Earnings release
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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 EBITDA 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 flow 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 EBITDA 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 GTF 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. 1 1 1 2
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"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 GTF 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 GTF 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 EBITDA 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 GTF engines. Network-wide capacity increased by 1.9% compared to the same period in 2024. For the nine-month period, adjusted EBITDA 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 flow 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 flow 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. 2 2 1 2 1 1 1
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During the nine-month period ended July 31, 2025, the Corporation entered into sale-leaseback transactions involving three Pratt & Whitney GTF 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. ________________________________________ 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 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: . 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 2 2
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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
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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)
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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 (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 1,768,039 2,277,320 Total debt 1,768,039 2,277,320 Cash and cash equivalents (357,153) (260,336) Total net debt 1,410,886 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) Caution regarding forward-looking statements () Media: Andréan Gagné 1 1 1
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Senior Director, Communications, Public Affairs and CSR 514-987-1616, ext. 104071 Financial analysts: Jean-François Pruneau Chief Financial Officer 514 987-1616 ext. 4567 Media site and image bank: SOURCE Transat A.T. Inc.