Transat posted revenues of $884.3 million for the quarter ended April 30, 2017, compared with $888.2 million for the same period in 2016, a decrease of $3.9 million, or 0.4 per cent.
The company recorded adjusted operating income of $1.5 million, versus an adjusted operating loss of $5 million in 2016, and a net loss attributable to shareholders of $8.4 million, compared with $25 million in 2016. Before non-operating items, Transat reported an adjusted net loss of $8.1 million for the second quarter of 2017, compared with $11.9 million in 2016.
According to Transat, the Q2 decrease of $3.9 million was due to the higher proportion of flights sold without a land portion versus all-inclusive packages compared with 2016. The number of travellers on the Sun destinations market, Transat’s primary market for the period, increased by 0.3 per cent. Meanwhile, the decline in revenues was mitigated by an increase of 8.2 per cent in the number of travellers on the transatlantic market. In addition, average selling prices were higher on all markets.
Transat reported adjusted operating income of $1.5 million, compared with an adjusted operating loss of $5 million in 2016, an improvement of $6.5 million. This stemmed mainly from the increase in average selling prices. The improvement in adjusted operating income was dampened by depreciation of the Canadian dollar vis-à-vis the U.S. currency—which, combined with an increase in fuel prices, resulted in a rise in operating costs of $21 million for the quarter—as well as by an increase in air costs.
Ocean Hotels, which is 35 per cent owned by Transat, contributed $5.9 million to the Corporation's net results for the quarter, compared with $6.2 million in 2016. Transat's equity participation in Ocean Hotels accounted for $109.1 million in assets as at April 30, 2017, compared with $97.7 million as at Oct. 31, 2016.
On April 3, 2017, Transat purchased a stake in a hotel near Puerto Vallarta on the Pacific coast of Mexico, operating under the name Rancho Banderas All Suites Resort, acquiring a 50 per cent equity interest in the company Desarrollo Transimar, S.A. de C.V., its owner and operator, for $10 million US [$13.4 million]. The hotel currently has 49 rooms, and will be expanded between now and 2018 to a capacity of 263 rooms. This transaction represents a further step in hotel management for Transat, as it continues to assess the opportunity, as previously announced, of either acquiring the entirety of Ocean Hotels or selling the 35 per cent stake that it currently owns with a view to reinvesting in another hotel project.
Transat posted revenues of $1.6 billion for the first six months of the year, compared with $1.6 billion in 2016. During the period, the company reduced its capacity on the Sun destinations market by 2.3 per cent, which resulted in a decrease of 1.4 per cent in the number of travellers on that market. The impact of that decrease was offset by an increase of 6.5 per cent in the number of travellers on the transatlantic market, the result of an increase in capacity of 9.6 per cent on that market. Average selling prices increased on the Sun destinations market, and decreased slightly on transatlantic market.
For the winter season, Transat posted an adjusted operating loss of $35.6 million, compared with $36.7 million in 2016, an improvement of $1.1 million. The increase in average selling prices on the Sun destinations market was offset by an unfavourable exchange-rate impact—which, combined with an increase in fuel prices, resulted in an increase in operating costs of $39.3 million for the period—as well as by higher air costs.
For the six-month period, Ocean Hotels accounted for $9.4 million of Transat’s income, compared with $8.2 million in 2016. That increase was attributable to higher operating profitability.