Record third quarter profitability. Its first net profits since the end of 2019. And a bright future with customer demand that appears to remain unaffected by economic headwinds. Transat has a lot to celebrate in its report for the 3rd quarter of 2023, ending 31JUL.
"Transat generated record adjusted EBITDA and net income for a third quarter, and its first net profit since the end of 2019," said Annick Guérard, President and Chief Executive Officer of Transat in a release Thursday, 14SEP.
"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% above 2019 levels despite capacity being 14% less, while our record adjusted EBITDA of $114.8 million was nearly 85% higher. Robust demand for leisure travel produced yields 29% above those of 2019."
The company attributes "solid operating performance" to "sustained demand and higher yields."
In an investor call later Thursday following the release of the Q3 results, Guérard told investors and media that Canadians are still booking sun and European vacations despite higher inflation and interest rates.
"We're pretty much confident about the fact that the Canadian airline sector continues to benefit from pent-up demand," she said in the call, citing particularly strong demand for premium "5-star, 4.5 star" packages. In JUN, Guérard noted that a sweet spot of travelling Canadians, those 55+, are less-affected by mortgage rate hikes and enjoy "significant disposable wealth and the time to travel and spend." And according to Transat, they're back into their pre-pandemic travel habits.
"Early bookings are ahead of last year which, combined with firm pricing, bode well for the start of the new fiscal year," Guérard said.
Transat says it's expanding capacity by nearly a quarter in 2024. Its fleet will grow by 5 aircraft to 40 planes this winter.
"With what we see today, despite inflation, we're pretty much comfortable that that's the right capacity to deploy to make sure that we position ourselves well in the market," Guérard said on the call, a tacit acknowledgment of new Canadian carriers and competition increasing especially for market share for sun destinations.