March 12, 2008 / 12:02 PM / 10 years ago

Transat swings to loss on commercial paper losses

TORONTO (Reuters) - Transat AT Inc TRZb.TO on Wednesday posted a surprise loss in the first quarter, stung by a C$14-million write-down related to asset-backed commercial paper (ABCP).

The Canadian holiday travel company, parent of Air Transat, also blamed lower prices and excess supply in a competitive industry for the results.

In response, its shares tumbled C$1.83, or more than 7 percent, to C$24.24 on the Toronto Stock Exchange, their lowest level since October, 2006.

The net loss was C$10.1 million ($10.2 million), or 30 Canadian cents a share in the three months ended January 31, compared to earnings of C$2.0 million, or 6 Canadian cents a share in the same period a year ago.

Before the impact of the ABCP write-down and a C$2.0-million loss related to hedge accounting standards, the company earned C$1.2 million, or 4 Canadian cents a share in the quarter, compared to C$8.5 million, or 25 Canadian cents a share in the comparable period.

Transat, based in Montreal, recorded revenues of C$787.4 million, up 10.5 percent from the year-earlier quarter.

Although the number of travelers to Canada and Europe was up, the company said it saw lower margins on packages sold in Canada to southern destinations.

The C$14-million write-down was related to its holdings in ABCP, which emerged as the epicenter of the credit crunch in Canada’s financial sector last summer. The market for ABCP securities has been frozen since August.

Looking ahead, the company said it expected demand in 2008 to remain higher than last year, although “heightened competition and excess capacity” would continue to push selling prices lower in Canada.

($1=$0.99 Canadian)

Reporting by Jonathan Spicer; Editing by Renato Andrade

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