Transat A.T. Inc. Reports Results for the First Quarter of Fiscal 2026 Adjusted EBITDA Increases 68% Year Over Year

First-quarter highlights:

• Revenues of $870.7 million, up 5.0% from $829.5 million last year
• Adjusted EBITDA¹ of $33.6 million, compared to $20.0 million last year
• Net loss of $29.5 million ($0.73 per share), versus net loss of $122.5 million ($3.10 per share) last year
• Positive free cash flow¹ of $246.6 million, compared to positive $129.1 million last year
• Cash and cash equivalents of $386.7 million as at January 31, 2026
• Long-term debt and deferred government grant totaled $375.0 million, compared to $813.4 million last year
• Announcement of a strategic partnership with Desjardins Group, supported by Visa Canada, in connection with the loyalty program scheduled to launch in the second half of 2026

MONTRÉAL, March 10, 2026 /CNW/ - Transat A.T. Inc. reported today its first quarter 2026 financial results.

"Transat delivered solid financial results in the first quarter of 2026, reflecting continued momentum from the diligent execution of its profitable growth strategy. Key initiatives implemented in the last several quarters, including our Elevation Program, diversification of network routes and airline partnerships, produced a 5% revenue growth and a strong 68% year-over-year increase in adjusted EBITDA¹. In terms of operating metrics, we are equally pleased with our performance, highlighted by traffic growth of 2.2% and a fifth consecutive quarter of yield improvement. Overall, our achievements demonstrate that Transat is moving in the right direction in laying the foundation for long-term shareholder value creation," said Annick Guérard, President and Chief Executive Officer of Transat.

"Following the end of the quarter, we temporarily suspended all flights to Cuba until April 30 due to an anticipated fuel shortage at destination airports and organized repatriation flights to Canada to ensure the safety and well–being of our customers. Importantly, we redeployed a portion of the affected capacity through our South network, where we have seen an influx in demand. We will continue to monitor the situation closely to determine when flights to Cuba can safely resume," added Ms. Guérard.

"We are encouraged by improved profitability in the first quarter. Adjusted EBITDA¹ grew significantly to $34 million, driven by higher revenues and improved cost efficiency, reflecting the positive impact of our Elevation Program. In addition, a strong operating cash flow enhanced our financial position, enabling us to reimburse $25 million on our revolving credit facility during the quarter, followed by a $30 million repayment on our working capital facility in early February," said Jean-François Pruneau, Chief Financial Officer of Transat.

First-quarter results

For the quarter ended January 31, 2026, revenues reached $870.7 million, up 5.0% from $829.5 million in the corresponding period last year. This growth was primarily driven by a 2.2% increase in traffic, expressed in revenue-passenger-miles and by a 1.4% increase in airline unit revenues (yield). For the quarter, across the entire network, the capacity offered increased by 1.0%, compared with 2025, while the capacity for sun routes, the main program during this period, increased by 4.4%. In addition, following the agreement entered into with the original equipment manufacturer of the GTF² engines in the second quarter of 2025, a financial compensation of $5.1 million was recorded in revenues during the quarter ended January 31, 2026.

Adjusted EBITDA¹ amounted to $33.6 million, compared with $20.0 million in 2025. This variation resulted primarily from higher airline unit revenues and traffic growth, combined with cost-control initiatives, reflecting the benefits of the Elevation Program. These factors were partially offset by ongoing costs related to Pratt & Whitney GTF¹ engine issues and operational disruptions in Jamaica caused by Hurricane Melissa, despite the redeployment of capacity to other destinations.

Cash flow and financial position

Cash flows related to operating activities generated $296.4 million during the first quarter of 2026, compared with a cash generation of $168.6 million for the same period last year, mainly due to more favourable changes in working capital balances and higher profitability this year versus last. After accounting for investing activities and repayment of lease liabilities, free cash flow¹ was positive $246.6 million during the quarter, compared with positive $129.1 million for the corresponding period last year.

