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Transat A.T. Inc. - Results for First Quarter 2003 - 20% increase in revenues; reduction in seasonal loss
- First quarter revenues increased by $86.9 million or approximately 20% to reach $529.1 million from $442.2 million recorded in the corresponding quarter of 2002.
- Net loss of $7.0 million or $0.24 per share, a $10.0 million improvement over the $17.0 million net loss or $0.52 per share recorded in the corresponding quarter of 2002.
- Solid financial position with $315.4 million in cash and cash equivalents as at January 31, 2003 (including $140.6 million held in trust or otherwise reserved).
- Cash flows from operating activities amounted to $62.3 million.
Transat A.T. Inc., one of the 10 leading leisure travel companies in the world and the leader in Canada, recorded revenues of $529.1 million for the first quarter ended January 31, 2003, an increase of $86.9 million or approximately 20% compared with revenues of $442.2 million in the corresponding quarter of 2002.
The Corporation recorded a net loss of $7.0 million for the quarter ($0.24 per share), compared with a net loss of $17.0 million ($0.52 per share) in the corresponding quarter of 2002. "The results of the quarter are, as expected, better than the 2002 first quarter results and reflect our tightened approach to costs and capacity management, which made a big difference over the last 18 months," stated Jean- Marc Eustache, President and Chief Executive Officer of Transat A.T. Inc.
"Historically, the first quarter has always been weaker for seasonality reasons. Our Canadian operations had a very successful quarter while in France, Look Voyages continued to struggle. Despite our overall improvement, however, Transat and the whole leisure travel industry continue to be surrounded by geopolitical issues arising from the Iraq conflict and the difficult economic conditions in France, issues that present significant challenges. We remain committed to managing very conservatively and to actively pursuing organizational and operational initiatives that will have a positive impact on the bottom line.
"The increase in revenues was due mostly to an overall increase in travellers as well as to price increases in both Canada and Europe.In Canada, revenues increased by $62.6 million (17.7%) to $417.3 million from $354.7 million last year due mostly to a 13.6% increase in the number of travellers as well as to price increases. Operating expenses increased by $46.2 million (12.9%) to $404.1 million from $357.9 million last year.
These increases were mostly due to increases in direct costs and commissions due to increased business activity.In Europe, revenues increased by $24.2 million (27.7%) to $111.7 million from $87.5 million last year due mostly to a 15.1% increase in the number of travellers and to the favourable impact of exchange rates between the Canadian and euro currencies. Operating expenses increased by $25.9 million (27.5%) to $120.2 million from $94.2 million last year.
These increases were also mostly due to increases in direct costs due to increased business activity, an overcapacity in the Corporation's French operations and the impact of exchange rates. The increase in operating expenses was not offset by the increase in revenues, resulting in an increased loss in Europe.
The overall loss in Europe increased only slightly in the euro currency. However, Look Voyage's loss increased significantly and was offset by improvements in the Corporation's other French operations. The overall increase therefore, in Canadian dollars, is due to the impact of exchange rates.The Corporation's cash position continues to improve as well, with over $315.4 million in cash and cash equivalents on hand as at January 31, 2003, an increase of $55.3 million or more than 20% over our cash position as at October 31, 2002.
Included in the $315.4 million is $140.6 million held in trust or otherwise reserved, compared with $101.3 million held in trust or otherwise reserved as at October 31, 2002.
As mentioned previously, despite an encouraging performance in the first quarter we continue to be cautious about future quarters and continue to expect 2003 to be a very challenging year. The geopolitical situation continues to significantly affect tourism, especially since the beginning of 2003. As the threat of war has intensified over the last few months and concerns about terrorist attacks continue, booking trends have slowed recently and the overcapacity in the market place is putting pressure on our margins as consumers are booking their vacation travel later.
In addition, very poor economic conditions in France are adding to the uncertainty especially for the Mediterranean destinations.
Overall cumulative winter bookings are ahead of last year but below the 2001 winter season which was our best winter season ever. As for summer bookings, we are still in the early stages but we are running behind our 2002 levels.
Despite the uncertainties, we continue to focus our efforts on reducing our costs by working on operational efficiencies and by ensuring that all of our products and services not generating desired returns are remedied. In addition, we continue to strengthen our balance sheet and financial flexibility as shown by our cash position and the recent renewal of our revolving credit facility.
Transat A.T. Inc. with its head office in Montreal, is an integrated company specializing in the organization, marketing and distribution of holiday travel. The core of its business is in Canada and France. Transat is also involved in air transportation, value-added services offered at travel destinations and distribution through travel agency networks. Transat is listed on the Toronto Stock Exchange (TSE:TRZ).
This news release contains certain forward-looking statements with respect to the Corporation. 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 (Management Discussion and Analysis) 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.