Transat A.T. Inc. Reports Results for the Third Quarter of Fiscal 2025

Improved operating and financial performance

Third-quarter highlights:

• Revenues of $766.3 million, up 4.1% from $736.2 million last year
• Adjusted EBITDA¹ of $81.2 million, compared to $48.0 million last year
• Net income of $399.8 million ($9.97 per share), including $345.1 million from long-term debt restructuring, compared to a net loss of $39.9 million ($1.03 per share) last year
• Negative free cash flow¹ of $122.1 million, compared to negative $168.7 million last year
• Cash and cash equivalents of $357.2 million as at July 31, 2025
• Elevation Program initiatives implemented to date are on track to deliver $100M in adjusted EBITDA¹ by mid-2026, in line with the objective
• Conclusion of the LEEFF debt restructuring, reducing the amount owed under the program from $762.2 million as of last quarter to $333.9 million
• Sale-leaseback transactions valued at $61.5 million for two Pratt & Whitney GTF² engines; proceeds used to reduce debt and fund operations

MONTRÉAL, Sept. 11, 2025 /CNW/ - Transat A.T. Inc. today reported its third quarter 2025 financial results.

"Transat delivered improved operating and financial performances in the third quarter of fiscal 2025. Revenues grew 4.1%, driven by a 2.6% year-over-year yield improvement and a 1.0% passenger traffic increase. Benefits from our Elevation Program, a comprehensive optimization plan aimed at maximizing long-term profitable growth, are materializing as anticipated and continue to drive results towards generating adjusted EBITDA of $100 million by mid-2026. The increase in revenue, combined with rigorous control of operating expenses and favourable fuel costs, resulted in improved operating profitability," said Annick Guérard, President and Chief Executive Officer of Transat.

"Looking ahead, economic uncertainty and capacity redeployment across the industry are posing short-term challenges for load factors, and we do not expect fuel costs to provide the same significant tailwind as they did so far this year. In this context, we are maintaining our focus on executing our business strategy through disciplined cost management, fleet optimization and network expansion. As for the upcoming winter season, we are excited with our broader offering. With new destinations in South America and Türkiye, along with the extension of  transatlantic services, we are pursuing our diversification strategy to offer more leisure travel options," added Ms. Guérard.

"Closing our refinancing agreement during the third quarter was a key milestone in achieving our objectives of reducing debt and strengthening our balance sheet. We also partly monetized our financial compensation from the manufacturer of the GTF² engines for 2025 through two sale-leaseback transactions, and proceeds were partially used to further repay debt and redeem preferred shares. With a significantly improved capital structure, we can concentrate more efficiently on carrying out our strategic plan and driving long-term operational progress," said Jean-François Pruneau, Chief Financial Officer of Transat.

Third-quarter results

For the quarter ended July 31, 2025, revenues reached $766.3 million, up 4.1% from $736.2 million in the corresponding period last year. The increase was mainly attributable to a 2.6% increase in airline unit revenues (yield) and a 1.0% increase in traffic expressed in revenue-passenger-miles (RPM) compared with 2024. In addition, following the agreement with the manufacturer of the GTF² engines, a financial compensation of $7.0 million was recorded in revenues. Reflecting disciplined management, the Corporation's capacity was up 2.4% from the corresponding period last year, while capacity for transatlantic routes, the main program during this period, increased by 4.2%.

Adjusted EBITDA¹ amounted to $81.2 million, compared with $48.0 million in 2024. This increase was mainly attributable to higher revenues, increased productivity, as well as a 14% decrease in fuel prices compared with the corresponding period of 2024.

Nine-month results

For the nine-month period ended July 31, 2025, revenues reached $2,626.9 million, up 5.3% from $2,494.9 million in the corresponding period a year ago. For the nine-month period, yield increased 2.2%, traffic was up 1.2% and the Corporation recorded a financial compensation of $27.0 million related to the GTF² engines. Network-wide capacity increased by 1.9% compared to the same period in 2024.

For the nine-month period, adjusted EBITDA¹ totaled $199.6 million, compared with $74.8 million for fiscal 2024. The increase was mainly attributable to revenue growth, productivity gains and lower fuel prices.

Cash flow and financial position

Cash flows related to operating activities used $104.9 million during the third quarter of 2025, compared with a cash usage of $91.1 million for the same period last year, as a reduction in non-cash working capital balances were partially offset by higher profitability. After accounting for investing activities and repayment of lease liabilities, free cash flow¹ was negative $122.1 million during the quarter, compared with negative $168.7 million for the corresponding period last year. For the nine-month period of 2025, free cash flow¹ was positive $149.3 million, compared to negative $19.8 million in the same period of 2024.

As at July 31, 2025, cash and cash equivalents stood at $357.2 million, compared to $260.3 million as at October 31, 2024. Cash and cash equivalents in trust or otherwise reserved mainly resulting from travel package bookings totaled $305.5 million as at July 31, 2025, compared with $484.9 million as at October 31, 2024, reflecting the seasonal nature of operations. Customers deposits for future travel totaled $821.5 million as at July 31, 2025, comparable to the amount recorded a year earlier.

