Tag Archives: 29923

CanJet Airlines to lay off 115 pilots and flight attendants

CanJet Airlines (2nd) (Halifax) will lay off 47 pilots and 68 permanent and seasonal flight attendants because the airline is dropping its unprofitable seasonal flights to Europe. According to this report by Halifax Herald, the airline is considering a low-cost schedule service alternative. This is the second setback for the struggling carrier after Air Transat (Montreal) announced previously it was acquiring its own Boeing 737s after CanJet had been operating for Air Transat. As a response, CanJet formed CanJet Vacations (Toronto).

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Copyright Photo: Gilbert Hechema/AirlinersGallery.com. Boeing 737-8AS C-FTCZ (msn 29923) departs from Montreal (Trudeau).

CanJet aircraft slide show: AG Airline Slide Show

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Air Transat’s parent reduces its fiscal second quarter net loss to $7.9 million

Transat A.T. Inc., (parent of Air Transat) (website) (Montreal) posted revenues of $1.1 billion for the quarter ended April 30, 2014, an increase of 1% compared with the same period in 2013.

The Corporation recorded an adjusted operating loss of $4.0 million (all dollar figures are in Canadian dollars), compared with an adjusted operating profit of $2.7 million in 2013, and a net loss of $7.9 million ($0.20 per share on a diluted basis), compared with a net loss of $22.8 million ($0.59 per share on a diluted basis) in 2013. The decline in value of the Canadian dollar alone resulted in an increase in operating expenses of $22 million. Before non-operating items, Transat reported an adjusted net loss3 of $7.6 million in 2014 ($0.19 per share on a diluted basis), compared with an adjusted net loss of $1.4 million ($0.04 per share on a diluted basis) in 2013.

Here is the full report:

“Our results for the quarter and the winter are slightly better than what we anticipated in March,” commented Jean-Marc Eustache, President and Chief Executive Officer, before adding: “It was a peculiar winter. In December, margins were higher year over year and we were heading toward a performance improvement. The sudden drop in value of the Canadian dollar provoked a significant increase in operating expenses that reversed the situation, as it came early in the season, when the market resists increases in selling prices.”

Second-quarter highlights

The Corporation posted revenues of $1.1 billion, an increase of 1% compared with 2013, and an adjusted operating loss1 of $4.0 million, compared with an adjusted operating profit of $2.7 million in 2013. During the quarter, Transat had reduced capacity on its Sun destination routes by 3.5%, which contributed to a 5.3% overall decrease in the number of travellers. Average selling prices were up, and the euro and pound traded higher against the Canadian dollar. The adjusted operating loss is attributable entirely to the decline in value of the Canadian dollar against the U.S. dollar.

Revenues of North American business units, which are generated by sales in Canada and abroad, decreased by $4.0 million (0.4%) compared with the same period in 2013. The decline in revenues stemmed from the Corporation’s decision to reduce supply on its Sun destination routes by 3.5%, and on its transatlantic routes by 2.9%, leading to a decrease of 5.9% in the number of travellers, while average selling prices rose. North American business units recorded an operating loss of $15.7 million, compared with one of $7.3 million in 2013. The increase in operating loss is attributable entirely to the decline in value of the Canadian dollar versus the U.S. dollar, and the accompanying increase in operating expenses. The combined effect of increased selling prices plus cost-control initiatives was not sufficient to offset the effect of those expense increases. The operating loss for the quarter includes a $2.2-million restructuring charge, compared with $3.9 million in 2013.

Revenues of European business units, which are generated by sales in Europe and in Canada, increased by $15.8 million (9.7%) over 2013, owing to the strength of the euro and pound against the Canadian dollar. Measured in local currencies, the revenues of the France business unit increased, while those of the U.K. unit decreased following the Corporation’s decision to reduce capacity. European activities resulted in an operating loss of $1.4 million, compared with $2.8 million in 2013.

