A sign of the strong return of travelers, Transat A. T. has reaped its first profits since the appearance of COVID-19. The Quebec company also released cash in the third quarter, which is key to reducing its heavy debt.
During the months of May, June and July, Air Transat’s parent company posted a net profit of $57 million, or $1.49 per share, while it lost $106.5 million, or $2.82 $ per share, at the same time last year. Its revenue jumped about 47%, to 746 million.
“These results demonstrate our quality of execution and our ability to respond to sustained customer demand in a profitable manner,” said Transat A. T. President and CEO Annick Guérard on Thursday.
The profitability of the blue star company improved considerably in the third quarter. Its operating profit was 64 million, compared to an operating loss of 93 million in the third quarter last year.
Despite the economic slowdown and the rise in interest rates – elements which increase pressure on household budgets – Ms. Guérard does not foresee a reduction in demand.
“To date, the number of advance bookings is higher than last financial year, which, combined with higher prices, bodes well for the start of the new financial year,” she says. As the summer season approaches, the addition of three aircraft to our fleet will help increase available capacity by 23%. »
Excluding non-recurring items, Transat A. T.’s adjusted profit was $42 million, or $1.10 per share. In the third quarter last year, the leisure travel specialist posted an adjusted loss of $121 million, or $3.20 per share.
This quarterly performance far exceeded the expectations of analysts surveyed by the firm Refinitiv. They expected revenue of $728 million and an adjusted loss per share of nine cents.
“The third quarter results and outlook are encouraging and we expect to see Transat improve its margins and liquidity,” writes Cameron Doerksen of National Bank Financial in a note sent to its clients.
The analyst, however, continues to advocate caution towards Transat A. T. due to its high debt. Its net debt amounted to 1.5 billion as of July 31. The company was nevertheless able to reduce it by 142 million during the third quarter.
