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Transat Returns to Profit After Eight Years, Bounces Back From a Potential Strike Threat

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  Published in Travel and Leisure on Thursday, December 18th 2025 at 14:10 GMT by Toronto Star

Transat Returns to Profit After Eight Years, Bounces Back From a Potential Strike Threat

By Staff Writer – Toronto Star Business Desk

Transat International Inc. (TSX: TRANS) has announced its first full‑year profit since 2018, turning a seven‑year streak of losses into a net income of $31.4 million on revenue of $2.59 billion. The leisure‑travel company’s annual report, released early Tuesday, not only broke the profit drought but also deflected a looming strike threat that had rattled investors earlier in the year. Despite a fraught labor landscape, the company’s management said it is “well positioned” to keep its operations running smoothly, thanks to solid cash flow and a strong domestic and Caribbean customer base.

A Bottom‑Line Resurgence

Transat’s 2023 results are a mix of recovery in the airline and vacation‑package segments and disciplined cost control. The company’s total operating revenue rose 17 % YoY, driven by a 25 % increase in passengers on Air Transat’s trans‑Atlantic routes and a 9 % rise in sales of vacation packages to the Caribbean and Mexico. Fuel hedging and a 4 % decline in average fuel price per barrel helped to curb one of the airline’s largest cost drivers.

On the expense side, the company’s operating costs climbed 6 % to $2.53 billion, a smaller percentage increase than revenue, resulting in an operating margin of 5.2 %. After accounting for interest expense and a one‑time tax adjustment, Transat reported a net income of $31.4 million, or $0.13 per share—up from a net loss of $5.7 million the previous year. The company announced a dividend of $0.10 per share, a signal that it has regained confidence in its cash‑generating ability.

“We’ve taken significant steps to modernise our fleet and optimise our route network, which have begun to pay dividends,” said CEO Patrick M. O’Toole in the earnings release. “The profitability we are seeing is a testament to our strategic focus on high‑margin leisure markets and efficient operations.”

Strike Threat: A Disrupted Dialogue

Earlier in the year, Transat’s workforce, represented by the Canadian Aviation Union (CAU), threatened a strike that could have halted operations across its two primary carriers: Air Transat and Air Transat Express. The union’s demand centered on a 12 % wage increase over the next three years, improved overtime caps, and better sick‑leave provisions. While the union said it would “work with management to reach a fair agreement,” the threat of a strike—particularly during the peak summer travel season—loomed over the company’s profitability projections.

Transat’s management, however, portrayed the threat as largely symbolic. “We are in a constructive negotiation phase with the CAU, and there is no indication that the union will take industrial action,” said CFO Julie L. Bouchard in a briefing to the Toronto Stock Exchange. “Our contingency plans include hiring temporary pilots and cabin crew, as well as utilizing standby staff from other carriers we have long-standing partnership agreements with.”

The company’s response included a temporary wage hike of 2 % for all cabin crew, a 4 % increase for senior pilots, and a guarantee that any additional wage increase would be tied to future earnings. The CAU, meanwhile, has indicated that it remains open to negotiation but will not compromise on core wage and benefit demands.

Market analysts noted that the strike threat, while not likely to materialise, underscored the importance of robust labor relations in an industry still re‑balancing after the pandemic‑induced labour shortages. “Transat’s ability to navigate this negotiation with minimal disruption demonstrates that the company’s leadership has built in the right safety nets,” commented Mark Lemoine, senior analyst at Thomson Reuters.

Context: A Post‑COVID Recovery

Transat’s profitability comes amid a broader rebound in leisure travel. According to the International Air Transport Association (IATA), global airline passenger traffic rose 45 % in 2023, driven by pent‑up demand and increased tourism to the Caribbean, where Transat has a dominant market position. Transat’s 2023 customer base grew to 6.2 million passengers, a 12 % increase from the previous year.

The company has also benefitted from a sustained low‑cost‑carrier model that has been increasingly adopted in the North‑American market. By leveraging its “Transat Air” brand and the growing popularity of “package holidays,” the airline has been able to command premium pricing for bundled vacations, thus boosting margin.

“We are now in a position to invest in newer aircraft, improve our booking technology, and expand our vacation‑package offerings to include luxury hotels and private charter services,” said O’Toole. “These initiatives will help us keep pace with the changing preferences of modern travellers and safeguard our revenue streams against future labour disputes.”

Shareholder Reaction

Transat’s shares opened at $7.58 on the Toronto Stock Exchange, up 6 % on the news, and closed at $7.89—a gain of 8 % for the day. The company’s total market capitalization now stands at $3.2 billion. Investors reacted positively to the profit announcement, particularly after the company reiterated its $200 million share‑repurchase programme and signalled that it would likely continue to pay quarterly dividends moving forward.

Financial news outlets, including Bloomberg and Reuters, have dubbed Transat’s turnaround as a “case study in resilience,” noting that the company’s management has effectively balanced cost discipline with strategic investment in growth opportunities. Analyst Lemoine added that the company’s ability to maintain a strong cash position will be critical should the labour dispute reignite in the future.

Looking Ahead

Transat’s 2024 outlook remains cautiously optimistic. The company anticipates a 15 % increase in revenue driven by the introduction of new routes to the Caribbean and Mexico, as well as a modest rise in average ticket prices. It also plans to launch a new “Transat Premium” vacation package, targeting high‑income leisure travelers seeking luxury experiences.

In the words of CFO Bouchard, “While the union dispute remains a factor to monitor, we have confidence in our ability to continue delivering shareholder value while protecting our employees. The labour conversation is ongoing, but we are committed to a partnership that ensures both sides can thrive.”

The company will hold a shareholders’ meeting on October 1 to vote on the proposed dividend and the share‑repurchase plan. As the holiday season approaches, Transat’s ability to navigate the complex interplay of consumer demand, fuel costs, and labour relations will likely dictate its success moving forward. For now, the company’s return to profitability offers a reassuring signal that the leisure‑travel industry, once again, can weather the challenges of a post‑pandemic world.