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Transat A.T. Inc. saw a significant decline into an adjusted operating loss in the second quarter as high aviation fuel prices and the suspension of flights to Cuba negatively impacted results.
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The airline on Thursday reported a loss or negative adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $20.7 million in the second quarter, a 121 per cent drop from an adjusted EBITDA of $98.4 million last year.
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“Following a solid first quarter that continued the positive momentum of fiscal 2025 … second-quarter results were disappointing as factors largely beyond our control severely impacted profitability,” said Transat chief executive Annick Guérard in the earnings release.
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Guérard said the suspension of flights to Cuba since earlier this year and the industry-wide fuel crisis caused by the Iran war have resulted in an estimated negative impact of $95 million on adjusted EBITDA. Approximately $70 million of this decline is attributable to higher fuel costs in March and April, she said.
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She added that the impact of rising aviation fuel prices persisted through May, bringing additional costs compared to the same period last year.
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Transat also reported a net loss of $79.0 million or $1.94 per share in the quarter, versus a net loss of $22.9 million or $0.58 per share last year.
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In a note to clients following the release, National Bank analyst Cameron Doerksen said that Transat warned in mid-May that the surge in jet fuel prices would be reflected in its fiscal Q2 results without much benefit from fuel surcharges or other pricing actions, given that the majority of bookings for the quarter were made prior to the spike in costs.
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The carrier implemented measures early in the conflict — including surcharges on new bookings and selective capacity adjustments across its network — to mitigate the effects of higher operating costs.
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“While surcharges on new bookings were initially well absorbed by consumers and effectively mitigated the impact of rising fuel costs, recent market volatility has weakened pricing power,” said CEO Guérard.
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More to come…
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