Recovery confirmed with a sharp rise in
volume
For the second quarter:
- Revenues of $358.2
million
- Adjusted operating loss1 of $51.0 million (operating loss of $87.5 million)
- Adjusted net loss1 of $111.6 million (net loss of $98.3 million)
Financial position and financing:
- Unrestricted liquity1 of $515.9 million as at April
30
- Customer deposits of $494.2
million, representing 80% of pre-pandemic levels and a 60%
increase over last quarter, reflecting the recovery in
demand
Continuation of the strategic plan:
- Rebuilding of the pre-pandemic network, with the opening of
several routes and the implementation of codeshare
agreements
- Continued fleet renewal, with the expected delivery of two
A321neoLRs during the third quarter and five more to come
MONTRÉAL, June 9, 2022
/CNW Telbec/ - Transat A.T. inc., a holiday travel reference
worldwide, particularly as an air carrier under the Air Transat
brand, announces its results for the second quarter ended
April 30, 2022.
"When the effect of Omicron subsided at the end of February,
operations and sales rebounded strongly, allowing us to end the
quarter on a very encouraging note and generate revenues of
$358 million for the period. We
foresee a strong recovery and will continue to implement all the
measures necessary to capitalize on it," stated Annick Guérard,
President and Chief Executive Officer of Transat.
"Sales are progressing in a very satisfactory manner for the
summer. The cost of fuel rose sharply, without which we would have
reported positive adjusted operating results in April. Nonetheless,
we observe that consumers are ready to accept price hikes and we
have implemented a fuel hedging program to protect us against
significant increases during the summer."
"For the longer term, we continue to implement our strategic
plan. While continuing to receive new fuel-efficient aircraft to
the fleet, we continue to develop our network by adding new
destinations and connections, with or without code sharing. We also
benefit from our employees' strong support, including our pilots
with whom we have entered into a three-year agreement, ensuring
stability for the coming period," concluded Ms. Guérard.
Second quarter
highlights
Compared with 2021, revenues for the quarter ended April 30, 2022 were up $350.6 million, driven by the significant
resumption of operations after the effect of Omicron subsided at
the end of February. Revenue growth in the quarter was dampened by
the sharp decline in demand and massive booking cancellations
following the emergence of the Omicron variant during the first
quarter and the new restrictive measures put in place by the
federal government on December 15,
2021. As a result, the Corporation initially cancelled
nearly 30% of flights scheduled from January to the end of
February. In addition, at the beginning of February, the
Corporation cancelled more winter season flights, thereby reducing
total winter season capacity by approximately 22% of the initially
deployed capacity.
Operations resulted in an operating loss of $87.5 million, comparable to the $86.5 million loss in 2021, as fuel prices surged
75.5% during the quarter, compared with 2021. Transat reported an
adjusted operating loss1 of $51.0
million, identical to the 2021 result.
Net loss attributable to shareholders amounted to $98.3 million or $2.60 per share (diluted) compared with
$69.6 million or $1.84 per share (diluted) for the corresponding
quarter of last year. The net loss attributable to shareholders in
2022 was marked by a $7.4 million
foreign exchange loss and partially offset by a $22.2 million gain on long-term debt
modification related to the renegotiation of the unsecured
financing - LEEFF. The net loss attributable to shareholders in
2021 was mitigated by a $29.8 million
foreign exchange gain. Foreign exchange gains and losses resulted
mainly from the exchange effect on lease liabilities related to
aircraft, following the fluctuations of the dollar against the U.S.
dollar. Excluding non-operating items, Transat reported an adjusted
net loss1 of $111.6
million ($2.95 per share) for
the second quarter of 2022, compared with $103.3 million ($2.74 per share) in 2021.
Financial position
As at April 30, 2022, cash and
cash equivalents amounted to $511.2
million, compared with $346.1 million at the same date in 2021. In
total, the available financing amounted to a maximum of
$863.3 million, of which
$858.6 million was drawn down, for
unrestricted liquidity1 of $515.9
million.
Customer deposits for future travel stood at $494.2 million, representing 80% of pre-pandemic
levels (as at April 30, 2019) and up
60% from last quarter, reflecting the strong recovery in
demand.
In addition, management is pursuing discussions with all current
lenders, in a spirit of continued collaboration, regarding
amendments to the existing financing agreements in order to ensure
greater financial flexibility to the Corporation.
Continuing the recovery and
implementing the strategic plan
The recovery that was temporarily slowed down by the Omicron
variant is now firmly entrenched and the Corporation continues to
implement its strategic plan and take the necessary measures to
make the most of the rebound in demand, both for the summer and in
the longer term.
