Transat A.T. revenues down in second quarter
Montreal-based Transat A.T. says it has managed to trim losses, despite a slight decline in revenue.
The parent company of Air Transat reported revenue of $884.3 million during the threemonth period ended on April 30, 2017.
That’s down $3.9 million from the $888.2 million it reported during the year-earlier period.
The company attributed the decline to an increase in the percentage of customers who only booked flights and not all-inclusive packages.
The company ’s net loss attributable to shareholders was $8.4 million, or 23 cents per share, during the quarter, its second of the fiscal year, compared with a net loss of almost $25 million, or 68 cents, per share during the year-earlier period.
“Despite our efforts to decrease our costs and improve our margins, the combined effect of the U.S. dollar and fuel has made our operating costs go up, upsetting a significant portion of the impact of the actual efficiency gains we have managed to realize,” Denis Pétrin, the company’s CFO, told analysts on a conference call.
The decline in value of the Canadian dollar, compared with the American dollar, along with an increase in fuel prices pushed operating costs up by $21 million during the quarter, the company said.
Transat currently has cash and cash equivalents $566.3 million, up from $440.6 million during the year-earlier period.
It plans to use some of that cash to increase its presence in the hotel business.
During the quarter, Transat acquired a 50 per cent share in a Puerto Vallarta hotel for $13.4 million. It plans to expand that property from 49 rooms to 263. It is also attempting to acquire a 100 per cent ownership stake in Ocean Hotels, a chain of seven properties in Mexico, the Dominican Republic and Cuba. It currently owns a 30 per cent stake in the chain.
If it can’t gain control, Transat says it plans to sell its stake and invest the proceeds in hotel investments it controls.
“We want to control our destiny in the hotel business,” CEO JeanMarc Eustache said.
While the increasing percentage of passengers booking flights alone contributed to the revenue decline, Pétrin says it could be good in the long term, as those passengers have less flexibility when booking and will pay more for tickets.
Eustache also addressed concerns that the company’s business might be damaged by “direct” flights operated by subcontractor Flair Airlines making unscheduled refuelling stops.
“We don’t have enough planes during the summer season going to the Caribbean and Mexico, so we use third parties,” Eustache said.
He said that even though stops were made, the flights are still considered direct.
“There are no regulatory or safety risks with these flights,” he said.
“It’s really exceptional cases when it’s happened.”
During the past three years, 0.1 per cent of flights sold by Transat stopped to refuel, he said.
“This year, we had 29 tech stops, including the fuel, on 12,903 flights. So, at the end of the day, considering the high volume of Air Transat operations, the number of technical stops is really, really, marginal.”