Transat reports drop in earnings
Firm sees reduced annual profits amid stiff competition from Canadian airlines
MONTREAL — Transat A.T. endured a frigid earnings year despite refocussing its sun destinations and beachside resorts as rising jet fuel prices and currency fluctuations reduced the travel company's profits ahead of the ramp-up of competition from Canadian airlines.
“The results of Q4 and summer ‘18 are not as positive as last year's. Yearly results are clearly not satisfying, reflecting the headwinds from jet fuel costs,” said chief financial officer Denis Petrin on a conference call with investors Thursday.
Annual net income attributable to shareholders dropped 97 per cent to $3.8 million from $134.3 million last year, a difference owing in part to Transat’s hotel sales in 2017. The earnings were the second worst it's posted in six years, with competition only set to increase.
Swoop, a low-cost offshoot of Calgary-based WestJet Airline Ltd. that launched operations in June, has announced upcoming routes to Mexican hot spots Cancun, Puerto Vallarta and Mazatlan, with flights to Jamaica’s Montego Bay starting in a few days.
“We've been following them, of course,” Transat chief operating officer Annick Guerard told analysts. “But as we are dealing with other low-cost carriers in the Atlantic market, we know how to face those.”
The Swoop sun flights will take off from Hamilton's airport, with B.C.'s Abbotsford International Airport also hosting flights to two of the four destinations.
Capacity among Canadian airlines for Mexican and Caribbean sun destinations will jump eight per cent year over year this winter, according to Transat. That includes a 16 per cent leap by Air Canada — which has put more pressure on the sun market since Rouge entered the airspace in 2012 — and a 14 per cent increase by WestJet — excluding the additional routes from
Swoop.
In its latest quarter ended Oct. 31, net income attributable to shareholders dropped to $7.8 million or 21 cents per dilute share, from $148.1 million or $3.97 per share a year ago.