Transat A.T. Inc.

Transat reported Q4 fiscal 2025 revenue of $772 million, down 2.2% year over year; passenger revenues were up 1.5% on higher yield, while total revenue was pressured by timing of Pratt & Whitney compensation. Q4 adjusted EBITDA was $71 million versus $128 million a year ago; net loss was $12 million, or $0.31 per share, versus net income of $41 million, or $1.05 per share, and adjusted net loss was $19 million, or $0.42 per share, versus adjusted net income of $32 million, or $0.81 per share. For fiscal 2025, revenue rose 3.5% to $3.4 billion and adjusted EBITDA reached a record $271 million, up 33%. Full-year cash flow from operations was $157 million, free cash flow was negative $45 million, cash and cash equivalents were $165 million, long-term debt and deferred government grant were $400 million, and net debt net of cash was $235 million. Management said free cash flow should turn positive in 2026, CapEx should be relatively stable versus 2025, and capacity should increase about 5% to 7% in the winter season and 6% to 8% for all of 2026.

Annick Guérard framed 2025 as a year of meaningful progress on Transat’s turnaround, emphasizing stronger operating results, network expansion, and a materially improved balance sheet. She highlighted new routes and partnerships as part of a strategy to target high-potential, low-seasonality markets, and said the company remains prudent about capacity expansion given economic uncertainty and competition. Her tone was constructive and confident, with repeated emphasis that Transat is on track for 2026.

Jean-Francois Pruneau focused on financial discipline and balance-sheet repair, saying the Elevation program and government debt refinancing strengthened Transat’s long-term profile. He noted Q4 adjusted EBITDA of $71 million, full-year operating cash flow of $157 million, and free cash flow of negative $45 million, while cash and cash equivalents were $165 million and debt plus deferred government grant was $400 million at year-end. He said free cash flow should become positive in 2026, CapEx should be roughly stable, and the company will benefit from lower interest charges and further Elevation gains; he also said the Elevation program is about halfway to its $100 million EBITDA goal by mid-2026, with the mix roughly 60% cost and 40% revenue management.

Analysts asked about winter yields and management said demand remains strong enough to absorb added industry capacity, with yields tracking well versus last year for Q1 and Q2 and a healthy booking curve supporting the outlook. On free cash flow, management said the 2026 improvement should come mainly from higher EBITDA, with CapEx only slightly higher at most and no major working-capital change expected year over year. Questions also covered the strike overhang, with management saying the impact on bookings was minimal because the issue was resolved quickly, and the Elevation program, where they clarified that some near-term costs are one-time implementation items such as consultants and AI/system deployment. On provisions, management explained that the larger charge was tied to CORSIA carbon-credit obligations, which can be volatile, and that smaller provisions included a vendor default and an older Italian sales-tax case.