Transat A.T. says adjusted earnings were up in the first quarter, as compared to last year. But the company's net loss was considerably higher, and they're extending talks about their more than $700 million in COVID-19 relief debt with Ottawa.
The Montreal-based company on 13MAR reported its first quarter financials for 2025. Adjusted EBITDA reached $20 million in the quarter, up from a loss of $3.3 million last year. Revenues were up 5.6% from the first quarter of 2024, rising from $785.5 million to $829.5 million.
The increase came as traffic expressed in revenue-passenger-miles rose 1.0 per cent compared with 2024. Transat’s capacity was up 0.5 per cent compared with a year earlier.
But Transat said their net loss reached $122.5 million for the quarter, double last year's $61.0 million loss.
The company also said it's extending the maturity dates of its financing agreement with the federal government, which provided Transat with a $700 million loan during the COVID-19 pandemic.
"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," she said.
"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.
"The refinancing of our debt of more than $800 million and the strengthening of our balance sheet remain our top priorities," Guérard said.
"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," Guérard added.
The Canada Enterprise Emergency Funding Corporation in April of 2021 announced it would provide $700 million in financial support to Transat through the Large Employer Emergency Financing Facility ("LEEFF".
"As a condition of the loan agreement, Transat has agreed to provide refunds for all pandemic-related cancellations to eligible customers—$310 million of the total financing will be a repayable loan to finance these refunds. Transat has also committed to maintaining active jobs as well as honouring collective agreements and pension benefits," Ottawa said at the time.
In an email sent to Open Jaw, Transat said it has the following debt:
- $50M revolving credit facility with banks
- $41M LEEF secured facility
- $377M LEEF subordinated credit facility
- $353M credit facility related to travel credits (to issue refunds to travellers to whom a travel credit was issued as a result of COVID-19)
"All of our debt was contracted due to the COVID-19 pandemic," a spokesperson said. "To the government, we need to repay the two LEEF facilities, totalling $418M, plus the $353M credit facility, making a total of $771M.
"Including the debt to our bankers, the total debt amounts to $822M."