- Rebuilding and developing the network with:
-
- the reopening of most of the pre-pandemic network routes
- codeshare agreements with WestJet (bookings now open) and
Porter (opening scheduled for the fall)
- new destinations (particularly Los
Angeles and San
Francisco)
- new direct flights (such as Montréal-Amsterdam or Québec City-London)
- improved network operations through the addition of connections
on existing routes to and from Europe and the
United States (such as Paris-San
Francisco or London-Los
Angeles with a stopover in Montréal)
- numerous additional routes possible via the connectair by Air
Transat platform through virtual interlining agreements with eight
airline companies offering over 245 destinations in Europe, North
Africa, the Middle East,
Central and South America, and
Canada
With all these initiatives, the Corporation will offer more than
1,200 itineraries (including 550 with Transat) in summer
2022, compared with about 500 in 2019
- Receipt of two new A321neoLR aircraft during the summer and
waiting for five on order which will allow the transformation and
optimization of the fleet, bringing the number of aircraft of this
type to 17
- Continuing efforts to control costs and limit the use of
cash
- Introduction of a fuel hedging program to offset a potential
further increase in prices during the summer
- Entering into an agreement in May
2022 with the Air Line Pilots Association, International
(ALPA), representing all of Transat's pilots, extending the term of
their current collective agreement by three years.
Outlook
Following the recent announcements regarding the easing of
health measures and travel restrictions by various governments in
Canada and other countries, the
current situation is showing very encouraging signs in terms of
bookings as the last-minute booking trend persists. After the low
reached during the Omicron wave, load factors have largely improved
in recent months, reaching 85% on flights from March to May for the
south destinations program, the Corporation's main market for the
period, which bodes well for the summer peak season. Selling prices
of bookings for the summer season have been steadily increasing
since the start of spring across all our programs.
Across all our markets, the planned capacity for summer 2022
represents 89% of the 2019 capacity. For the transatlantic program,
the Corporation's main market for the summer season, the planned
capacity in 2022 is 75% of the 2019 levels. In the sun destinations
program, the Corporation's planned capacity represents 98% of the
2019 levels. Moreover, the Corporation plans to increase its
presence in the transborder market by quadrupling its capacity
compared with 2019 by offering, among other things, new flights
from Montréal to Los Angeles and
San Francisco. Lastly, the
Corporation also plans to increase its capacity by 5% in the
domestic market compared with 2019.
Fuel prices, if they remain at the current level, are however
creating strong pressure on our operating costs and profitability.
As discussed above, the Corporation is making every effort to
offset these effects and improve its performance.
It remains difficult at this time to forecast the evolution of
the health and economic situation or its impact on bookings and
future financial results with sufficient precision for the
Corporation to present a more comprehensive outlook for the third
quarter and summer of 2022.
Additional Information
The results were affected by non-operating items, as summarized
in the following table:
Highlights and
Non-IFRS financial measures
|
(In thousands of
C$)
|
|
Second
quarter
|
First six-month
period
|
2022
|
2021
|
2022
|
2021
|
Revenues
|
358,157
|
7,569
|
560,595
|
49,489
|
|
|
|
|
|
Operating
loss
|
(87,513)
|
(86,480)
|
(161,354)
|
(184,528)
|
Special
items
|
—
|
245
|
—
|
7,171
|
Depreciation and
amortization
|
36,499
|
35,272
|
73,971
|
72,762
|
Adjusted operating
loss1
|
(51,014)
|
(50,963)
|
(87,383)
|
(104,595)
|
|
|
|
|
|
Net loss attributable
to shareholders
|
(98,276)
|
(69,561)
|
(212,621)
|
(130,095)
|
Special
items
|
—
|
245
|
—
|
7,171
|
Fuel-related and other
derivatives
|
1,192
|
(3,433)
|
1,720
|
(8,629)
|
Revaluation of
liability related to warrants
|
353
|
757
|
809
|
757
|
Gain on long-term debt
modification
|
(22,191)
|
—
|
(22,191)
|
—
|
Gain on asset
disposals
|
(66)
|
(1,525)
|
(4,018)
|
(18,897)
|
Foreign exchange loss
(gain)
|
7,425
|
(29,770)
|
29,421
|
(62,643)
|
Adjusted net loss1
|
(111,563)
|
(103,287)
|
(206,880)
|
(212,336)
|
|
|
|
|
|
Diluted loss per
share
|
(2.60)
|
(1.84)
|
(5.63)
|
(3.45)
|
Special
items
|
—
|
0.01
|
—
|
0.19
|
Fuel-related and other
derivatives
|
0.03
|
(0.09)
|
0.05
|
(0.23)
|
Revaluation of
liability related to warrants
|
0.01
|
0.02
|
0.02
|
0.02
|
Gain on long-term debt
modification
|
(0.59)
|
—
|
(0.59)
|
—
|
Gain on asset
disposals
|
—
|
(0.04)
|
(0.11)
|
(0.50)
|
Foreign exchange loss
(gain)
|
0.20
|
(0.80)
|
0.78
|
(1.66)
|
Adjusted net loss per
share1
|
(2.95)
|
(2.74)
|
(5.48)
|
(5.63)
|
|
|
|
|
|
|
|
|
As at
April 30, 2022
|
As at
October 31, 2021
|
Cash and cash
equivalents
|
|
|
511,210
|
433,195
|
Undrawn funds from
credit facilities
|
|
|
4,706
|
170,000
|
Unrestricted
liquidity1
|
|
|
515,916
|
603,195
|
As the Corporation has ceased to recognize deferred tax assets,
the presentation of the adjusted loss before tax expense has been
suspended, this result being similar to the adjusted net loss,
which continues to be presented.
