Airline and tour operator Transat AT Inc.’s third-quarter loss more than doubled due to fees and executive compensation relating to its impending takeover by rival Air Canada.
For the three months ending on July 31, Montreal-based Transat said it lost $11-million, or 29 cents a share, compared with a loss of $5-million or 13 cents in the same period of 2018.
Revenue rose by 5 per cent to $700-million as vacation prices rose and the number of customers increased by 4 per cent in the company’s main market of transatlantic travel, Transat said in a premarket release on Thursday morning.
Transat shareholders on Aug. 23 voted in favour of selling the company to Air Canada for $720-million. The takeover, subject to approval by transport and competition authorities, is expected to close in the second quarter of 2020, Transat said.
In a statement accompanying the financial results, Transat said the net loss included payouts associated with the takeover process, including “professional fees” of $6-million and stock-based compensation worth $7.7-million triggered by change-of-control provisions in employee contracts.
Excluding the takeover fees, compensation and other one-time items, Transat posted an adjusted operating profit of $22-million in the third quarter, compared with a loss of $7.6-million in the year-earlier period.
Transat operates a fleet of about 40 planes and has 5,000 employees.
Denis Pétrin, Transat’s chief financial officer, said on a conference call with analysts that the operating results show Transat has been able to sell tickets at higher prices in a competitive market for leisure travel spending.
Mr. Petrin said the rising share price is expected to add another $10-million in costs related to stock-based compensation by the time the Air Canada takeover closes.
The takeover means Jean-Marc Eustache, Transat’s 71-year-old founder and chief executive officer, will receive total compensation worth more than $14-million after the deal closes and another $5.5-million if he is dismissed by the new owners of the company, according to company documents filed with regulators. This amount includes the values of his stock holding, bonuses, stock options and share units.
Mr. Eustache has not said whether he plans to stay on when Air Canada completes the deal, but he has said Transat will not need a CEO once Air Canada takes over.
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