Even if household wallets are under pressure, the air carrier Transat wants to increase its offer by 19% next year while the threat of a flight attendant strike now seems to be over.
The airline unveiled its forecasts for the 2024 financial year on Thursday, with the publication of quarterly results better than expectations. At the same time, the Montreal company announced the conclusion of an agreement in principle with its flight attendants.
“Reservations are still strong in anticipation of winter,” assures the president and CEO, Annick Guérard, during a conference call with financial analysts. Clearly, consumers continue to make travel a priority, despite inflation. »
For fiscal 2024, which ends October 31, 2024, management plans to increase its capacity by 19%. It also believes it can generate operating margins higher than its historical average.
Ms. Guérard acknowledged that ticket prices were increasing at a more moderate pace. “The price increase has slowed down, but they are still higher than last year. »
“This is not a surprise to us or to consumers due to economic instability,” she adds. […] We are not concerned about what is happening. We see it as market normalization. »
Agreement with flight attendants
The threat of a strike by Transat’s 2,100 flight attendants in January seems to have been ruled out after the announcement of an agreement in principle on Thursday. The flight attendants had a strike mandate, with 99.8% support.
The Canadian Union of Public Employees (CUPE), which represents the company’s flight attendants, said it was satisfied with the agreement in a press release. “We are confident that the agreement will meet the expectations of our members,” declares Dominic Levasseur, president of the Air Transat component of the union.
Details of the agreement will be presented to members in the coming days. The result of the vote is expected at the beginning of January.
Questioned on the subject by a financial analyst, Ms. Guérard responded that the conditions of the agreement would not have any effect on the company’s forecasts.
Transat makes a profit and repays debts
Transat revealed results that exceeded analysts’ expectations. The airline posted an operating profit in the fourth quarter ended October 31 and managed to devote $53 million to repay its debt.
The company posted a profit of $3.2 million compared to a net loss of $126.2 million in the same period last year. Adjusted diluted earnings per share were 41 cents. Revenues, for their part, reached $764.5 million, an increase of $191.3 million.
Before the results were published, analysts were instead expecting a loss per share of 39 cents and revenues of $753.8 million, according to financial data firm Refinitiv.
Ms. Guérard stressed that revenues are 10% higher than 2019 thresholds, before the pandemic, even if capacity is still 7% lower.
Analyst Tim James of TD Securities believes the results will be interpreted favorably by investors. He highlights margin forecasts for 2023 and debt repayment. “This should give greater confidence to investors to know that Transat is on the path to reducing its debt and having the capacity to generate profits in the long term. »
His colleague at National Bank Financial, Cameron Doerksen, is more cautious. He believes that competition is intensifying for sun destinations this winter and he questions the company’s longer-term debt reduction plan. “The potential for debt refinancing activity which could dilute shareholders leads us to remain cautious. »
Transat shares fell 12 cents, or 3.2%, to $3.61 on the Toronto Stock Exchange late in the morning.