TSE:TRZ Transat A.T. Q2 2024 Earnings Report C$1.52 -0.01 (-0.65%) As of 05/5/2025 04:00 PM Eastern Earnings HistoryForecast Transat A.T. EPS ResultsActual EPS-C$1.02Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ATransat A.T. Revenue ResultsActual Revenue$973.20 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ATransat A.T. Announcement DetailsQuarterQ2 2024Date6/5/2024TimeN/AConference Call DateThursday, June 6, 2024Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckInterim ReportEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Transat A.T. Q2 2024 Earnings Call TranscriptProvided by QuartrJune 6, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen. Welcome to the Transat Conference Call. Note that this call is being recorded. And I would like to turn the meeting over to Ms. Andrienne Gagne, Senior Director, Communications and Corporate Affairs. Operator00:00:11Please go ahead, Ms. Gangy. Speaker 100:00:14Thank you, Cindy. Sylvie. Hello, everyone, and thank you for attending our earnings call of the Q2 ended April 30, 2024. I'm here this morning with Annie Guerard, President and CEO and Jean Francois Pruneau, our Chief Financial Officer. Anneke will provide an overview of the quarter and share comments on the current operational situation and commercial plans for the future. Speaker 100:00:40Jean Francois will have to cover our financial results in more detail. We will then take questions from financial analysts. Questions from journalists will be handled offline after this call. The conference call will be held in English, but questions may be asked in French or English. As usual, our investors presentation has been updated and is posted on our website in the Investors section. Speaker 100:01:06Safran Fo may refer to it as he presents the results. Our comments and discussion today may contain forward looking information about Transat's outlook, objectives and strategies that are based on assumptions and subject to risks and uncertainties. Forward looking statements represent Transat's expectations as at June 6, 2024 and accordingly are subject to change after such date. Our actual results could differ materially from any stated expectations. Please refer to our forward looking statement in Transat's 2nd quarter news release available on transat.com and on TADA. Speaker 100:01:43With that, let me turn the call over to Annick for opening remarks. Speaker 200:01:48Good morning, everyone. Thank you for joining us for our fiscal 2024 Q2 conference call. Transat delivered double digit revenue growth for a 2nd straight quarter in Q2 2024 on the strength of sustained customer traffic. On the profitability side, adjusted EBITDA decreased to $38,000,000 due to well documented industry wide and company specific issues, including a highly competitive environment creating downward pressure on deals and the ongoing impact of Pratt and Whitney engine issues. We promptly responded to the situation by implementing initiatives to mitigate the impact of these challenges that will remain over a longer period. Speaker 200:02:40In terms of our financial position, we continued our ongoing deleveraging efforts, which totaled approximately $110,000,000 in debt repayments in the last three quarters. Jean Francois will provide you with more details in his financial overview. Turning to operating metrics for the quarter. Customer traffic increased 12% from the Q2 of 2023, while overall capacity grew 13%. Capacity offered for sub destination, our main programs during the quarter also increased 13% year over year. Speaker 200:03:23Our load factor of 85.5 percent for the Q2 remain largely in line with last year. However, yield decreased 7.5% year over year due to increased competition industry wide, the ongoing economic slowdown, the negative effects of potential strikes on revenues and inefficiencies related to grounded aircraft. Regarding our on time performance, despite an increase in flight volume year over year, 2nd quarter results showed a marked improvement by 9 percentage points. This demonstrates our operational teams unparalleled focus and execution. As we look ahead to the second half of the fiscal year, we are fully prepared from an operational standpoint to welcome passengers for the summer season. Speaker 200:04:22Our team has worked diligently to ensure our operations are seamless and efficient. First, we recently completed the process of bringing in house passenger and ramp services at Trudeau's International Airport. The Montreal Airport represents a key hub for Transat, where we have a strong footprint and operate a high volume of flights. We firmly believe this strategic move will improve customer service and enhance our well earned reputation in this area. We have already seen an increase in customer satisfaction as a result. Speaker 200:05:042nd, we've just launched this week the first phase of our joint venture with Porter Airlines, which will generate incremental customer traffic. Travelers can now book direct and connecting flights with either Air Transat or Porter. Our codesharing partnership results so far have been in line with our expectations, so we are confident about the added potential of this JV. 3rd, we are taking delivery of 7 additional aircraft for this summer, including 4 A321 LRs bringing the total 19 and 3 A330 aircraft on permanent leases to mitigate the impact of grounded planes. Turning to key indicators, load factors for the summer seasons are currently down 2.1 percentage points from the same period last year, while yields are 8% lower. Speaker 200:06:08Reflecting current market conditions and aircraft availability, we have adjusted our capacity expansion plans slightly for fiscal 2024 from 