Airline Transat Posts Surprise Loss as Investor Pressure Mounts

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(Bloomberg) — Shares of Canadian vacation provider Transat AT Inc. fell after the company missed earnings forecasts, adding pressure on management just as a major shareholder demands changes.

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The Montreal-based company, which owns Air Transat, reported a loss of 42 Canadian cents per share on an adjusted diluted basis in the quarter ended Oct. 31, far from the 21 cents in profit expected by analysts in a Bloomberg survey. Revenue was higher than projected at C$772 million ($561 million), but down 2.2% year over year.

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Shares were down 1.6% as of 10 a.m. in Toronto. 

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Transat reduced its total net debt, which mainly comprises lease liabilities on aircraft, by C$420 million to C$1.6 billion during the fiscal year. The airline received emergency funding from Canada during the pandemic, and in June the government agreed to reduce and restructure the debt, partly with preferred shares that would give it a 19.9% voting stake if converted to common shares.

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The company said repayment was made more challenging because vacation travel took longer than expected to ramp up after the pandemic.

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On Dec. 1, Quebec billionaire Pierre Karl Peladeau’s family office, Financiere Outremont Inc., requested an investor meeting and proposed cutting the board to six directors, including three of its own nominees. The office, which owns 9.5% of Transat, said the company must also restructure its balance sheet and launch a strategic review. Peladeau has attempted to buy Transat several times since 2019.

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The airline called a shareholder meeting on March 10 to address, among other things, Peladeau’s proposed changes. The company said in a statement Monday that his proposal “would provide effective control of the board without a control premium being paid to other shareholders, and without a publicly disclosed strategic plan for Transat’s business.”

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Transat reached a tentative agreement earlier this month with its more than 700 pilots, preventing a strike a few hours before it could have started. The deal includes salary increases of 50% over five years for current pilots, according to a person with knowledge of the matter.

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“Targeted network expansion across destinations in Africa, Europe and South America, combined with fewer grounded aircraft and network optimization, should result in increased capacity for 2026,” Transat Chief Executive Officer Annick Guerard said in a statement Thursday, adding that “revamped cost and revenue management practices” should deliver results next fiscal year.

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Transat also said in the statement that revenues to date for winter 2026 are 1.4% higher than the same time last year, while load factors are down by 0.8 percentage points.

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