TRZ Transat A T Inc

Further Progress on Elevation Program

First-quarter highlights:

• Revenues of $829.5 million, up 5.6% from $785.5 million last year
• Adjusted EBITDA¹ of $20.0 million, compared to negative Adjusted EBITDA¹ of $3.3 million last year
• Net loss of $122.5 million ($3.10 per share), compared to a net loss of $61.0 million ($1.58 per share) last year
• Free cash flow¹ of $129.1 million, compared to $39.1 million last year
• Customer deposits of $1,034.3 million, up 0.7% from January 31, 2024
• Extension of the $312.0 million LEEFF subordinated financing maturity from April 2026 to April 2027, and the $50.0 million revolving term credit and $41.4 million LEEFF secured financing maturities from February 2026 to November 2026
• Elevation optimization Program initiatives implemented to date are expected to deliver an annualized adjusted EBITDA¹ run-rate of $37.0 million

MONTRÉAL, March 13, 2025 /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 first quarter ended January 31, 2025.

"The first quarter of fiscal 2025 ended with a better performance compared to the same period last year despite economic uncertainty. Higher traffic and a disciplined capacity increase of 0.5% resulted in a yield improvement of 1.7% year-over-year. Transat's financial results also progressed with revenue growing 5.6% from the first quarter last year and adjusted EBITDA totaling $20.0 million driven by reduced fuel costs and a tight control on operating expenses," said Annick Guérard, President and Chief Executive Officer of Transat.

"Our Elevation Program, a comprehensive optimization plan aimed at maximizing long-term profitable growth, continues to advance as anticipated. Once fully deployed, the initiatives implemented to date are expected to generate an annualized adjusted EBITDA run-rate of $37 million. The program remains on track to reach $100 million by mid-2026. The initial phase has optimized our organizational cost structure, with efficiency gains and cost savings generated through the implementation of new technology tools and AI. In the upcoming months, we will move forward revenue management initiatives and various productivity measures to further bolster profitable growth," added Ms. Guérard.

"The refinancing of our debt of more than $800 million and the strengthening of our balance sheet remain our top priorities. Assisted by a special advisory committee of the Board of Directors composed of independent directors, we continue to explore all alternatives that will allow us to implement an optimal capital structure over the long term. Although they have not yet led to a permanent solution, discussions with our main lender, the Federal Government, initiated more than 18 months ago, and other stakeholders are still ongoing. Given the complexity of these discussions, and to provide greater flexibility while they continue, we recently extended the maturity dates of our subordinated and secured LEEFF financing agreements with the federal government to April 2027 and November 2026, respectively. Additionally, we renegotiated our revolving credit facility, extending its maturity to November 2026," concluded Ms. Guérard.

First-quarter results

For the three-month period ended January 31, 2025, revenues reached $829.5 million, up 5.6% from $785.5 million in the corresponding period last year. The increase in revenues is attributable to a 1.7% increase in airline unit revenues (yield) and a 1.0% increase in traffic expressed in revenue-passenger-miles (RPM) compared with 2024. Reflecting disciplined management, the Corporation's capacity was up 0.5% from the corresponding period last year.

Adjusted EBITDA¹ stood at $20.0 million, compared with negative adjusted EBITDA¹ of $3.3 million a year ago. This increase reflects revenue growth, a 15% decrease in fuel prices compared with the corresponding period of 2024, as well as lower aircraft rent expenses. These factors were partially offset by slightly higher operating expenses associated with capacity expansion.

Cash flow and financial position

Cash flow related to operating activities amounted to $168.6 million during the first quarter of 2025, compared with $110.7 million for the same period last year, mainly due to more favourable changes in working capital balances this year versus last. After accounting for investing activities and repayment of lease liabilities, free cash flow¹ reached $129.1 million during the quarter, compared with $39.1 million for the corresponding period last year.

As at January 31, 2025, cash and cash equivalents amounted to $389.4 million, compared to $453.3 million at the same date in 2024 and $260.3 million as at October 31, 2024. Cash and cash equivalents in trust or otherwise reserved mainly resulting from travel package bookings totalled $604.2 million as at January 31, 2025, compared with $612.2 million as at January 31, 2024 and $453.8 million as at October 31, 2024.

During the quarter ended January 31, 2025, the Corporation received net proceeds of $30.6 million from the final of the four previously announced spare engine sale-leaseback transactions, completed in early November.

