Transat A.T. is starting to welcome a rather discreet clientele again since the lifting of health restrictions: baby boomers. Better off and more spendthrift, these travelers are accentuating an already vigorous demand for travel despite the increase in the price of plane tickets.
“Customers aged 55 and over have returned to their pre-pandemic habits,” observes the president and chief executive officer of the Quebec company, Annick Guérard. They spend on average 15-20% more than our average clientele. »
Ms. Guérard offered this analysis Thursday, in a conference call with financial analysts, on the occasion of the publication of the second quarter results of the parent company of Air Transat. It posted an operating profit – 19 million – for the first time since the end of its 2019 financial year.
The return to old habits among baby boomers is timely for Transat A. T., hard hit by the health crisis, where its planes have been temporarily grounded on more than one occasion. Demand remains strong despite the economic downturn, but Ms. Guérard is well aware that this could change.
“This is very important to us because they (55+) are expected to be much more resilient than current consumers in this time of rising prices and inflation which we know , will continue. »
In the meantime, most of the indicators are green on the dashboard of the company with the blue star. At the start of the second quarter, prices were up 15% from a year ago due to demand. By April 30 – the end of the second quarter – that growth was 25% due to consumer interest.
Transat A.T. plans to offer summer capacity at 89% of what it was before the arrival of COVID-19, with 20 fewer aircraft in its fleet, which has a positive impact on its expenses. The majority of connections will be to Europe. So far, more than 60% of the tickets have been sold.
“We remain cautious,” says Ms. Guérard. This is why we are deploying growth that is not too high […] in case the economic slowdown affects demand. »
The way things have been going since the beginning of the year, the company expects to generate a higher operating margin at the end of the year. Its forecast now fluctuates between 5.5 and 7%, compared to the previous range of between 4 and 6%.
Transat A.T. still has work to do despite the operating profit posted during the three-month period ending on April 30. This was the 14th consecutive quarter in which a net loss was recorded – although it narrowed considerably. By comparison, in the first three months of its fiscal year, Air Canada had made a net profit of $4 million.
Additionally, at nearly $1.3 billion, the carrier’s net debt still worries most financial analysts.
“The company is in a much better position than it was several quarters ago, but in my opinion, the net indebtedness is too high, underlines Cameron Doerksen, of the Financière Banque Nationale. However, Transat continues to improve its margins and liquidity within the horizon of our forecasts. »
The Quebec airline was able to buy time by pushing back the repayment deadlines for loans totaling 198 million by one year, to April 2025. Doerksen believes part of the debt reduction will be through the issuance of new shares, which will dilute existing shareholders.
On the Toronto Stock Exchange, Thursday afternoon, Transat A.T.’s stock was trading at $4.52, up 1 cent, or 2.25%. Year-to-date, the stock has jumped around 55%, or $1.60.