Transat A.T. Inc. shareholders have rejected media magnate Pierre Karl Péladeau’s bid to seize effective control of the company’s board on Tuesday, opting instead to stay the course.
At the travel company’s annual meeting in downtown Montreal, the Quebecor CEO proved unable to convince fellow shareholders to back his proposal to install himself and two associates on a slimmed-down board where they would comprise half of the directors.
Péladeau, whose investment firm Financière Outremont Inc. holds the second-largest stake in Transat at 9.5%, called in December for an overhaul as well as a strategic review that put management in its sights. He demanded the company restructure its “broken” balance sheet following a five-year share price decline that exceeded 50%.
His two other nominees were pollster and economist Jean-Marc Léger and Quebecor vice-chair André Brosseau.
By March, the odds were stacked against the trio after leading proxy advisers Glass Lewis and Institutional Shareholder Services as well as the Fonds de solidarité FTQ and the Caisse de dépôt et placement – Quebec fund managers that combined hold 16% of Transat – came out in favour of its rival slate of eight directors. Outgoing chairwoman Susan Kudzman, at the board’s helm since 2023, was not on the ballot.
Daniel Desjardins, re-elected to the board on Tuesday, said the vast majority of retail shareholders voted in favour of the company’s plan.
“This outcome delivers the necessary stability, experience and oversight for Transat to complete its multi-year transformation and move to the next phase of its strategy to drive profitable growth,” he said in a statement.
A precise tabulation of the vote was expected later in the day.
Transat may have won its showdown with Péladeau, who attended the shareholder meeting Tuesday, but the company still faces challenges.
Losses less than expected
It reported Tuesday tens of millions of dollars in losses in its latest quarter amid stiff competition for vacation destinations and a big debt burden, even as it beat earnings expectations.
The company, which sells vacation packages and flights largely to spots in Europe and the Caribbean, lost $29.5 million in the three months ended Jan. 31, versus losses of $122.5 million during the same period a year earlier.
“The last year has been very difficult for Transat,” chief executive Annick Guérard told analysts on a conference call Tuesday afternoon.
Bright spots included higher passenger numbers that boosted first-quarter revenues by five per cent year-over-year to $870.7 million. Yield – a metric gauging the average revenue an airline garners per paying passenger for each mile flown – also ticked up for the sixth straight quarter.
The company has seen revenues hit by Hurricane Melissa in October, which prompted weeks of cancelled flights and lower bookings since, and by an ongoing recall of Pratt & Whitney turbofans that continues to ground four of Air Transat’s 40-odd jets. Some groundings are expected through late 2027 or early 2028.
Last month, the carrier suspended all flights to Cuba through the end of April after the United States blocked oil tankers heading to the island from Venezuela, sparking a fuel shortage.
Now, Transat has tacked on higher fuel surcharges for flights to Europe as jet fuel prices soar amid the ongoing U.S.-Israeli war on Iran, which prompted the effective closure of the Strait of Hormuz, a waterway that typically carries a fifth of the world’s oil shipments.
“What we’re also doing is currently raising fares on peak travel dates and routes where we see less competition,” Guérard said.
Transat forecast that capacity will grow between 5 and 7% this year, slightly below prior expectations of 6 to 8%.
Péladeau, a vocal presence in the world of Quebec business, has long had his eye on Transat and criticized its leadership before, most recently in 2021 after his bids to buy the tour operator failed.
“Owning an airline seems to be very cool stuff. It seems to appeal to egos to some degree,” said Karl Moore, associate professor at McGill University’s Desautels Faculty of Management.
Despite recent struggles at Transat, the business case for legacy leisure airlines remains as well.
“People travel a lot. We have winter so we like to go south,” Moore said.
“It’s an attractive market compared to Europe, where there’s a lot of competition, a lot of government involvement, and the U.S. where it’s a great market but there’s a lot of competition.”
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