Solid increase in traffic and further debt
reduction
First-quarter highlights:
- Revenues of $785.5 million, up
17.7% from $667.5 million last
year
- Negative adjusted EBITDA1 of $8.6 million, compared to adjusted
EBITDA1 of $3.3 million
last year
- Net loss of $61.0 million
($1.58 per share), versus
$56.6 million ($1.49 per share) last year
- Positive free cash flow1 of $39.1 million, compared to $144.2 million last year
- Proceeds from the sale of an investment in Mexico applied to reduce secured facilities by
$20.7 million
- Record customer deposits for future travel of $1,026.9 million, up 14% from January 31, 2023
MONTREAL, March 14,
2024 /CNW/ - Transat A.T. Inc., a leisure travel
reference worldwide, operating as an air carrier under the Air
Transat brand, announced today its results for the First Quarter
ended January 31, 2024.
"Transat's first-quarter results reflect sustained demand for
leisure travel. Revenues grew 17.7% year-over-year, driven by a
solid traffic increase. However, the persisting speculation of a
strike by flight attendants starting last November clearly affected
bookings and yield for the winter season, and we are pleased that
the adoption of a new collective agreement in late February removed
this uncertainty. As for the operating challenges related to the
Pratt & Whitney GTF2 engine issue, costs incurred,
including those related to the temporary leasing of additional
aircraft, applied pressure on profitability. Finally, while demand
remains sound, softer yields indicate heightened consumer price
sensitivity in the current macro-economic environment as well as
fierce price competition, especially in the Toronto market," said Annick Guérard,
President and Chief Executive Officer of Transat.
"In recent months, several industry-wide supply chain
challenges, including the Pratt & Whitney GTF engine issue,
have resulted in higher costs and the need to make certain capacity
modifications going forward. These adjustments should limit
capacity expansion to 13% in fiscal 2024, still representing a
healthy increase compared to 2023. Accordingly, we now expect an
adjusted EBITDA1 margin for the full year 2024 to be at
the lower end of the range announced last December. Finally, the
refinancing plan remains the organization's top priority and
discussions with stakeholders continue," added Jean-François
Pruneau, Chief Financial Officer of Transat.
______________________________
|
2Geared turbofan
("GTF").1
|
First-quarter Results
For the three-month period ended January
31, 2024, revenues reached $785.5 million, up 17.7% from $667.5 million in the corresponding period a
year ago. The increase reflects sustained demand for leisure travel
driven by a 20% increase in traffic expressed in
revenue-passenger-miles (RPM). However, this increase was mitigated
by persistent speculations throughout the quarter about a potential
strike by the flight attendants. Company-wide capacity was up 25%
from last year, while airline unit revenues (yield) was down 3.1%.
Negative adjusted EBITDA1 stood at $8.6 million, compared with an adjusted
EBITDA1 of $3.3 million a year ago. The variation is
mainly due to higher operating expenses associated with capacity
expansion, such as increases in the cost of providing tourism
services, wages and benefits, and aircraft-related expenses, the
latter also including, among other things, (i) costs related to the
operating challenges caused by the Pratt & Whitney GTF engine
issue and (ii) an unfavorable year-over-year aircraft maintenance
calendar due to the low aircraft utilization during the pandemic.
These factors were partially offset by lower fuel expenses
reflecting a price decline of 18% compared to last year.
Cash flow and financial position
Cash flow from operating activities amounted to $110.7 million during the First Quarter of
2024, compared with $195.1 million for the same period last
year, due to a less favorable net change in non-cash working
capital balances and to a greater operating loss this year. After
accounting for investing activities and repayment of lease
liabilities, free cash flow1 reached $39.1 million during the quarter, versus
$144.2 million a year
earlier.
As at January 31, 2024, cash and cash equivalents
amounted to $453.3 million,
compared to $467.7 million at
the same date in 2023 and $435.6
million as at October 31,
2023. Cash and cash equivalents in trust or otherwise
reserved mainly resulting from travel package bookings improved
year-over-year reaching $612.2 million as at
January 31, 2024, compared with $523.8 million at the same date in 2023.
Reflecting sound demand, customer deposits for future travel
stood at an all-time record level of $1,026.9 million as at
January 31, 2024, up 14% from January 31, 2023.
During the quarter, the Corporation completed the previously
announced sale of an investment in a hotel in Mexico and proceeds were applied to reduce
secured facilities by $20.7 million.
Following this repayment, long-term debt and deferred government
grant, net of cash, amounted to $352.3
million as at January 31,
2024, down from $375.3 million
a year ago and from $380.1 million as
at October 31, 2023.
