Transat A.T. lost at least 20 million (16 million US) selling land bought in 2018 in Mexico when the tour operator and air carrier dreamed of a hotel chain in sun destinations – a project that was buried for good in June 2021.
The Quebec company had already announced its intention to divest itself of this asset, located in Puerto Morelos, as part of its refocusing on leisure air travel. The transaction was confirmed on Monday. The acquirer, Finest Resort, will pay approximately 50 million (US$38 million).
In 2018, the company with the blue star had spent, according to the conversion rates of the time, between 70 million and 74 million (54 to 57 million US) to acquire this land on the Yucatan peninsula.
“With the pandemic, the value of land has been revised downwards, explained the senior director of communications of Transat A. T., Andréan Gagné, in an email. Transat had already recorded a restructuring charge at the end of 2020, the net result of which corresponds to the sale value of the land announced this morning. »
The leisure travel specialist intends to use the money from this transaction, which is expected to close before the end of its fiscal year, to alleviate its debt. As of April 30, net debt totaled $1.3 billion.
In a sign that things are looking up for Transat A.T. after the pandemic turmoil, the company has raised some of its forecasts. It now expects an operating margin of between 5.5% and 7%, compared to its previous range of between 4 and 6%. Nevertheless, the company is still losing money. It was still in the red in the quarter that ended on April 30. This was the 14th consecutive quarter in which a net loss was recorded.
“Transat is approaching an inflection point, but we prefer to wait for other execution metrics given the company’s high leverage and volatility in fuel prices and currency exchange rates,” underlines the analyst Benoit Poirier, of Desjardins Securities, in a note, underlining that the tour operator had finally been able to liquidate an unused asset.
On the Toronto Stock Exchange on Monday, Transat A.T.’s stock was trading at $5.08, down 3 cents, or 0.59%. Year-to-date, the stock is up 73%, or $2.15.