About Transat
Founded in Montreal 35 years
ago, Transat has grown to become a holiday travel reference
worldwide, particularly as an air carrier under the Air Transat
brand. Voted World's Best Leisure Airline by passengers at the
Skytrax World Airline Awards, it flies to international and
Canadian destinations, striving to serve its customers with
enthusiasm and friendliness at every stage of their trip or stay,
and emphasizing safety throughout. Transat has been
Travelife-certified since 2018, renewing its fleet with the
greenest aircraft in their category as part of a commitment to a
healthier environment, knowing that this is essential to the
integrity of its operations and the magnificent destinations it
serves (TSX: TRZ)
(1) Non-IFRS financial measures
Transat prepares its financial statements in accordance with
International Financial Reporting Standards ["IFRS"]. We will
occasionally refer to non-IFRS financial measures in the press
release. These non-IFRS financial measures do not have any meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other issuers. They are intended to
provide additional information and should not be considered as a
substitute for measures of performance prepared in accordance with
IFRS. All dollar figures are in Canadian dollars unless otherwise
indicated.
The following are non-IFRS financial measures used by management
as indicators to evaluate ongoing and recurring operational
performance.
Adjusted operating income (loss):
Operating income (loss) before depreciation, amortization and asset
impairment expense, restructuring charge and other significant
unusual items, and including premiums for fuel-related derivatives
and other derivatives matured during the period. The Corporation
uses this measure to assess the operational performance of its
activities before the aforementioned items to ensure better
comparability of financial results.
Adjusted net income (loss): Net
income (loss) attributable to shareholders before net
income (loss) from discontinued operations, change in fair
value of fuel-related derivatives and other derivatives,
revaluation of liability related to warrants, gain (loss) on
long-term debt modification, gain (loss) on business
disposals, gain (loss) on asset disposals, restructuring
charge, asset impairment, foreign exchange gain (loss),
reduction in the carrying amount of deferred tax assets and other
significant unusual items, and including premiums for fuel-related
derivatives and other derivatives that matured during the period,
net of related taxes. The Corporation uses this measure to assess
the financial performance of its activities before the
aforementioned items to ensure better comparability of financial
results. Adjusted net income (loss) is also used in
calculating the variable compensation of employees and senior
executives.
Adjusted net income (loss) per share:
Adjusted net income (loss) divided by the adjusted weighted
average number of outstanding shares used in computing diluted
earnings (loss) per share.
Unrestricted liquidity: The sum of cash
and cash equivalents and available undrawn funds from credit
facilities. The Corporation uses this measure to assess the total
potential cash available in the short term.
Conference call
Second-quarter 2022 conference call: Thursday, June 9, 10:00 a.m. Dial
1 800 926-9795 or 1 212 231-2919. Name of
conference: Transat. Webcast: follow this link. The archived call
will be available at 416 626-4100 or 1 800 558-5253,
access code 22015315, until July 10,
2022.
The third quarter results will be announced on September 8, 2022.
Caution regarding forward-looking
statements
This press release contains certain forward-looking
statements with respect to the Corporation, including those
regarding its results, its financial position, the impacts of the
coronavirus ["COVID-19"] pandemic, its outlook for the future
and planned measures, including in particular the gradual
resumption of certain flights and actions to improve its cash
flows. These forward-looking statements are identified by the use
of terms and phrases such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," "plan," "potential,"
"predict," "project," "will," "would,", the negative of these terms
and similar terminology, including references to assumptions. All
such statements are made pursuant to applicable Canadian securities
legislation. Such statements may involve but are not limited to
comments with respect to strategies, expectations, planned
operations or future actions. Forward-looking statements, by their
nature, involve risks and uncertainties that could cause actual
results to differ materially from those contemplated by these
forward-looking statements.
As at April 30, 2022, a material uncertainty exists
that may cast significant doubt on the Corporation's ability to
continue as a going concern. The MD&A's Section 7. Financial
position, liquidity and capital resources and Note 2 to the interim
condensed consolidated financial statements contain more detail on
this issue.
