Transat AT Inc (TRZBF) (Q3 2026) Earnings Call Highlights: Fuel Costs Fuel a Sharp Swing to ...

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Release Date: September 10, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• Revenue and traffic grew in Q3 2026, with revenue up 3% to $793 million, demonstrating resilient demand for Transat AT Inc ( TRZBF )'s product.

• Transatlantic network performed well with yield increasing 0.6% despite 8% capacity growth, showing underlying resilience in core markets.

• Secured up to $150 million under the LASR facility, fully drawn, and an additional $250 million loan under LEEFF, strengthening liquidity position.

• New loyalty program beta launch exceeded expectations with over 23,000 members enrolled and engagement outperforming initial projections.

• Cabin reconfiguration program on track to increase premium seating capacity and ancillary revenue, with first modernized aircraft entering service in second half of 2027.

Negative Points

• Persistently high fuel prices significantly impacted profitability, with fuel costs up 56% year-over-year, leading to adjusted EBITDA of negative $1 million compared to positive $81 million last year.

• Net loss was $107 million compared with net income of $400 million last year, and adjusted net loss was $89 million or $2.18 per share versus $0.28 per share last year.

• Free cash flow was negative $302 million in the quarter, reflecting lower operating profitability and unfavorable comparison to prior year.

• Ongoing Pratt & Whitney GTF engine issues grounded four aircraft, one more than anticipated, causing operational disruptions and additional costs expected to persist until 2028.

• Intense competitive environment and promotional activity in the Canadian market constrained ability to pass higher fuel costs through fares, with yield declining 1% and load factor slightly below last year.

Q & A Highlights

Q: Konark Gupta of Scotiabank asked about the gap in yield performance versus peers, noting most North American airlines reported 10%-plus yields, and whether there were incremental pockets of weakness in Transat's network. A: CEO Annick Guerard explained that Transat competes in a highly price-sensitive segment, and this summer saw industry capacity growth and exceptionally intense promotional activity across the Canadian market, constraining the ability to pass higher fuel costs through fares. She noted the economy segment performance was not materially different from competitors, but the key difference lies above the economy cabin legacy carriers have premium corporate and loyalty revenue streams that more than compensated for higher fuel costs, levers Transat does not have at scale today. This is exactly what the loyalty program and cabin transformation initiatives are designed to address.

Q: Konark Gupta of Scotiabank asked whether the LASR facility and incremental LEEFF loan would be sufficient to satisfy liquidity needs for the next several months, or whether Transat might need to explore other options. A: CFO Jean-Francois Pruneau said that based on the forward fuel price curve, the company will be okay and feels the amount of money from the federal government plus additional funding will be sufficient. He cautioned the situation is dynamic and volatile, and it's difficult to predict fuel prices in a month or a year, but confirmed that based on the current forward curve, Transat is in a comfortable position.

Q: Cameron Doerksen of National Bank asked why Transat is adding any capacity in Q4 given high fuel prices, when most airlines historically cut capacity significantly in such environments, and whether reducing capacity is the only way to get yields up. A: CEO Annick Guerard said the Q4 capacity increase is very limited, below 2%, and for the upcoming winter there will be no capacity increase at all. She expressed comfort with the capacity deployed given overall patterns being observed.

Q: Tim James of TD Cowen asked whether Transat has the ability to reduce Q4 capacity, or whether seats already sold months ago at lower fuel price assumptions lock in the 2% growth. A: CEO Annick Guerard clarified that in terms of seats, growth is below 2% versus last year, and the plus 2% in ASMs is strictly due to the removal of Cuba there is no market increase. She added that Transat always adjusts capacity through a season based on performance to protect the highest margin possible, and the cleanup has been done for Q4. She recalled that at the beginning of spring, 6% of capacity was cut for the whole summer, with further adjustments made throughout the summer.

Q: Tim James of TD Cowen asked about year-over-year yield comparisons, noting trip length and route mix can influence yield, and requested apples-to-apples fare changes on a route-comparable basis for Q3 and Q4. A: CEO Annick Guerard said fares for Q4 are up 6%, and Q3 was up 4.8%, but the mix and network changed importantly with the removal of Cuba, which represents shorter distances, so yield is now more weighted to longer-haul flying. She noted the increase in TMC does not cover the loss of Cuba, which was a highly performing market especially in summer and at the end of last winter. For next winter, with Cuba gone, capacity for the South is being rebalanced, with the Dominican Republic playing a big role and performing very well so far.

Q: Tim James of TD Cowen asked about the increased competition cited in the Q2 report, whether it continued or intensified over the summer, and what form it took more capacity, more aggressive pricing, or reluctance to raise prices to offset fuel costs. A: CEO Annick Guerard said it was both: there were big increases in the Atlantic market, and when Transat introduced fuel surcharges, demand went down, prompting the whole Canadian market to launch promotions that never ended one after another all summer and continuing. She said this was the most highly competitive network environment ever seen, affecting overall yield especially in the economy segment and preventing the passing of fuel cost increases to customers.

Q: Benoit Poirier of Desjardins asked about the incremental CapEx required for the premium cabin upgrade and which regions are most attractive for introducing the new cabins first. A: CEO Annick Guerard said the most attractive markets are primary year-round European routes such as Paris, London and Portugal, plus longer-stage destinations like Athens and Rome, where the highest level of premium cabin will be deployed. She added that some aircraft lack Club Class, so the goal is to standardize and increase or introduce that class to maximize revenue per client across the fleet. CFO Jean-Francois Pruneau added that while no CapEx guidance for next year is being provided, the cabin reconfiguration starting in the second half of next year will have minimal impact on year-over-year CapEx, with the bulk falling in 2028.

Q: Benoit Poirier of Desjardins asked about the pricing environment for the upcoming winter, given the heavy promotions seen in recent months, and whether pricing would be enough to cover the fuel increase. A: CEO Annick Guerard said Transat is seeing yields rebounding and a more stable picture, especially on the South program heading into fall and winter. Given economic volatility and uncertainty, the company is taking a highly disciplined and conservative approach with no capacity growth for next winter. She noted strong demand for South destinations, with load factor similar to last year and yields up year-over-year, but when asked directly whether that would be enough to cover the fuel increase, she answered: "Not yet."

Q: Benoit Poirier of Desjardins asked whether, beyond the $170 million remaining under the $250 million term credit facility, Transat is looking at any other options, and whether there are changes to the fuel hedging policy. A: CFO Jean-Francois Pruneau said nothing else is under analysis as of now and the company feels very confident with the forward curve today, though other solutions might be needed if fuel prices don't improve. On hedging, he said the program has been beneficial fuel expense would have risen more without it and Transat is hedged about 65% on the fuel side for Q3, a bit less for the first half of 2027.

Q: Krista Friesen of CIBC asked for additional color on the expected contribution from the new loyalty program into 2027 and longer term, and whether anything has changed given the launch is tracking ahead of expectations

For the complete transcript of the earnings call, please refer to the full earnings call transcript .