During the nine-month period ended July 31, 2025, the Corporation entered into sale-leaseback transactions involving three Pratt & Whitney GTF² engines for a total of $92.1 million, including two engines during the third quarter for a total of $61.5 million.

Long-term debt and deferred government grant totaled $383.9 million as at July 31, 2025, compared to $803.1 million as at October 31, 2024. This decrease is mainly attributable to the reduction in long-term debt following the Corporation's debt restructuring, including the full repayment of the $41.4 million principal balance of the secured LEEFF financing. Reflecting the proceeds mentioned above, the long-term debt and deferred government grant net of cash stood at $26.7 million, down from $542.7 million as at October 31, 2024.

The Corporation renegotiated its revolving credit facility agreement on September 5, 2025, mainly to extend the maturity date from November 1, 2026 to November 1, 2027.

Key indicators

To date, load factors for the fourth quarter, are 1.2 percentage points lower compared to the same date in fiscal 2024, while airline unit revenues, expressed as yield, are 3.1% higher than they were at this time last year, although currently trending downward.

For fiscal year 2025, the Corporation expects a 1.0% increase in capacity, measured in available seat-miles, compared to 2024, reflecting a modest reduction in capacity during the fourth quarter.

________________________________________

² Geared turbofan ("GTF")

Conference call

The third quarter 2025 conference call will take place on Thursday, September 11, 2025, 10:00 a.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 September 18, 2025, by dialing 1 888 660-6345 (toll-free in North America), access code 00118 followed by the pound key (#). The webcast will remain available for 90 days following the call.

Fourth-quarter 2025 results will be announced on December 17, 2025.

(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, 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, 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, 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
	Third quarter		Nine-month period
	2025	2024	2025	2024
(in thousands of Canadian dollars, except per share amounts)	$	$	$	$
Operating income (loss)	24,241	(9,837)	9,555	(77,427)
Depreciation and amortization	62,674	55,412	188,319	160,324
Reversal of impairment of the investment in a joint venture	—	—	—	(3,112)
Effect of discount rate changes	(3,122)	6,668	3,141	4,458
Restructuring costs	157	500	4,214	2,477
Premiums related to derivatives that matured during the      period	(2,771)	(4,749)	(5,634)	(11,925)
Adjusted operating income¹ or adjusted EBITDA¹	81,179	47,994	199,595	74,795
Net income (loss)	399,821	(39,893)	254,405	(155,257)
Reversal of impairment of the investment in a joint venture	—	—	—	(3,112)
Effect of discount rate changes	(3,122)	6,668	3,141	4,458
Restructuring costs	157	500	4,214	2,477
Gain on asset disposals	(14,060)	(392)	(19,243)	(6,176)
Change in fair value of derivatives	(56,637)	7,142	32,142	24,323
Revaluation of liability related to warrants and      preferred shares	5,107	(12,781)	2,981	(7,270)
Foreign exchange loss (gain)	4,869	7,205	(8,658)	(6,752)
Gain on long-term debt modification	(345,116)	—	(345,332)	—
Premiums related to derivatives that matured during the      period	(2,771)	(4,749)	(5,634)	(11,925)
Adjusted net loss¹	(11,752)	(36,300)	(81,984)	(159,234)
Adjusted net loss¹	(11,752)	(36,300)	(81,984)	(159,234)
Adjusted weighted average number of outstanding shares used      in computing diluted earnings per share	42,351	38,906	40,531	38,733
Adjusted net loss per share¹	(0.28)	(0.93)	(2.02)	(4.11)
Cash flows related to operating activities	(104,915)	(91,137)	271,505	202,781
Cash flows related to investing activities	31,202	(29,333)	19,624	(89,325)
Repayment of lease liabilities	(48,421)	(48,250)	(141,855)	(133,298)
Free cash flow^1	(122,134)	(168,720)	149,274	(19,842)

	As at July 31, 2025	As at October 31, 2024
(in thousands of dollars)	$	$
Long-term debt	180,427	682,295
Deferred government grant	203,431	120,784
Liability related to warrants	19,022	8,519
Lease liabilities	1,365,159	1,465,722
Total debt^1	1,768,039	2,277,320
Total debt	1,768,039	2,277,320
Cash and cash equivalents	(357,153)	(260,336)
Total net debt^1	1,410,886	2,016,984

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 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, maintain and grow its reputation and brand, the availability of funding in the future 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 ability to reduce operating costs through the Elevation program initiatives, among other things, 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 MD&A included in our 2024 Annual Report.

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 or other credit facilities.
  
  
• The outlook whereby, for fiscal year 2025, the Corporation expects a 1.0% increase in capacity, measured in available seat-miles, compared to 2024, reflecting a modest reduction in capacity during the fourth quarter.
  
  
• The outlook whereby the benefits the Elevation Program, a comprehensive optimization plan aimed at maximizing long-term profitable growth, are materializing as anticipated and continue to drive results towards generating adjusted EBITDA of $100 million by mid-2026.

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 MD&A for the quarter ended July 31, 2025 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.

(www.transat.com)

SOURCE Transat A.T. Inc.