TORONTO (Reuters) - Transat AT Inc TRZb.TO said on Wednesday it fell to a third-quarter loss as the holiday travel firm was hurt by rising fuel costs.
The parent company of Air Transat lost C$2.4 million, or 7 Canadian cents a share, in the period ended July 31, down from a profit of C$16.1 million, or 47 Canadian cents a share in the same period last year.
Before the impact of hedge accounting standards, Transat said it earned C$700,000, or 2 Canadian cents a share.
Revenue rose 15.9 percent to C$859.9 million from C$741.8 million, helped in part by a rise in passengers in Canada and Europe, the company said.
Analysts on average had expected earnings of 23 Canadian cents a share on revenue of C$834.58 million, according to Reuters Estimates.
Results were hit as Canadian tour operators had a tough time factoring high fuel prices into selling prices, though the negative impact was partially offset by the good performance in its European operations, the company said.
“Oil prices have diminished since the end of the quarter, but still, they have quickly reached unprecedented levels and remain very high,” Jean-Marc Eustache, president and chief executive, said in a release.
Price increases and hedging can merely limit the negative impact of this situation, Eustache said, noting the company’s fuel bill rose by more than C$30 million compared with last year.
The company expects higher revenue in the fourth quarter compared with the year-earlier period, but warned that “unpredictable fluctuations” in aircraft fuel prices could hit margins in North America.
Transat said it logged non-cash losses of C$4.7 million, or C$3.1 million after tax related to the change in the fair value of the forward contracts it uses to manage changes in fuel prices.
Reporting by Jennifer Kwan; Editing by Scott Anderson