Transat AT Inc

Transat AT Inc (TSX: TRZ) is a travel & leisure company based out of Canada. TRZ deals in international tour and holiday travel services. The Group operates as an incoming and outgoing tour operator with operations in Canada and Abroad. The Company sells its packages and destination services, primarily in the UK, France, Canada, Mexico, Jamaica, and the Dominican Republic.

Financial Highlights – Q1 Financial Year 2020 (31^st January 2020)

(Source: Quarterly Report, Company Website)

In the first quarter of the financial year 2020, driven by an increase in the travellers in the sun destinations program and increased capacity, the revenue increased by 7 per cent to CAD 692,799 thousand as against CAD 647,566 thousand in Q1 FY2019. The adjusted operating income stood at CAD 27,393 thousand in Q1 FY2020 versus an adjusted operating loss of CAD 7,550 thousand in Q1 FY2019. The group reported an operating loss of CAD 25,066 thousand in Q1 FY2020 versus an operating loss of CAD 48,620 thousand in Q1 FY2019. The adjusted net loss stood at CAD 20,303 thousand in the first quarter of the financial year 2020 versus an adjusted net loss of CAD 39,208 thousand in Q1 FY2019. The Net loss attributable to shareholders declined by 36.2 per cent to CAD 33,805 thousand in Q1 FY2020 versus a Net loss attributable to shareholders of CAD 52,952 thousand in Q1 FY2019. The basic and diluted loss per share stood at 0.90 cents in Q1 FY2020 versus a basic and diluted loss per share of 1.41 cents in the first quarter of the financial year 2019. The cash balance as on 31^st January 2020 stood at CAD 1,143,910 thousand versus CAD 917,615 thousand as on 31^st October 2019.

Share Price Performance

 Daily Chart as of 26^th May 2020 (Source: Refinitiv, Thomson Reuters)

Transat AT Inc shares are trading at CAD 7.21 at the time of writing on 26^th May 2020. Stock's 52 weeks High is CAD 17.00 and Low is CAD 4.68.

Conclusion

The Company has shown an improvement in the financial performance in the first quarter of the financial year 2020. Both the top-line and the bottom-line performance have improved, and profitability remained in the negative zone for the current period. The Group needs to manage its operating and non-operating expenses unless it results in further deterioration in financial performance in the coming years. Due to the impact of Covid-19, the bookings have declined and stood lower than last year. TRZ has taken actions to increase liquidity, reduce costs and is confident towards its innovative and disciplined business model to tackle the crisis. The Group do not provide any update on the guidance for the second quarter for the financial year 2020. It has also entered into an agreement to sell its business to Air Canada, subject to the approval from European and Canadian authorities.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of CAD 7.21 (as on 26^th May 2020), with support from few catalysts needs to be evaluated at a later stage.

Disclaimer

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