08 SEP 2011: A long rumoured shakeup of senior management at Transat A. T. was confirmed this morning when the company announced chief operating officer Nelson Gentiletti and Transat Tours Canada president Michael DiLollo will leave the company. Air Transat chief executive Allen Graham will become president of Transat Canada.

``We have a healthy balance sheet, but the situation demands that we take action to return to profitability,'' said president and CEO Jean-Marc Eustache in a release.

``We have begun reviewing all operations and developing a plan focused mainly on reducing direct and operating costs, and on revisiting our approach to our IT systems.

Transat's net loss for the fiscal third quarter was $2.9 million, or eight cents per share, down from a profit of $20.9 million, or 55 cents per share a year earlier.

On an adjusted basis, the company's had a profit of $2.8 million or seven cents per share, significantly lower than the average expectations of 54 cents per share, according to a poll of two analysts by Thomson Reuters.

Transat said part of the challenge during the quarter was offsetting a 30 per cent increase in fuel costs.

Revenue rose to $937 million from $867.3 million.

Despite higher sales, management had previously warned that its summer profit would be inferior than the record $1.95 per share earned in the third and fourth quarters of last year.

Transat said last quarter that it increased its summer capacity to Europe by 15 per cent, even though it faces increased competition from rivals such as Sunwing and scheduled carriers like Air Canada.

Meanwhile, about 1,500 Air Transat flight attendants ratified a labour agreement during the quarter reached last month.

The deal, which is retroactive to November 2010 when the previous contract expired, includes wage increases and pension upgrades. The union also said the maximum shift length will remain at 14 hours - not 15 hours as initially requested by the airline.

The company has about 6,500 employees and recorded $3.5 billion of revenues in 2010

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Jen Savedra

Jen Savedra is the founder and editor of Travel Industry Today with  a long career and considerable experience in various sectors of travel and tourism. She is dedicated to producing a publication that differentiates itself from the pack. One that pulls no punches, and - along with being a forum for news and ideas - is easy to navigate and always fun to read.

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