As at January 31, 2026, cash and cash equivalents stood at $386.7 million, compared to $164.9 million as at October 31, 2025. Cash and cash equivalents in trust or otherwise reserved mainly resulting from travel package bookings totaled $528.1 million as at January 31, 2026, compared with $430.0 million as at October 31, 2025, reflecting the seasonal nature of operations.

Customers deposits for future travel totaled $1,089.6 million as at January 31, 2026, compared to $823.3 million as at October 31, 2025.

Long-term debt and deferred government grant totaled $375.0 million as at January 31, 2026, compared to $400.0 million as at October 31, 2025. This decrease is attributable to the repayment of $25.0 million on the Corporation's revolving term credit facility.

Long–term debt and deferred government grant, net of cash and cash equivalents, stood at a net cash position of $11.7 million, compared to a net debt position of $235.1 million as at October 31, 2025.

On February 13, 2026, the Corporation repaid the $30.0 million balance on its subordinated working capital facility. The facility remains available for future drawdowns.

______________________________
¹ Geared turbofan ("GTF")

Key indicators

To date, for the second quarter of 2026, airline unit revenues, expressed as yield, are in line with last year in a context of approximately 5% higher capacity, measured in available seat-miles. Load factors are 1.8 percentage points lower than at the same time last year, with the unfavorable variance mostly weighting on the back-end of the quarter.

For fiscal year 2026, the Corporation expects a 5% to 7% increase in capacity, measured in available seat-miles, compared to 2025.

Conference call

The first quarter 2026 conference call will take place on Tuesday, March 10, 2026, 3:00 p.m. To join the conference call without operator assistance, you may register by entering your phone number here to receive an instant automated call back.

You can also dial direct to be entered into the call by an operator:
Montreal: 514 400-3794
North America (toll-free): 1 800 990-4777
Name of conference: Transat
The conference will also be accessible live via webcast: click here to register. 

An audio replay will be available until March 17, 2026, by dialing 1 888 660-6345 (toll-free in North America), access code 34505 followed by the pound key (#). The webcast will remain available for 90 days following the call.

Second-quarter 2026 results will be announced on June 11, 2026.

(1) Non-IFRS financial measures

Transat prepares its financial statements in accordance with International Financial Reporting Standards ["IFRS"]. We will occasionally refer to non-IFRS financial measures in the news release. These non-IFRS financial measures do not have any meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. They are intended to provide additional information and should not be considered as a substitute for measures of performance prepared in accordance with IFRS. All dollar figures are in Canadian dollars unless otherwise indicated.

The following are non-IFRS financial measures used by management as indicators to evaluate ongoing and recurring operational performance.

Adjusted operating income (loss) or adjusted EBITDA: Operating income (loss) before depreciation, amortization and asset impairment expense, reversal of impairment of the investment in a joint venture, the effect of changes in discount rates used for accretion of the provision for return conditions, changes in market price of CORSIA Eligible Emissions Units (carbon credits), restructuring costs and other significant unusual items, and including premiums related to derivatives that matured during the period. The Corporation uses this measure to assess the operational performance of its activities before the aforementioned items to ensure better comparability of financial results. Adjusted operating income is also used to calculate variable compensation for employees and senior executives.

Adjusted pre-tax income (loss) or adjusted EBT: Income (loss) before income tax expense before change in fair value of derivatives, revaluation of liability related to warrants and preferred shares, gain on long-term debt extinguishment, gain on business disposals, gain on disposal of investment, gain (loss) on asset disposals, gain on sale and leaseback of assets, the effect of changes in discount rates used for accretion of the provision for return conditions, changes in market price of CORSIA Eligible Emissions Units (carbon credits), restructuring costs, write-off of assets, reversal of impairment of the investment in a joint venture, foreign exchange gain (loss) and other significant unusual items, and including premiums related to derivatives that matured during the period. The Corporation uses this measure to assess the financial performance of its activities before the aforementioned items to ensure better comparability of financial results.

