It wasn’t a great quarter for travel company Transat A.T. (TSE:TRZ), but it wasn’t as bad as it could have been. Still, investors weren’t pleased with the recently released earnings report and made their displeasure known by sending shares down fractionally in Thursday morning’s trading.
There was good news and bad news in Transat’s earnings report. Revenues reached C$973.2 million, up 11.8% from the second quarter of 2023, when only C$870.1 million came in. However, Transat also posted a loss in earnings: -C$54.4 million compared to -C$29.2 million posted in 2023’s second quarter.
What these earnings displayed was a clear and rising demand for air travel—particularly leisure travel—but also rising expenses related to competition, labor trouble, and engine issues in aircraft, among other things.
Can a New Joint Venture Help?
This isn’t the greatest of news; Transat is making more sales, but it’s spending so much more that the revenue gains are swamped. However, a new joint venture may prove helpful; just yesterday, it started working with Porter Airlines. Now, the two airlines have reworked their schedules, allowing passengers to use either airline more effectively for connecting flights and using either company’s booking systems to set up their flight overall.
Since Porter is more of a domestically-focused airline, while Transat goes more internationally—including to such far-flung destinations as North Africa and Latin America—the end result should be a lot more possibilities, more purchasing opportunities, and further revenue improvement even in a slowing domestic economy.
Is Transat Stock a Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on TRZ stock based on two Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 32.13% loss in its share price over the past year, the average TRZ price target of C$2.84 per share implies 5.02% downside risk.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