The global air transportation and tourism industry has faced
a collapse in traffic and demand. Travel restrictions introduced by
numerous countries, vaccination and testing requirements in
Canada and in other countries, as
well as concerns related to the pandemic and its economic impacts
are creating some demand uncertainty, at least for fiscal 2022. For
the 2022 winter season, the Corporation rolled out a reduced winter
program that had to be adjusted following the emergence of the
Omicron variant and new restrictive measures implemented by
Canada and other countries. For
the summer 2022 season, the Corporation has also deployed a further
reduced program although much more similar to pre-pandemic levels.
While the situation considerably improved during the quarter, the
Corporation cannot yet predict with certainty all the impacts of
COVID-19 on its operations and results, the pace at which the
situation will improve or precisely when conditions will become
normal again. Since the beginning of the pandemic, the Corporation
implemented a series of operational, commercial and financial
measures, including new financing and cost reduction measures,
aimed at preserving its cash. The Corporation is monitoring the
situation daily to adjust these measures as it evolves. However,
until the Corporation is able to resume operations at a sufficient
level, the COVID-19 pandemic will have significant negative impacts
on its revenues, cash flows from operations and operating results.
Although the lifting of certain restrictions has allowed a
significant resumption of operations during 2022, the Corporation
does not expect to reach the pre-pandemic level before
2023.
The forward-looking statements may differ materially from
actual results for a number of reasons, including without
limitation, economic conditions, changes in demand due to the
seasonal nature of the business, extreme weather conditions,
climatic or geological disasters, war, political instability, real
or perceived terrorism, outbreaks of epidemics or disease, consumer
preferences and consumer habits, consumers' perceptions of the
safety of destination services and aviation safety, demographic
trends, disruptions to the air traffic control system, the cost of
protective, safety and environmental measures, competition, the
Corporation's ability to maintain and grow its reputation and
brand, the availability of funding in the future, fluctuations in
fuel prices and exchange rates and interest rates, the
Corporation's dependence on key suppliers, the availability and
fluctuation of costs related to our aircraft, information
technology and telecommunications, changes in legislation,
unfavourable regulatory developments or procedures, pending
litigation and third party lawsuits, the ability to reduce
operating costs, the Corporation's ability to attract and retain
skilled resources, labour relations, collective bargaining and
labour disputes, pension issues, maintaining insurance coverage at
favourable levels and conditions and at an acceptable cost, and
other risks detailed in the Risks and Uncertainties section of the
MD&A included in our 2021 Annual Report.
The reader is cautioned that the foregoing list of factors is
not exhaustive of the factors that may affect any of the
Corporation's forward-looking statements. The reader is also
cautioned to consider these and other factors carefully and not to
place undue reliance on forward-looking statements.
The forward-looking statements in this press release are
based on a number of assumptions relating to economic and market
conditions as well as the Corporation's operations, financial
position and transactions. Examples of such forward-looking
statements include, but are not limited to, statements
concerning:
- The outlook whereby until the Corporation is able to resume
operations at a sufficient level, the COVID-19 pandemic will have
significant negative impacts on its revenues, cash flows from
operations and operating results.
- The outlook whereby, subject to going concern uncertainty as
discussed in Section 7. Financial position, liquidity and capital
resources of the MD&A and Note 2 to the interim condensed
consolidated financial statements, we believe that the Corporation
will be able to meet its obligations with cash on hand, cash flows
from operations and drawdowns under existing credit
facilities.
In making these statements, the Corporation has assumed,
among other things, that travel and border restrictions imposed by
government authorities will be relaxed to allow for a resumption of
operations of the type and scale expected, that the standards and
measures imposed by government and airport authorities to ensure
the health and safety of personnel and travellers will be
consistent with those announced or currently anticipated, that
travellers will continue to travel despite the new health measures
and other constraints imposed as a result of the pandemic, that
workers will continue to be available to the Corporation, its
suppliers and the companies providing passenger services at the
airports, that credit facilities and other terms of credit extended
by its business partners will continue to be made available as in
the past, that management will continue to manage changes in cash
flows to fund working capital requirements for the full fiscal
year. If these assumptions prove incorrect, actual results and
developments may differ materially from those contemplated by the
forward-looking statements contained in this press release.
The Corporation considers that the assumptions on which these
forward-looking statements are based are reasonable.
These statements reflect current expectations regarding
future events and operating performance, speak only as of the date
this press release is issued, and represent the Corporation's
expectations as of that date. For additional information with
respect to these and other factors, see Section 1. Caution
regarding forward-looking statements of the MD&A for the
quarter ended April 30, 2022 filed with the Canadian
securities commissions and available on SEDAR at
www.sedar.com. The Corporation disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
other than as required by applicable securities
legislation.
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SOURCE Transat A.T. Inc.