share), compared with $23.3 million ($0.60 per share) in 2014.
Jean-Marc Eustache, president and CEO of Transat, said: “On the Sun destinations market, higher selling prices, our cost-control initiatives and our currency-hedging program were not sufficient to offset the increase in our operating expenses, which was mainly caused by the significant, recent drop in the value of the Canadian dollar against the U.S. currency. That, combined with a deterioration in results in France and reduced revenues from aircraft subleasing, kept us from posting improved results for the quarter compared with last year.”
The company announced its intention to launch a normal-course issuer bid share buyback program, subject to approval from regulatory authorities.
Eustache said that: “We are on the offensive,” noting that Transat was introducing its three-year 2015-2017 strategic plan which is aimed at continuing the Corporation’s efforts to improve efficiency and margins as well as develop markets and foster growth, and comprises four key components.
A program to reduce costs and improve margins totaling $100 million over three years, specifically $45 million in 2015 (including the impact of narrow-body aircraft), $30 million in 2016 and $25 million in 2017.
The main initiatives and projects are:
- Reduce air costs by decreasing the number of wide-body aircraft operated in winter, following the successful implementation of a flexible narrow-body aircraft fleet.
- Implement a connecting-flights strategy, starting next summer in Canada, using Air Transat’s narrow-body aircraft to expand the destination offering in certain source markets. Implement a similar strategy in 2016 in Europe, with an air partner, paving the way for new destinations and source markets.
- Increase density of three wide-body Airbus A330s to be dedicated to the London and Paris routes.
- Increase ancillary revenues from the sale of optional services to travellers and from other sources such as freight.
- Continue technological upgrade projects of reservation systems, primarily to improve efficiency and reduce time-to-market of new products.
A program to improve the offering, focused on growth in existing source markets. The main efforts in this respect will be to:
- Introduce new destinations in Europe, starting with Budapest in summer 2015.
- Fine-tune the Sun destinations offering through exclusive partnerships with hotels and the continued improvement of collections, based on customer expectations.
Continue to develop Lookea clubs in France, as well as the tour market.
A program to significantly transform the Corporation’s distribution ecosystem in a fully integrated fashion. Concretely:
- Continue developing the Transat Travel brand, and in particular complete its implementation in the Corporation’s own agencies.
- Develop a new distribution website as part of a strategy for transparently integrating the customer relations centres and travel agencies.
A program to develop markets and continue the integration strategy, with the aim of ensuring growth, namely to:
- Penetrate new source markets that can generate synergies with current operations, through acquisitions.
- Enhance presence in destinations as an incoming tour operator, particularly by leveraging Jonview Canada, Tourgreece and Trafic Tours.
- Develop and grow Ocean Hotels, increasing the number of rooms from the current 2,200 to potentially 5,000 over the duration of the plan.
Go to http://www.transat.com for more.
