Transat A.T. Inc.

Bonjour, Mesdames et Messieurs. Bienvenue à la conférence Transat. Good morning, ladies and gentlemen, and welcome to the Transat conference call. Please note that this call is being recorded. I would now like to turn the meeting over to Andriane Gagne, Senior Director, Communications, Public Affairs, and Corporate Responsibility. Please go ahead, Ms. Gagne.

Bonjour et bienvenue à cet appel trimestriel de Transat. Hello, everyone, and thank you for joining us for our fourth quarter earnings call ended October 31st, 2024. I'm here this morning with Annick Guérard, President and CEO, and Jean-François Pruneau, our Chief Financial Officer. Annick will provide an overview of the quarter and comment on the current operational situation and commercial plans for the future. Jean-François will then discuss our financial results in more detail. We will then take questions from financial analysts. Questions from journalists will be taken offline after the call. The conference call will be conducted in English, but questions may be asked in French or English. As usual, our supplementary disclosure has been updated and is available on our website in the Investor section. Jean-François may refer to it when he presents the results. Our comments and discussion today may include forward-looking information regarding Transat's outlook, objectives, and strategies that are based on assumptions and subject to risk and uncertainty. Forward-looking statements represent Transat's expectations as of December 12, 2024, and are therefore subject to change after that date. Our actual results may differ materially from any stated expectations. please refer to our forward-looking statement in Transat's fourth quarter news release available on Transat.com and on CEDAR+. With that, I would like to turn the call over to Annick for opening remarks.

Good morning. Thank you for joining us for our fourth quarter conference call for fiscal 2024. Transat ended the year on a positive note with better than expected adjusted EBITDA of 123 million in the quarter. This result was mainly driven by growth in customer traffic, lower fuel costs, and financial compensation from Pratt & Whitney related to aircraft grounded over the last two years. Cisco Year 2024 presented numerous challenges, both specific to Transat and industry-wide, which have put pressure on our yields and overall financial performance. In response, as announced last September, we launched our elevation program, a comprehensive optimization plan designed to strengthen our operations and improve long-term performance. Looking ahead to fiscal 2025, we expect the industry to be disciplined with fairly stable capacity. Combined with declining interest rates and easing inflation, which signal potential relief for consumer budgets, this sets a favorable backdrop for further yield improvements in the upcoming fiscal year. We are seeing early signs of a gradually improving competitive landscape as demonstrated by better yields on a sequential basis in Q4. Our yield decreased 8.5% year-over-year in the fourth quarter compared to a decline of 9.7% in the third quarter. However, we remain in a context of high economic uncertainty, which leads us to take a cautious approach to our predictions for next year. Turning to our operating matrix in terms of available seat miles, Our capacity increased 4% year-over-year in the quarter and trended downwards from the third quarter. Transat reported customer traffic growth of 2.7% in the quarter and of 7.6% for the year, reflecting solid demand for leisure travel. Our load factor reached 87.2% in the quarter, down slightly from the same period last year. Consumers continue to have a strong appetite for travel, but as we have noted in previous quarters, they are looking for discounts before booking, such as those offered during Black Friday and Cyber Monday promotions. Revenues during this promotion increased by 9% compared to last year, highlighting the effectiveness of these discount periods in driving bookings. Yields are moving in the right direction with sequential improvement in the quarter, helped in part by more disciplined industry capacity conditions. Looking at our fleet, we took delivery of seven aircraft in 2024, including four A321LRs and three A330s. With no new deliveries expected in 2025, our fleet will remain stable throughout the year, resulting in moderate capacity growth. The current number of grounded aircraft due to Pratt & Whitney GTF engine issue remain stable at six since Q3. The delivery of two additional engines provided as part of the compensation from Pratt & Whitney allowed us to prevent additional grounded aircraft. While our priority in 2025 will be to strengthen our core network, we remain committed to identifying new opportunities to grow revenue. We are introducing two new destinations to our network, Tulum, Mexico this winter, and Valencia, Spain next summer. On the operational front, we're very pleased to report a 7 percentage points improvement in our on-time performance in Q4 compared to the same time last year. This marks the second consecutive quarter of significant progress largely due to the successful insourcing of passenger and ramp services at Montreal Trudeau earlier this year. Moreover, our commitment to improving customer experience continues to pay off as our customer satisfaction score rose again in the fourth quarter thanks to the quality of service delivered by our employees. Turning now to our elevation program. This is our primary focus and we are executing on it with full commitment and discipline. It is progressing as planned and it is on track to meet our targets. We have identified over 30 initiatives within the program that are being closely tracked and measured to ensure continuous value creation. As of today, we have implemented initiatives representing an annual runner rate improvement of 25 million in adjusted EBITDA, moving us steadily toward our goal of 100 million by mid-fiscal 2026. Three initiatives have already started generating value for the organization. First, the redesign of our structure removing several management positions, ensuring a leaner, more streamlined, and agile organization. Second, the deployment of productivity tools in our call center. By accelerating AI integration, we've enhanced efficiency, reducing average handle time, and freeing up 22% of agent capacity. Third, we are upgrading our distribution model by integrating new distribution capabilities, NDC, enabling direct connections with distribution partners. This is reducing distribution costs, increasing control over our offerings, and providing greater flexibility. It's important to emphasize that these three initiatives are simply illustrative example of the many actions already underway. Looking ahead, next-generation pricing strategies and holistic analytics and cost reduction will drive profitability in the later stages of the program. We will continue to work intensively over the coming weeks to reduce external spend on a sustainable basis through pricing, the optimization of procurement contracts, and the review of supplier performance. We will also continue to overhaul our revenue management practices by introducing AI into our systems, leveraging willingness to pay, price elasticity, and better customer segmentation. As we make steady progress, the efficiencies, focus, and streamlined structure established will accelerate our strategic execution. The launch of our GV with Porter is another key highlight of the past year. In fiscal 2024, we carried over 170,000 connecting passengers, marking a 175% increase compared to the previous year. Altogether, 4% of our passengers connected with Porter in fiscal 2024, and we expect a significant increase in connectivity in 2025. Turning to our outlook for fiscal 2025, we enter the year with cautious optimism, supported by industry-wide capacity discipline, which provides a positive backdrop, though tempered by high economic uncertainty. In line with this, we are planning a prudent 2% increase in available seat miles in 2025. For the first quarter, of 2025, we are seeing that unit revenues, or yield, have increased by 1%, while load factors are 1.1 percentage points higher compared to last year. In summary, Transat concluded a challenging fiscal year 2024 with an encouraging financial performance in the fourth quarter. Discussion with stakeholders and the review of all options to strengthen our balance sheet are ongoing and remain a key priority for Transat. Meanwhile, our focus is on delivering the elevation program and driving significant improvements in Transat's financial performance. While we are still at the early stages of the program, we have already delivered to 25 million of our 100 million annual adjusted EBITDA targets on a run-rate basis. Finally, I would like to thank our employees for their resilience, excellence, and dedication during this period filled with challenges and opportunities. This concludes my remarks. Jean-Francois will now present our financial results.