Air Transat Expects More A321neo To Be Grounded

Air Transat is preparing to be impacted by the ongoing Pratt & Whitney engine crisis in 2024, with A321neo groundings expected.

The airline has said that three A321LRs are currently grounded following these engine issues. However, the expectation is that this should increase towards five or six aircraft by the end of the fiscal year.

The Pratt & Whitney Geared Turbofan Problems

Air Transat joins many companies across North America and the globe currently impacted by the engine crisis surrounding Pratt & Whitney engines.

Ultimately, the uncertainty around inspections, removals and replacements of geared turbofan engines means understanding what aircraft can return to service or are grounded remains unclear.

Despite these issues with the A321LR that are out of their control, they still expect to grow capacity thanks to the introduction of new aircraft. This also includes leasing more aircraft in the coming year.

Short-term leases and extending existing leases can dramatically improve the utilisation of current assets amid exterior issues. In the case of Air Transat, these are solutions they believe will provide sufficient enough while it navigates the storm.

Air New Zealand has acted as a primary example of an airline navigating scheduling issues with existing planes by drafting aircraft in the short term. The New Zealand flag carrier is impacted by Pratt & Whitney issues like Air Transat. However, in the 2010s, it faced troubles with the 787 following engine difficulties and was forced to resort to leasing.

Air Transat Reports Q4 2023 Results

Alongside further updates surrounding aircraft impacted by the Turbofan engines at Pratt & Whitney, the airline also reported its Q4 and Fiscal 2023 operating results.

For the fourth quarter, the airline’s revenues stood at $746.5 million, with operating income at $44.7 million. Ultimately, the year saw a net loss of $11.543 million compared to the $403.7 million for Fiscal Year 2022.

Driven by a strong execution of its strategic plan, Transat has solidified its positioning in the Canadian leisure travel industry. As industry dynamics gathered momentum throughout the year, our team focused on meeting growing demand and improving operating efficiency, allowing us to end fiscal 2023 with financial results that exceeded the upper range of our profitability target. Driven by robust yields, we delivered a strong fourth-quarter performance with revenues of $764.5 million, 10% above 2019 levels on 7% less capacity and with similar load factors, while adjusted EBITDA reached $89.0 million, culminating a solid second half. We also generated free cash flow¹ of $162.4 million in fiscal 2023, enabling us to reduce debt and conclude the year with an improved cash position

Annick Guérard, President and Chief Executive Officer of Transat.

Future Outlook For Air Transat

Load factors currently are 1.3 percentage points lower than in fiscal 2023. Air Transat forecasts that with current pricing and demand, they’ll be able to cope with the cost environment that faces inflation.

Additionally, the airline is adjusting its EBITDA margin target range of 7.5% to 9%. As a result, this also exceeds previous historical levels set by the airline.

Air Transat’s current fleet consists of 33 in-service aircraft, with 7 units listed as parked. Since its introduction in 1987, the Canadian carrier has operated several historic aircraft types.