* Q2 EPS C$0.16 vs C$1.27 year-ago
* Q2 rev down 6 pct to C$1.06 bln
* Incurs C$4 mln cost due to Iceland volcano
June 10 (Reuters) - Transat A.T. Inc TRZa.TO reported an 85 percent drop in quarterly profit, as lower selling prices and strengthening Canadian dollar hurt the holiday travel company.
For the second quarter ended April 30, the company earned C$6.2 million, or 16 Canadian cents a share, down from C$42.2 million, or C$1.27 per share, a year ago.
Adjusting for certain items, it reported a loss of 7 Canadian cents a share.
Revenue dropped about 6 percent to C$1.06 billion, mainly hurt by weaker performance of its European business units.
The company said strength in the Canadian dollar against European currencies would have a negative impact on its income generated in Europe.
Transat's said its load factor was slightly higher than the last year, as bookings were higher in Canada and Europe.
The company said its operations were partly disrupted by the volcanic activity in Iceland, resulting in the additional costs of about C$4 million.
Class A shares of the company closed at C$10.35 Wednesday on the Toronto Stock Exchange. (Reporting by Ashutosh Joshi in Bangalore)