Outlook
Early trends for the summer season indicate bookings and pricing
conditions that are largely in line with the same period last year.
However, as the Corporation does not foresee the same uplift in
yields that was exhibited throughout the summer season last year,
it will remain proactive in managing costs under its control, while
actively seeking to mitigate the structural cost increases
affecting the industry.
Given the current operating environment, the Corporation revised
its fiscal 2024 capacity expansion plans to 13%, versus 19%
previously.
Reflecting the above, the Corporation now expects its adjusted
EBITDA1 margin for the full year 2024 to be at the lower
end of the range of 7.5% to 9.0% announced last December. In making
these forward-looking statements, the Corporation used the
following assumptions for the fiscal year: weak GDP growth in
Canada, an exchange rate of
C$1.34 to US$1 and an average price per gallon of jet fuel
of C$4.00.
Conference call
First-quarter 2024 conference call: Thursday, March 14, 10:00 a.m. To join the
conference call without operator assistance, you may register and
enter your phone number here to receive an instant automated call
back.
You can also dial direct to be entered into the call by an
operator:
Montreal: 514-225-7344
North America (toll-free):
1-888-390-0620
Name of conference: Transat
The conference will also be accessible live via webcast: click here
to register.
An audio replay will be available until March 21, 2024, by dialing 1 888 390-0541
(toll-free in North America),
access code 776189 followed by the pound key (#). The webcast will
remain available for three months following the call.
Second-quarter 2024 results will be announced on
June 6, 2024.
(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 news
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) or adjusted
EBITDA: Operating income (loss) before depreciation,
amortization and asset impairment expense, reversal of impairment
of the investment in a joint venture, restructuring and transaction
costs and other significant unusual items, and including premiums
related to derivatives that 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 pre-tax income (loss) or adjusted EBT: Income
(loss) before income tax expense before change in fair value of
derivatives, revaluation of liability related to warrants, gain
(loss) on long-term debt modification, gain (loss) on business
disposals, gain on disposal of investment, gain (loss) on asset
disposals, restructuring and transaction costs, write-off of
assets, reversal of impairment of the investment in a joint
venture, foreign exchange gain (loss) and other significant unusual
items, and including premiums related to derivatives that matured
during the period. 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): Net income (loss) before change
in fair value of derivatives, revaluation of liability related to
warrants, gain (loss) on long-term debt modification, gain (loss)
on business disposals, gain on disposal of investment, gain (loss)
on asset disposals, restructuring and transaction costs, write-off
of assets, reversal of impairment of the investment in a joint
venture, foreign exchange gain (loss), reduction in the carrying
amount of deferred tax assets and other significant unusual items,
and including premiums related to 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 earnings (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.
Free cash flow: Cash flows related to operating
activities less cash flows related to investing activities and
repayment of lease liabilities. The Corporation uses this measure
to assess the cash that's available to be distributed in a
discretionary way such as repayment of long-term debt or deferred
government grant or distribution of dividend to shareholders.
Total debt: Long-term debt plus lease liabilities, deferred
government grant and liability related to warrants, net of deferred
financing costs related to the unsecured debt - LEEFF. Management
uses total debt to assess the Corporation's debt level, future cash
needs and financial leverage ratio. Management believes this
measure is useful in assessing the Corporation's capacity to meet
its current and future financial obligations.
Total net debt:Total debt (described above) less cash and
cash equivalents. Total net debt is used to assess the cash
position relative to the Corporation's debt level. Management
believes this measure is useful in assessing the Corporation's
capacity to meet its current and future financial obligations.