Adjusted net income (loss): Net income (loss) before change in fair value of derivatives, revaluation of liability related to warrants and preferred shares, gain on long-term debt extinguishment, gain on business disposals, gain on disposal of investment, gain (loss) on asset disposals, gain on sale and leaseback of assets, the effect of changes in discount rates used for accretion of the provision for return conditions, changes in market price of CORSIA Eligible Emissions Units (carbon credits), restructuring costs, write-off of assets, reversal of impairment of the investment in a joint venture, foreign exchange gain (loss), reduction in the carrying amount of deferred tax assets and other significant unusual items, and including premiums related to derivatives that matured during the period, net of related taxes. The Corporation uses this measure to assess the financial performance of its activities before the aforementioned items to ensure better comparability of financial results. Adjusted net income (loss) is also used in calculating the variable compensation of employees and senior executives.

Adjusted net earnings (loss) per share: Adjusted net income (loss) divided by the adjusted weighted average number of outstanding shares used in computing diluted earnings (loss) per share.

Free cash flow: Cash flows related to operating activities less cash flows related to investing activities and repayment of lease liabilities. The Corporation uses this measure to assess the cash that's available to be distributed in a discretionary way such as repayment of long-term debt or deferred government grant or distribution of dividend to shareholders.

Total debt: Long-term debt plus lease liabilities, deferred government grant and liability related to warrants, net of deferred financing costs related to the subordinated debt - LEEFF. Management uses total debt to assess the Corporation's debt level, future cash needs and financial leverage ratio. Management believes this measure is useful in assessing the Corporation's capacity to meet its current and future financial obligations.

Total net debt:Total debt (described above) less cash and cash equivalents. Total net debt is used to assess the cash position relative to the Corporation's debt level. Management believes this measure is useful in assessing the Corporation's capacity to meet its current and future financial obligations.

Additional Information

The results were affected by non-operating items, as summarized in the following table: 

Highlights and non-IFRS financial measures

	First quarter
	2026	2025
(in thousands of Canadian dollars, except per share amounts)	$	$
Operating loss	(19,154)	(51,956)
Depreciation and amortization	61,949	62,965
Effect of discount rate changes	(8,590)	7,149
Changes in market price of CORSIA Eligible Emissions Units	(297)	--
Restructuring costs	220	3,078
Premiums related to derivatives that matured during the period	(530)	(1,267)
Adjusted operating income¹ or adjusted EBITDA¹	33,598	19,969
Net loss	(29,498)	(122,532)
Effect of discount rate changes	(8,590)	7,149
Changes in market price of CORSIA Eligible Emissions Units	(297)	--
Restructuring costs	220	3,078
Change in fair value of derivatives	24,400	(3,462)
Revaluation of liability related to warrants and preferred shares	6,287	(7)
Foreign exchange (gain) loss	(39,848)	47,472
Gain on long-term debt extinguishment	--	(216)
Gain on asset disposals	--	(5,183)
Premiums related to derivatives that matured during the period	(530)	(1,267)
Adjusted net loss¹	(47,856)	(74,968)
Adjusted net loss¹	(47,856)	(74,968)
Adjusted weighted average number of outstanding shares used      in computing diluted earnings per share	40,544	39,466
Adjusted net loss per share¹	(1.18)	(1.90)
Cash flows related to operating activities	296,397	168,578
Cash flows related to investing activities	(13,654)	7,734
Repayment of lease liabilities	(36,186)	(47,183)
Free cash flow^1	246,557	129,129
	As at January 31, 2026	As at October 31, 2025
(in thousands of dollars)	$	$
Long-term debt	179,882	200,818
Deferred government grant	195,118	199,182
Liability related to warrants	18,711	14,235
Lease liabilities	1,271,900	1,347,396
Total debt^1	1,665,611	1,761,631
Total debt	1,665,611	1,761,631
Cash and cash equivalents	(386,654)	(164,920)
Total net debt^1	1,278,957	1,596,711

