Transat A.T. Inc.

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

Bonjour et bienvenue à cet appel trimestriel de Transat. Hello, everyone, and thank you for joining us for our second quarter earnings call ended April 31, 2026. Annick Guérard, President and CEO, and Jean-François Pruneau, Chief Financial Officer, will provide you an overview of the quarter and comment on the current operational situation and commercial plans. Jean-François will also discuss our financial results in 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 Investors section. Jean-Francois 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 risks and are sent in peace. Forward-looking statements represent Transat's expectations as of June 11, 2026, and are therefore subject to change after today. Our actual results may differ materially from any stated expectation. Please refer to our forward-looking statement in Transat's second quarter news release available on Transat.com and on TED-R Plus. With that, I would like to turn the call over to Annick for opening remarks.

Thank you, Andréanne. Good morning. Thank you for joining our conference call for the second quarter of fiscal 2026. Following a solid first quarter that continued the positive momentum of fiscal 2025 and reflected the tangible benefits of our strategic initiatives, second quarter results were significantly below our expectations as factors beyond our control severely impacted profitability. With prices remaining high due to prolonged closure of the Strait of Ormuz Fuel costs increased operating expenses by about $70 million in March and April, and the impact persisted in May. Additionally, the sudden halt of our operations to Cuba further impacted results by about $25 million. Together, these two external factors resulted in a negative impact of about $95 million on adjusted EBITDA. During this period of intense volatility, we've implemented specific measures to mitigate adverse effects such as fuel surcharges on new bookings and targeted adjustments to network capacity, which was reduced by 6% from May to October 2026. Fuel surcharges had a marginal impact on our second quarter results, since most reservations for this period had been booked prior to the start of the conflict in the Middle East. We anticipate surcharges will gradually mitigate the effect of higher fuel costs with full offset only expected toward the end of the year. We welcome the introduction by the Government of Canada of the Liquidity for Airline Sector Resilience Facility, which recognizes the significant fuel cost pressures currently facing Canadian airlines. Transat intends to apply to the facility, which will provide meaningful support as we navigate the current environment with a continued focus on disciplined cost management, operational execution, and delivering for our customers. In the context of an industry-wide fuel crisis that caused operational disruptions and network adjustments, we experienced downward pressure on key metrics in the second quarter. Our yield declined 0.7 percentage points after five consecutive quarters of growth, while our low factor was 83.8% compared to 84.6% in the second quarter of 2025. Capacity expressed in available seat miles grew by 4.8%, while capacity for south routes, our main program during this period, rose by 1.7% despite the suspension of Cuba. It should be recalled that following the initial cancellation of flights to Cuba in mid-February, the short notice only allowed for a partial redeployment of that capacity to other destinations. Finally, traffic expressed in revenue passenger miles rose 3.9% in the second quarter, reflecting strong demand. Out of a fleet of 42 aircrafts, at the end of the second quarter, five were grounded due to GTF engine issues compared to three initially anticipated. This ongoing problem continues to drive operating inefficiencies, increased scheduling variability, and negatively impact revenues. Since the beginning of this supply chain crisis, Pratt & Whitney has not been able to provide us with clear visibility on a detailed resolution plan. The situation remains highly volatile for Transat. We still expect three aircraft to be grounded this summer, and full resolution is not expected before early 2028. Moving to our network, several new routes were recently unveiled as part of the Next Winter Program, alongside the extension of European routes to year-round service. These include new connections to South Destination and Europe, as well as the annualization of key transatlantic key transatlantic routes such as Toronto-Paris and Montreal-Barcelona. This reflects continued progress on network diversification and a focus on reducing seasonality through a more balanced year-round offering. We also announced recently the introduction of a year-round nonstop service between Montreal and Istanbul starting in October. This addition builds on the existing Toronto-Istanbul route, whose strong performance has confirmed solid demand for travel to Turkey and beyond through the collaboration with Turkish Airlines. Partnerships remain a key pillar and cornerstone of our network strategy. Not only with Turkish Airlines and several interline agreements, with Arberia as the newest addition, but also through our joint venture with Porter Airlines that has been further strengthened with the launch of transit sub-packages on Porter-operated flights with Transat acting as a tour operator. This initiative adds new destination for Transat customers such as NASA and Grand Cayman and expands options to Mexico with flights operated by either Porter or transit offering greater flexibility and convenience. As we look ahead to the summer season, load factors to date are 0.6 percentage points lower compared to the same period last year, while unit revenues expressed as yield or 0.6% higher than they were at this time last year. As for capacity, reflecting our latest adjustment, we expect a 4 to 5% increase measure in available seat miles for all of fiscal 2026 compared to last year. In conclusion, the quarter, and likely the defining chapter of our year, was shaped by two abrupt external shocks rather than underlying execution issues. First, the sudden halt of our Cuba operations led to an immediate and significant revenue loss while leaving us with fixed operating costs that could not be redeployed in the short term. Second, the industry faced a sharp and rapid increase in fuel prices. While we implemented mitigating measures, market condition and demand elasticity constrain our ability to fully pass these costs on to customers without materially affecting demand and overall revenue performance. Both these factors were exceptional, exogenous, and unfolded within a very short timeframe, limiting our capacity to adjust our operation and cost structure dynamically. Our Q2 results do not reflect in any way the progress accomplished by our teams in executing our plan. They remain fully committed, navigating today's industry challenges with determination and resilience. we will continue to proactively adjust our strategies in a timely and diligent manner for the remainder of the fiscal year. This concludes my remarks for today. Jean-Francois will now review our financial results.