Ms. Annick Guerard reports

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

Transat A.T. Inc. has released its results for the third quarter ended July 31, 2023.

"Transat generated record adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] and net income for a third quarter, and its first net profit since the end of 2019. These results demonstrate strong overall execution and our ability to meet sustained customer demand in a cost-efficient way. Third quarter revenues of $746.3-million were 6.8 per cent above 2019 levels despite capacity being 14 per cent less, while our record adjusted EBITDA of $114.8-million was nearly 85 per cent higher. Robust demand for leisure travel produced yields 29 per cent above those of 2019," said Annick Guerard, president and chief executive officer of Transat.

"Transat will conclude fiscal 2023 with solid momentum and, as a result, we are raising our adjusted EBITDA margin target from 5.5 to 7 per cent to 7.5 to 8 per cent for the year. Looking ahead to the winter season, the addition of three new A321LR and one A321ceo will contribute to increasing available capacity by 23 per cent to be deployed on our best performing routes and promising new destinations. Early bookings are ahead of last year which, combined with firm pricing, bode well for the start of the new fiscal year," concluded Ms. Guerard.

"From a financial perspective, our focus remains on debt reduction. In this regard, net proceeds from our recent land sale in Mexico of approximately $50-million will be used to reduce our secured facilities. Although the second half usually produces negative free cash flows, our third quarter performance improved by $45-million compared to last year, bringing our free cash flows generated by operations for the last 12 months to $153-million. This solid momentum raised unrestricted liquidity 31 per cent above last year's level, while record customer deposits for a third quarter are a strong indicator of resilient demand, which should allow Transat to further improve its financial position," added Patrick Bui, chief financial officer of Transat.

Third quarter highlights:

• For the third quarter, the corporation generated $746.3-million in revenues, up $238-million from $508.3-million for the corresponding period of 2022. In 2022, the corporation's revenues were recovering from earlier sharp declines in demand and massive booking cancellations following the emergence of the Omicron variant.
• Transat recorded operating income of $64.4-million, an improvement of $157.6-million from a $93.2-million loss in 2022.
• Adjusted EBITDA amounted to $114.8-million, up $172.6-million from a loss of $57.8-million in 2022.
• Net income amounted to $57.3-million ($1.49 per share), compared with a net loss of $106.5-million ($2.82 per share) for the corresponding quarter of last year.
• Excluding non-operating items, Transat reported an adjusted net income of $42.3-million ($1.10 per share) for the third quarter of 2023, compared with an adjusted net loss of $120.9-million ($3.20 per share) in 2022.

Financial position

As at July 31, 2023, cash and cash equivalents amounted to $570.6-million, an increase of $159.2-million from $411.3-million at the same date in 2022. Cash and cash equivalents in trust or otherwise reserved resulting from travel package sales also improved year-over-year, reaching $263.6-million as at July 31, 2023, compared with $213.5-million at the same date in 2022.

Reflecting the rebound in demand and higher average selling prices, customer deposits for future travel stood at $819.9-million, up 34 per cent from prepandemic levels as at July 31, 2019, and up 40 per cent from July 31, 2022.

In total, available financing amounted to a maximum of $963.3-million, of which $863.2-million was drawn down ($863.2-million as at July 31, 2022), for unrestricted liquidity of $670.6-million. The unused amount of $100-million is available until Oct. 29, 2023.

Outlook

To date, load factors for the fourth quarter are 2.2 percentage points lower than in 2019, while airline unit revenues, expressed in yield, remain 26 per cent higher. The combination of sustained demand and firm pricing will allow the corporation to cope with a cost environment that remains generally higher and volatile.

Considering the solid results achieved in the first nine months of fiscal 2023, the corporation is raising the target for adjusted EBITDA margin from a range of 5.5 per cent to 7 per cent to a target of 7.5 per cent to 8 per cent for the year. 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.

For the coming winter season, the recent addition of four aircraft (three A321LRs and one A321ceo) and enhanced fleet utilization will contribute to increasing available capacity by 23 per cent, as the corporation continues to methodically expand its offering. Current market trends regarding demand and pricing continue to bode well for the early stages of the new fiscal year.

About Transat A.T. Inc.

Founded in Montreal 35 years ago, Transat has achieved worldwide recognition as a provider of leisure travel, operating as an air carrier under the Air Transat brand. Voted world's best leisure airline by passengers at the 2023 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. Transat has been Travelife certified since 2018.

Conference call

Third quarter 2023 conference call: Thursday, Sept. 14, 10 a.m. To join the conference call without operator assistance, you may register and enter your phone number to receive an instant automated call back.

You can also dial direct to be entered into the call by an operator:

Montreal: 514-225-7344

North America (toll-free): 1-888-390-0620

Name of conference: Transat

The conference will also be accessible live via webcast.

An audio replay will be available until Sept. 20, 2023, by dialling 1-888-390-0541 (toll-free in North America), access code 569905 followed by the pound key. The webcast will remain available for three months following the call.

The fourth quarter results will be announced on Dec. 14, 2023.

We seek Safe Harbor.