Transat’s fuel costs surge by more than $100 million

The parent company of Air Transat paid more than ever for jet fuel in its latest quarter due to the ripple effects of the Iran war, prompting the company to seek further federal aid.

The cost of fuel bought by Transat A.T. Inc. TRZ-T climbed by $105-million in the three months ended July 31, compared with a year earlier, the travel company said.

The amount also marked a 50 per cent increase from the additional expense Transat paid in the preceding second quarter, according to chief executive Annick Guérard.

Combined, the two quarters saw the Montreal-based company pay an extra $175-million for the refined kerosene that powers its 42 planes.

For an outfit that made $242-million in total last year – and that lost nearly $140-million in 2023 and 2024 combined – the expense stands out on the income statement.

Blue skies have yet to emerge for airlines. Energy market volatility is expected to keep up the pressure on jet fuel costs across the industry, the company said.

In North America, jet fuel costs nearly US$160 per barrel, up almost 75 per cent from the year before, according to the International Air Transport Association. However, prices are down from their April peaks.

Transat’s ability to pass higher fuel costs on to passengers remains “very limited,” the company said in a statement. As a result, it is in talks with the federal government “to explore potential solutions.”

Last month, Transat secured up to $150-million in federal aid to help offset the soaring price of jet fuel.

At first, customers could stomach the increased fares that resulted, which roughly balanced out the spike in fuel expenses, Guérard told analysts on a second-quarter conference call earlier this summer.

“But more recent increases resulted in a slowdown in the booking momentum … the demand went down,” prompting the airline to tamp down fares and remove some fees, she said on June 11.

The size of Transat’s loan from July will be based on the difference in the cost of fuel in the window between late July and Oct. 31 and the same period last year.

The financial relief came less than two months after Ottawa announced a loan lifeline available to airlines struggling to cope with sky-high oil prices and the slashed flight schedules and lower profit forecasts that followed.

Air Canada suggested earlier in the summer it would not need to draw on the aid, while WestJet said it “strongly opposes” the move because of its market-distorting effects.

Headwinds closer to home have also taken a toll.

All three airlines have indefinitely suspended all flights and vacation packages to Cuba as the country grapples with an increasingly desperate fuel shortage triggered by a U.S. oil blockade.

Cuba marks a major market for Transat, which is a popular destination for Canadians.

About 861,000 Canadians visited the island in 2024, according to the country’s statistics office. Trips there accounted for nine per cent of Transat’s flights in the first half of 2025, with Cuba particularly popular among vacationers in Quebec, Transat’s home base.

The airline first halted Cuba voyages in mid-February.

Air Transat, like most other Canadian carriers, also slashed its flight capacity to the U.S. after demand plummeted following the election of President Donald Trump.

Last month, Air Transat cancelled a weekly Halifax-Fort Lauderdale, Fla., route and five-days-a-week service between Montreal and Fort Lauderdale for the upcoming winter season.

That left the thrice weekly Quebec City-Fort Lauderdale route as Air Transat’s only service between Canada and a U.S. state.