MONTREAL — Travel company Transat AT Inc. has seen daily bookings drop off since late February, with a steep year-over-year decline this month as travel fears spread with COVID-19.
Daily bookings fell 50 per cent year-over-year in the last few days, chief financial officer Denis Petrin told shareholders at their annual meeting in Montreal on Thursday.
"Since Feb. 24, daily bookings are lower than last year's and the difference has increased significantly in recent days. In the current situation, it is impossible to predict the effect on future bookings," the company said in its first quarter results.
"Today I think the situation is very serious and we will see how it will develops over the next few days and months," chief executive Jean-Marc Eustache told investors.
With its "outlook overshadowed by COVID-19," Transat opted not to provide an outlook for the second quarter or the summer — which now features lower prices in an attempt to attract wary travellers.
Transat shares closed down nearly 17 per cent or $2.16 at $10.59, compared to a more than 12 per cent plunge on the S&P/TSX Composite Index, its worst day in decades.
Travel fears and U.S. President Donald Trump's travel ban on most of Europe are expected to dent Transat's transatlantic business — the bulk of its operations between May and October — Laurentian Bank analyst Mona Nazir said in a research note.
The Montreal-based firm has shifted to cost-reduction mode, which could include cutting flights, it said.
"We're taking all the necessary measures to allow our clients to travel with peace of mind," chief executive Jean-Marc Eustache said in the release.
"We're satisfied with the improvement in results for the first quarter, even though the coronavirus epidemic makes the rest of the year difficult to predict."
The comments came as Transat reported a first-quarter loss of $33.8 million or 90 cents per diluted share compared with a loss of nearly $53 million or $1.41 per diluted share in the same period a year earlier.
An upswell of travellers to Transat's sun destinations boosted revenues by seven per cent year over year to $692.8 million for the quarter ended Jan. 31.
On an adjusted basis, Transat said it lost 54 cents per share for the quarter compared with an adjusted loss of $1.04 per share in the same period a year earlier. Analysts had expected an adjusted loss of 50 cents per share, according to financial markets data firm Refinitiv.
Shareholders at Transat, which owns Air Transat, approved a $720-million acquisition offer from Air Canada in August, but the deal still faces scrutiny by Canadian and European regulators eyeing the impact of a takeover that will see the country's biggest airline control more than 60 per cent of transatlantic air travel from Canada.
The deal "now carries a question mark" due to the 34 per cent plunge in Transat's share price over the past two months, said Canaccord Genuity analyst Doug Taylor, noting the widening spread between Air Canada's $18-per-share bid and Transat's current stock, which is now 42 per cent cheaper.
"Air Canada is moving forward with the acquisition of Transat AT as planned, and looks forward to the regulatory approvals necessary to complete the transaction," Air Canada spokeswoman Pascale Dery said in an email.
Transport Canada has until May 2 to conduct a review — with input from the Competition Bureau — and make a recommendation to the minister.
Petrin said Transat has not discussed the review with its prospective parent as they remain competitors. "We do our thing and they do their thing," Petrin said on an afternoon conference call with analysts.
Major Canadian airlines are feeling turbulence as the novel coronavirus triggers event cancellations and ailment anxieties across the globe.
Air Canada has suspended flights to mainland China and Italy through April and cut back on routes to Hong Kong, Tokyo and Seoul. Its shares dropped 47 per cent over the past four weeks before falling another nine per cent or $2.50 to $24.90 on Thursday.
WestJet, despite offering no flights to China and only a handful to Europe, has reduced its flight capacity by 12 per cent and implemented a freeze on hiring and discretionary spending.
On Thursday the International Air Transport Association trade group called on governments to assist airlines with extended lines of credit, lighter tax burdens and other measures, forecasting the pandemic will wipe out more than $113 billion in global carrier revenue.
The $1-billion funding package Ottawa announced Wednesday, which targets the country's health-care system and workers forced to isolate themselves, offers no direct support to airlines.
Air Canada said Prime Minister Justin Trudeau reached out to airline executives ahead of its initial response to the outbreak, including CEO Calin Rovinescu.
"We took the opportunity to discuss the impact of the situation on our industry. It was an informational conversation," said Air Canada spokesman Peter Fitzpatrick.
— With files from Julien Arsenault
This report by The Canadian Press was first published March 12, 2020.
Companies in this story: (TSX:TRZ, TSX:AC)
Christopher Reynolds, The Canadian Press
