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Higher ticket prices boost Transat fourth-quarter profits by 200 per cent

MONTREAL — Higher ticket prices and fees tripled Transat AT Inc. profits last quarter as the tour operator worked to complete its takeover by Air Canada.

Net income jumped to $20.3 million in the quarter ended Oct. 31, up from $6.8 million a year earlier. Revenues rose 3.6 per cent to $693.2 million from $668.8 million.

“This increase resulted from higher average selling prices across all programs, as well as growth in ancillary revenues,” Transat said in a pre-market release.

So-called ancillary revenue includes baggage fees, seating upgrades and onboard snacks as well as frequent flyer programs. Popularized by budget airlines more than a decade ago, ancillary revenue plays an increasingly critical role in the industry, helping to diversify income and insulate airlines from fluctuations in fuel price and competition.

Transat’s higher income was “partially offset by the costs associated with the transaction with Air Canada and by higher aircraft maintenance costs,” it said.

Transat shareholders voted in August to approve the acquisition by Air Canada, but the deal still faces scrutiny by regulators eyeing the impact of an acquisition that will see Air Canada control more than 60 per cent of transatlantic air travel from Canada.

The travel company expects the takeover to close in the second quarter of the 2020 calendar year.

“We’re working to obtain the required approvals to complete our transaction, while focusing significant efforts on serving our customers and improving our results,” chief executive Jean-Marc Eustache said in a statement Thursday.

Air Canada has said Transat will remain a distinct brand based in Montreal.

Transat said profits amounted to 54 cents per diluted share in the fourth quarter, up from 18 cents per diluted share in the same period last year.

On adjusted basis, it earned 72 cents per share for the quarter, up from 36 cents per share a year ago.

This report by The Canadian Press was first published Dec. 12, 2019.

Companies in this story: (TSX:TRZ, TSX:AC)

The Canadian Press

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