Ms. Annick Guerard reports

TRANSAT A.T. INC. -- RESULTS FOR SECOND QUARTER OF 2023

Transat A.T. Inc. has released its results for the second quarter ended April 30, 2023.

Annick Guerard, president and chief executive officer of Transat, commented: "For the second quarter of 2023, Transat reported a solid performance, with an adjusted operating income of $56.1-million, nearly 40 per cent higher than in the same quarter of 2019. At midyear, and based on current booking trends, we are raising the target for the adjusted operating income margin from the initially set range of 4 per cent to 6 per cent to a target of 5.5 per cent to 7 per cent for the fiscal year.

"Several factors contributed to the corporation's favourable results. Firstly, the demand for leisure travel, which is Transat's primary niche, is holding steady. This high volume of activity is driving prices up, resulting in 15-per-cent increases at the beginning of the quarter, and almost 24 per cent at the end of the quarter, compared with the same period in 2019. In addition, Transat actively continued its fleet optimization plan, deploying in winter 2023 a capacity comparable to winter 2019 with 20 fewer aircraft in service. Better price management, thanks to improved practices and new tools, has also helped to maximize revenues and seize market opportunities. Transat also relied on continuous improvement in its operational efficiency throughout the quarter.

"With more than 60 per cent of our capacity sold, the stage is set for a dynamic summer. Transat will deploy for the summer a capacity representing 89 per cent of its 2019 level, with Europe comprising 80 per cent of the activity, leveraging the most-profitable routes for Transat."

Second-quarter highlights:

• For the second quarter, the corporation generated $870.1-million in revenues, up $512.0-million from $358.2-million for the corresponding period of 2022. In 2022, the corporation had to cancel nearly 30 per cent of flights scheduled as a result of the sharp decline in demand and massive booking cancellations following the emergence of the Omicron variant.
• Transat recorded operating income of $18.7-million, an improvement of $106.3-million compared with the $87.5-million loss in 2022.
• Adjusted operating income amounted to $56.1-million, an improvement of $107.2-million compared with an adjusted operating loss of $51.0-million in 2022.
• Net loss amounted to $29.2-million (76 cents per share), compared with $98.3-million ($2.60 per share) for the corresponding quarter of last year.
• Excluding non-operating items, Transat reported an adjusted net loss of $8.0-million (21 cents per share) for the second quarter of 2023, compared with $111.6-million ($2.95 per share) in 2022.

Financial position

As at April 30, 2023, cash and cash equivalents amounted to $623.6-million, an increase of $112.4-million compared with $511.2-million at the same date in 2022. Cash and cash equivalents in trust or otherwise reserved resulting from travel package sales also increased; the balance stood at $262.2-million as at April 30, 2023, compared with $191.9-million at the same date in 2022.

Customer deposits for future travel stood at $867.1-million, up 38 per cent from prepandemic levels as at April 30, 2019, reflecting the rebound in demand and higher average selling prices.

During the second quarter, Transat renegotiated secured loans totalling $198.0-million, extending the maturity dates from April, 2024, to April, 2025. "These amendments provide us greater flexibility in repaying debt and attest to our financial partners' trust in our recovery plan," stated Patrick Bui, chief financial officer of Transat.

In total, available financing amounted to a maximum of $963.3-million, of which $863.2-million was drawn down ($858.6-million as at April 30, 2022), for unrestricted liquidity of $723.6-million.

Outlook

To date, although load factors for this summer are 2.6 percentage points lower than in 2019, airline unit revenues, expressed in yield, are 29 per cent higher than four years ago. The combination of strong demand and upward pricing will allow the corporation to cope with a cost environment that remains generally higher and volatile.

In light of the midyear indicators, the corporation is raising the target for adjusted operating income margin from the initially set range of 4 per cent to 6 per cent to a target of 5.5 per cent to 7 per cent for fiscal 2023. In making these forward-looking statements, the corporation adjusted its assumptions for the full year, including moderate growth in Canada's gross domestic product, an exchange rate of $1.35 to $1 (U.S.) and an average price per gallon of jet fuel of $4.25.

Additional information

The results were affected by non-operating items, as summarized in an attached table.

About Transat A.T. Inc.

Founded in Montreal 35 years ago, Transat has achieved worldwide recognition as a provider of holiday travel, particularly as an airline under the Air Transat brand. Voted world's best leisure airline in North America by passengers at the 2022 Skytrax World Airline Awards, it flies to international, United States and Canadian 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.

Conference call details

Date/time:  Thursday, June 8, 2023, at 10 a.m. ET

Dial-in number:  1-800-926-9795

Name of conference:  Transat

Archived call (until July 7, 2023):  1-800-558-5253, access code 22025962

The third-quarter results will be released on Sept. 7, 2023.

We seek Safe Harbor.