MONTREAL – Soaring fuel prices and a freeze on its flights to Cuba pushed Transat A.T. Inc. deeper into loss territory last quarter, prompting the travel company to seek federal aid as geopolitical turmoil continues to damage airlines’ bottom lines.
The owner of Air Transat reported a $79-million loss in the quarter ended April 30, more than 240 per cent below its more modest earnings loss of $23 million a year earlier.
“Second-quarter results were significantly below our expectations as factors beyond our control severely impacted profitability,” chief executive Annick Guérard told analysts on a conference call Thursday.
The increase in aviation fuel costs and the suspension of trips to Cuba took a $95-million bite out of Transat’s adjusted earnings, she said.
The jump in jet fuel prices, which in March reached roughly double their levels from before the Iran war, accounted for about $70 million of that total, the CEO said.
Transat took steps to mitigate the fallout, including surcharges on new bookings, higher fares and shuffled flight schedules.
At first, customers could take the increased cost, which virtually offset the spike in fuel expenses, she said.
“But more recent increases resulted in a slowdown in the booking momentum … the demand went down,” prompting the airline to tamp down fares and remove some fees, Guérard said.
Nonetheless, summer fares remain up 4.5 per cent on average from last year, she said.
The Montreal-based company plans to apply for a federal loan program rolled out earlier this week, she said.
The Liberal government on Monday offered a lifeline to airlines struggling to cope with the cost of aviation fuel, announcing a facility that lets carriers borrow up to $150 million each. Transat aims to receive the full amount, said chief financial officer Jean-François Pruneau.
Meanwhile, Air Transat as well as WestJet and Air Canada have indefinitely suspended all flights and vacation packages to Cuba as the country grapples with an increasingly desperate fuel shortage triggered by a U.S. oil blockade.
Cuba marks a major market for Transat, which is a popular destination for Canadians.
About 861,000 Canadians visited the island in 2024, according to the country’s statistics office. Trips there accounted for nine per cent of Transat’s flights in the first half of 2025, with Cuba particularly popular among vacationers in Quebec, Transat’s home base.
The airline first halted Cuba voyages in mid-February.
Barely two weeks later, the closure of the Strait of Hormuz caused by the Middle East war — now in its fourth month — began to choke off nearly a fifth of global oil supply and send jet fuel prices skyward.
As a result, profits among major North American airlines this year will shrink by US$3 billion or nearly a quarter, the International Air Transport Association forecast this week.
While overall travel demand in Canada remains solid, airlines have cut less profitable flights from their schedules, raised fares and tacked on fuel surcharges to keep profit margins from shrinking too far.
At Air Transat, surcharges offset only a “marginal portion” of the ballooning fuel expense, partly because most bookings for the quarter were made before the charges took effect in April.
The company’s fuel costs for the quarter rose 46 per cent year-over-year, according to regulatory filings.
Leisure and low-cost carriers such as Air Transat and Flair remain more vulnerable to fuel price swings than their larger competitors. Fuel often represents a bigger proportion of their costs, and they have fewer buffers in the form of higher-margin business passengers, myriad route options and a clientele less reactive to rising fares.
“We have less of a premium class, we’re more leisure-focused. So when we compare ourselves to our legacy carriers on the Atlantic market, for instance, they benefit from customers that are less price-sensitive,” said Guérard.
The company continues to deploy a hedging strategy that relies on options rather than forward contracts, said Pruneau.
Options allow companies to cap the maximum cost while also paying lower rates if prices fall. Forwards lock in the price of future purchases, shielding buyers from big increases but working against them if rates decrease.
The airline also remained down five planes — 12 per cent of its 42-plane fleet, Guérard said. The carrier is one of many hit by a recall of turbofans from aircraft engine giant Pratt & Whitney that has diminished fleets across the globe.
“This ongoing problem continues to drive operating inefficiencies, increased scheduling variability and negatively impact revenues,” she said.
Three aircraft will likely stay grounded this summer, with full resolution not expected until early 2028.
Transat saw year-over-year revenues remain effectively flat at $1.03 billion last quarter.
On an adjusted basis, the company said it lost $2.58 per share in its latest quarter compared with an adjusted profit of 12 cents per share in the same quarter last year.
The figure fell far below analysts’ expectations of an adjusted loss of 21 cents per share on average, according to financial markets firm LSEG Data & Analytics.
This report by The Canadian Press was first published June 11, 2026.
Companies in this story: (TSX:TRZ, TSX:AC)
