Transat A.T. Inc. Reports Results for the Second Quarter of Fiscal 2025
Revenue Growth and Improved ProductivityBalance Sheet Strengthened through Debt Restructuring Agreement
Second-quarter highlights:
Revenues of $1,031.1 million, up 5.9% from $973.2 million last year
Adjusted EBITDA1 of $98.4 million, compared to $30.2 million last year
Net loss of $22.9 million ($0.58 per share), compared to a net loss of $54.4 million ($1.40 per share) last year
Free cash flow1 of $142.3 million, compared to $109.8 million last year
Cash and cash equivalents of $532.6 million as at April 30, 2025
Elevation optimization Program initiatives implemented to date are expected to deliver an annualized adjusted EBITDA1 run-rate of $67.0 million
Reached an agreement in principle for the restructuring of the LEEFF debt incurred in connection with the COVID-19 pandemic
MONTRÉAL, June 12, 2025 /CNW/ - Transat A.T. Inc. today reported its second quarter 2025 financial results.
"Transat delivered improved operating and financial performances in the second quarter of fiscal 2025, building on the positive momentum that began in the fourth quarter of 2024. During the second quarter, revenue grew 5.9%, driven by a 2.0% year-over-year yield improvement and a 1.6% passenger traffic increase. Tight control of operating expenses led to productivity gains, while lower fuel costs further supported performance, resulting in adjusted EBITDA of $98.4 million. Despite persistent economic uncertainty, Transat is methodically executing its business strategy through disciplined fleet optimization and network expansion. Recent additions of new routes and changes to our program have further strengthened our leadership in providing leisure travel services to Canadian consumers," said Annick Guérard, President and Chief Executive Officer of Transat.
"We are making significant progress through our Elevation Program, a comprehensive optimization plan aimed at maximizing long-term profitable growth. The initiatives implemented to date are expected to generate an annualized adjusted EBITDA run rate of $67 million and we remain on track to reach our goal of $100 million. Our teams are fully committed to successfully executing the plan and we expect to benefit directly from cost-saving and revenue-generating initiatives beginning in the second half of the current year," added Ms. Guérard.
"We are pleased to have reached a refinancing agreement with our main lender. This represents a major milestone, as it significantly reduces our debt, strengthens our balance sheet, and positions Transat to further implement its long-term strategic plan. In addition, we have reached a new compensation agreement with the manufacturer of the GTF2 engines for the 2025 and 2026 fiscal years, partially recorded during the second quarter as non-cash revenue. We are currently evaluating opportunities to monetize this financial compensation," said Jean-François Pruneau, Chief Financial Officer of Transat.
Second-quarter results
For the quarter ended April 30, 2025, revenues reached $1,031.1 million, up 5.9% from $973.2 million in the corresponding period last year. The increase was mainly attributable to a 2.0% increase in airline unit revenues (yield) and a 1.6% increase in traffic expressed in revenue-passenger-miles (RPM) compared with 2024. Reflecting disciplined management, the Corporation's capacity was up 2.6% from the corresponding period last year, while capacity for sun routes, the main program during this period, remained stable. In addition, following the agreement entered into with the original equipment manufacturer of the GTF2 engines, a financial compensation of $20.0 million was recorded in revenues.
Adjusted EBITDA1 amounted to $98.4 million, compared with $30.2 million in 2024. This increase was mainly attributable to higher revenues, increased productivity, as well as a 18% decrease in fuel prices compared with the corresponding period of 2024.
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2 Geared turbofan ("GTF").
Six-month results
For the six-month period ended April 30, 2025, revenues reached $1,860.6 million, up 5.8% from $1,758.7 million in the corresponding period a year ago. For the six-month period, network-wide capacity increased by 1.6% compared with 2024, while capacity for sun routes, the main program during this period, increased by 0.5%. Overall, traffic was 1.3% higher than in 2024. The revenue increase also reflects the financial compensation noted above.
For the six-month period, adjusted EBITDA1 totaled $118.4 million, compared with $26.8 million for fiscal 2024. The increase was mainly attributable to revenue growth, productivity gains and lower fuel prices.
