MONTREAL – Rising jet fuel prices and the COVID-19 pandemic have affected Transat AT Inc.’s profits. in the second quarter, despite higher revenues as air travel began to recover, raising hopes for a turbocharged summer.
The tour operator noted that its net loss due to shareholders increased by 41% for the quarter ended April 30, although revenues were more than 47 times higher than a year earlier.
“Fuel prices have risen sharply, without which we would have seen positive adjusted operating results in April,” CEO Anik Gerard said in a statement Thursday.
She said consumers were willing to accept price increases while the company introduced a fuel hedging program to guard against significant increases over the summer.
The arrival of two new fuel-efficient Airbus A321neo aircraft this summer will also reduce fuel costs.
Jet fuel prices in North America rose 124 percent year-on-year to $ 174 a barrel as of June 3, according to the International Air Transport Association. It rose in March amid Russia’s invasion of Ukraine, with prices falling 14 percent in the past month.
Months earlier, the highly contagious strain Omicron caused additional border restrictions and another drop in travel reservations.
As a result, Transat canceled nearly 30% of its scheduled flights in January and February.
However, the CEO said the recovery was already under way, with summer travel sales now above 2019 levels, lagging behind between mid-December and early March.
In April, seating capacity reached two-thirds of pre-pandemic levels, with more than 80 percent occupied, Gerard said during a conference call with analysts.
“Our capacity for the summer is about 90% of the levels for 2019” – only 75% for the key transatlantic program, but almost 100% for sunny destinations. “If this trend continues, we expect to see good volumes in the coming months.”
The story continues
There may be more blows ahead, as endless security queues and more flight delays at airports threaten to throw a wrench into plans before the peak travel season.
“We’ve had delays in Pearson, among other places – there are challenges in Europe as well. As travel demand increases, Canada’s border policies and airport resources … need to reflect this new reality,” Gerard told analysts.
She said it was “very difficult” to reconcile normal travel volumes with current restrictions, such as random tests for COVID-19 on international arrivals, a policy Ottawa said would remain in place for at least 30 years. June.
Foreign visitors must also continue to provide evidence of at least two doses of the vaccine – unvaccinated Canadians who cannot return home but must be quarantined for 14 days. All travelers must also continue to submit their health information through the ArriveCAN app before returning.
Public health protocols mean that customs agents now take two to four times more than the typical 30-second processing time for international passengers, according to Monet Pascher, interim president of the Canadian Airports Council.
The Canadian Air Security Authority, which manages airport security checks, aims to increase the number of inspectors, with another 400 staff in various phases of training by the end of the month, Transport Minister Omar Algabra said.
Transat’s debt burden is another hurdle since the end of the second quarter, owing $ 1.78 billion, up 11% from six months earlier.
“We still have significant debt to restart our operation,” Gerard said.
On Thursday, the company reported a net loss due to shareholders of $ 98.3 million or $ 2.60 per share for the quarter. The result compared to a loss of $ 69.6 million or $ 1.84 per discounted share a year earlier.
Revenue was $ 358.2 million, compared to $ 7.6 million in the same quarter last year, when Air Transat, the company’s airline, halted operations after Ottawa demanded a halt to travel to Mexico and the Caribbean, as well as the acceptance of new quarantine measures and testing requirements.
On an adjusted basis, Transat said it lost $ 2.95 per discounted share compared to an adjusted loss of $ 2.74 per discounted share in the same quarter last year.
The first figure fell 22% below analysts’ expectations for $ 2.42 in losses per discounted share, according to market data firm Refinitiv.
This report by The Canadian Press was first published on June 9, 2022.
Companies in this story: (TSX: TRZ)
Christopher Reynolds, The Canadian Press
Add Comment