Package tour operator Transat A.T. Inc. posted a loss in the second quarter as the impact of the lower Canadian dollar hit hard but the results were better than expected.
Montreal-based Transat said the second-quarter net loss was $7.9-million or 20 cents per share, compared with a net loss of $22.8-million in the year-earlier period.
Industry analysts' consensus estimate was a loss of 35 cents.
Revenues came in at $1.1-billion, up 1 per cent.
The company said the decline in the value of the loonie alone resulted in an increase in operating expenses of $22-million in the quarter.
Before non-operating items, Transat reported an adjusted net loss of $7.6-million or 19 cents per share, compared with an adjusted net loss of $1.4-million or 4 cents.
"Our results for the quarter and the winter are slightly better than what we anticipated in March," said Transat president and chief executive officer Jean-Marc Eustache.
"It was a peculiar winter. In December, margins were higher year over year and we were heading toward a performance improvement. The sudden drop in value of the Canadian dollar provoked a significant increase in operating expenses that reversed the situation, as it came early in the season, when the market resists increases in selling prices."
Transat said it reduced capacity on its sun destinations by 3.7 per cent in the second quarter, which contributed to a 5.3 per cent decline overall in the number of travellers.
Average selling prices were up.
On its transatlantic routes, the company decreased capacity by 2.9 per cent.
"We are pleasantly surprised with better than anticipated Q2 results," Laurentian Bank Securities analyst Ben Vendittelli said in a research note Thursday.
"Although we expect [foreign exchange] to have an impact on summer 2014 results, slightly offset by the company's cost-reduction initiative, we believe that the street is overly negative on the story."