Review of its activities | Transat cannot rule out layoffs

A few weeks after lifting the veil on a plan to straighten out its finances and reduce its expenses, Transat AT warned Quebec that this could result in layoffs. The leisure travel specialist insists that this is a “preventative measure”.

The parent company of Air Transat sent a notice to the Ministry of Employment and Social Solidarity indicating that 80 people could be affected by the 1^er november. It does not specify the sector of the company that would be affected.

After scrutinizing its activities over the summer with the help of an external firm, the blue star company presented, on September 12, a plan aimed at improving its profits. 100 million over the next 18 months. This coincided with the unveiling of its third quarter results.

The “Elevation program” is structured around three main themes: technological improvements and the use of artificial intelligence, reviewing expenses with suppliers and network optimization. It is in this context that the notice was sent to the ministry, says the senior director of communications and public affairs at Transat, Andréan Gagné.

“The process includes, among other things, the review of our organizational structure,” she wrote in an email. It is therefore not excluded that changes will result from this, but this opinion was intended to comply with the regulations of the Ministry of Employment [les délais requis] in the event of layoffs. »

When presenting its plan last month, senior management of the Quebec company indicated that it would offer more details on the upcoming changes by the end of the year. It was not possible to know whether staff reductions were planned.

Tumultuous period

Profitability indicators are red at Transat, which is facing turbulence on several fronts.

In addition to pressures on ticket prices due to excess capacity in the airline industry, the airline and tour operator is seeing several of its Airbus A321LRs – the single-aisle aircraft at the heart of its strategy – grounded due to premature wear of engines built by Pratt & Whitney.

The engine manufacturer’s glitches are affecting several airlines around the world. The situation is therefore not unique to Transat.

All these elements nevertheless weigh on the financial performance of the company. After three quarters, Transat notably displays an operating loss of 77 million, compared to an operating profit of 45 million during the same period in 2023.

“We believe that Transat should generate more than 100 million in improvements if it wants to be able to generate a profit margin greater than 10%. [ce qui demeurerait inférieur par rapport aux compagnies aériennes comparables] », Estimated analyst Cameron Doerksen, of National Bank Financial, when commenting on the third quarter results of the leisure travel specialist.

Investors are still waiting to know how the company will be able to refinance its heavy debt, which reached 1.9 billion as of July 31. Transat must repay 740 million to the federal government, which granted it significant loans at the heart of the COVID-19 pandemic, while its planes were grounded.

On the Toronto Stock Exchange on Wednesday afternoon, Transat shares fell 1.16%, or two cents, to trade at $1.70. Since the start of the year, the stock has fallen 55%.