Transat to relaunch flights on July 23 provided travel restrictions ease

Yahoo Finance Canada
REUTERS/Regis Duvignau
REUTERS/Regis Duvignau

Transat A.T. Inc. (TRZ) plans on resuming some flights to Europe, the United States, Caribbean and within Canada starting on July 23, but it may have to ditch the relaunch if governments don’t ease travel restrictions soon.

The Montreal-based travel and tour company, which reported earnings on Thursday and operates the Air Transat airline, said the resumption of flights was the “first step towards getting healthy operations back on track.”

Transat has suspended all of its flights since April 1, as travel demand disappeared due to the coronavirus pandemic. The company’s chief executive Jean-Marc Eustache told analysts on a conference call Thursday that the suspension was “the right decision” and allowed the company to limit the financial damage prompted by the COVID-19 pandemic.

Revenue in the second quarter ending April 30 fell to $571 million from $897 million during the same time last year, a drop of 36 per cent. Transat reported an adjusted loss of $39 million, or $1.03 per adjusted share, compared to a loss of $6 million, or 17 cents per share, last year.

As of July 23, the company hopes to offer flights from Montreal and Toronto to 13 destinations in Europe, five destinations in the Caribbean and United States, as well as domestic routes between Montreal, Toronto, Calgary and Vancouver.

But the plan is contingent on governments around the world loosening restrictions that are currently in place around travel, Annick Guerard, Transat’s chief operating officer, said on the conference call. Some of the routes Transat will operate feature restrictions that may discourage travellers from booking flights. For example, Canada still requires international travellers to quarantine for 14-days upon return.

“Most of the (flight routes) require political change before we are able to operate our flights,” Guerard said. However, she said there is nothing that is preventing Transat from flying, and pointed to several destinations that have eased restrictions, including the United Kingdom, France, Portugal and Mexico.

“But from a customer perspective, we want passengers to be accepted at borders and we want them to not have to follow restrictions such as (mandatory quarantine), which would give them barriers for travelling.”

Guerard said the company is hopeful the Canadian government will lift restrictions in the coming weeks.

“The first one that we are expecting, of course, and that we are waiting impatiently for is Canada,” she said.

“If borders do not reopen, we will have to cancel most of our plan, but we don’t believe this will happen.”

The company also announced a “Traveller Care” program aimed at reassuring passengers with the introduction of new health measures based on guidelines from the International Civil Aviation Organization, Transport Canada, and Canada’s Public Health Agency.

Passengers will receive traveller kits including face masks, hand sanitizer and disinfecting wipes. Both passengers and crew will be required to wear face masks throughout the flight. Transat also said it has high-efficiency particulate air filters on all its planes, which eliminates “almost 100 per cent of small particles such as bacteria and viruses, refreshing cabin air every three minutes.”

“We are confident that a decent number of consumers will be interested (in flying) on our aircrafts in the upcoming months,” Guerard said.

Transat ‘firmly committed’ to Air Canada deal

As it embarks on a COVID-19 recovery, the travel company is also at the centre of a $720 million deal that would see Air Canada takeover its operations, although the future of the transaction remains unclear. The proposed deal is currently being investigated by the European Commission over competition concerns, and will require approval from the Minister of Transport in Canada.

Le Journal de Montreal reported last week that Air Canada wants the federal government to block the transaction.

Eustache said Transat remains “firmly committed” to the Air Canada deal, but warned that the market conditions may impact the company’s ability to implement any corrective measures required to secure regulatory approval. Transat has also agreed not to take on additional debt, which may not be possible given the impact of the COVID-19 pandemic.

“It must be noted that several factors beyond our control could influence the outcome of the proposed arrangement,” he said.

“Nevertheless, the process of seeking these approvals is ongoing and we are making sure that whatever happens, we will be prepared to deal with this situation in the best interest of all stakeholders.”

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