MONTREAL - The head of Transat A.T. Inc. says fallout was "limited" from a strike threat by its pilots and that the company continues to benefit from ºÃÉ«tvs' turn away from U.S. travel, paving the runway for growth in the new year after the tour operator turned its first annual profit since 2018.
"Demand for leisure travel remains solid, particularly for south destinations driven by the continued shift away from U.S. leisure markets towards the Caribbean and Mexico," said chief executive Annick Guérard on a conference call with analysts Thursday.
The number of ºÃÉ«tvs returning from overseas — rather than America — rose nearly 12 per cent year-over-year to 1.1 million in November, according to preliminary figures from Statistics Canada. Meanwhile, return trips by air from the United States dropped more than 19 per cent.
Air Transat flies mainly to destinations in Mexico, the Caribbean and Europe, with only two destinations in the U.S.: Orlando and Fort Lauderdale, Fla.
The company lost $12.5 million in its fourth quarter and its planes are slightly emptier so far this winter than a year ago. But Guérard stressed that yields — a metric gauging the average revenue an airline garners per paying passenger for each mile flown — are up, with bookings still "healthy."
The CEO also noted that Transat has renegotiated all major collective agreements through 2027 and beyond.
Last week, the Montreal-based company narrowly avoided a costly work stoppage when it reached a last-minute tentative deal with the union representing Air Transat's 750 pilots that boosted their wages by more than 50 per cent over five years.
The company said it cancelled just 18 flights and contained the potential blow to its business.Â
"It was a pretty short period and we were able to get back on our booking curve very quickly," Guérard said.
The strike threat also arrived after its Black Friday and Cyber Monday promotions, "a key sales moment for us" that drove an 11 per cent year-over-year spike in bookings in that period, she added.
As demand for flights to Florida, Las Vegas and other stateside spots continues to plummet, the airline has sought out destinations farther afield.
Transat announced several new routes in recent months, including to Accra in Ghana, Agadir in Morocco, and Dakar in Senegal, as well as one on Thursday between Toronto and Tirana, Albania, as demand for cheaper getaway spots ticks up.
The company is aiming for a jump in capacity of between six and eight per cent next year.
However, it faces increased competition from Air Canada and other carriers that have also responded to the drop in demand for U.S. visits with a beefed-up presence on transatlantic and Caribbean routes.
"We have some concerns about a more competitive environment in the coming quarters," said ºÃÉ«tv Bank analyst Cameron Doerksen in a note to investors.
"They're going after more and more obscure markets. They're flying from Halifax to Glasgow, Montreal-Edinburgh, Montreal-Nantes, in France," said John Gradek, who teaches aviation management at McGill University, referring to Air Canada.
"To me, they're trying to cut off Transat at the knees by duplicating Transat's network and forcing it to drop its yields on the North Atlantic."
The stiffer competition comes at a fraught time for Transat as it struggles to manage a large net debt load — still $1.6 billion, despite a major restructuring of pandemic-era debt earlier this year that forgives hundreds of millions of dollars owed — and fend off a coup attempt from an activist investor.
Earlier this month, media mogul Pierre Karl Péladeau — Transat's second-biggest shareholder with 9.5 per cent of the company's shares — demanded a strategic overhaul and a board shakeup that would give him and two allies seats.
Transat on Monday brushed off his demand for a Feb. 6 shareholder meeting and scheduled one for March 10 to vote on the board overhaul and other changes sought by the Quebecor Inc. CEO.
On Thursday, Transat reported a loss in the millions for the quarter ended Oct. 31 versus a net income of $41.2 million in the same period last year.
More than half of last year's windfall came from compensation doled out by aircraft engine giant Pratt & Whitney after it recalled turbofans for inspection and repair, affecting numerous airlines. Between three and five aircraft will remain grounded through 2026 due to the engine recall, with a "full resolution" expected by early 2028, Guérard said.
For the full fiscal year, Transat earned $241.9 million thanks to a stellar third quarter compared with a $114-million loss in fiscal 2024.
Fourth-quarter revenue totalled $771.6 million, down two per cent from $788.8 million a year ago. The drop reflected the fact it took in $28 million less in Pratt & Whitney compensation than a year earlier.
On an adjusted basis, Transat said it lost 42 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share the year before. The figure notched well below analysts' expectations of 12 cents per share, according to financial markets firm LSEG Data & Analytics.
This report by ºÃÉ«tvwas first published Dec. 18, 2025.
Companies in this story: (TSX:TRZ, TSX:QBR.B)
