Transat A.T. Inc. posts record results for the second quarter of fiscal 2000



- A significant increase in sales volumes, in both the Canadian and the French markets
- A 32% increase in revenues
- A 86% increase in earnings per share

Transat A.T. Inc. (TSE: TRZ), the leader in the vacation travel industry in Canada, announced revenues of $594.6 million for the second quarter ended April 30, 2000, a 32% increase over revenues of $451.4 million for the same period the previous year. The Corporation recorded quarterly net income of $13,292,000, an increase of 76% compared with net income of $7,553,000 for the same period last year. The earnings per share increased by 86% from $0.22 per share last year to $0.41 per share this year.

"The winter season has been excellent for our group of companies," said Jean-Marc Eustache, President and Chief Executive Officer of Transat. "After a slow start resulting from difficulties encountered in marketing vacation packages for millennium celebrations, the second half of the season was especially busy as many travellers had delayed until then their holiday travel to sunshine destinations. Consequently, the group's subsidiaries recorded a solid increase in sales volumes, and this contributed to a significant increase in profitability."

For the first six months of fiscal 2000, the Corporation reported net income of $12,740,000 or $0.39 per share, compared with net income of $4,674,000 or $0.14 per share for the same period last year. For this six-month period ended April 30, 2000, revenues totalled $992 million, compared with $815 million for the same period last year.

In Canada, growth was again higher in the markets in Ontario and Western Canada. In addition to a significant increase in sales volumes, selling prices increased to offset the rise in costs, including the cost of fuel. In France, Look Voyages and Vacances Air Transat (France) reported considerable growth in sales volumes, added to which was the effect of the 100% consolidation of Brok'Air's results, after the company became a wholly owned subsidiary of the Corporation.

A number of factors contributed to the substantial increase in profitability during the second quarter compared with the same quarter last year. In the Canadian market, increased profitability resulted from the following: an increase in sales volumes and in selling prices, the increase in the value of the Canadian dollar against its U.S. counterpart, an increase in interest income, and the increase in the share of results of companies subject to significant influence. In France, the increase in profitability can primarily be attributed to an increase in sales volumes and in selling prices.There were also factors, however, that exerted downward pressure on profitability. In Canada, some subsidiaries experienced lower load factors due to, among other things, fierce competition in the markets in Ontario and Western Canada.

On another front, certain operating expenses increased, especially those related to fuel costs. But as a result of surcharges introduced at the beginning of the season and the Corporation's management of risk related to fuel costs, the Corporation was able to avoid any negative impact on its profitability. In France, a decline in the share of the results of companies subject to significant influence was among other factors that had a downward effect on the increase in profits.

"The second half of the year, the summer season is heavily travelled in the vacation travel market, and as such it is a very important period for the Corporation in the attainment of its financial objectives for the entire year," added Mr. Eustache. "To date, the trends are encouraging. Despite competition that remains fierce, there is a satisfactory level of bookings for Canadian departures to all European destinations. The weakness of the euro against the Canadian dollar has a marginal impact on demand for travel to Canada from France. Reservations for departures from the United Kingdom, however, are up over last year. With regard to Look Voyages, bookings are at a good level, a promising indicator for the entire summer season. To offset the impact of increased fuel cost on profitability, the Corporation has imposed, as did its competitors, a surcharge on transatlantic flights-both for departures from Canada and from France-as well as on domestic flights and on flights to sunshine destinations."

Transat A.T. Inc., the leader in the Canadian tourism industry, is a public corporation listed on the Toronto Stock Exchange. Through its subsidiaries and affiliated companies, it is active in all aspects of the organization and distribution of travel services as well as in air transportation.

Air Transat is an air carrier and is a wholly owned subsidiary, as are Air Transat Holidays (Montreal, Quebec City, Toronto, Vancouver, and Fort Lauderdale); Vacances Air Transat (France); Brok'Air/Anyway (France); Voyages Nolitour (Montreal); and Regent Holidays (Toronto), which are tour operators; Tourbec, a travel agency chain; Consultour/Club Voyages, a travel agency franchisor; Handlex, an airport groundhandling service company; Exit Travel, in retail e-commerce; and Cameleon, a hotel management company.

Transat A.T. Inc. holds an interest in tour operators Look Voyages (98%) and World of Vacations (35%). In addition, Air Transat Holidays holds an interest in the incoming tour operator DMC Transat (66.7%), while Look Voyages holds an interest in STAR Airlines (49.6%).


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