Airline company Transat A.T. Inc. TRZ-T fell to a loss in the third quarter and borrowed more money from the federal government as the Montreal-based leisure carrier faced soaring fuel costs amid the war in Iran.
The operator of Air Transat lost $106.6-million, or $2.60 a share, for three months ending on July 31, compared with a profit of $399.8-million ($9.97 a share) in the same period a year ago. Revenue rose by 3 per cent to $792.7-million, Transat reported before markets opened on Thursday.
Transat said it borrowed an additional $250-million from the Canada Enterprise Emergency Fund, a fund established in the pandemic. This is on top of the $150-million Transat recently borrowed from a separate federal fund established to help airlines that are struggling with high fuel costs. All together, Transat said its credit agreements with the government total $483.7-million.
Porter, Transat secure bailout loans to cope with soaring jet-fuel costs
“Our third-quarter results were significantly impacted by sustained higher fuel prices, which remained elevated well beyond expectations and were the primary driver of lower profitability,” Annick Guérard, chief executive officer of Transat, said in a statement accompanying the results.
Transat said in August the impact of higher fuel prices has cost it about $175-million since the Strait of Hormuz was closed.
Prices for jet fuel have doubled since late February, when the U.S. and Israel began bombing Iran. Iran then largely closed the Strait of Hormuz, an important waterway for oil and aviation fuel.
National Bank of Canada analyst Cameron Doerksen said the new government funding alleviates the airline’s short-term liquidity concerns. But he said he is surprised the airline has been unable to pass along the higher fuel costs to customers, something Air Canada and some global carriers have largely been able to do.
“Unless fuel prices fall significantly or Transat can find a way to increase fares materially, the company will continue to incur losses,” he said.
More to come
More Stories
China’s Huawei is a ‘criminal enterprise’ that stole company secrets, U.S. prosecutor says as trial starts
With hundreds of planes in the air on 9/11, Canada had minutes to respond
Empire reports higher sales and profit as it adds locations, focuses on discount