Transat A.T. Inc. - Second Quarter 2009 Results



    
                 Record number of travellers this past winter

    - Revenues of $1,129.1 million, up 5.0 % from $1,075.2 million for the
      corresponding quarter of in 2008, reflecting increases in the numbers
      of travellers in Canada and the strength of the euro.
    - Margin(1) of $39.1 million, compared with $70.7 million in 2008, the
      variance being attributable to the impact of selling prices of intense
      competition.
    - Net income of $42.2 million ($1.27 per share fully diluted), compared
      with $41.7 million ($1.25 per share) in 2008.
    - Net income of $20.7 million or $0.62 per share fully diluted, compared
      with $41.4 million or $1.24 per share in 2008, before impact of
      non-cash items (adjusted net income).
    

    MONTREAL, June 11 /CNW Telbec/ - Transat A.T. Inc., one of the largest
integrated tourism companies in the world and Canada's holiday travel leader,
posted revenues of $1,129.1 million for the quarter ended April 30, 2009,
compared with $1,075.2 million for the corresponding period of 2008--an
increase of $53.9 million or 5.0%. The Corporation recorded a margin(1) of
$39.1 million, down from $70.7 million in 2008, and net income of $42.2
million, or $1.27 per share on a fully diluted basis, compared with $41.7
million ($1.25 per share on a fully diluted basis) in 2008.
    "We saw a record number of travellers this past winter, despite the
economic downturn. Margins remain under pressure due to excess supply in sun
destinations," stated Jean-Marc Eustache, President and Chief Executive
Officer of Transat A.T. Inc.

    Second quarter and first six-month period highlights
    ----------------------------------------------------

    Revenues increased by $53.9 million for the quarter and by $143.8 million
for the six-month period, resulting from revenue growth of 3.3% for the
quarter and 6.0% for the six-month period in North America; and 12.9% for the
quarter and 16.6% for the six-month period in Europe. These increases are
attributable in part to greater commercial activity, but also to the strength
of the euro versus the Canadian dollar. Overall, the number of travellers
increased by 2.9% for the quarter and 6.1% for the six-month period.
    In proportion of revenues, margins(1) decreased from 6.6% in the second
quarter of 2008 to 3.5% for the 2009 period, and from 4.8% to 1.5% for the
six-month period. The variance results mainly from the pressure on selling
prices resulting from the combination of excess supply and intense
competition, especially in North America.
    In North America, revenues increased by $29.4 million, or 3.3%, for the
quarter, and by $93.5 million, or 6.0%, for the six-month period, compared
with the same 2008 periods. These improvements are attributable to increases
in the numbers of travellers of 2.2% for the quarter and 6.0% for the
six-month period, compared with 2008. During the winter season, the Company
increased its capacity to sun destinations and decreased it to Florida,
translating into increases in the number of travellers of 16.2% for the
quarter and 17.7% for the six-month period, compared with 2008. For the
quarter, the Corporation recorded a margin(1) of 4.2%, compared with 7.3% in
2008; for the six-month period the margin stood at 2.4%, compared with 5.8% in
2008. The variance in margins results mainly from lower selling prices,
especially to sun destinations, due to the combination of excess supply and
intense competition.
    Revenues of European business units increased by $24.6 million, or 12.9%,
during the quarter, and by $50.3 million, or 16.6%, during the six-month
period, compared with 2008. These increases are mainly attributable to the
strength of the euro compared to the dollar and to an increase in the number
of travellers (6.9% for the quarter and of 6.6% for the six-month period,
compared with 2008). In Europe, the Corporation recorded a margin(1) of $0.3
million (0.1%) for the quarter and an operating loss of $9.5 million (2.7%)
for the six-month period, compared with a margin of $6.1 million (3.2%) and an
operating loss of $1.3 million (0.4%) respectively in 2008. The decrease in
margin is due in part to the Corporation not being in a position to benefit
fully from the decrease in the price of aircraft fuel due to its fuel hedging
position.
    Net income for the six-month period ended April 30, 2009, was $12.8
million, or $0.39 per share on a fully diluted basis, compared with $33.9
million ($1.01 per share on a fully diluted basis) for the corresponding
year-ago period.
    As at April 30, 2009, the Corporation had $239.8 million in cash and cash
equivalents, compared with $145.8 million at October 31, 2008.

    Non-cash and non-operating items
    --------------------------------

    Based on updated assumptions, the Corporation has increased its
provisions for writedowns on asset-backed commercial paper (ABCP) by $5.2
million ($4.2 million after tax) during the quarter. In addition, during the
quarter, Transat recorded $0.4 million ($0.3 million after tax) in receivables
linked to ABCP. In the second quarter of 2008, the Corporation had recorded a
non-cash loss of $17.9 million ($13.8 million after tax) related to its ABCP
holdings. The total provision for writedowns of $55.3 million at April 30,
2009, represents 40.6% of the new nominal value on ABCP holdings of $136.1
million.
    The Corporation also recorded a non-cash and non-operating gain of $37.4
million ($25.7 million after tax) in the second quarter of 2009, compared to a
non-cash and non-operating gain of $20.9 million ($14.1 million after tax) in
the second quarter of 2008, representing the change in the fair value of the
forward contracts it uses to manage fuel price fluctuation risks.

