Transat A.T. Inc.’s (TRZ) said it will consider grounding planes and laying off employees as it grapples with a significant drop in bookings due to the coronavirus pandemic.
Transat’s chief executive Jean-Marc Eustache told analysts on a conference call Thursday that the company is ready to make all necessary adjustments to deal with the coronavirus pandemic that has impacted the global aviation industry.
“If we have to put planes on the ground, we will put the planes on the ground. If we have to lay off people, it’s not something we want to do, it’s something I like to do, but we will do it,” Eustache said, adding that the travel company is on solid financial footing to deal with the issue.
“We have never (gone) through financial problems at the end of the day. We are very agile.”
Shares of the Montreal-based travel and tour operator closed Thursday at $10.59 per share, a decline of nearly 17 per cent – and down more than 41 per cent lower than the share price Air Canada offered to take over the airline.
Still, Eustache said the stock market collapse will not effect the Air Canada deal, which was overwhelmingly approved by Transat’s shareholders last summer.
“The condition of the market has nothing to do with (the deal.) Even the pandemic right now, it’s outside of the deal with Air Canada,” Eustache said.
“There’s nothing material happening right now that can change the deal or the price of the deal. The deal is there, we will be there in the end.”
Canadian airline stocks were pummelled on Thursday after the U.S. administration banned travel from Europe in an effort to stop the spread of the coronavirus, sending markets around the world tumbling. When the markets closed on Thursday, Air Canada’s stock was valued at $24.90, a decline of 9 per cent. In January, shares of Canada’s largest airline were as high as $52.90.
WestJet Airlines announced on Wednesday that it would be cutting capacity, instituting a hiring freeze and offering voluntary buyouts as passenger demand plummets due to the COVID-19 pandemic.
Transat has also seen demand drop significantly, particularly in recent days, as travellers opt to stay home because of the coronavirus outbreak.
“If we take a snapshot of our bookings today, the situation has certainly deteriorated, the drops in booking in recent days of around 50 per cent,” Denis Pétrin, Transat’s chief financial officer, said through a translator, adding that the company will refrain from offering an outlook on financial results because of the uncertainty.
“Considering the average booking window, there is reason to fear today that the months of April and May will be difficult, but it is utterly impossible to make a longer term forecast.”
Pétrin said the company is currently re-evaluating its flight offering, and has already begun reducing flights and cutting back on some destinations. The travel and tour operator is also implementing several measures aimed at cutting costs, including suspending all discretionary spending and launching a voluntary reduced-working time program for employees.
This week, Prime Minister Justin Trudeau spoke with the chief executives of Air Canada and WestJet Airlines to discuss the impacts of the coronavirus outbreak, but it remains to be seen if the government will offer assistance to the aviation industry.
Eustache said that the government has to help the airlines.
“When we see the taxes that we pay, when we see how much we pay to use the airports... tomorrow, (we’re) not going to have the customers that we have today,” Eustache said.
“It’s a very, very hard time and we’re taking this very, very seriously... We are going to do everything in our power to get through it.”