Release Date: December 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Transat AT Inc (TRZBF, Financial) reported better-than-expected adjusted EBITDA of $123 million in the fourth quarter, driven by increased customer traffic, lower fuel costs, and compensation from Pratt & Whitney.
- The company launched the Elevation program, a comprehensive optimization plan aimed at strengthening operations and improving long-term performance.
- Transat AT Inc (TRZBF) saw a 9% increase in revenues during promotional periods like Black Friday and Cyber Monday, indicating effective discount strategies.
- The company reported a 7 percentage point improvement in on-time performance in Q4, attributed to the successful in-sourcing of passenger and ramp services.
- Transat AT Inc (TRZBF) introduced two new destinations, Tulum, Mexico, and Valencia, Spain, to its network, indicating growth and expansion opportunities.
Negative Points
- The company faced challenges such as overcapacity and economic uncertainty, which pressured yields and overall financial performance.
- Transat AT Inc (TRZBF) reported a decrease in yield by 8.5% year-over-year in the fourth quarter.
- The company continues to deal with the Pratt & Whitney engine issue, with six aircraft grounded, impacting operational capacity.
- Cash flow used by operating activities amounted to $108 million in Q4 2024, reflecting seasonal unfavorable changes in working capital balances.
- Transat AT Inc (TRZBF) is working on improving its capital structure, indicating ongoing financial challenges and the need for strategic adjustments.
Q & A Highlights
Q: Regarding the Pratt & Whitney compensation, is there any outstanding compensation expected, and does the current compensation conclude the settlement?
A: Jean-Francois Pruneau, CFO: The compensation agreement covers 2023 and 2024. For future years, a new agreement will be needed. We expect further compensation as aircraft will remain grounded next year, but no figures are available yet.
Q: Can you provide an update on the progress of negotiations regarding the company's capital structure?
A: Jean-Francois Pruneau, CFO: Significant progress has been made in evaluating potential solutions. Discussions with the federal government are ongoing to find a win-win solution. Optimizing our capital structure remains a top priority, and updates will be provided when material information is available.
Q: Are you seeing any changes in traveler behavior due to the weaker Canadian dollar?
A: Annick Guerard, CEO: No changes have been observed so far. Demand for travel remains strong, but we remain cautious due to economic uncertainty. Lower interest rates are expected to ease consumer budgets, supporting a favorable yield environment.
Q: How do you balance the partnership with Porter and manage capacity and yield?
A: Annick Guerard, CEO: We have strong collaboration with Porter to balance interests. We reached a 4% passenger connection in 2024 and are aligning schedules for 2025. It's a give-and-take to maximize revenues for both sides.
Q: Can you elaborate on the revenue initiatives within the Elevation program?
A: Annick Guerard, CEO: We are leveraging AI to improve systems, focusing on upgrading revenue management, integrating market price elasticity, refining consumer segmentation, and optimizing branded fare pricing. These initiatives are being implemented and will show results in upcoming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
