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- Air Transat
5959 Côte-Vertu Blvd.
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Air Transat is a Canadian airline based in Montreal, Quebec. Owned and operated by parent company Transat A.T. Inc., Air Transat operates scheduled and charter services to points across the Americas and Europe, with a focus on leisure destinations.The airline operates from three main bases at Montréal-Pierre Elliott, Toronto Pearson and Vancouver Airport with a widebody Airbus fleet.
Air Transat is part of an integrated international tour operator, Transat A.T. Inc. which is listed on the Toronto Stock Exchange (TSX: TRZ.B, TRZ.A).
Location of Air Transat main hub (Toronto Pearson International Airport)
158 total articles
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Air Canada’s low-cost carrier Rouge is ratcheting up service to leisure destinations in Europe during the 2014 summer high season, which should prove a definitive test for the carrier’s theory that a low cost operation on routes producing softer yields is the correct equation to turn profits.
The growth and operation of Air Canada Rouge to a possible fleet of 50 aircraft is a strategic pillar of the company’s efforts to cut its unit costs by 15% – quite a formidable goal. Similar to Rouge’s initial roll-out of service from Toronto to Athens, Edinburgh and Venice and from Montreal to Athens, most of Rouge’s planned route expansion during 2014 is into markets that have been served by Air Transat during the high season. With just a few months of operations under its belt, no clear-cut conclusions can be made about Rouge’s future or the total effects on Air Transat, but Air Canada appears to be throwing down the competitive gauntlet, noting that it is now in a much better position to compete on those routes.
Air Canada is sticking to its strategy for its new low-cost carrier Rouge by introducing service in Jul-2013 to untapped long-haul leisure markets and operating flights to sun destinations - with a presumably lower cost structure.
The carrier is taking aim at both domestic rival WestJet and its vacations package business and large Canadian tour operator Transat. Now that Air Canada has unveiled the initial routes for Rouge, its competitors appear to be making schedule adjustments in response to the decision by Canada’s largest carrier to compete more aggressively in the leisure market.
Air Canada finally gained the green light to move forward with the establishment of Rouge after the government in 2012 stepped into contentious negotiations between pilots and management and ultimately allowed the carrier to impose a contract on pilots that included elements for the establishment of a low-cost carrier.
Canadian tour operator Transat was back in the black for the fiscal quarter ending 31-Jul-2012 (3QFY2012) and remains bullish on its prospects for 4QFY2012 despite considerable challenges in its operations in Europe and the Caribbean. Tightening of capacity that began during 3QFY2012 is continuing throughout the remainder of this year and into early 2013 as the parent company of Air Transat seeks to achieve consistent profitability.
Company management believes capacity discipline, coupled with improved revenue management, should serve as a solid foundation for improving its financial performance even as macro economic conditions continue to remain shrouded in uncertainty. But while management stresses it is doing everything it can to ensure Transat’s turnaround, it is stopping short of declaring a reversal of fortunes has begun in earnest.
Air Canada’s plans to create a new low-cost subsidiary to better compete in leisure markets is far from a foolproof scheme to wipe away the legacy cost elements that management believes make Air Canada mainline uncompetitive on various levels. The airline faces the danger of disrupting those markets with additional capacity those routes are unlikely to absorb. In its planned slow ramp-up, the new carrier will also likely create upfront costs that might not be recovered until the low-cost carrier reaches full scale, which will further pressure Air Canada’s costs in the short-term.
Other than touting the establishment of the low-cost carrier as a significant growth platform to allow Air Canada to compete in the crucial low-cost space, few details have emerged about the new airline. Air Canada has not stated if it will seek a separate operating certificate for the carrier, if there will be a separate management structure, estimated aircraft utilisation levels, seat density or how network planning and optimisation between the two carriers will be carried out.
Hopes by Canadian tour operator Transat of a return to profitability during 2012 are quickly diminishing as the carrier during the first half of the year racked up a net loss of CAD43 million (USD41 million) driven by a fiscal 2Q loss that resulted from challenges created in the Canadian “sun destinations” from overcapacity and competitive pricing pressure. Heading into the busy summer travel season the bulk of capacity operated by Transat subsidiary Air Transat is being deployed to Europe, where market conditions are highly uncertain due to the continent’s economic turmoil. Transat management is warning that turning around the losses incurred during the last six months will be difficult, but the company has managed to gain concessions from pilots and flights attendants in the form of three-year wage freezes and expects mechanics to endorse the scheme.
Even though Transat is likely to post a loss in 2012 after incurring a CAD12.2 million (USD12 million) loss in 2011, the company does expect to achieve its previously stated goal of improving pre-tax earnings this year by CAD20 million (USD20 million).
Montréal-Trudeau Airport is planning a large expansion of its international terminal in response to continued rapid growth in international traffic. For the first time in its 70-year history the airport expects this year to have more international passengers than domestic or trans-border.
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