13% to 11%. Our flight portfolio, however, remains the same with a total of 45 destinations covered this summer, including the addition of Marrakesh and Lima. In summary, we delivered encouraging top line results in the Q2 despite prevailing challenges both industry and customer specific. We are highly optimistic about our commercial joint venture with Porter, which is expected to generate incremental booking. We reimbursed $110,000,000 in debt during the last three quarters to improve our overall financial position. Speaker 200:07:02However, it is clear that this year is a challenging one for Transat. We are facing multiple external factors, some beyond our control, but also some in areas where we can make a significant difference. We are proactively implementing measures to navigate these turbulent times effectively. In an industry that has endured significant damage stemming from the pandemic, including severe supply chain disruptions, patience and resilience are crucial. It is not a straightforward journey, but with our dedicated team and strategic initiatives, we are confident in our ability to overcome these obstacles. Speaker 200:07:47Before I close, I would like to thank our loyal customers and recognize the unwavering commitment of our teams in providing outstanding customer service, which remains at the core of everything we do at Transat. This concludes my remarks. Jean Francois will now review our financial results. Speaker 300:08:11Thank you, Anik. Good morning, everyone. Before reviewing our financial results, I would like to highlight improvements to our financial position in the 2nd quarter. We diligently continue to deleverage our balance sheet by voluntarily paying off our high interest subordinated debt of $36,000,000 in the quarter, which would allow us to save $5,000,000 of interest costs annually. Of note, this latest payment flowed from our operations, not from a land sale or external sources. Speaker 300:08:41As Enic mentioned earlier, total loan payments have amounted to $110,000,000 in the last three quarters. So we continue making progress in reducing our debt level. We have also extended our secured debt maturity from 2025 to 2026, providing Transat with added flexibility to secure a refinancing. In that respect, we are engaged in continued discussions with our main debt holder, the federal government. Our refinancing remains top priority. Speaker 300:09:09Now let's turn to our 2nd quarter results. Revenues in the Q2 of 2024 reached $973,000,000 up 12% from the Q2 of 2023. The revenue growth reflects sustained demand for leisure travel, driven by a 12% increase in traffic and additional capacity of 13% year over year. However, growth was tempered by intense competition, challenges in revenue management stemming from the Pratt and Whitney engine issues, the negative impact on bookings of employee strike threats and the economic slowdown, which all apply downward pressure on airline unit revenues. As a result, yield declined 7.5% year over year. Speaker 300:09:52Net loss totaled $54,000,000 or $1.40 per share in the Q2 of 2024 compared to a loss of $29,000,000 or $0.76 per share for the same period in 2023. Meanwhile, adjusted EBITDA amounted to $38,000,000 in the Q2 of 2024 compared to $56,000,000 in the Q2 of last year. The variation is mainly due to the fall in airline unit revenues and to higher operating expense associated with capacity expansion and expenses caused by the Pratt and Whitney engine issue, including additional temporary aircraft lease during the quarter to replace grounded aircraft. These factors were partially offset by lower fuel expenses, reflecting a price decline of 11% year over year. It should be noted that we are still in negotiations with Pratt and Whitney to obtain compensation for grounded aircraft. Speaker 300:10:47To date, load factors for this summer are 2.1 percentage points lower than in 2023 and yields are 8% lower than last year. Moving to cash flows and financial position. Cash flow from operating activities amounted to $183,000,000 in the Q2 of 2024 compared to $191,000,000 in the Q2 of 2023. The slight decrease can mainly be explained by lower operating income this year and to a decline in net change in the provision for return conditions. These factors were partially offset by higher liquidity generated by a net change in non cash working capital balances as well as in other assets and liabilities. Speaker 300:11:32After accounting for investing activities and repayment of lease liabilities, free cash flows reached $110,000,000 in the Q2 of 2024 versus $154,000,000 in the same period last year. In terms of our balance sheet, cash and cash equivalents stood at $529,000,000 at the end of the Q2 of this year, up from 453,000,000 dollars at the end of Q1 2024. Following the debt repayment that I referred to earlier, Transat's long term debt and deferred government grant stood at $781,000,000 at the end of the second quarter compared to $806,000,000 at the end of the previous quarter. Consequently, we strengthened our cash position and reduced our long term debt in the Q2 of 2024. Finally, long term debt and deferred government grants, net of cash and cash equivalents declined to $252,000,000 as of April 30, 2024, down $100,000,000 from the end of Q1, 2024. Speaker 300:12:37So this concludes our prepared comments. We are now ready to take questions. Operator00:12:41Thank you, sir. We will now take questions from the analysts. And your first question is from Konrad Gupta at Scotiabank. Please go ahead. Speaker 400:13:24Thanks, operator. Good morning. My first question is on the capacity. You went down from 19% growth to 13% recently and then now 11%. Just curious if