While waiting to find a way to refinance its heavy debt, Transat is buying itself a little time by pushing back a repayment deadline. This did not prevent the leisure travel specialist from widening its losses in the second quarter.
The parent company of Air Transat had already warned investors that pressure on package prices, union unrest and planes grounded due to engine problems would clip its wings. If its revenues from the blue star company climbed by 12% during the months of February, March and April to reach 973 million, the picture is different in terms of profitability indicators.
The net loss was $54.4 million, or $1.40 per share, compared to a deficit of $29 million, or $76 million, in the second quarter last year. Adjusted operating profit contracted 32%.
Excluding non-recurring items, the Montreal-based company posted an adjusted loss of $39 million, or $1.02 per share, in the second quarter ended April 30, compared with $8 million, or 21 cents per share, a year ago.
Analysts surveyed by financial data firm Refinitiv had expected an adjusted loss per share of 81 cents.
“In addition to some weakness in unit air revenues on its main transatlantic routes, which represent the majority of flights during the summer, Transat will continue to face cost headwinds and operational issues due to its grounded aircraft,” said analyst Cameron Doerksen of National Bank Financial in a note sent to clients.
During the second quarter, Transat was able to postpone the date on which it must repay a $91 million debt until February 2026. The company also repaid another $36 million loan. As of April 30, the airline and tour operator’s net debt nevertheless stood at $1.9 billion.