MONTREAL, March 29/CNW/
Transat A.T. Inc. (TSE: TRZ), the leader in the Canadian travel and tourism industry, reported revenues in the amount of $397.4 million for the first quarter ended January 31, 2000, compared with $363.5 million for the same period last year, or an increase of 9.3%.
The Corporation posted net income before goodwill charges of $76,000 ($0.00 per share), compared with a net loss before goodwill charges of $2,231,000, ($0.06 per share) last year. For the first quarter of 2000, the net loss totalled $552,000 ($0.02 per share), compared with a net loss of $2,879,000 ($0.08 per share) last year.
"In the first quarter, internal growth which characterized fiscal year 1999 continued and Transat succeeded in further enhancing its position in all its markets,'' noted Transat President and CEO Jean-Marc Eustache. "Both in Canada and France, the growth in activities of our subsidiaries enabled the Corporation to sharply improve profitability, the quarter's net loss has almost been eliminated.''
In the Canadian market, revenues rose 18% compared with the same period last year. Sales continued to grow in the Ontario and Western Canada markets. In addition to higher volume, the growth in sales is attributable to price increases intended to offset rising operating expenses, including fuel.
Excluding the sharp drop in the euro, sales posted by our subsidiaries in France would have been up 12%, compared with the first quarter last year. As was the case in Canada, growth was based on a higher volume and price increases. However, as a result of fluctuations in the value of the euro, growth was offset when sales are converted into Canadian dollars.
PROFITABILITY
The first quarter was marked by a major event: the changeover to the Year 2000. From an operational standpoint, the Corporation did not experience any problems related to the Year 2000 bug. However, the changeover did have an impact on demand. The Holiday Season is traditionally a busy period. However, this year, many people apparently decided to postpone their travelling at this time of the year. Our French and Canadian subsidiaries therefore had to adjust their supply of vacation products and packages, and this generated downward pressure on profitability.
A combination of several factors contributed to improved results for the quarter. In Canada, the noteworthy factors included the strengthening of the Canadian dollar against its U.S. counterpart, higher volumes and prices, as well as a drop in interest expense. In France, Look Voyages experienced an increase in volumes and higher selling prices. However, other factors had a negative impact on results during the quarter, and they include higher fuel costs and operating expenses, the weakness of the euro against the Canadian dollar and, the decrease in load factors for certain subsidiaries.
OUTLOOK
“Based on the trends noted so far, we are optimistic about our results for the winter season overall, which will end April 30, 2000. It would appear that many people who did not take a vacation during the Holiday Season have decided to do so now,” added Mr. Eustache. With respect to the summer season, we expect continued sharp competition, particularly for European destinations departing from Canada, although current indications point to an encouraging number of bookings. The cost of fuel and the value of the euro against the dollar are among other factors that we will be closely monitoring in the coming months. As other industry players are doing, the Corporation is imposing a surcharge on domestic flights, flights to sunshine destinations and on departures from France to Canada. Moreover, in Europe, the euro’s weakness may have a negative impact on demand for Canadian destinations departing from France, Germany and the Netherlands. However, with respect to Look Voyages, there is sustained demand for destinations in the Mediterranean region, which is particularly good news for this tour operator, since the summer season is very important for its overall annual financial results.
EVENTS SUBSEQUENT TO JANUARY 31, 2000
In February, the Corporation completed its acquisition of all the shares of Services Haycot and Brok’Air, in which it previously held a 50% and 39% stake respectively. And in March, the Corporation announced its intention to acquire all the shares of Consultour/Club Voyages, in which it already held a 50% interest. In this way, the Corporation will be better positioned to control the development of its interests and respond to future growth opportunities in a timely manner.
INTERNET-RELATED DEVELOPMENTS
Since the introduction of Internet technology in the travel industry, Transat has promoted the development of related activities among its subsidiaries, in particular the implementation of e-commerce operations. In France, Brok’Air set up a transactional site (Anyway.com) that is already playing a leading role in the on-line distribution of airline tickets in the French market. Moreover, in Canada, the Corporation has introduced an on-line travel agency (Exit.ca), which will soon be actively marketing the vacation packages and air transportation available from tour operators both inside and outside the group. These Internet activities are complementary to each other and are a natural extension of the principle of vertical integration applied by the Corporation.
Transat A.T. Inc., the leader in the Canadian travel and tourism industry, is a public corporation listed on the Toronto Stock Exchange. Through its subsidiaries and affiliates, it is involved in all aspects of the organization and distribution of travel services and air transportation. Its wholly-owned subsidiaries are: the airline Air Transat, tour operators Air Transat Holidays (Montréal, Québec City, Toronto, Vancouver and Fort Lauderdale), Vacances Air Transat (France), Brok’Air (France), Voyages Nolitour (Montréal), Regent Holidays (Toronto), the Tourbec travel agency chain, Services Haycot, an airport handling services company, as well as Exit Travel, which specializes in retail e-commerce.
Transat A.T. Inc. holds interests in tour operators Look Voyages (98%), World of Vacations (35%) and Consultour/Club Voyages, a travel agency franchise group (50%). As well, Air Transat Holidays holds a 66.7% interest in the incoming tour operator DMC Transat, and Look Voyages owns 49.6% of STAR Airlines.