this incremental capacity cut is all driven by the union noise that we are hearing and then the Pratt and Whitney continued issues there? Speaker 400:13:49Or is there something else in these cuts? Speaker 200:13:54Well, it's not only good morning. It's not only the impact of the union, but it's also the impact of change in program that we have to make due to Pratt and Whitney issues. So we had to revise some downward capacity on the routes. We had to cut some routes. Some of the aircraft that were supposed to be delayed earlier as well, the A321LRs. Speaker 200:14:26So because of the delay, we had to get to cut on capacity. So it's a mix of different factors. The unions, Pratt and Whitney and late deliveries in our aircraft as well. Speaker 400:14:39Okay. That makes sense. And is there any specific area or region where you had to cut more capacity because of these issues? Speaker 200:14:48I would say mostly on the U. S. Western U. S. So destinations like San Francisco, Los Angeles. Speaker 200:15:03Of course, we cut as well on domestic, but that was planned, that was part of the plan. We had to reduce some frequencies on the European program because we don't have necessarily the right aircraft to be operating on specific routes. So that's about it. Speaker 400:15:25Okay. That's very helpful. Thank you. And then last one for me before I turn over. Jonathan, sorry if we can dig into the debt side of things, you repaid some over the last three quarters, which is pretty good, I guess, but you still probably have a few more kind of things to kind of take care of in the next few quarters. Speaker 400:15:46Can you help us understand what opportunity do you see now on the debt side to delever the balance sheet further and this new sort of interest rate cut environment that we are starting to see now finally, Does it help you? Speaker 300:16:03Yes, of course it helps. Some of the debt is on a flowing rate basis, obviously, if the rate cuts going to help on the interest expense. That being said, there's no magic. Free cash flow generation is the magic. So we definitely have to generate positive free cash flow to be able to reduce our debt level. Speaker 300:16:22That being said, as I mentioned in my prepared comments, we are in ongoing discussions with our main creditor, the government. And we're still confident that we are able to execute on our refinancing plan that's going to be helpful for the company. Speaker 400:16:42That's great. Thanks guys. Speaker 300:16:44Thank you. Operator00:16:45Next question will be from Cameron Doerksen at National Bank Financial. Please go ahead. Speaker 500:16:51Thanks very much. Good morning. A question on the port JV, which is now good to see that it's approved and underway. But you sort of characterize it, I guess, as the first phase of the joint venture. Can you talk about what additional phases there will be with this relationship? Speaker 200:17:11Yes. So the first phase was to increase our capability to connect the North American network of quarter with our European network. So that's the first phase. So making sure that we align schedule, making sure that we align pricing as well and that we coordinate the commercial efforts at both sides. What was announced as well yesterday is that both carriers are now able to commercialize each one's full network. Speaker 200:17:50So that's good news as well. In terms of Phase II, what we're looking at is approaching the U. S. Market on route that we have in common. So especially on Florida, so we're going to have to work on that. Speaker 200:18:06So Phase 2 is going to come more in fall. And Phase 3 is looking at how we will work together on South destination. That's going to be in 2025 as well. As we have previously mentioned, we will be doing the tour operator business for Porter. Porter will deploy capacity in South destinations. Speaker 200:18:34So we will see we will have to work to make sure we coordinate our efforts effectively on the stock market. So these are the 3 phases. So by the end of 2025, we should have pretty much everything in line, adding as well some alignment on loyalty. So Porter will be able to burn their points customers of Porter will be able to burn their points on our network. And eventually, we will be able to do so as well once we have our loyalty program launched next year. Speaker 500:19:21Okay. That's great detail. Just second question for me. On the salaries and benefits costs, they were up quite a bit year over year 30.5%, but also a pretty big sequential increase as well from Q1. So just wondering if there's anything unusual going on there? Speaker 300:19:42Yes. Well, obviously, salaries reflect added capacity. So we're hiring based on the capacity I want to deploy. So it's obviously on a year over year basis explaining most of it. But it's true, we had a one time cost in our salaries that boosted the expense in Q2. Speaker 300:20:01It was a $5,000,000 one time cost. Speaker 500:20:06Okay. And bringing the some of the airport operations in Montreal in house, does that affect the I guess the headcount and will also affect that line item? Speaker 300:20:18Absolutely. Yes, it's true. I should have mentioned it, but it's true. The fact that we internalize our grounding operations, ramp our operations in Montreal, We added employees obviously to on our payroll. Speaker 500:20:32Okay. Okay. That's very helpful. Thanks very much. Speaker 400:20:35Thank you. Operator00:20:47The next question will be from Tim James at TD Cowen. Please go ahead. Speaker 600:20:53Thank you. Good morning. Just wondering if you could talk a bit about what you're seeing. You've called it competitive pressure. Could you just talk about kind of regionally