Soaring fuel prices and a halt of all of its flights to Cuba pushed Transat A.T. Inc. earnings deep into loss territory last quarter, as global strife continues to damage airlines’ bottom lines.
The travel company, which owns Air Transat, reported a $79-million loss in the quarter ended April 30, more than 240% below its more modest earnings loss of $23 million a year earlier.
“Second-quarter results were disappointing as factors largely beyond our control severely impacted profitability,” CEO Annick Guérard said in a news release Thursday.
Guérard said the suspension of flights to Cuba and the increase in fuel prices resulted in an estimated negative impact of $95 million on adjusted earnings.
Jet fuel prices, which at one point in the quarter reached roughly double their levels from before the Iran war, accounted for about $70 million of that total, she said.
Transat took steps to mitigate the fallout, including additional charges on new bookings, raising fares and adjusting flight schedules.
At first, customers could take the increased cost, which virtually offset the spike in fuel expenses, she said.
“But more recent increases resulted in a slowdown in the booking momentum … the demand went down,” prompting the airline to tamp down fares and remove some fees, Guérard said.
Nonetheless, summer fares remain up 4.5% on average from last year, she said.
The Montreal-based company plans to apply for a federal loan program rolled out earlier this week, she said.
The Liberal government on Monday offered a lifeline to airlines struggling to cope with the cost of aviation fuel, announcing a facility that lets carriers borrow up to $150 million each, as fallout from the Middle East war forces them to slash flight schedules and cut profit forecasts.
Cuba
Cuba marks a major market for Transat, which is a popular destination for Canadians. About 861,000 Canadians visited the island in 2024, according to the country’s statistics office. Trips there accounted for 9% of Transat’s flights in the first half of 2025, with the destination particularly popular among vacationers in Quebec. The airline first halted Cuba voyages in mid-February.
While overall travel demand in Canada remains solid, airlines have cut less profitable flights from their schedules, raised fares and tacked on fuel surcharges to keep profit margins from shrinking too far.
At Air Transat, surcharges offset only a “marginal portion” of the ballooning fuel expense, partly because most bookings for the quarter were made before the charges took effect in April.
The company’s fuel costs for the quarter rose 46% year-over-year.
Leisure and low-cost carriers such as Air Transat and Flair remain more vulnerable to fuel price swings than their larger competitors. Fuel often represents a bigger proportion of their costs, and they have fewer buffers in the form of higher-margin business passengers, myriad route options and a clientele less reactive to rising fares.
“We have less of a premium class, we’re more leisure-focused. So when we compare ourselves to our legacy carriers on the Atlantic market, for instance, they benefit from customers that are less price-sensitive,” said Guérard.
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