Revenues and Profitability Increase in Fourth Quarter and Promising Start for the Elevation Program
Fourth-quarter highlights:
- Revenues of $788.8 million, up 3.2% from $764.5 million last year
- Adjusted EBITDA of $123.3 million, compared to $89.0 million last year
- Net income of $41.2 million ($1.05 per share), compared to $3.2 million ($0.08 per share) last year
- Negative free cash flow of $102.2 million, compared to $83.8 million last year
- Customer deposits of $781.2 million, up 3.6% from October 31, 2023
- Financial compensation agreement of $33.6 million with the equipment manufacturer of GTF engines to make up for the cost of aircraft grounded in 2023 and 2024
- Sale-leaseback transactions for three Pratt & Whitney GTF engines valued at $87.5 million; proceeds will be used to finance operations
Fiscal year highlights:
- Revenues of $3,283.8 million, up 7.7% from $3,048.4 million for fiscal 2023
- Adjusted EBITDA of $193.6 million, compared to $263.3 million last year
- Net loss of $114.0 million ($2.94 per share), compared to $25.3 million ($0.66 per share) in 2023
- Negative free cash flow of $122.1 million, compared to positive cash flow of $162.4 million during fiscal 2023
MONTRÉAL, Dec. 12, 2024 /CNW/ – Transat A.T. Inc., a leisure travel reference worldwide, operating as an air carrier under the Air Transat brand, announced today its results for the fourth quarter ended October 31, 2024.
“Transat closed fiscal 2024 on a positive note with adjusted EBITDA of $123.3 million in the fourth quarter mainly driven by higher traffic, lower fuel costs, and financial compensation from Pratt & Whitney related to grounded aircraft over the past two years. In addition, our results point to a more disciplined competitive environment as reflected by slightly better yields on a sequential basis. Looking ahead to fiscal 2025, we expect the industry to continue to favour a measured approach while maintaining relatively stable capacity. The decline in inflation and interest rates also suggests an increase in consumers’ discretionary spending. This situation should provide a suitable backdrop to deliver further yield improvements. However, we remain in a period of high economic uncertainty, leading us to exercise caution,” said Annick Guérard, President and Chief Executive Officer of Transat.
“Our Elevation program, a comprehensive optimization plan aimed at maximizing long-term profitable growth, is progressing according to plan. At this stage, the initiatives implemented will contribute $25 million toward our goal of an annualized adjusted EBITDA improvement of $100 million. Initial significant impacts on our results are expected beginning in the second half of fiscal 2025,” added Ms. Guérard.
“We improved our liquidity position through the sale and leaseback of four GTF engines from Pratt & Whitney, including three agreements that closed before the end of fiscal 2024. These transactions generated approximately $118 million in cash to strengthen our balance sheet. Finally, discussions with stakeholders and the review of all solutions to improve our capital structure continue and remain a priority for the organization,” said Jean-François Pruneau, Chief Financial Officer of Transat.
Fourth-quarter results
For the quarter ended October 31, 2024, revenues reached $788.8 million, up 3.2% from $764.5 million in the corresponding period last year. The increase in revenues is attributable to a 2.7% increase in traffic expressed in revenue-passenger-miles compared with 2023, as well as the recognition in revenues of a financial compensation of $33.6 million following an agreement entered into with the original equipment manufacturer of the GTF engines. The Corporation’s capacity was up 4.0% from the corresponding period last year. These factors were partially offset by an 8.5% decrease in airline unit revenues compared with the same period in 2023, though slightly higher compared with the third quarter of 2024.
Adjusted EBITDA stood at $123.3 million, compared with $89.0 million a year ago. This increase reflects revenue growth and a 22.2% decrease in fuel prices compared with the corresponding period of 2023, partially offset by higher operating expenses associated with capacity expansion.
Fiscal year results
For the year ended October 31, 2024, revenues reached $3,283.8 million, up 7.7% from $3,048.4 million for the previous fiscal year. Capacity offered across the entire network increased by 10.1% compared with 2023, while traffic was 7.6% higher than in 2023. In addition to the factors described for the quarter, the change in revenues was affected by economic uncertainty, overcapacity across the industry, the Pratt & Whitney GTF engines issues affecting revenue management, as well as strike threats during the winter season.
For fiscal 2024, adjusted EBITDA stood at $193.6 million, compared with $263.3 million for fiscal 2023. The decline was mainly attributable to operating expenses related to capacity expansion, expenses incurred due to issues with the GTF engines, partially offset by revenue growth.
Cash flow and financial position
Cash flow used in operating activities amounted to $108.1 million during the fourth quarter of fiscal 2024, compared with $56.4 million for the same quarter last year, mainly due to unfavourable changes in working capital balances. After accounting for investing activities and repayment of lease liabilities, negative free cash flow reached $102.2 million during the quarter, compared with negative cash flow of $83.8 million for the corresponding period last year.
For fiscal 2024, cash flows generated from operating activities amounted to $94.7 million, compared with $321.8 million for fiscal 2023. The decrease is mainly attributable to unfavourable changes in working capital balances and a decrease in operating income. Negative free cash flow reached $122.1 million in fiscal 2024, compared with positive free cash flow of $162.4 million in 2023.
As at October 31, 2024, cash and cash equivalents amounted to $260.3 million, compared to $435.6 million as at October 31, 2023. Cash and cash equivalents in trust or otherwise reserved mainly resulting from travel package bookings increased year-over-year, reaching $453.8 million as at October 31, 2024, compared with $421.0 million as at October 31, 2023.
During the fiscal year ended October 31, 2024, the Corporation repaid its subordinated credit facility for its operations. The repayment totalled $46.0 million. The Corporation also reduced its LEEFF secured facility by repaying an amount of $11.0 million. Reflecting these repayments and the change in cash, long-term debt and deferred government grant, net of cash, amounted to $542.7 million as at October 31, 2024, up from $380.1 million as at October 31, 2023.
About Transat
Founded in Montreal 37 years ago, Transat has achieved worldwide recognition as a provider of leisure travel particularly as an airline under the Air Transat brand. Voted World’s Best Leisure Airline by passengers at the 2024 Skytrax World Airline Awards, it flies to international destinations. By renewing its fleet with the most energy-efficient aircraft in their category, it is committed to a healthier environment, knowing that this is essential to its operations and the destinations it serves. (TSX: TRZ) www.transat.com