Tour operator Transat A.T. Inc. is taking a step to restoring its profitability by eliminating 143 non-union positions across Canada, including 115 layoffs in a bid to save $10-million a year.
Transat staff were informed of the layoffs on Tuesday. About 60 per cent of the lost jobs, or 80 positions, are in Quebec.
“The main thing is that it was essential for us to return to profitability and to go there we had to make efforts on several levels and this is one of them,” spokeswoman Debbie Cabana said in an interview.
The Montreal-based company said the positions included vice-presidents, senior directors, supervisors and administrative personnel.
No flight attendants have been let go.
“We tried to limit the cuts for departments that were working with customers,” she added.
Half the jobs were at the corporate headquarters of Transat and the other half at its newly reorganized Transat Canada group, which includes Air Transat, Transat Distribution Canada and Transat Tours Canada.
Ms. Cabana said the company is not planning on more cuts “over the short term” of its 6,500 employees in Canada, Britain and France.
It’s also preparing a corporate restructuring that will be announced later this fall to simplify its decision making, reduce operating costs and to respond more nimbly to changes in the market.
Several top officials including chief operating officer Nelson Gentiletti and Transat Tours Canada president Michael DiLollo have already left Transat as chief executive officer Jean-Marc Eustache takes a more active management role.
Air Transat CEO Allen Graham has become the president of Transat Canada.
“There are still some other changes, both in our processes and into our structure. They are in the works and will be announced later on,” Ms. Cabana said.
David Tyerman of Canaccord Genuity said he’s not surprised by the move since Mr. Eustache signalled in the last conference call in September that it wanted to lower its cost structure and wouldn’t rule out layoffs.
“Labour is one of your biggest items and one of your biggest controllable items so to the degree that they can do that I’m not surprised at all,” he said in an interview.
Mr. Tyerman had expected to hear Transat’s restructuring plans in December but said it likely didn’t want to wait until then if it has identified some actions to take.
Mr. Eustache says his goal is to make between 1 per cent and 3 per cent profit.
Transat lost $2.9-million, or 8t cents per share, for its third quarter, down from a profit of $20.9-million, or 55 cents per share, a year earlier. Revenue rose to $937-million from $867.3-million.
The CEO said the challenge next year will come from overcapacity in the industry that prevents it from raising prices to cover high fuel costs. Another factor could be slow consumer demand caused by weak economic growth.
Transat is an integrated international tour operator and holiday specialist with more than 60 destination countries, mainly in Canada and Europe as well as the Caribbean, Mexico and the Mediterranean Basin.