Transat Warns Of "Inferior" Results

March 13, 2014

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Canadian tour operator Transat said it expected "inferior" results in the current quarter, after a bigger first-quarter loss due to a weak Canadian dollar that pushed up operating expenses.

Low inflation and a possibility of an interest rate cut dragged down the Canadian dollar to a four-and-a-half year low against US dollar on January 31.

"(The weak dollar) resulted in a significant increase in our operating expenses, which was offset only partially by higher selling prices and by our hedging programme," chief executive Jean-Marc Eustache said in a statement.

The company, which also owns leisure travel airline Air Transat, makes major purchases such as aircraft and fuel in US dollars.

Transat said its first-quarter operating expenses rose 2.7 percent from a year earlier.

The company said Air Transat's load factor was expected to fall about 2 percent in its "sun destinations" market and about 5 percent in its Transatlantic market in the quarter ending April.

The Montreal-based company offers discounted air fares and travel packages, competing mainly with WestJet Vacations and Air Canada Vacations.

Air Canada warned in February that adverse weather conditions and weakness in the Canadian dollar were likely to hurt its current-quarter earnings and revenue. The company had also said it was looking to trim costs and raise prices at an appropriate time.

Transat's net loss in the first quarter ended January 31 widened to CAD$25.6 million (USD$23.0 million), from CAD$15.1 million a year earlier.

Total revenue rose 5 percent to CAD$847.2 million. Revenue from its North American business units increased 4.6 percent, while revenue from its European business units rose 8.7 percent.