Air Transat swings to quarterly loss on fuel costs and pilot pay

Air Transat swung to a loss in its fiscal third quarter as high fuel costs and a newly ratified pilot contract weighed on results. Parent company Transat AT reported an adjusted loss of C$949,000 ($684,000), compared with an adjusted profit of C$81.2 million a year earlier.

Executives said the airline had limited ability to pass higher fuel bills on to price-sensitive leisure customers. "We compete in a segment where customers are highly price sensitive," chief executive Annick Guerard told analysts. She contrasted the carrier with legacy airlines that have premium corporate and loyalty revenue to offset fuel costs.

A new pilot contract ratified in January included a wage increase of more than 60% over five years, adding to cost pressures. The airline is upgrading its fleet with new premium cabins on routes to Paris, London and Portugal, and is developing a loyalty programme now in beta with 23,000 members. Neither initiative is expected to boost earnings this year.

Capacity growth through the end of the year will be less than 2% compared with a year ago, and flat for the winter season. Guerard said capacity deployment would remain "highly disciplined."

In July, Transat received a C$150 million credit line from the government.