Travel firm Transat plans U.S. expansion
New business plan to be in place by next year: CEO
Fourth-quarter earnings rise on lower revenue

MONTREAL—Travel company Transat A.T. Inc. is preparing a new business plan in which it hopes to capture more of the Ontario tour market and make its first U.S. acquisition, executives said yesterday in commenting on the fiscal 2003 results.

Chief executive Jean-Marc Eustache said Transat has almost completed a reorganization, including job cuts and fleet changes, forced upon it by the steep downturn in the travel industry over the past two years. This year, Transat will focus on the future with a new plan it hopes to put it into place in 2005, he said during a conference call.

Eustache said Transat has 27 to 30 per cent of the tour market in Ontario, and would like to move that to between 35 per cent and 40 per cent.

"We're not sure how, but we have to get a bigger share of that market," Eustache vowed, despite the fierce competition in the country's most populous area that has forced other tour operators to offer discounts for winter packages and even cancel some flights.

Transat will renew efforts, put on the back burner by the terrorist attacks of 2001, to buy a U.S. tour operator.

"We are working on a new business plan and we want the growth of Transat to come mainly from the United States," Eustache said. "To grow rapidly, you have to go by acquisitions, and that's what we'll do."

In France, the focus will continue to be on reducing the losses at Look Voyages, with the objective of returning it to profitability in fiscal 2005.

Eustache said he is expecting a stronger travel year in 2004, with bookings for winter and spring vacations up about 10 per cent across Canada compared with a year ago.

Despite a 21 per cent drop in operating revenue in the fourth quarter ended Oct. 31, largely related to the SARS crisis, profits jumped to $46.6 million thanks to a gain of $54.1 million from the sale of Anyway, the France-based online travel site, in October.

This amounts to $1.40 a share, compared with $5.5 million, or 14 cents per share, earned a year earlier. Revenue sank to $404.6 million from $512.7 million.

For the full year, earnings jumped to $44.9 million, or $1.27 a share, compared with $9.8 million, or 24 cents per share, in 2002, as revenue rose 1.1 per cent to $2.1 billion.

Analyst Cameron Doerksen of Dlouhy Merchant has issued a buy recommendation on Transat stock, with a one-year price target of $15.

The stock gained $2.00, or 17 per cent, to $13.60 on the Toronto Stock Exchange yesterday. This compares with a low of $3.40 in May, 2003.

"The global tourism industry is on the rebound following two horrific years," believes Doerksen, who said that Transat, the country's largest travel company, is well positioned to take advantage of the improvement.