    
             Highlights and impact of non-cash items on results
                            (in thousands of CAD)

    -------------------------------------------------------------------------
                                      Second quarter      First six months
                                 --------------------------------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
    REVENUES                      1,129,077  1,075,158  2,006,331  1,862,547
    -------------------------------------------------------------------------
    MARGIN(1)                        39,130     70,715     30,632     89,989
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ADJUSTED INCOME(2)               30,318     60,796     14,450     69,453
    -------------------------------------------------------------------------
      Impact of fuel hedge
       accounting                    37,428     20,942      8,916     18,975
    -------------------------------------------------------------------------
      Impact of ABCP revaluation     (5,200)   (17,915)    (1,407)   (32,137)
    -------------------------------------------------------------------------
    REPORTED INCOME before income
     taxes and non-controlling
     interest in business units'
     results                         62,526     63,823     21,959     56,291
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ADJUSTED NET INCOME(3)           20,676     41,389      8,875     44,834
    -------------------------------------------------------------------------
      Impact of fuel hedge
       accounting                    25,710     14,137      4,994     12,943
    -------------------------------------------------------------------------
      Impact of ABCP revaluation     (4,200)   (13,805)    (1,119)   (23,907)
    -------------------------------------------------------------------------
    REPORTED NET INCOME              42,186     41,721     12,750     33,870
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ADJUSTED NET EARNINGS PER
     SHARE(3)                          0.62       1.24       0.27       1.33
    -------------------------------------------------------------------------
      Impact of fuel hedge
       accounting                      0.78       0.42       0.15       0.38
    -------------------------------------------------------------------------
      Impact of ABCP revaluation      (0.13)     (0.41)     (0.03)     (0.71)
    -------------------------------------------------------------------------
    DILUTED NET INCOME PER SHARE       1.27       1.25       0.39       1.01
    -------------------------------------------------------------------------
    

    Outlook for the summer 2009
    ---------------------------

    With regard to Canada-Europe travel, reservations from Canada are similar
to their 2008 levels, whereas reservations from Europe are trailing slightly.
In total, our passenger load factor is similar to 2008 at the same date, with
prices slightly lower. However, we are currently noting increased price
pressure that could adversely affect margins for the remainder of our
inventory for sale.
    Reservations and the passenger load factor for sun destinations from
Canada are similar to 2008. The outbreak of influenza A(H1N1) resulted in a
shift of volume from Mexico to other countries, but does not seem to have
significantly impacted overall demand. For now, margins remain under pressure
due to the current business environment. Given that a significant portion of
our inventories has yet to be sold, it is difficult to estimate where
reservations will stand at season-end and assess the ultimate impact on
margins.
    In France, medium-haul travel is tracking higher than in 2008, whereas
long-haul travel with ground services is trailing. For now, margins remain
under pressure.

    Transat A.T. Inc. is an integrated international tour operator with more
than 60 destination countries and that distributes products in over 50
countries. A holiday travel specialist, Transat operates mainly in Canada and
Europe, as well as in the Caribbean, Mexico and the Mediterranean Basin.
Montreal-based Transat is also active in air transportation, accommodation,
destination services and distribution. (TSX: TRZ.B, TRZ.A)

    
    NOTES

    (1) MARGIN: Revenues less operating expenses (non-GAAP financial measure
        used by management as an indicator to evaluate ongoing and recurring
        operational performance).

    (2) ADJUSTED INCOME: Income before income taxes, non-controlling interest
        in business units' results, impact of fuel hedge accounting and ABCP
        revaluation.

    (3) ADJUSTED NET INCOME: Net income before impact of fuel hedge
        accounting and ABCP revaluation.
    

    Conference Call
    ---------------

    Second quarter 2009 conference call: Thursday June 11, 2009, 10.00 a.m.
Dial 1-877-922-4773 or 514-392-1478. Name of conference: Transat. Webcast
www.transat.com. The archived call will be available at 1-800-408-3053 or
514-861-2272 access code 5813703 pound sign, until July 10, 2009.

    Non-GAAP measures

    Transat prepares its financial statements in accordance with Canadian
generally accepted accounting principles ("GAAP"). We will occasionally refer
to non-GAAP financial measures in the news release. These non-GAAP financial
measures do not have any meaning prescribed by GAAP and are therefore unlikely
to be comparable to similar measures presented by other issuers. They are
furnished to provide additional information and should not be considered as a
substitute for measures of performance prepared in accordance with GAAP.

    Caution regarding forward-looking statements

    This news release contains certain forward-looking statements regarding
the Corporation's expectation that the assumptions used in the valuation of
the ABCP securities will materialize, and that travel reservations will follow
the trends. In making these statements, the Corporation has assumed that the
trends in reservations will continue throughout the remainder of the season.
If this assumption proves incorrect, actual results and developments may
differ materially from those contemplated by the forward-looking statements
contained in this press release. Factors that could lead actual results to
differ also include general economic conditions, competition, extreme weather
conditions, disease outbreaks, war, terrorism, and other risks detailed from
time to time in the Corporation's continuous disclosure documents.
    These forward-looking statements, by their nature, necessarily involve
risks and uncertainties that could cause actual results to differ materially
from those contemplated by these forward-looking statements. The Corporation
considers the assumptions on which these forward-looking statements are based
to be reasonable, but cautions the reader that these assumptions regarding
future events, many of which are beyond its control, may ultimately prove to
be incorrect since they are subject to risks and uncertainties that affect the
Corporation. For additional information with respect to these and other
factors, see the Annual Information Form and Annual Report for the year ended
October 31, 2008, filed with Canadian securities commissions. The Corporation
disclaims any intention or obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, other than as required by law.
    %SEDAR: 00002758EF




For further information:

For further information: Media: Pierre Tessier, (514) 987-1616, ext.
4662; Financial Analysts: Nelson Gentiletti, Interim Chief Financial Officer,
(514) 987-1660; Source: Transat A.T. Inc., www.transat.com


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