Transat struggles amid battle for sun-seekers
MONTREAL Transat A.T. endured a frigid earnings year despite refocusing 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 fell 97 per cent to $3.8 million from $134.3 million last year, due in part to Transat’s hotel sales in 2017. The earnings were the second worst in six years, with competition set to rise.
Swoop, a low-cost offshoot of Calgary-based WestJet Airline Ltd., 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 the airport in Hamilton, Ont., 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.
Transat expects its own capacity to nudge up just two per cent in the winter season compared to the same time last year.
The steeper competition comes as Transat shifts its focus to building a network of beachside hotels it hopes will better position the holiday tour operator against greater competition from Canadian rivals.
Transat aims to own or manage 5,000 rooms in Mexico and the Caribbean by 2024.