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Transat A.T. Inc. — Results for Third Quarter 2003 Positive Year-to-Date Results despite SARS and Positive Outlook for 2004
-Revenues for the third quarter decreased by $51.3 million or 10.3% compared with the corresponding quarter in 2002.
-Additional restructuring charge of $4.3 million after tax taken during the quarter ($6.9 million during the first nine months of fiscal 2003).
-Net loss for the third quarter of $5.8 million (excluding the after-tax restructuring charge) compared with a net income of $5.7 million in the corresponding quarter in 2002.
-Revenues for the first nine months of fiscal 2003 increased by $131.2 million or 8.4% compared with the corresponding period in 2002.
-Net income for the first nine months increased by $0.9 million (excluding the after-tax restructuring charge).
-Solid financial position with $327.4 million in cash and cash equivalents as at July 31, 2003 (including $83.4 million held in trust or otherwise reserved).
Transat A.T. Inc., one of the 10 leading leisure travel companies in the world and the leader in Canada, recorded revenues of $444.1 million for the third quarter ended July 31, 2003, a decrease of $51.3 million or 10.3% compared with revenues of $495.4 million in the corresponding quarter of 2002. The Corporation recorded a loss of $10.1 million for the quarter ($0.33 per share), compared with a net income of $5.7 million ($0.15 per share) in the corresponding quarter of 2002. The Corporation also recorded an additional $6.6 million restructuring charge ($4.3 million after tax) related to the reorganizations in France and Canada that were previously announced but not accrued. Excluding the effect of the $4.3 million after-tax restructuring charge, the Corporation recorded a net loss of $5.8 million ($0.20 per share) in the current quarter.
“The effects of SARS on our Canadian operations combined with the economic situation and the overcapacity in the market in France led to a 19% drop in travellers in the current quarter,” stated Jean-Marc Eustache, President and Chief Executive Officer of Transat A.T. Inc. “We expect SARS to have a lingering impact into the fourth quarter and expect our results for the fourth quarter to be below the results of the corresponding quarter of 2002. We also expect Look Voyages to continue to incur losses in the next quarter,” he continued.
“We did however continue to deliver on the objectives we set for ourselves in fiscal 2003 and we see positive signs for fiscal 2004. In short we feel that we have set the stage for our initiatives to deliver the cost reductions, operational efficiencies, and profitable products and services we committed to delivering at the beginning of the current fiscal year,” he concluded.On September 10, 2003 the Board of Directors of the Corporation approved a plan to phase out the use of its six Lockheed L-1011-500s by April 30, 2004. As a result the Corporation will be adding four Airbus A310s to its fleet in 2004. This will harmonize the fleet and reduce its operating costs, and result in a charge of approximately $34.0 million before tax in the fourth quarter related to the aircraft being phased out. The Corporation has completed its restructuring program related to its tour operator activities in Canada and France. It has finalized negotiations with regulatory authorities in France related to Look Voyages’ redundancy plan (required under French law).
Furthermore, the Corporation has demonstrated its commitment to and confidence of its French operations by approving an additional investment in the amount of $15.0 million in Look Voyages.
Overall, the restructuring program is on track and will be substantially completed in 2003 and is expected to result in savings of approximately $12.0 to $14.0 million in fiscal 2004.
The Corporation also announced a two-year partnership agreement with WestJet Airlines Ltd. to charter their aircraft to southern vacation destinations. This will enable the Corporation to broaden its service offerings in new markets and better serve its existing customers.
In line with its strategy to focus on its core competencies, the Corporation also recently announced that it is having discussions with potential buyers for the sale of its French subsidiary, Anyway, one of the leading online travel agencies in France.For the first nine months of fiscal 2003 the Corporation recorded revenues of $1,692.0 million, an increase of $131.2 million or 8.4% compared with revenues of $1,560.9 million in the corresponding period of 2002. The Corporation recorded a net loss of $1.7 million for the period ($0.13 per share), compared with a net income of $4.3 million ($0.09 per share) in the corresponding period of 2002. Excluding the effect of the $6.9 million after-tax restructuring charge, the Corporation recorded net income of $5.2 million ($0.08 per share).
The Corporation’s cash position is sound due to an efficient cash management. As at July 31, 2003, the Corporation had $327.4 million in cash and cash equivalents, including $83.4 million held in trust or otherwise reserved, compared with $260.1 million as at October 31, 2002 (including $101.3 million held in trust or otherwise reserved).
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 (TSX: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.