Inflation does not spoil the desire to travel this winter, according to Transat

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Inflation does not spoil the desire to travel this winter, according to Transat

An Air Transat plane in the sky

For the moment, inflation and economic uncertainty do not seem to have called into question travellers' plans for the winter season, according to reservations already made with Transat.

The Montreal airline says that reservations for a trip this winter are at a level similar to that observed on the same date for winter 2019, i.e. before the pandemic. For the season, revenue per passenger mile is approximately 15% higher than winter 2019.

Strong demand is contributing to higher prices, helping to deal with rising costs, President and CEO Annick Guérard said during a conference call to discuss fourth quarter results. completed October 31. Consumers are willing to pay more to travel.

The leader believes that people maintain their desire to travel and that travel spending is a priority for them, even in the face of an economic slowdown and inflation.

For the next fiscal year, which ends October 31, 2023, the company expects to deploy capacity equivalent to 90% of that of 2019. This scenario is based on projections from the International Air Transport Association (IATA).

< p class="e-p">Customer deposits, which reached $602.5 million, exceeded the pre-pandemic threshold by 7% on this date. Tim James, of TD Securities, sees this as confirmation that demand for tourist travel is on the upswing.

Transat unveiled Thursday a smaller loss than expected and revenue above expectations in the fourth quarter of its fiscal year 2022.

The company recorded a net loss of $126.2 million compared to $121.3 million in the same period a year earlier. Excluding non-operating items, Transat posted a diluted adjusted loss of $2 per share.

Revenues, for their part, amounted to 573 $.1 million, compared to $62.8 million for the same period last year. Capacity offered was 91% of 2019.

Prior to the earnings release, analysts were expecting a loss per share of $2.40 and revenue of $555.33 million, according to data firm Refinitiv.

However, it will be necessary to wait until the 2024 financial year for the company to no longer be forced to dip into its reserves to finance its activities, reiterated the chief financial officer, Patrick Bui. The year 2023 is always a year of transition. […] For the year 2023, our objective is to be as close as possible to a balanced budget.

While the recovery bodes well, investors should remain vigilant given the company's high debt load, said Kevin Chiang of CIBC World Markets. At the end of October, net debt was $1.6 billion.

“Although Transat's results and forecasts were above our expectations, the company's high indebtedness remains a source of concern.

—Kevin Chiang, CIBC World Markets

Mr. Bui said he was more than aware of the high level of debt of the company, whose activities were under great pressure at the height of the pandemic. We continue to plan our deleveraging phase, which will be possible through a combination of improved profitability, cash generation, improved working capital and refinancing.

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Transat's stock gained 10 cents, or 3.19%, to $3.23 on the Toronto Stock Exchange at the end of the morning.

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