Transat takes action as margins suffer

Transat A.T has reported that for its fiscal year ending Oct. 31, 2011, it posted revenues of $3.7 billion, compared with $3.5 billion in 2010. Its margin before restructuring charge of $36.5 million, compared with $127.6 million in 2010, and a net loss of $12.2 million ($0.32 per share on a diluted basis), compared with net income of $65.6 million ($1.73 per share on a diluted basis) in 2010. Before non-operating items, Transat reported an adjusted after-tax loss3 of $7.2ámillion in 2011 ($0.19 per share on a diluted basis), compared with a net income of $53.7 million ($1.41 per share on a diluted basis) in 2010. In commenting on the results, Transat’s president and CEO, Jean-Marc Eustache said: “We have started implementing an action plan aimed at returning to profitability and resume growth.” That plan includes the reduction of overhead costs in Canada and France for a recurring cost-savings of approximately $11 million per year; optimization of IT systems, boosting the company’s ability to dynamically manage prices and inventories, and reduce costs; reduction of input costs, especially in Canada, to stem from changes in Air Transat fleet, higher aircraft utilization, outsourcing of wide-body aircraft to third parties in winter and implementation of an exclusive hotel program; enhanced customer experience, with a renewed sun product and the refurbishment of Transat’s A330 fleet cabins; increase volume, including the expansion of its travel agency network and targeted acquisitions in Canada and abroad, in line with its 2012-2014 strategic plan. Transat said that the reduction of overhead costs should reach $17 million per year (including $11 million in salaries). Optimization of IT systems should generate efficiency gains, and bring approximately $4 million in cost savings, for an aggregated favourable impact of $20 million per year, starting in 2013. It expects that these measures (cost reductions, additional revenues, efficiency gains) should contribute $20 to $25 million to the margin in 2012, $35 to $40 million in 2013, and $50 million in 2014. Transat also reported its fourth quarter numbers which include revenues of $809.9 million for the quarter ended Oct. 31, 2011, compared with $778.6 million in 2010, an increase of $31.3 million, or 4.0%. It recorded a margin, before restructuring charge of $27.4 million, compared with $77.9 million in 2010 and a net loss of $4.5 million ($0.12 per share on a diluted basis), compared with net income of $52.4 million ($1.37 per share on a diluted basis) in 2010. Before non-operating items, the company reported an adjusted after-tax income3 of $10.1 million in 2011 ($0.27 per share on a diluted basis), compared with $47.7 million ($1.25 per share on a diluted basis) in 2010. Go to http://www.transat.com for more.