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Transat loss more than doubles as it works to complete Air Canada deal
MONTREAL -- Transat AT Inc.'s third-quarter net loss more than doubled from the same time last year as the tour operator worked to complete its takeover by Air Canada.
The Montreal-based company lost $11.0 million in the quarter ended July 31 versus its $5.0-million net loss the year prior.
The push to close Transat's sale to Air Canada heaped on an extra $14 million in costs in its third quarter, including $6 million in professional fees and $7.7 million in stock-based compensation for executives.
Offsetting part of the expense were more travellers opting to book last-minute flights -- typically pricier than long-term bookings -- in a "surprising" trend that boosted revenue per passenger, chief operating officer Annick Guerard said.
"I think that was an important difference that we saw, which allowed us, of course, to increase load factors, but as well to increase pricing," Guerard said on a conference call with investors Thursday.
"I don't know if it's going to continue like this in Europe for the months to come, but for September this is what we're still seeing."
Transatlantic passenger traffic -- key in the late-spring and summer months when sun-destination trips drop off -- rose more than four per cent year over year last quarter to help boost revenue to $698.9 million, up from $664.6 million a year earlier.
Guerard said the ongoing grounding of the Boeing 737 Max, which has forced airlines such as Air Canada and WestJet Airlines Ltd. to fall back on less fuel-efficient planes and spend more on aircraft leases, has not worked to the advantage of Transat, which has no Max jets in its fleet.
"They have been able to look for alternate solutions to replace that capacity in most of the markets where we compete," Guerard said of rival carriers.
The $720-million Air Canada deal, approved last month by 94.7 per cent of Transat shareholders, faces intense scrutiny from regulators eyeing the impact of an acquisition that will see the country's largest carrier control at least 60 per cent of transatlantic air travel from Canada.
Transport Canada has said it will conclude its assessment of the transaction by May 2, 2020.
Transat, which saw a Quebec court sign off on the agreement in August, expects the $18-per-share purchase to close by the second quarter of the 2020 calendar year if the required regulatory approvals are obtained and conditions are met.
"We're very satisfied with the strong support received from our shareholders and the final approval of the arrangement plan," chief executive Jean-Marc Eustache said in a statement.