Transat in tour business 20 years

[Henry Tenby]

This article is quite interesting...

Transat celebrates its 20th
Strong tailwinds. Heavy bookings and high-flying dollar
by ROBERT GIBBENS, Freelance

Air Transat, Canada's leading vacation travel airline, is flying into the winter season with strong tailwinds from the high Canadian dollar and heavy bookings for most sun destinations, CEO Allen Graham said yesterday.

Air Transat, along with parent Transat A.T. Inc., also is celebrating its 20th anniversary today. It all started in 1987 when Quebec tour operator Trafic Voyages decided to launch its own airline.

Founder Jean-Marc Eustache then took his newly minted Transat A.T. public with a modest $8-million initial public offering of shares.

"Since then, the airline has carried more than 35 million passengers around the world," Graham said. "We have 300 pilots, 1,100 flight attendants, 290 technicians and 300 office staff. We make 12,000 flights a year, departing from every region of Canada."

To celebrate the birthday, Air Transat check-in counters in Montreal, Quebec City, Toronto, Vancouver, Calgary, Edmonton, Paris and London will be decked out with special colours today and will offer passengers special prizes once aboard.

The upsurge in the Canadian dollar is strengthening Canadian demand for vacation travel and the weaker U.S. dollar is helping to keep Air Transat's fuel, leasing and aircraft maintenance costs down. It buys much of its fuel and many services in U.S. dollars.

"There's even more competition this winter, but Transat is vertically integrated with our network of tour operators and travel agencies working closely with the airline," Graham said. "But even when times are good, you still have to pare costs."

Air Transat, operating a fleet of 16 A330s and A310s, carries more than 2.6 million tourists to 30 sun destinations every year in the specific market where it will immediately operate profitably.

"We plan to renew the fleet in 2011-12 and we're already talking to both Airbus and Boeing. ... A lot will depend on the leasing market."

Parent Transat A.T., including the airline, ranks as Canada's leading vacation travel group with a marketing and distribution network across Canada and in Europe and a payroll of 6,000. Eustache wants to buy a U.S. tour operator and continue the expansion.

The stock market values the total business at about $1.25 billion, up sharply in the past few months after a surprisingly strong summer performance and early winter bookings spurred by the high Canadian dollar.

Last month, Transat A.T. confirmed it is moving into the hotel business. Eustache said he is holding talks with hotel companies, "which could lead to a $50- to $60-million transaction in line with our strategic plan."

He was referring to partnerships with hotel operators mainly in the sun destinations, but said no binding agreements have yet been signed.

Transat A.T. is expected to have total revenue of more than $3 billion this year and net earnings of about $78 million.

Some analysts say because it has $154 million or about half its cash resources "frozen" temporarily in asset-backed commercial paper, it may have to go slow on acquisitions for now.