where you see that being the most significant or maybe I guess in reference to your various hubs across the country, if there's any particular regions where that's more significant than other locations? Speaker 200:21:17I would say that it's really across all programs, all destination. I think that when we're looking at overall capacity, of course, on one side, we are seeing sustained demand for travel. But I think we all believe I would say the market all believe that last year's urge for travel would persist this year in the same way. And obviously, capacity was deployed with that assumption. What we see, we still see a lot of uncertainty in the market from an economic standpoint. Speaker 200:21:57Canadians continue to feel the negative impacts of high inflation, high interest rates on their budget. We see even some postponing their spending. So overall result is that there is significant increase in capacity, but all of this has put a lot of pressure on yields because the demand is there, but it's not at a growth rate that is as strong as last year. Speaker 600:22:29Okay. Then on the same topic, the 7.5% decline in yield, Is that a pretty good indication of the year over year change in fares or packages? Or is there anything in terms of mix and route additions that would be influencing that as well? I'm just trying to disaggregate between maybe what's just really year over year changes in the price that the customers are facing versus any other influences that drive that yield number. Speaker 200:23:02No, it's really yields are tracking below last year. It's really it's not a question of mix. It's really year over year what we're seeing compared to last year, understanding that last year was exceptionally strong as so the comparison is a little bit difficult to do. And we need to bear in mind as well that we're still ahead of pre pandemic levels. So the comparisons with 2023 is little bit difficult. Speaker 700:23:38Okay. And my last question, Speaker 600:23:42have any changes in Porter's capacity plans been a contributing factor plans, Speaker 300:23:51been a contributing factor Speaker 600:23:52to your changing sort of capacity plans or your financial guidance for this year? I'm just wondering if that your assumptions that have been put into your business plan regarding the timing of quarter and how it would ramp up have changed at all or if it's kind of tracking to your original assumption? Speaker 200:24:10No, not on 2024. And we are very well aligned on our growth plan. Of course, we know their plans. They're expanding quickly coordinating that capacity together and making sure that we create as much value as possible. So but there hasn't been any changes, significant changes in order plan that had an impact on us. Speaker 600:24:54Thank you very much. Operator00:24:58Thank you. Next question will be from Michael Kippurias at Desjardins Capital Markets. Please go ahead. Speaker 700:25:06Yes, good morning and thank you for taking my question. Maybe on CapEx, for the 1st 6 months of the year, you spent around $79,000,000 on CapEx primarily for aircraft maintenance. It's a pretty nice step up versus last year. Could you maybe just give us an update on your expectations for CapEx, free cash flow generation for the balance of the year? And if there are any plans to kind of scale down some of this given the lower expected profitability? Speaker 300:25:34Sure. Well, in terms of the maintenance calendar, obviously, like I think we said in the past, due to the pandemic, our calendar is unfavorable this year. So it's obviously had an impact. On top of that, we have increased capacity in more airplanes or more aircraft in our fleet. So it also have an impact on maintenance on the CapEx related to maintenance. Speaker 300:25:58And the fact that we internalize our ground operations at the Montreal airport, we obviously had to spend more on capital expenditures. And in fact, for the first two quarters of the year and it's over it's almost over now and we still have some few things to do, but I would say it's pretty minor. But total for this the 1st semester or the 1st two quarters of the year is total of $10,000,000 related to the investment for ground ending operations in Montreal. So that should be almost over. In terms of next year, obviously, it has to reflect the fleet. Speaker 300:26:38We might have some reduced needed for maintenance related to our current calendar, but I wouldn't expect that to be material. Speaker 700:26:54Thank you. I appreciate it. Speaker 300:26:56Thank you. Operator00:26:57Thank you. And at this time, we have no other questions registered. Please proceed. Speaker 100:27:05Thank you, everyone. Before we close the line, let me remind you that our 3rd quarter results will be released on September 12. Thank you, and have a great day. Operator00:27:14Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallTransat A.T. Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckInterim report Transat A.T. Earnings HeadlinesTransat reached a new support agreement for GTF enginesApril 17, 2025 | finance.yahoo.comApril 1st Alert: Air Transat Renames the Atlantic Ocean to the Canadien OceanApril 1, 2025 | finance.yahoo.comMassive new energy source found in UtahNEW THIS WEEK: Huge Energy Discovery In Utah The Department of Energy say it could power America for millions of years. And both grizzled oilmen and clean energy supporters love it: Energy Secretary Chris Wright called it "an awesome resource," while Warren Buffett, Jeff Bezos, Mark Zuckerberg, and Bill Gates are all directly invested.May 6, 2025 | Stansberry Research (Ad)Earnings call transcript: Transat beats Q1 2025 forecasts, stock dipsMarch 15, 2025 | uk.investing.comTransat dépasse les prévisions au T1 2025, mais l’action reculeMarch 14, 2025 | fr.investing.comTransat A.T. rapporte une perte nette de 122,5 millionsMarch 13, 2025 | msn.comSee More Transat A.T. Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Transat A.T.? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Transat A.T. and other key companies, straight to your email. Email Address About Transat A.T.Transat A.T. (TSE:TRZ) Inc is a Canadian company that specializes in the organization, marketing, and distribution of holiday travel in the tourism industry. The company offers vacation packages, hotel stays, and air travel under the Transat and Air Transat brands. The company's core business consists of tour operators based in Canada that are vertically integrated with its other services of air transportation, distribution through a dynamic travel agency network, value-added services at travel destinations, and accommodations. Its geographical segments include the Transatlantic, Americas, and others.View Transat A.T. ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings American Electric Power (5/6/2025)Advanced Micro Devices (5/6/2025)Marriott International (5/6/2025)Constellation Energy (5/6/2025)Arista Networks (5/6/2025)Brookfield Asset Management (5/6/2025)Duke Energy (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Ferrari (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 8 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen. Welcome to the Transat Conference Call. Note that this call is being recorded. And I would like to turn the meeting over to Ms. Andrienne Gagne, Senior Director, Communications and Corporate Affairs. Operator00:00:11Please go ahead, Ms. Gangy. Speaker 100:00:14Thank you, Cindy. Sylvie. Hello, everyone, and thank you for attending our earnings call of the Q2 ended April 30, 2024. I'm here this morning with Annie Guerard, President and CEO and Jean Francois Pruneau, our Chief Financial Officer. Anneke will provide an overview of the quarter and share comments on the current operational situation and commercial plans for the future. Speaker 100:00:40Jean Francois will have to cover our financial results in more detail. We will then take questions from financial analysts. Questions from journalists will be handled offline after this call. The conference call will be held in English, but questions may be asked in French or English. As usual, our investors presentation has been updated and is posted on our website in the Investors section. Speaker 100:01:06Safran Fo may refer to it as he presents the results. Our comments and discussion today may contain forward looking information about Transat's outlook, objectives and strategies that are based on assumptions and subject to risks and uncertainties. Forward looking statements represent Transat's expectations as at June 6, 2024 and accordingly are subject to change after such date. Our actual results could differ materially from any stated expectations. Please refer to our forward looking statement in Transat's 2nd quarter news release available on transat.com and on TADA. Speaker 100:01:43With that, let me turn the call over to Annick for opening remarks. Speaker 200:01:48Good morning, everyone. Thank you for joining us for our fiscal 2024 Q2 conference call. Transat delivered double digit revenue growth for a 2nd straight quarter in Q2 2024 on the strength of sustained customer traffic. On the profitability side, adjusted EBITDA decreased to $38,000,000 due to well documented industry wide and company specific issues, including a highly competitive environment creating downward pressure on deals and the ongoing impact of Pratt and Whitney engine issues. We promptly responded to the situation by implementing initiatives to mitigate the impact of these challenges that will remain over a longer period. Speaker 200:02:40In terms of our financial position, we continued our ongoing deleveraging efforts, which totaled approximately $110,000,000 in debt repayments in the last three quarters. Jean Francois will provide you with more details in his financial overview. Turning to operating metrics for the quarter. Customer traffic increased 12% from the Q2 of 2023, while overall capacity grew 13%. Capacity offered for sub destination, our main programs during the quarter also increased 13% year over year. Speaker 200:03:23Our load factor of 85.5 percent for the Q2 remain largely in line with last year. However, yield decreased 7.5% year over year due to increased competition industry wide, the ongoing economic slowdown, the negative effects of potential strikes on revenues and inefficiencies related to grounded aircraft. Regarding our on time performance, despite an increase in flight volume year over year, 2nd quarter results showed a marked improvement by 9 percentage points. This demonstrates our operational teams unparalleled focus and execution. As we look ahead to the second half of the fiscal year, we are fully prepared from an operational standpoint to welcome passengers for the summer season. Speaker 200:04:22Our team has worked diligently to ensure our operations are seamless and efficient. First, we recently completed the process of bringing in house passenger and ramp services at Trudeau's International Airport. The Montreal Airport represents a key hub for Transat, where we have a strong footprint and operate a high volume of flights. We firmly believe this strategic move will improve customer service and enhance our well earned reputation in this area. We have already seen an increase in customer satisfaction as a result. Speaker 200:05:042nd, we've just launched this week the first phase of our joint venture with Porter