In a conference call Thursday following the release of Transat’s third-quarter earnings, in which it posted a plunge in revenues 98.6% to $9.5 million, CEO Jean-Marc Eustache said the situation is “especially difficult” in Canada.
“With Canada maintaining some of the most stringent border restrictions and still requiring quarantine for people returning from abroad, it’s time for the government to provide targeted support for the airline sector to ensure the existence of a competitive industry in Canada over the long term,” Eustache said.
“We are frustrated.”
Transat has taken measures to cut costs and preserve its bank balance. However, the operator said it needs to raise more money.
Transat cautioned that while it’s trying to line up additional sources of financing, it may be blocked from doing so as a result of the pending Air Canada takeover, which is still awaiting regulatory approval.
“The covenants undertaken under the arrangement agreement with Air Canada restrict and govern the corporation’s capacity to obtain additional sources of financing and may require Air Canada’s prior consent,” Transat wrote in its third-quarter earnings report yesterday.
“Although the agreement provides that Air Canada’s consent may not be unreasonably withheld, there is no certainty that Air Canada will consent to the obtaining of additional sources of financing by the corporation.”
These challenges have prompted Transat to reissue a call for a government bailout.
Canada is one the few countries which has held off on sector-specific support for its carriers flying international routes. Instead Prime Minister Justin Trudeau rolled out economy-wide measures such as the Canada Emergency Wage Subsidy and loans starting at $60 million for large firms.
“Nobody is helping this industry. As you know, we’re suffering like crazy,” said Eustache. “We’re not going to be on the same playing field as the others tomorrow.”
“We are hit just as any airline or travel company in the world. What really matters for now is our liquidity,” he added.
Transat shareholders in AUG 2019 overwhelmingly approved Air Canada’s $720 million takeover offer. The deal is awaiting regulatory approvals in Canada and Europe. Transat says it expects a decision by 11DEC from the European Commission. There is no deadline on the Canadian ruling.
Transat has extended the deal’s deadline three times, but regulatory approvals must be obtained by 27DEC or the deal is off, according to the agreement.
Transat yesterday released its third-quarter earnings, in which it posted an operating loss of CA$139.8 million.
Anna Kroupina Journalist
Anna is OJ’s newest member and she joins the team as a writer/reporter. She co-writes the daily news and covers events. Although she’s new to the industry, pursuing a career path in travel/tourism has been a goal since her first family road trip to the Florida Keys sparked a desire to discover the world and this exhilarating, fast-paced industry.