Transat bets on Caribbean, Europe as travellers spurn U.S.

People look on as an Air Transat plane takes off at Trudeau in Montreal, Sunday, June 11, 2023. THE CANADIAN PRESS/Graham Hughes

MONTREAL — Transat A.T. Inc. hopes to turn Canadians’ aversion to U.S. travel into a boon as it bets on new routes to the Caribbean, Mexico and Europe rather than destinations in the land of Donald Trump.

Chief executive Annick Guérard made the case Thursday for a winter schedule that includes fresh flights between Toronto and Guyana, Fredericton and Cancun, Mexico, and Quebec City and Martinique.

“We are taking advantage of the shift in demand from the U.S. to the Caribbean and Mexican markets by offering new exclusive routes,” Guérard told analysts on a conference call to discuss the company’s latest results.

As Canadians turn away from their southern neighbour amid a trade war and “51st state” threats from the U.S. president, they’ve looked also to Europe for sun-splashed getaways.

Air Transat will extend routes to the port cities of Bordeaux, France, and Valencia, Spain, into the winter, the CEO said, while steering clear of the U.S. except for a handful of routes.

The number of Air Transat flights slated to take off from Canada to the U.S. this December is down 13 per cent year-over-year, according to aviation data firm Cirium. This month, the figure is down 36 per cent compared with June 2024.

Whether Air Transat’s new routes will turn a profit remains to be seen.

In its latest quarter, Transat, which owns the airline, reported losses of $22.9 million, though the hit marked a major improvement from its $54.4-million loss in the same period a year earlier.

Several hurdles now confront the carrier, including competition, frugal customers and a diminished fleet.

“We’ve seen a little bit of shift as well from some players on the European destinations, creating downward pressure on pricing for this upcoming summer,” Guérard said, noting that Air Transat is not the only airline to ramp up transatlantic trips.

“Looking at the past weeks, we can see that bookings have been soft in Europe. With the uncertainty in the market — the economic environment — this is a little bit what we were expecting.”

Some of that downturn owes to more last-minute booking trends.

“People tend to wait and see what’s going to happen — if people are going to keep their jobs, how the economy is going to move forward.”

Transat also continues to deal with fallout from the recall of turbofans for inspection and repair by enginemaker Pratt & Whitney. Air Transat, one of many airlines hit by the recall, has grounded at least a half-dozen planes as a result.

Guérard said she expects six or seven jets — up to 16 per cent of the 43-plane fleet — to remain out of commission through the year.

“We don’t think that this situation will be settled before 2027,” chief financial officer Jean-François Pruneau said.

On the plus side, Pratt & Whitney paid Transat $20 million in compensation in its second quarter.

Despite notching a loss, the company boosted year-over-year revenues by six per cent to $1.03 billion in the three months ended April 30.

Guérard said higher revenue per seat, lower fuel expenses, tight cost control and the compensation from Pratt and Whitney helped it come closer to breaking even.

The Montreal-based company also increased adjusted net earnings to 12 cents per share in the quarter versus a loss of $1.21 per share a year earlier. The outcome soared above analysts’ expectations of a loss of 92 cents per share, according to financial markets firm LSEG Data & Analytics.

Last week, Transat announced a deal to reduce its total debt with a federal Crown corporation by more than half to $334 million. Most of that reduction is due to about $380 million of debt forgiven under the agreement in principle.

This report by The Canadian Press was first published June 12, 2025.

By Christopher Reynolds