Airlines, which will generate incremental customer traffic. Travelers can now book direct and connecting flights with either Air Transat or Porter. Our codesharing partnership results so far have been in line with our expectations, so we are confident about the added potential of this JV. 3rd, we are taking delivery of 7 additional aircraft for this summer, including 4 A321 LRs bringing the total 19 and 3 A330 aircraft on permanent leases to mitigate the impact of grounded planes. Turning to key indicators, load factors for the summer seasons are currently down 2.1 percentage points from the same period last year, while yields are 8% lower. Speaker 200:06:08Reflecting current market conditions and aircraft availability, we have adjusted our capacity expansion plans slightly for fiscal 2024 from 13% to 11%. Our flight portfolio, however, remains the same with a total of 45 destinations covered this summer, including the addition of Marrakesh and Lima. In summary, we delivered encouraging top line results in the Q2 despite prevailing challenges both industry and customer specific. We are highly optimistic about our commercial joint venture with Porter, which is expected to generate incremental booking. We reimbursed $110,000,000 in debt during the last three quarters to improve our overall financial position. Speaker 200:07:02However, it is clear that this year is a challenging one for Transat. We are facing multiple external factors, some beyond our control, but also some in areas where we can make a significant difference. We are proactively implementing measures to navigate these turbulent times effectively. In an industry that has endured significant damage stemming from the pandemic, including severe supply chain disruptions, patience and resilience are crucial. It is not a straightforward journey, but with our dedicated team and strategic initiatives, we are confident in our ability to overcome these obstacles. Speaker 200:07:47Before I close, I would like to thank our loyal customers and recognize the unwavering commitment of our teams in providing outstanding customer service, which remains at the core of everything we do at Transat. This concludes my remarks. Jean Francois will now review our financial results. Speaker 300:08:11Thank you, Anik. Good morning, everyone. Before reviewing our financial results, I would like to highlight improvements to our financial position in the 2nd quarter. We diligently continue to deleverage our balance sheet by voluntarily paying off our high interest subordinated debt of $36,000,000 in the quarter, which would allow us to save $5,000,000 of interest costs annually. Of note, this latest payment flowed from our operations, not from a land sale or external sources. Speaker 300:08:41As Enic mentioned earlier, total loan payments have amounted to $110,000,000 in the last three quarters. So we continue making progress in reducing our debt level. We have also extended our secured debt maturity from 2025 to 2026, providing Transat with added flexibility to secure a refinancing. In that respect, we are engaged in continued discussions with our main debt holder, the federal government. Our refinancing remains top priority. Speaker 300:09:09Now let's turn to our 2nd quarter results. Revenues in the Q2 of 2024 reached $973,000,000 up 12% from the Q2 of 2023. The revenue growth reflects sustained demand for leisure travel, driven by a 12% increase in traffic and additional capacity of 13% year over year. However, growth was tempered by intense competition, challenges in revenue management stemming from the Pratt and Whitney engine issues, the negative impact on bookings of employee strike threats and the economic slowdown, which all apply downward pressure on airline unit revenues. As a result, yield declined 7.5% year over year. Speaker 300:09:52Net loss totaled $54,000,000 or $1.40 per share in the Q2 of 2024 compared to a loss of $29,000,000 or $0.76 per share for the same period in 2023. Meanwhile, adjusted EBITDA amounted to $38,000,000 in the Q2 of 2024 compared to $56,000,000 in the Q2 of last year. The variation is mainly due to the fall in airline unit revenues and to higher operating expense associated with capacity expansion and expenses caused by the Pratt and Whitney engine issue, including additional temporary aircraft lease during the quarter to replace grounded aircraft. These factors were partially offset by lower fuel expenses, reflecting a price decline of 11% year over year. It should be noted that we are still in negotiations with Pratt and Whitney to obtain compensation for grounded aircraft. Speaker 300:10:47To date, load factors for this summer are 2.1 percentage points lower than in 2023 and yields are 8% lower than last year. Moving to cash flows and financial position. Cash flow from operating activities amounted to $183,000,000 in the Q2 of 2024 compared to $191,000,000 in the Q2 of 2023. The slight decrease can mainly be explained by lower operating income this year and to a decline in net change in the provision for return conditions. These factors were partially offset by higher liquidity generated by a net change in non cash working capital balances as well as in other assets and liabilities. Speaker 300:11:32After accounting for investing activities and repayment of lease liabilities, free cash flows reached $110,000,000 in the Q2 of 2024 versus $154,000,000 in the same period last year. In terms of our balance sheet, cash and cash equivalents stood at $529,000,000 at the end of the Q2 of this year, up from 453,000,000 dollars at the end of Q1 2024. Following the debt repayment that I referred to earlier, Transat's long term debt and deferred government grant stood at $781,000,000 at the end of the second quarter compared to $806,000,000 at the end of the previous quarter. Consequently, we strengthened our cash position and reduced our long term debt in the Q2 of 2024. Finally, long term debt and deferred government grants, net of cash and cash equivalents declined to $252,000,000 as of April 30, 2024, down $100,000,000 from the end of Q1, 2024. Speaker 300:12:37So this concludes our prepared comments. We are now ready to take questions. Operator00:12:41Thank you, sir. We will now take questions from the analysts. And your first question is from Konrad Gupta at Scotiabank. Please go ahead. Speaker 400:13:24Thanks, operator. Good morning. My first question is on the capacity. You went down from 19% growth to 13% recently and then now 11%. Just curious if this incremental capacity cut is all driven by the union noise that we are hearing and then the Pratt and Whitney continued issues there? Speaker 400:13:49Or is there something else in these cuts? Speaker 200:13:54Well, it's not only good morning. It's not only the impact of the union, but it's also the impact of change in program that we have to make due to Pratt and Whitney issues. So we had to revise some downward capacity on the routes. We had to cut some routes. Some of the aircraft that were supposed to be delayed earlier as well, the A321LRs. Speaker 200:14:26So because of the delay, we had to get to cut on capacity. So it's a mix of different factors. The unions, Pratt and Whitney and late deliveries in our aircraft as well. Speaker 400:14:39Okay. That makes sense. And is there any specific area or region where you had to cut more capacity because of these issues? Speaker 200:14:48I would say mostly on the U. S. Western U. S. So destinations like San Francisco, Los Angeles. Speaker 200:15:03Of course, we cut as well on domestic, but that was planned, that was part of the plan. We had to reduce some frequencies on the European program because we don't have necessarily the right aircraft to be operating on specific routes. So that's about it. Speaker 400:15:25Okay. That's very helpful. Thank you. And then last one for me before I turn over. Jonathan, sorry if we can dig into the debt side of things, you repaid some over the last three quarters, which is pretty good, I guess, but you still probably have a few more kind of things to kind of take care of in the next few quarters. Speaker 400:15:46Can you help us understand what opportunity do you see now on the debt side to delever the balance sheet further and this new sort of interest rate cut environment that we are starting to see now finally, Does it help you? Speaker 300:16:03Yes, of course it helps. Some of the debt is on a flowing rate basis, obviously, if the rate cuts going to help on the interest expense. That being said, there's no magic. Free cash flow generation is the magic. So we definitely have to generate positive free cash flow to be able to reduce our debt level. Speaker 300:16:22That being said, as I mentioned in my prepared comments, we are in ongoing discussions with our main creditor, the government. And we're still confident that we are able to execute on our refinancing plan that's going to be helpful for the company. Speaker 400:16:42That's great. Thanks guys. Speaker 300:16:44Thank you. Operator00:16:45Next question will be from Cameron Doerksen at National Bank Financial. Please go ahead. Speaker 500:16:51Thanks very much. Good morning. A question on the port JV, which is now good to see that it's approved and underway. But you sort of characterize it, I guess, as the first phase of the joint venture. Can you talk about what additional phases there will be with this relationship? Speaker 200:17:11Yes. So the first phase was to increase our capability to connect the North American network of quarter with our European network. So that's the first phase. So making sure that we align schedule, making sure that we align pricing as well and that we coordinate the commercial efforts at both sides. What was announced as well yesterday is that both carriers are now able to commercialize each one's full network. Speaker 200:17:50So that's good news as well. In terms of Phase II, what we're looking at is approaching the U. S. Market on route that we have in common. So especially on Florida, so we're going to have to work on that. Speaker 200:18:06So Phase 2 is going to come more in fall. And Phase 3 is looking at how we will work together on South destination. That's going to be in 2025 as well. As we have previously mentioned, we will be doing the tour operator business for Porter. Porter will deploy capacity in South destinations. Speaker 200:18:34So we will see we will have to work to make sure we coordinate our efforts effectively on the stock market. So these are the 3 phases. So by the end of 2025, we should have pretty much everything in line, adding as well some alignment on loyalty. So Porter will be able to burn their points customers of Porter will be able to burn their points on our network. And eventually, we will be able to do so as well once we have our loyalty program launched next year. Speaker 500:19:21Okay. That's great detail. Just second question for me. On the salaries and benefits costs, they were up quite a bit year over year 30.5%, but also a pretty big sequential increase as well from Q1. So just wondering if there's anything unusual going on there? Speaker 300:19:42Yes. Well, obviously, salaries reflect added capacity. So we're hiring based on the capacity I want to deploy. So it's obviously on a year over year basis explaining most of it. But it's true, we had a one time cost in our salaries that boosted the expense in Q2. Speaker 300:20:01It was a $5,000,000 one time cost. Speaker 500:20:06Okay. And bringing the some of the airport operations in Montreal in house, does that affect the I guess the headcount and will also affect that line item? Speaker 300:20:18Absolutely. Yes, it's true. I should have mentioned it, but it's true. The fact that we internalize our grounding operations, ramp our operations in Montreal, We added employees obviously to on our payroll. Speaker 500:20:32Okay. Okay. That's very helpful. Thanks very much. Speaker 400:20:35Thank you. Operator00:20:47The next question will be from Tim James at TD Cowen. Please go ahead. Speaker 600:20:53Thank you. Good morning. Just wondering if you could talk a bit about what you're seeing. You've called it competitive pressure. Could you just talk about kind of regionally where you see that being the most significant or maybe I guess in reference to your various hubs across the country, if there's any particular regions where that's more significant than other locations? Speaker 200:21:17I would say that it's really across all programs, all destination. I think that when we're looking at overall capacity, of course, on one side, we are seeing sustained demand for travel. But I think we all believe I would say the market all believe that last year's urge for travel would persist this year in the same way. And obviously, capacity was deployed with that assumption. What we see, we still see a lot of uncertainty in the market from an economic standpoint. Speaker 200:21:57Canadians continue to feel the negative impacts of high inflation, high interest rates on their budget. We see even some postponing their spending. So overall result is that there is significant increase in capacity, but all of this has put a lot of pressure on yields because the demand is there, but it's not at a growth rate that is as strong as last year. Speaker 600:22:29Okay. Then on the same topic, the 7.5% decline in yield, Is that a pretty good indication of the year over year change in fares or packages? Or is there anything in terms of mix and route additions that would be influencing that as well? I'm just trying to disaggregate between maybe what's just really year over year changes in the price that the customers are facing versus any other influences that drive that yield number. Speaker 200:23:02No, it's really yields are tracking below last year. It's really it's not a question of mix. It's really year over year what we're seeing compared to last year, understanding that last year was exceptionally strong as so the comparison is a little bit difficult to do. And we need to bear in mind as well that we're still ahead of pre pandemic levels. So the comparisons with 2023 is little bit difficult. Speaker 700:23:38Okay. And my last question, Speaker 600:23:42have any changes in Porter's capacity plans been a contributing factor plans, Speaker 300:23:51been a contributing factor Speaker 600:23:52to your changing sort of capacity plans or your financial guidance for this year? I'm just wondering if that your assumptions that have been put into your business plan regarding the timing of quarter and how it would ramp up have changed at all or if it's kind of tracking to your original assumption? Speaker 200:24:10No, not on 2024. And we are very well aligned on our growth plan. Of course, we know their plans. They're expanding quickly coordinating that capacity together and making sure that we create as much value as possible. So but there hasn't been any changes, significant changes in order plan that had an impact on us. Speaker 600:24:54Thank you very much. Operator00:24:58Thank you. Next question will be from Michael Kippurias at Desjardins Capital Markets. Please go ahead. Speaker 700:25:06Yes, good morning and thank you for taking my question. Maybe on CapEx, for the 1st 6 months of the year, you spent around $79,000,000 on CapEx primarily for aircraft maintenance. It's a pretty nice step up versus last year. Could you maybe just give us an update on your expectations for CapEx, free cash flow generation for the balance of the year? And if there are any plans to kind of scale down some of this given the lower expected profitability? Speaker 300:25:34Sure. Well, in terms of the maintenance calendar, obviously, like I think we said in the past, due to the pandemic, our calendar is unfavorable this year. So it's obviously had an impact. On top of that, we have increased capacity in more airplanes or more aircraft in our fleet. So it also have an impact on maintenance on the CapEx related to maintenance. Speaker 300:25:58And the fact that we internalize our ground operations at the Montreal airport, we obviously had to spend more on capital expenditures. And in fact, for the first two quarters of the year and it's over it's almost over now and we still have some few things to do, but I would say it's pretty minor. But total for this the 1st semester or the 1st two quarters of the year is total of $10,000,000 related to the investment for ground ending operations in Montreal. So that should be almost over. In terms of next year, obviously, it has to reflect the fleet. Speaker 300:26:38We might have some reduced needed for maintenance related to our current calendar, but I wouldn't expect that to be material. Speaker 700:26:54Thank you. I appreciate it. Speaker 300:26:56Thank you. Operator00:26:57Thank you. And at this time, we have no other questions registered. Please proceed. Speaker 100:27:05Thank you, everyone. Before we close the line, let me remind you that our 3rd quarter results will be released on September 12. Thank you, and have a great day. Operator00:27:14Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending.Read morePowered by