Air Transat First Quarter Revenue Down 94%; Airline Hopes to Resume Operations in June

Air Transat First Quarter Revenue Down 94%; Airline Hopes to Resume Operations in June

March 11, 2021 ctn_admin

Air Transat is reporting a revenue drop of 93.9% for its 2021 first quarter operations.

Transat had revenues of $650.9 million in the first quarter of 2020. But that fell to just $41.9 million in the first quarter of this year, which ended Jan. 31, 2021.

As of January 31, 2021, cash and cash equivalents totalled $302.8 million, compared with $682.2 million as of January 31, 2020.

“Since mid-March of 2020, restrictions on international travel and government-imposed quarantine measures have made travel sales very difficult.,” Transat noted in a statement. “Demand remained very weak due to the COVID-19 pandemic with the Corporation’s capacity representing a fraction of the 2020 first quarter level.”

Transat officials said they don’t expect business to return to pre-pandemic levels before 2023, but that they hope to resume operations around mid-June.

“These results are for a quarter where it was once again impossible to operate our business in a sustainable manner,” said Jean-Marc Eustache, President and Chief Executive Officer of Transat. “With the arrival of vaccines, we’re now preparing ourselves for a resumption of operations in the summer and particularly next winter. Our priority for the current quarter, while continuing to work on obtaining EU approval, is to secure financing, finalize our recovery plan and review all our options in the event the transaction with Air Canada will not take place,” he said.

Air Canada has offered to take over Transat, a deal that was approved by the Canadian government. But the European Union says it has questions about how a merger would affect competition on flights between Canada and Europe, and Air Canada recently decided not to extend its agreement. The deal could still go ahead, but either side could walk away at any moment.

“The global air transportation and tourism industry has faced a collapse in traffic and demand,” Eustache said. “Travel restrictions, uncertainty about when borders will reopen, both in Canada and at certain destinations the Corporation flies to, the imposition of quarantine measures and testing requirements both in Canada and other countries, as well as concerns related to the pandemic and its economic impacts are creating significant demand uncertainty, at least for fiscal 2021.

“For the first half of winter 2021, the Corporation rolled out a reduced winter program. On January 29, 2021, following the Canadian government’s request to not travel to Mexico and the Caribbean, and the introduction of new quarantine measures and COVID-19 testing requirements, the Corporation announced the complete suspension of all its regular flights and the repatriation of its clients to Canada. The Corporation currently expects to resume its operations during the high summer season, that is, around mid-June.

“The Corporation cannot predict all the impacts of COVID-19 on its operations and results, or precisely when the situation will improve. The Corporation has implemented a series of operational, commercial and financial measures, including cost reduction, aimed at preserving its cash. The Corporation is monitoring the situation daily to adjust these measures as it evolves.

“However, until the Corporation is able to resume operations at a sufficient level, the COVID-19 pandemic will have significant negative impacts on its revenues, cash flows from operations and operating results. While the availability of a vaccine makes it possible to hope for the resumption of operations at a certain level during 2021, the Corporation does not expect such level to reach the pre-pandemic level before 2023, in the best case scenario.”