Transat A.T. Inc. posted revenues of $792.6 million for the quarter ended January 31st, 2010 compared with $877.3 million for the same period of 2009, a decline of $84.7 million, or 9.7%. The Corporation recorded an operating loss of $12.4 million for the quarter, compared with $8.5 million in 2009, and a net loss of $13.9 million, compared with a net loss of $29.4 million in 2009.
"The decrease in revenues stems mainly from lower selling prices and volumes," said Jean-Marc Eustache, President and Chief Executive Officer. "Our operating costs decreased significantly, partially offsetting the unfavourable impact of lower prices on our margins, in a highly competitive commercial environment."
The decrease in revenues also stems in part from the Corporation's decision to reduce its capacity, in light of a reduction in the number of travellers in America; it is also attributable to lower selling prices and a stronger Canadian dollar. The decrease in margin is attributable to a reduction in commercial activity and lower selling prices.
Revenues for the North American business units, which are generated by sales to customers in Canada and abroad, decreased by $82.6 million (11.2%) during the first quarter from the same period in 2009. The decrease is attributable to a reduction in commercial activity, partially stemming from a decision to reduce capacity and a 8.6% reduction in the number of travellers, as well as from lower selling prices. For the quarter, Transat recorded an operating loss of $3.9 million (0.6%), compared with a margin of $1.3 million (0.2%) in 2009. The decrease in margin is mainly due to lower selling prices, the result of overcapacity in the marketplace, and a highly competitive commercial environment.
Revenues for the European business units, which are generated by sales to customers in Europe and in Canada, decreased by $2.1 million (1.5%) in the first quarter compared with the same period in 2009, despite a 30.1% increase in the number of travellers. The revenue boost from higher traveller volumes was insufficient to offset the effect of a strong Canadian dollar against the euro and the pound sterling, and lower selling prices. The sharp growth in traveller volumes was driven by Canadian Affair's sales in the U.K. and Canada, partially offset by lower volumes in France. The European business units recorded an operating loss of $8.5 million (6.2%) during the quarter, versus an operating loss of $9.8 million (7.1%) for the corresponding period in 2009.
For the second quarter, reservations from Canada to sun destinations are similar to the record volumes of the previous year, and Transat's capacity is slightly higher. In France, reservations levels are similar to the previous year.
Selling prices are inferior to the previous year, and the decrease will be partially offset by lower fuel prices, hotel costs, other land portion expenses, and air seats costs. In addition, as in the first quarter, Transat will not be able to fully benefit from the strength of the Canadian dollar in the second quarter, as a result of its foreign exchange hedging positions. For the second quarter, Transat expects to record a loss.
For the summer 2010, it is too early to make a statement on pricing trends, but reservations are superior to the previous year.
