After more than two years of pain and peril, Transat is finally back on a path to profitability.

For its fiscal first quarter ended January 31, Transat A.T. Inc. saw its revenues soar, its capacity return to pre-pandemic levels and its operating income return to the black.

"The momentum from the end of 2022 continues, confirming our financial scenarios," stated President and CEO Annick Guérard.

"Transat is on an upswing and is headed for a return to profitability. In the first quarter of 2023, revenues more than tripled compared with the corresponding quarter in 2022. Across all programs, combining European and South destinations, Transat deployed capacity comparable to that of 2019; load factors were slightly lower, but the shortfall was largely offset by higher prices. These results are especially encouraging since the first quarter, which falls in the shoulder period, is usually the lowest of the year."

Airline unit revenues, expressed in yield, increased by more than 20% compared with the first quarter of 2019. As a result, Transat recorded an adjusted operating income of $3.3 million for the period, an improvement of $39.7 million compared with the first quarter of 2022.

"Transat maintains the adjusted operating income margin target of 4% to 6% for the year. Resilient demand for travel is supporting prices and helps us deal with the pressure on operating costs. The context is therefore challenging but remains favourable to recovery in travel and Transat's relaunch," added Guérard.

During the first quarter, Transat deployed capacity equivalent to that of 2019 and recorded a load factor of 84.5%, which it described as satisfactory.

For the first quarter, Transat generated $667.5 million in revenues, up $465 million from $202.4 million for the corresponding period of 2022. In that period, Transat had to cancel nearly 30% of flights scheduled as a result of the sharp decline in demand and massive booking cancellations following the emergence of the Omicron variant.

Transat still posted an operating loss of $38.1 million, but that was an improvement of $35.7 million compared with the $73.8 million loss in 2022. While demand was strong, this improvement was dampened by a 46% surge in fuel prices.

Adjusted operating income amounted to $3.3 million, an improvement of $39.7 million, compared with a loss of $36.4 million in 2022.

Customer deposits for future travel stood at a record $898.3 million, up 11% from pre-pandemic levels (as at January 31, 2020), reflecting the recovery in demand and higher average selling prices.

Looking to the second quarter, although load factors are 3 percentage points lower than in 2019, airline unit revenues, expressed in yield, are significantly higher and show a more than 25% increase.

Transat says the combination of demand and higher prices will allow it to cope with higher costs. While the company says it is too early to have a complete picture for the summer, winter trends appear to be continuing into summer 2023.

For the full fiscal year 2023, Transat expects to deploy capacity equivalent to 90% of the 2019 level. This level is consistent with International Air Transport Association (IATA) projections for Transat’s main markets.

Considering current indicators, Transat is maintaining its target of an adjusted operating income margin of 4% to 6% for fiscal 2023. In making these forward-looking statements, Transat says it has relied on a number of assumptions, including moderate growth in Canada's GDP taking into account the risk of a short recession, an exchange rate of C$1.34 to US$1 and an average price per gallon of jet fuel of C$4.50.