Cash flow and financial position
Cash flow related to operating activities amounted to $207.8 million during the second quarter of 2025, compared with $183.2 million for the same period last year, mainly due to higher net income before non-cash operating items this year versus last. After accounting for investing activities and repayment of lease liabilities, free cash flow1 reached $142.3 million during the quarter, compared with $109.8 million for the corresponding period last year.
As at April 30, 2025, cash and cash equivalents stood at $532.6 million, compared to $260.3 million as at October 31, 2024. Cash and cash equivalents in trust or otherwise reserved mainly resulting from travel package bookings totaled $295.6 million as at April 30, 2025, compared with $484.9 million as at October 31, 2024, reflecting the seasonal nature of operations. Customers deposits for future travel totaled $888.7 million as at April 30, 2025, comparable to the amount recorded a year earlier.
During the six-month period ended April 30, 2025 the Corporation received net proceeds of $30.6 million from the final of the four previously announced spare engine sale-leaseback transactions, completed in early November.
Long-term debt and deferred government grant totaled $812.2 million as at April 30, 2025, compared to $803.1 million as at October 31, 2024. Reflecting the proceeds mentioned above and the change in cash, the amount net of cash stood at $279.6 million, down from $542.7 million as at October 31, 2024.
Event after the reporting period
On June 5, 2025, the Corporation announced that it had reached an agreement in principle with the Canada Enterprise Emergency Funding Corporation (CEEFC) for the restructuring of all its debt contracted under the Large Employer Emergency Financing Facility (LEEFF), managed by the CEEFC. As of April 30, 2025, this debt had a principal amount of $773.4 million and a carrying value of $762.2 million, including the deferred government grant amount. Following the transaction, outstanding debt with CEEFC is expected to decrease from $773.4 million to $333.7 million.
Key indicators
To date, load factors for the summer period, which consists of the third and fourth quarters, are 1.2 percentage points lower compared to the same date in fiscal 2024, while airline unit revenues, expressed as yield, are 1.7% higher than they were at this time last year.
For fiscal year 2025, the Corporation expects an available capacity increase of 1.0%, measured in available seat-miles, compared to 2024.
Conference call
The second quarter 2025 conference call will take place on Thursday, June 12, 2025, 10:00 a.m. To join the conference call without operator assistance, you may register by entering your phone number here to receive an instant automated call back.
You can also dial direct to be entered into the call by an operator:Montreal: 514 400-3794North America (toll-free): 1 800 990-4777Name of conference: Transat The conference will also be accessible live via webcast: click here to register.
An audio replay will be available until June 19, 2025, by dialing 1 888 660-6345 (toll-free in North America), access code 91901 followed by the pound key (#). The webcast will remain available for 90 days following the call.
Third-quarter 2025 results will be announced on September 11, 2025.
(1) Non-IFRS financial measures
Transat prepares its financial statements in accordance with International Financial Reporting Standards ["IFRS"]. We will occasionally refer to non-IFRS financial measures in the news release. These non-IFRS financial measures do not have any meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. They are intended to provide additional information and should not be considered as a substitute for measures of performance prepared in accordance with IFRS. All dollar figures are in Canadian dollars unless otherwise indicated.
The following are non-IFRS financial measures used by management as indicators to evaluate ongoing and recurring operational performance.
Adjusted operating income (loss) or adjusted EBITDA: Operating income (loss) before depreciation, amortization and asset impairment expense, reversal of impairment of the investment in a joint venture, the effect of changes in discount rates used for accretion of the provision for return conditions, restructuring and transaction costs and other significant unusual items, and including premiums related to derivatives that matured during the period. The Corporation uses this measure to assess the operational performance of its activities before the aforementioned items to ensure better comparability of financial results. Adjusted operating income is also used to calculate variable compensation for employees and senior executives.
Adjusted pre-tax income (loss) or adjusted EBT: Income (loss) before income tax expense before change in fair value of derivatives, revaluation of liability related to warrants, gain (loss) on long-term debt modification, gain (loss) on business disposals, gain on disposal of investment, gain (loss) on asset disposals, gain on sale and leaseback of assets, the ...