First six-month period highlights

For the first six months, the Corporation posted revenues of $2.0 billion in 2014, compared with $1.9 billion in 2013, and an adjusted operating loss1 of $27.8 million, compared with $18.3 million in 2013. During the six-month period, the Corporation reduced capacity on certain markets, resulting in a 3.6% overall decrease in the number of travellers. Capacity on Sun destination routes, meanwhile, was similar to that in 2013. Average selling prices were up, and the euro and pound traded higher against the Canadian dollar. The adjusted operating loss is attributable entirely to the decline in value of the Canadian dollar versus the U.S. dollar.

Revenues of North American business units increased by $27.5 million (1.7%) compared with the same period in 2013. For the six-month period, capacity on Sun destination routes was similar to that of 2013, while transatlantic market capacity was reduced by 6.2%. North American business units recorded an adjusted operating loss1 of $40.7 million, compared with $23.6 million in 2013. The operating loss is attributable entirely to the Corporation’s increased costs following the depreciation of the Canadian dollar against its U.S. counterpart. The operating loss for the six-month period includes a $2.2-million restructuring charge, compared with $3.9 million in 2013.

Revenues of the European business units increased by $25.8 million (9.3%) from 2013, owing to the strength of the euro and pound against the Canadian dollar. Measured in local currencies, these business units’ revenues declined slightly, following the decision to reduce capacity. European activities resulted in an operating loss of $9.9 million, compared with one of $16.5 million for the first six months of 2013.

Financial position

As at April 30, 2014, the Corporation’s free cash totalled $404.6 million, compared with $336.1 million at the same date in 2013. The working capital ratio was 1.04, against 0.98, and deposits from customers for future travel amounted to $540.3 million, compared with $514.7 million a year earlier. Off-balance-sheet agreements stood at $648.6 million as at April 30, 2014, compared with $655.8 million as at October 31, 2013,4 the decrease being attributable to payments made during the period, offset by the increase resulting from the depreciation of the Canadian dollar against the U.S. dollar.

Outlook

The transatlantic market outbound from Canada and Europe accounts for a very significant portion of Transat’s business in the summer. For the period May to October 2014, Transat’s capacity on that market is lower by 1% than that for summer 2013. To date, 65% of that capacity has been sold. Load factors are 2.4% lower and selling prices of bookings taken are approximately 4.3% higher, compared with the same date in 2013. If the Canadian dollar remains at its current value against the U.S. dollar, the euro and the pound, this will result in an increase in operating expenses of 4.4%.

On the Sun destinations market outbound from Canada, Transat’s capacity is higher by 9% than that for the previous year. To date, 49% of that capacity has been sold, load factors are 1% lower, and selling prices are higher.

In France, compared with last year at the same date, medium-haul bookings are ahead by 24%, while long-haul bookings are at a similar level. Variations in the product mix have resulted in a lower average selling price, with no negative impact on the average margin.

To the extent the aforementioned trends hold, the Corporation expects to record satisfying results in the second half, though lower than the record results posted last year.

Cost-reduction and margin-improvement initiatives

The Corporation continues implementing its initiatives to reduce operating costs, improve margins, and make changes to its systems and processes. In April 2013, Transat announced its decision to internalize narrow-body medium-haul aircraft (Boeing 737-800s) for travel outbound from Canada, starting in May 2014. These measures had, as expected, a favorable impact of $20 million on the margin in 2012 and one of $15 million in 2013. The Corporation expects another $20 million in 2014, as well as in 2015, when internalization of the narrow-body fleet will produce its full benefits.

Copyright Photo: TMK Photography/AirlinersGallery.com. In April 2013, Transat announced its decision to internalize narrow-body medium-haul aircraft (Boeing 737-800s) for travel outbound from Canada, starting in May 2014. Formerly operated by Ryanair as EI-CSH, CanJet Airlines’ Boeing 737-8AS C-FTCZ (msn 29923) is pictured operating as Air Transat in their new 2011 colors.

Air Transat: AG Slide Show