Citing the “challenging environment” in which to operate an airline, Transat released its Q1 results 09MAR, 2023.
One record-breaking number stands out: customer deposits reached a new high of $898.3 million, breaking Transat’s previous record set in JAN, 2020 by 11 per cent.
But most other metrics, while beating pandemic numbers, have not yet returned to - let alone exceeded - pre-pandemic levels.
During the first quarter, Transat described its capacity as “equivalent to that of 2019” and called its load factor of 84.5 per cent “satisfactory.”
Nonetheless, the company’s statement was firmly optimistic.
"The momentum from the end of 2022 continues, confirming our financial scenarios," stated Annick Guérard, President and Chief Executive Officer of Transat.
"Transat is on an upswing and is headed for a return to profitability. In the first quarter of 2023, revenues more than tripled compared with the corresponding quarter in 2022. Across all programs, combining European and South destinations, Transat deployed capacity comparable to that of 2019; load factors were slightly lower, but the shortfall was largely offset by higher prices. In addition, airline unit revenues, expressed in yield, increased by more than 20% compared with the first quarter of 2019.”
“As a result,” she added, “We recorded an adjusted operating income of $3.3 million for the period, an improvement of $39.7 million compared with the first quarter of 2022. These results are especially encouraging since the first quarter, which falls in the shoulder period, is usually the lowest of the year."
Transat closed out the first quarter of 2023 with an operating loss of just over $38 million.
The company noted that the benefits of surging demand were dampened by a 46 per cent spike in fuel prices and other cost pressures, including a high U.S. dollar.
“Resilient demand for travel is supporting prices and helps us deal with the pressure on operating costs. The context is therefore challenging but remains favourable to recovery in travel and Transat's relaunch," added Guérard.
Outlook
Looking forward, Transat anticipates it will deploy 90 per cent of 2019’s capacity in the full 2023 year, with high demand as it notes that “winter trends seem to be continuing into summer 2023.”
Transat’s statement added, “The combination of demand and higher prices will allow the Corporation to cope with higher costs.”