About Transat

Founded in Montreal in 1987, Transat has achieved worldwide recognition as a provider of leisure travel particularly as an airline under the Air Transat brand. Voted World's Best Leisure Airline by passengers at the 2025 Skytrax World Airline Awards, it flies to international destinations. By renewing its fleet with the most energy-efficient aircraft in their category, it is committed to a healthier environment, knowing that this is essential to its operations and the destinations it serves. Based in Montreal, Transat has nearly 5,000 employees with a common purpose to bring people closer together. (TSX: TRZ) www.transat.com

Caution regarding forward-looking statements

This news release contains certain forward-looking statements with respect to the Corporation, including those regarding its results, its financial position and its outlook for the future. These forward-looking statements are identified by the use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "will," "would," the negative of these terms and similar terminology, including references to assumptions. All such statements are made pursuant to applicable Canadian securities legislation. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements.

The forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, economic conditions, changes in demand due to the seasonal nature of the business, extreme weather conditions, climatic or geological disasters, war, political instability, measures taken, planned or contemplated by governments regarding the imposition of tariffs on exports and imports, real or perceived terrorism, outbreaks of epidemics or disease, consumer preferences and consumer habits, consumers' perceptions of the safety of destination services and aviation safety, demographic trends, disruptions to the air traffic control system, the cost of protective, safety and environmental measures, competition, the Corporation's ability to maintain and grow its reputation and brand, the availability of funding in the future for the Corporation including its debt refinancing, the Corporation's ability to repay its debt from internally generated funds or otherwise, the Corporation's ability to adequately mitigate the Pratt & Whitney GTF engine issues, fluctuations in fuel prices and exchange rates and interest rates, the Corporation's dependence on key suppliers, the availability and fluctuation of costs related to our aircraft, information technology and telecommunications, cybersecurity risks, changes in legislation, regulatory developments or procedures, pending litigation and third-party lawsuits, the Corporation's ability to reduce operating costs through, among other things, the Elevation Program initiatives, the Corporation's ability to attract and retain skilled resources, labour relations, collective bargaining and labour disputes, pension issues, maintaining insurance coverage at favourable levels and conditions and at an acceptable cost, and other risks detailed in the Risks and Uncertainties section of the Management's Discussion and Analysis included in our 2025 Annual Report, filed on SEDAR+ at www.sedarplus.ca.

The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Corporation's forward-looking statements. The reader is also cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements.

The forward-looking statements in this news release are based on a number of assumptions relating to economic and market conditions as well as the Corporation's operations, financial position and transactions. Examples of such forward-looking statements include, but are not limited to, statements concerning:

• The outlook whereby the Corporation will be able to meet its obligations with cash on hand, cash flows from operations, drawdowns under existing credit facilities or by other means.
  
  
• The outlook whereby, for fiscal year 2026, the Corporation expects a 5% to 7% increase in capacity, measured in available seat-miles, compared to 2025.

In making these statements, the Corporation assumes, among other things, that the standards and measures for the health and safety of personnel and travellers imposed by government and airport authorities will be consistent with those currently in effect, that workers will continue to be available to the Corporation, its suppliers and the companies providing passenger services at the airports, that credit facilities and other terms of credit extended by its business partners will continue to be made available as in the past, that management will continue to manage changes in cash flows to fund working capital requirements for the full fiscal year and that fuel prices, exchange rates, selling prices and hotel and other costs remain stable, the Corporation will be able to adequately mitigate the Pratt & Whitney GTF engine issues and that the initiatives identified to improve adjusted operating income (adjusted EBITDA) can be implemented as planned, and will result in cost reductions and revenue increases of the order anticipated by mid-2026. If these assumptions prove incorrect, actual results and developments may differ materially from those contemplated by the forward-looking statements contained in this press release.The Corporation considers that the assumptions on which these forward-looking statements are based are reasonable. These statements reflect current expectations regarding future events and operating performance, speak only as of the date this news release is issued, and represent the Corporation's expectations as of that date. For additional information with respect to these and other factors, see the Management's Discussion and Analysis for the quarter ended January 31, 2026 filed with the Canadian securities commissions and available on SEDAR+ at www.sedarplus.ca. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable securities legislation.

Media site and image bank: transat.com/en-CA/corporate/media

SOURCE Transat A.T. Inc.