Transat AT reaches $700-million aid deal with federal government

Discuss topics related to Air Transat.

Moderators: sky's the limit, sepia, Sulako, lilfssister, North Shore, I WAS Birddog

TFTMB heavy
Rank 7
Rank 7
Posts: 656
Joined: Mon Feb 16, 2004 9:58 am

Re: Transat AT reaches $700-million aid deal with federal government

Post by TFTMB heavy »

pelmet wrote: Sat May 01, 2021 7:53 pm Any chance of Transat hiring an outside company to do all their flying. I bet WJ could do it cheaper with narrow and widebodies quickly available.
Not a chance they can do it cheaper. Canjet was cheaper than Westjet and when TS brought the flying back in-house the 737 fleet saved them millions per year. TS has chartered a lot in the past and they realized that even the headache of running an airline was more profitable than chartering.

When they took the flying back from Westjet they abandoned most of that capacity and launched Westjet into sun destination flying and created the worse sur-capacity the market had seen in years. Add Sunwing into the mix and you have years of your winter revenues disappearing.
---------- ADS -----------
 
rudder
Rank 11
Rank 11
Posts: 3848
Joined: Wed Mar 08, 2006 12:10 pm

Re: Transat AT reaches $700-million aid deal with federal government

Post by rudder »

The problem for TRZ is that it is meeting its cash flow obligations using debt rather than capital or at least a debt/capital combination. A supplemental stock issuance is not an option in the current market.

Status quo even with a travel recovery will not allow TRZ to meet its debt servicing obligations. TRZ needs to recapitalize its balance sheet. Most likely source is new ownership.

This story isn’t over yet.
---------- ADS -----------
 
TFTMB heavy
Rank 7
Rank 7
Posts: 656
Joined: Mon Feb 16, 2004 9:58 am

Re: Transat AT reaches $700-million aid deal with federal government

Post by TFTMB heavy »

rudder wrote: Sun May 02, 2021 8:41 am The problem for TRZ is that it is meeting its cash flow obligations using debt rather than capital or at least a debt/capital combination. A supplemental stock issuance is not an option in the current market.

Status quo even with a travel recovery will not allow TRZ to meet its debt servicing obligations. TRZ needs to recapitalize its balance sheet. Most likely source is new ownership.

This story isn’t over yet.
I'm thinking it's way too quiet on the new ownership front for it to be over. Thanks for the reasonable input, a breath of fresh air for this place.
---------- ADS -----------
 
rudder
Rank 11
Rank 11
Posts: 3848
Joined: Wed Mar 08, 2006 12:10 pm

Re: Transat AT reaches $700-million aid deal with federal government

Post by rudder »

TFTMB heavy wrote: Sun May 02, 2021 10:13 am
I'm thinking it's way too quiet on the new ownership front for it to be over.
FWIW - I think that the TRZ trading price is hovering around $4.50-4.90 only because the market believes there is a $5 outstanding offer on the table.

I am not convinced that there is $5 per share in underlying value there.
---------- ADS -----------
 
fish4life
Rank 10
Rank 10
Posts: 2405
Joined: Sun Jun 27, 2010 6:32 am

Re: Transat AT reaches $700-million aid deal with federal government

Post by fish4life »

The big issue I see for Transat is servicing the debt in 1 year. I don’t think it’s unreasonable to say that all Canadian airlines will be about 1 year until they are cash flow positive. At that time the interest rate for AT is going to be 8% and it’s going to be very difficult to deploy cash to the business when all your free cash flow is going to just be servicing your debt costs.
If this was a low interest loan I think AT would have a good chance at decent recovery but the interest rates the federal government gave them is going to make it a much more difficult recovery
---------- ADS -----------
 
rudder
Rank 11
Rank 11
Posts: 3848
Joined: Wed Mar 08, 2006 12:10 pm

Re: Transat AT reaches $700-million aid deal with federal government

Post by rudder »

fish4life wrote: Sun May 02, 2021 11:13 am The big issue I see for Transat is servicing the debt in 1 year. I don’t think it’s unreasonable to say that all Canadian airlines will be about 1 year until they are cash flow positive. At that time the interest rate for AT is going to be 8% and it’s going to be very difficult to deploy cash to the business when all your free cash flow is going to just be servicing your debt costs.
If this was a low interest loan I think AT would have a good chance at decent recovery but the interest rates the federal government gave them is going to make it a much more difficult recovery
The new ‘owners’ will have to either discharge or replace the high cost debt.

If not, there will be no possibility of positive cash flow, nor profit.
---------- ADS -----------
 
simply_no_one
Rank 3
Rank 3
Posts: 150
Joined: Mon Mar 01, 2021 8:04 pm

Re: Transat AT reaches $700-million aid deal with federal government

Post by simply_no_one »

co-joe wrote: Sat May 01, 2021 9:53 pm What bothers me about this is the government is loaning TS money, to pay back tickets that the government cancelled, and TS will have to pay interest on that loan? It's basically extortion. It's like beating you up for your lunch money, and then loaning you money to buy lunch and charging you interest on it.
Yeah same for AC. Same for SW, same for Porter.

If there's at least anything that's "fair" among all airlines it's that they ALL need to pay back tickets with loaned money.
---------- ADS -----------
 
Longtimer
Rank 7
Rank 7
Posts: 544
Joined: Tue Aug 24, 2004 7:31 am

Re: Transat AT reaches $700-million aid deal with federal government

Post by Longtimer »

Air Transat extends suspension of operations
12 May 2021Canadian Aviation News

May 12, 2021 – Air Transat Website

Due to continued travel restrictions, both in Canada and in the destinations we serve, our operations are temporarily suspended until July 29, 2021, inclusively.

Clients affected by flight cancellations will receive a notice shortly informing them of their options.

If you have any questions, please refer to our FAQ.
---------- ADS -----------
 
ikarus
Rank 3
Rank 3
Posts: 187
Joined: Mon Jan 23, 2012 3:04 pm

Re: Transat AT reaches $700-million aid deal with federal government

Post by ikarus »

Well, that pretty much does it for their summer season.
Hopefully they'll be around for the winter flying.... These travel restrictions have to be lifted immediately.
---------- ADS -----------
 
Post Reply

Return to “Air Transat”