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Transat AT Inc (TRZBF) Q2 2025 Earnings Call Highlights: Revenue Growth and Strategic Debt ...
Revenue: Increased by 5.9% to over $1 billion.
Adjusted EBITDA: Reached $98.4 million, up from $30 million in the previous year.
Net Loss: $23 million or $0.58 per share, compared to $54 million or $1.40 per share last year.
Adjusted Net Income: $5 million or $0.12 per share, versus an adjusted net loss of $47 million or $1.21 per share last year.
Customer Traffic: Increased by 1.6% in revenue passenger miles.
Yield Improvement: 2% year-over-year increase.
Load Factor: 84.6%, a slight decline from last year.
Capacity: Increased by 2.6% in available seat miles.
Cash Flow from Operating Activities: $208 million, up from $183 million last year.
Free Cash Flow: $140 million in Q2, compared to $110 million a year ago.
Cash and Cash Equivalents: $533 million as of April 30, 2025.
Long-term Debt and Deferred Government Grant: $812 million, expected to decrease to $384 million post-restructuring.
Net Cash Position: Pro forma net cash position of $104 million after debt restructuring.
Warning! GuruFocus has detected 4 Warning Signs with TRZBF.
Release Date: June 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Transat AT Inc (TRZBF) reported a revenue growth of 5.9% to over $1 billion and an adjusted EBITDA of $98.4 million, driven by favorable yields, lower fuel costs, and tight control of operating expenses.
The company reached an agreement to restructure its debt, significantly deleveraging its balance sheet and enhancing financial flexibility.
Customer traffic increased by 1.6% year over year, reflecting continued demand for leisure travel.
The elevation program is on track to deliver $100 million in adjusted EBITDA by mid-2026, with initiatives already generating $67 million annually.
Operational improvements were noted, with on-time performance improving for the fourth consecutive quarter and enhanced customer service at call centers due to AI tool deployment.
The load factor declined slightly to 84.6% compared to the previous year.
The company is managing the negative impact of the Pratt & Whitney engine situation, with six to seven aircraft expected to remain grounded for the rest of the year.
There is observed softness in bookings for the fourth quarter, particularly in European markets, due to economic uncertainty affecting consumer confidence.
Despite revenue growth, the company reported a net loss of $23 million for the second quarter of 2025.
The competitive environment is challenging, with downward pressure on pricing for European destinations due to increased capacity from competitors.
Q: Can you explain the difference between the $77 million maximum compensation from Pratt & Whitney and the $20 million recognized in Q2? Will the remainder be recognized in future quarters? A: The compensation agreement is based on the number of grounded aircraft per day. The $20 million recognized in Q2 reflects this calculation. Additional revenues will be booked over time as aircraft remain grounded, with a cap of USD55 million for 2025 and 2026. (Jean-Francois Pruneau, CFO)
Q: Do you expect the number of grounded aircraft to continue for the next several quarters? A: Yes, we anticipate the situation will persist until 2027, allowing us to book additional revenues for 2025 and 2026. (Jean-Francois Pruneau, CFO)
Q: What is the expected capacity growth for the full year, and are there any specific areas where capacity is being scaled back? A: We expect an annual capacity increase of 1.5% compared to 2024. Given the six grounded aircraft, we do not plan to increase capacity further. (Annick Guerard, CEO)
Q: Can you expand on the competitive environment and its impact on revenues? A: We've seen a shift in capacity from the US to South destinations, which are performing well. However, there's downward pressure on pricing for European destinations due to increased competition. (Annick Guerard, CEO)
Q: Regarding the debt restructuring, what is the new quarterly interest expense run rate, and do you have a new leverage target? A: The interest expense will be closer to $5 million annually, excluding leases. We aim to reduce leverage to below 3.5 times within 18 to 24 months, with a long-term target closer to 2.5 times. (Jean-Francois Pruneau, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
