Because of the stop of its activities because of the COVID-19, the parent company of Air Transat, has seen its revenue dip in the second quarter.
Compared to the same period last year, the revenues of Transat were down 36.3 %, to 571.3 million $.
“The efforts have resulted in an operating loss of $ 29.6 million, compared to $ 3.8 million in 2019, a deterioration of $ 25.8 million, lower operating expenses has not been sufficient to offset the fall in income,” explained the company by news release Thursday morning.
Its losses increased compared to the second quarter of last year.
“The net loss attributable to shareholders was $ 179,5 million ($4,76 $ per share (diluted), compared to $ 0.9 million, or $ 0.02 per share (diluted) in 2019,” said the carrier in montreal.
This loss includes a charge for the derivatives of the fuel and other derivatives of 89,1 million $, caused by the collapse of the oil price, a foreign exchange loss of $ 32.5 million related primarily to the revaluation of capital lease obligations and a charge to reduce the carrying amount of a deferred tax asset of $21.7 million.
“The pandemic of sars coronavirus and the border closure measures that have resulted have hit the airline industry in a way never seen before. It has forced Transat to suspend all of its flights from the 1st of April. This has plunged our results, while we noted a marked improvement in the first four months of the year,” said Jean-Marc Eustache, president and chief executive officer of Transat.
He pointed out that temporary lay-off of 85 % of the employees have to maintain as much as possible cash, even if the losses pile up.
Sale to Air Canada?
To be sold to Air Canada for $ 18 per share, Transat has seemed to confirm that this transaction is in danger in its current form.
“Certain factors outside of its control and related to the pandemic COVID-19 could influence the outcome of the proposed arrangement,” said Transat.
“The market conditions of the global industry, have been transformed all that. Among other things, the vast majority of airlines in north american, european, and international have announced a reduction of their capacity, and requested financial assistance measures. This could impact the possibility of reaching an agreement with the regulatory authorities at the level of an appropriate set of corrective measures to obtain the necessary approvals,” said the airline in montreal.
If the transaction goes ahead, it is expected to be completed in the fourth quarter of 2020.