Reflecting the proceeds mentioned above and the change in cash, long-term debt and deferred government grant, net of cash, amounted to $424.0 million as at January 31, 2025, down from $542.7 million as at October 31, 2024.

Key indicators

To date, for the second quarter of 2025, load factors are 2 percentage points lower than on the same date in fiscal 2024, while airline unit revenues, expressed in revenue per passenger mile (or "yield"), are 2% higher than in the corresponding period last year. While it is too early to have a complete picture for the summer, the winter trends seem to be continuing into summer 2025.

For fiscal year 2025, the Corporation expects to increase available capacity by 2%, measured in available seat-miles, compared to 2024, with potential adjustments depending on the evolving situation with Pratt & Whitney GTF² engine issues.

Conference call

The first quarter 2025 conference call will take place on Thursday, March 13, 10:00 a.m. To join the conference call without operator assistance, you may register by entering your phone number here to receive an instant automated call back.

You can also dial direct to be entered into the call by an operator:
Montreal: 514 400-3794
North America (toll-free): 1 800 990-4777
Name of conference: Transat
The conference will also be accessible live via webcast: click here to register. 

An audio replay will be available until March 20, 2025, by dialing 1 888 660-6345 (toll-free in North America), access code 27111 followed by the pound key (#). The webcast will remain available for 90 days following the call.

Second-quarter 2025 results will be announced on June 12, 2025.

(1) Non-IFRS financial measures

Transat prepares its financial statements in accordance with International Financial Reporting Standards ["IFRS"]. We will occasionally refer to non-IFRS financial measures in the news release. These non-IFRS financial measures do not have any meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. They are intended to provide additional information and should not be considered as a substitute for measures of performance prepared in accordance with IFRS. All dollar figures are in Canadian dollars unless otherwise indicated.

The following are non-IFRS financial measures used by management as indicators to evaluate ongoing and recurring operational performance.

Adjusted operating income (loss) or adjusted EBITDA: Operating income (loss) before depreciation, amortization and asset impairment expense, reversal of impairment of the investment in a joint venture, the effect of changes in discount rates used for accretion of the provision for return conditions, restructuring and transaction costs and other significant unusual items, and including premiums related to derivatives that matured during the period. The Corporation uses this measure to assess the operational performance of its activities before the aforementioned items to ensure better comparability of financial results.

Adjusted pre-tax income (loss) or adjusted EBT: Income (loss) before income tax expense before change in fair value of derivatives, revaluation of liability related to warrants, gain (loss) on long-term debt modification, gain (loss) on business disposals, gain on disposal of investment, gain (loss) on asset disposals, gain on sale and leaseback of assets, the effect of  changes in discount rates used for accretion of the provision for return conditions, restructuring and transaction costs, write-off of assets, reversal of impairment of the investment in a joint venture, foreign exchange gain (loss) and other significant unusual items, and including premiums related to derivatives that matured during the period. The Corporation uses this measure to assess the financial performance of its activities before the aforementioned items to ensure better comparability of financial results.

Adjusted net income (loss): Net income (loss) before change in fair value of derivatives, revaluation of liability related to warrants, gain (loss) on long-term debt modification, gain (loss) on business disposals, gain on disposal of investment, gain (loss) on asset disposals, gain on sale and leaseback of assets, the effect of changes in discount rates used for accretion of the provision for return conditions, restructuring and transaction costs, write-off of assets, reversal of impairment of the investment in a joint venture, foreign exchange gain (loss), reduction in the carrying amount of deferred tax assets and other significant unusual items, and including premiums related to derivatives that matured during the period, net of related taxes. The Corporation uses this measure to assess the financial performance of its activities before the aforementioned items to ensure better comparability of financial results. Adjusted net income (loss) is also used in calculating the variable compensation of employees and senior executives.

Adjusted net earnings (loss) per share: Adjusted net income (loss) divided by the adjusted weighted average number of outstanding shares used in computing diluted earnings (loss) per share.

Free cash flow: Cash flows related to operating activities less cash flows related to investing activities and repayment of lease liabilities. The Corporation uses this measure to assess the cash that's available to be distributed in a discretionary way such as repayment of long-term debt or deferred government grant or distribution of dividend to shareholders.

Total debt: Long-term debt plus lease liabilities, deferred government grant and liability related to warrants, net of deferred financing costs related to the subordinated debt - LEEFF. Management uses total debt to assess the Corporation's debt level, future cash needs and financial leverage ratio. Management believes this measure is useful in assessing the Corporation's capacity to meet its current and future financial obligations.

