Transat A.T. Inc.: Flying High on all Fronts in Q3 2000

Montreal, September 13, 2000


-Higher volume in both French and Canadian markets 28% growth in sales
-Consolidation of Brok'Air and Consultour/Euro Charter results
-Net earnings per share soar 19%Transat A.T. Inc., the leader in the Canadian travel and tourism industry, posted net income of $9,819,000, or $0.31 per share for the quarter ended July 31, 2000, compared with $8,839,000, or $0.26 per share for the same quarter last year, an increase of 19.2%. For the same period, revenues rose 28.3% to $530.8 million, compared with $413.6 million in the corresponding year-earlier quarter.

“We are very satisfied with these results, especially since significant growth in sales was achieved in both the French and Canadian markets, in particular in Ontario and Western Canada. Moreover, given that Transat had to cope with higher fuel costs and a lower euro, the results underscore the efforts undertaken by the Corporation to further improve profitability,” noted Transat President and CEO Jean-Marc Eustache.

“In addition to these factors, the Corporation’s growth is attributable to the consolidation of operations conducted by companies in which Transat increased its interest during the year, namely Brok’Air which increased from 39% to 100% and Consultour/Euro Charter from 50% to 100%,” added Mr. Eustache.

For the nine months ended July 31, 2000, the Corporation posted net income in the amount of $22,559,000, or $0.70 per share, compared with $13,513,000, or $0.40 per share for the year-earlier period. Revenues amounted to $1.5 billion, compared with $1.2 billion for the same period last year. Over all, the revenue posted by the Canadian companies rose almost 19% on average, while the revenue of the French companies, despite the impact of a lower euro against the Canadian dollar, advanced over 16%.

The third quarter is the first portion of the summer season, which extends from May 1 to October 31. The Corporation’s profitability in the third quarter was up compared with the corresponding period last year. Aside from the sharp hike in fuel costs compared with last year, the Corporation’s results, both in the Canadian and French markets, would have been substantially better, given that sale price adjustments were unable to fully offset the negative impact on income produced by higher costs.

In Canada, higher volume is undoubtedly the factor that generated the most positive impact on profitability in the quarter, and this reflects the Corporation’s solid positioning in all markets. The appreciation of the Canadian dollar against the US currency and higher interest income also helped enhance profitability. In France, higher volume is the primary factor that improved the results of Look Voyages.

Downward pressure on profitability resulted from a number of factors, including higher costs, especially fuel. In Canada, the other major factors were the decline of the euro against the Canadian dollar, the drop in certain load factors and higher interest expenses. In France, the results were also weighed down by the decline of the euro against the Canadian dollar, load factors, downward pressure on prices for Vacances Air Transat (France) and the drop in the share of net income posted by STAR Airlines.

The Corporation is entering the final quarter in its fiscal year ending October 31, 2000. This quarter marks the second portion of the summer season and is a very busy period for all subsidiaries. With respect to the Canadian and French markets, the Corporation expects that profitability in the quarter will be impacted as a result of higher fuel costs, as was the case in the quarter ended July 31, 2000.

However, the surcharge introduced for departures after July 1, for all transatlantic flights, both for departures from Canada and France, as well as domestic flights in Canada and departures for sunshine destinations, is expected to reduce the impact of the increase. In the French market, the lower value of the euro against the U.S. and Canadian dollars will continue to have an impact on departures for North American destinations. Despite these factors, the Corporation is optimistic for its final-quarter results.

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

Its wholly-owned subsidiaries are: the airline Air Transat, tour operators Air Transat Holidays (Montréal, Québec City, Toronto, Vancouver and Fort Lauderdale), Vacances Air Transat (France), Brok’Air/Anyway (France), Voyages Nolitour (Montréal), Regent Holidays (Toronto), the Tourbec travel agency chain, the Consultour/Club Voyages travel agency franchise group, Handlex, an airport handling services company, Exit Travel, which specializes in retail e-commerce, and the hotel management company Cameleon.

Transat A.T. holds interests in tour operators Look Voyages (98%) and World of Vacations (35%). As well, Vacances Air Transat holds a 66.7% interest in the incoming tour operator DMC Transat, and Look Voyages owns 49.6% of STAR Airlines.