Additional Information
The results were affected by non-operating items, as summarized
in the following table:
Highlights and non-IFRS financial measures
Highlights and
non-IFRS financial measures
|
|
First
quarter
|
2024
|
2023
|
(in thousands of
Canadian dollars, except per share amounts)
|
$
|
$
|
|
|
|
Operating
loss
|
(52,429)
|
(38,103)
|
Depreciation and
amortization
|
50,164
|
41,108
|
Reversal of impairment
of the investment in a joint venture
|
(3,112)
|
—
|
Restructuring
costs
|
66
|
2,900
|
Premiums related to
derivatives that matured during the period
|
(3,314)
|
(2,574)
|
Adjusted operating
income (loss)1
|
(8,625)
|
3,331
|
|
|
|
Net loss
|
(60,977)
|
(56,610)
|
Reversal of impairment
of the investment in a joint venture
|
(3,112)
|
—
|
Restructuring
costs
|
66
|
2,900
|
Change in fair value
of derivatives
|
22,159
|
9,921
|
Revaluation of
liability related to warrants
|
11,747
|
10,139
|
Foreign exchange
gain
|
(42,127)
|
(22,829)
|
Gain on disposal of an
investment
|
(5,784)
|
—
|
Gain on asset
disposals
|
—
|
(2,511)
|
Premiums related to
derivatives that matured during the period
|
(3,314)
|
(2,574)
|
Adjusted net
loss1
|
(81,342)
|
(61,564)
|
|
|
|
Adjusted net
loss1
|
(81,342)
|
(61,564)
|
Adjusted weighted
average number of outstanding shares used in computing
diluted
earnings per
share
|
38,580
|
38,065
|
Adjusted net loss
per share1
|
(2.11)
|
(1.62)
|
|
|
|
|
|
|
Cash flows related to
operating activities
|
110,702
|
195,088
|
Cash flows related to
investing activities
|
(28,745)
|
(10,481)
|
Repayment of lease
liabilities
|
(42,864)
|
(40,457)
|
Free cash
flow1
|
39,093
|
144,150
|
|
|
|
As at
January 31, 2024
|
As at
October 31, 2023
|
(in thousands of
dollars)
|
|
|
$
|
$
|
Long-term
debt
|
|
|
665,104
|
669,145
|
Deferred government
grant
|
|
|
140,480
|
146,634
|
Liability related to
warrants
|
|
|
32,563
|
20,816
|
Lease
liabilities
|
|
|
1,138,407
|
1,221,451
|
Total
debt1
|
|
|
1,976,554
|
2,058,046
|
|
|
|
|
|
Total debt
|
|
|
1,976,554
|
2,058,046
|
Cash and cash
equivalents
|
|
|
(453,286)
|
(435,647)
|
Total net
debt1
|
|
|
1,523,268
|
1,622,399
|
About Transat
Founded in Montreal 36 years
ago, Transat has achieved worldwide recognition as a provider of
leisure travel particularly as an airline under the Air Transat
brand. Voted World's Best Leisure Airline by passengers at the 2023
Skytrax World Airline Awards, it flies to international
destinations. By renewing its fleet with the most energy-efficient
aircraft in their category, it is committed to a healthier
environment, knowing that this is essential to its operations and
the destinations it serves. Transat has been Travelife-certified
since 2018. (TSX: TRZ) www.transat.com
Caution regarding forward-looking statements
This news release contains certain forward-looking statements
with respect to the Corporation, including those regarding its
results, its financial position and its outlook for the future.
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.
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 and the
lingering effects of the COVID-19 pandemic, 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,
maintain and grow its reputation and brand, the availability of
funding in the future, the Corporation's ability to adequately
mitigate the Pratt & Whitney GTF engine issues, 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, cybersecurity risks, 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 2023 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 news 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 the Corporation will be able to meet its
obligations with cash on hand, cash flows from operations and
drawdowns under existing credit facilities.
- The outlook whereby the Corporation does not foresee the
same uplift in yields that was exhibited throughout the summer
season last year, it will remain proactive in managing costs under
its control, while actively seeking to mitigate the structural cost
increases affecting the industry.
- The outlook whereby the Corporation now expects its adjusted
EBITDA 1margin for the full year 2024
to be at the lower end of the range of 7.5% to 9.0%.
- The outlook whereby the Corporation revised its fiscal 2024
capacity expansion plans to 13%, versus 19% previously.
In making these statements, the Corporation assumes, among
other things, that the standards and measures for the health and
safety of personnel and travellers imposed by government and
airport authorities will be consistent with those currently in
effect, 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 and that fuel prices, exchange rates, selling
prices and hotel and other costs remain stable, and the Corporation
will be able to adequately mitigate the Pratt &
Whitney GTF engine issues. 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 news release is issued, and represent the Corporation's
expectations as of that date. For additional information with
respect to these and other factors, see the MD&A for the
quarter ended January 31, 2024 filed with the Canadian
securities commissions and available on SEDAR at www.sedarplus.ca.
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.
www.transat.com
Media:
|
Andréan
Gagné
|
|
Senior Director, Public
Affairs and Communications
|
|
andrean.gagne@transat.com
|
|
514-987-1616, ext.
104071
|
Financial
analysts:
|
Jean-François
Pruneau
|
|
Chief Financial
Officer
|
|
jean-francois.pruneau@transat.com
|
Media site and image bank:
|
514 987-1616 ext.
4567
transat.com/en-CA/corporate/media
|
SOURCE Transat A.T. Inc.