Total net debt:Total debt (described above) less cash and cash equivalents. Total net debt is used to assess the cash position relative to the Corporation's debt level. Management believes this measure is useful in assessing the Corporation's capacity to meet its current and future financial obligations.

Additional Information

The results were affected by non-operating items, as summarized in the following table: 

Highlights and non-IFRS financial measures

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. Based in Montreal, Transat has 5,000 employees with a common purpose to bring people closer together. (TSX: TRZ) www.transat.com

Caution regarding forward-looking statements

This news release contains certain forward-looking statements with respect to the Corporation, including those regarding its results, its financial position and its outlook for the future. These forward-looking statements are identified by the use of terms and phrases such as "anticipate" "believe" "could" "estimate" "expect" "intend" "may" "plan" "potential" "predict" "project" "will" "would", the negative of these terms and similar terminology, including references to assumptions. All such statements are made pursuant to applicable Canadian securities legislation. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements.

The forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, economic conditions, changes in demand due to the seasonal nature of the business, extreme weather conditions, climatic or geological disasters, war, political instability, measures taken, planned or contemplated by governments regarding the imposition of tariffs on exports and imports, real or perceived terrorism, outbreaks of epidemics or disease, consumer preferences and consumer habits, consumers' perceptions of the safety of destination services and aviation safety, demographic trends, disruptions to the air traffic control system, the cost of protective, safety and environmental measures, competition, maintain and grow its reputation and brand, the availability of funding in the future, the Corporation's ability to repay its debt from internally generated funds or otherwise, the Corporation's ability to adequately mitigate the Pratt & Whitney GTF engine issues, fluctuations in fuel prices and exchange rates and interest rates, the Corporation's dependence on key suppliers, the availability and fluctuation of costs related to our aircraft, information technology and telecommunications, cybersecurity risks, changes in legislation, regulatory developments or procedures, pending litigation and third-party lawsuits, the ability to reduce operating costs through the Elevation program initiatives, among other things, the Corporation's ability to attract and retain skilled resources, labour relations, collective bargaining and labour disputes, pension issues, maintaining insurance coverage at favourable levels and conditions and at an acceptable cost, and other risks detailed in the Risks and Uncertainties section of the MD&A included in our 2024 Annual Report.

The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Corporation's forward-looking statements. The reader is also cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements.

The forward-looking statements in this news release are based on a number of assumptions relating to economic and market conditions as well as the Corporation's operations, financial position and transactions. Examples of such forward-looking statements include, but are not limited to, statements concerning:

• The outlook whereby the Corporation will be able to meet its obligations with cash on hand, cash flows from operations drawdowns under existing credit facilities or otherwise.
  
  
• The outlook whereby for fiscal year 2025,  the Corporation expects to increase available capacity by 2%, measured in available seat-miles, compared to 2024, with potential adjustments depending on the evolving situation with Pratt & Whitney GTF² engine issues.
  
  
• The outlook whereby the initiatives implemented to date are expected to generate an annualized adjusted EBITDA run-rate of $37 million. The program remains on track to reach $100 million by mid-2026. 

In making these statements, the Corporation assumes, among other things, that the standards and measures for the health and safety of personnel and travellers imposed by government and airport authorities will be consistent with those currently in effect, that workers will continue to be available to the Corporation, its suppliers and the companies providing passenger services at the airports, that credit facilities and other terms of credit extended by its business partners will continue to be made available as in the past, that management will continue to manage changes in cash flows to fund working capital requirements for the full fiscal year and that fuel prices, exchange rates, selling prices and hotel and other costs remain stable, the Corporation will be able to adequately mitigate the Pratt & Whitney GTF engine issues and that the initiatives identified to improve adjusted operating income (adjusted EBITDA) can be implemented as planned, and will result in cost reductions and revenue increases of the order anticipated by mid-2026. If these assumptions prove incorrect, actual results and developments may differ materially from those contemplated by the forward-looking statements contained in this press release.

The Corporation considers that the assumptions on which these forward-looking statements are based are reasonable.

These statements reflect current expectations regarding future events and operating performance, speak only as of the date this news release is issued, and represent the Corporation's expectations as of that date. For additional information with respect to these and other factors, see the MD&A for the quarter ended January 31, 2025 filed with the Canadian securities commissions and available on SEDAR at www.sedarplus.ca. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable securities legislation.

(www.transat.com)

SOURCE Transat A.T. Inc.