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Air Transat Presents Q2 Results and Return to Operation Plan
Air Transat released its 2nd quarter report on June 11 and announced its plans to return to the skies next month.
Predictably, its 2nd quarter results were significantly impacted by the ongoing health crisis but in the airline’s announcement, it stated that summer sales figures are showing “clear improvement.”
Canada’s third-largest airline also announced it will resume limited operations starting July 23, 2020 to 23 destinations under a new flight schedule. The carrier suspended operations in mid-March 2020 but did continue limited flights for a short time to repatriate displaced workers and citizens.
Prior to the suspension of operations, Air Transat reported positive results. Its February 2020 adjusted operating income was $28.3 million more than the previous year with an operating income up by $28.1 million. But the loss of bookings due to the health-related groundings resulted in revenues of only $571.3 million for the 2nd quarter, down $326.1 million (36.3%) from the previous year.
Similar to other airline efforts, the Canadian charter and leisure carrier took strong measures to preserve its cash. Among those were the laying-off of 85% of its workforce, leadership pay reductions, drawing on a $50 million revolving credit facility agreement, issuing travel credits to its customers, aircraft and facility lease renegotiations and the retirement of its A310 fleet. As a result, Air Transat reported holding $733.7 million in cash and cash equivalents in the quarterly report.
But countering the dip in financial performance, Air Transat also announced it will return to the skies on July 23. The restart of summer operations shows promise but still is off pace to 2019 performance. Deposits from customers for future travel amounted to $605.1 million, compared with $629.7 million, a decrease of $24.5 million.
“After these long months that put the entire tourism industry to the test, we are very happy to announce today the resumption of our operations,” said Annick Guérard, Chief Operating Officer of Transat. “We will gradually operate a flight schedule with 23 international routes to Europe, the South and the United States, in addition to a domestic flight schedule between major Canadian cities.”
The revamped flight schedule is comprehensive. From Montreal, Air Transat will gradually begin operating direct flights to Athens, Bordeaux, Lisbon, Lyon, Nantes, Marseille, Paris and Toulouse.
Travelers from Toronto will benefit from direct flights to Athens, Glasgow, London, Manchester, Porto and Rome.
Air Transat will also offer direct flights to Cayo Coco, Cuba, Cancun, Fort Lauderdale and Punta Cana) from both Montreal and Toronto as well as Port-au-Prince, Haiti from Montreal.
The airline will also offer domestic Canadian flights between Montreal, Toronto, Calgary and Vancouver.
But operations will cease until the end of summer season to 14 European, 9 Southern, and 3 U.S. destinations as well as all international departures from Vancouver and Quebec City, Canada.
The airline is looking ahead to serve additional destinations in the September and October 2020 timeframe but cautioned these are highly dependent on demand and regulatory restrictions.
Air Transat also updated shareholders on its agreement with Air Canada to purchase all of its issued and outstanding stock shares. The pandemic has slowed progress on the plan but the carrier reported it is still pursuing the deal, subject to Canadian and European Union approvals. But the airline warned of additional challenges ahead.
“While the Corporation remains firmly committed to completing the transaction with Air Canada, certain factors beyond its control and related to the COVID-19 pandemic could influence the outcome of the proposed arrangement. The market conditions of the global industry have been completely transformed” the carrier said. I
t reported that it is still hoping to finalize the deal by the 4th quarter of 2020.
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