* Shares drop as much as 6 pct on TSX
* Says Q2 results could be slightly weaker (Recasts, adds analyst’s comment, stock price)
March 15 (Reuters) - Canadian travel operator Transat AT Inc blamed intense competition and rising fuel costs for a bigger than expected first-quarter loss on Thursday and it forecast weaker results in its typically strong second quarter.
Shares of the Montreal-based carrier fell as much as 6 percent after it said second-quarter results may be “slightly inferior” to the year-before quarter’s because climbing fuel prices are expected to offset savings resulting from its restructuring plan.
Transat, which competes with WestJet Airlines’ WestJet Vacations, Air Canada’s Air Canada Vacations, and Sunwing Vacations, also said it will stick with the return-to-profit plan it launched in late 2011.
As part of the three-year plan, Transat laid off 115 employees to save C$10 million a year.
“The winter outlook guidance suggests the negative competitive dynamic continues to dominate, making Transat’s near-term outlook challenging,” Canaccord Genuity analyst David Tyerman said in a note.
Transat said that stiff competition on key sun destination routes made it impossible to increase ticket prices to offset rising fuel costs in the first quarter.
For the quarter ended Jan. 31, Transat said its net loss more than doubled to C$29.5 million ($29.8 million), or 77 Canadian cents a share, compared with a loss of C$13.4 million, or 35 Canadian cents a share, a year earlier.
The adjusted after-tax loss rose to 79 Canadian cents a share from 51 Canadian cents a share.
On average, analysts had expected a net loss of 61 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Transat, which operates in Canada, Europe, Mexico, the Caribbean and Mediterranean Basin, said revenue rose 2 percent to C$829.3 million.
The carrier’s class B shares bottomed at C$6.10 on the Toronto Stock Exchange on Thursday before edging higher to C$6.35, a decline of 15 Canadian cents, or 2.3 percent.
$1=$0.99 Canadian Reporting By Susan Taylor, with additional reporting by Nicole Mordant in Vancouver and Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila and Peter Galloway