Transat A.T. (TRZ) Q4 2025 earnings summary

Executive summary

• Achieved record adjusted EBITDA of $271 million for fiscal 2025, up 33% year-over-year, with revenues rising 3.5% to $3.4 billion, despite macroeconomic volatility and engine issues.

• Net income reached $242 million, with negative free cash flow improving to $45 million from $122 million.

• Fully met 2025 objectives, advanced long-term growth strategy, and reduced government debt through refinancing.

• Pratt & Whitney engine issues led to 5-8 aircraft grounded during the year, impacting costs and revenues.

• All collective agreements renegotiated through at least 2027, supporting operational stability.

Financial highlights

• Q4 2025 revenues were $772 million, down 2.2% year-over-year, mainly due to lower Pratt & Whitney compensation, but passenger revenues rose 1.5% on higher yield.

• Q4 adjusted EBITDA was $71 million, down from $128 million in Q4 2024, impacted by lower compensation and higher provisions.

• Net loss for Q4 was $12 million, compared to net income of $41 million last year; adjusted net loss for Q4 was $19 million versus adjusted net income of $32 million in Q4 2024.

• Full-year cash flows from operating activities totaled $157 million, up 65% year-over-year; free cash flow improved to negative $45 million from negative $122 million.

• Year-end cash and cash equivalents were $165 million, down from $260 million a year earlier.

Outlook and guidance

• Expects 6% to 8% capacity growth in fiscal 2026, with targeted network expansion in Africa, Europe, and South America.

• Elevation Program initiatives are projected to contribute $100 million in adjusted EBITDA by mid-2026, with permanent cost reductions and improved revenue management.

• Free cash flow anticipated to turn positive in 2026, with CapEx expected to remain stable.

• Margin expansion expected in 2026, driven by increased capacity, productivity gains, and improved fleet utilization.

• Winter 2026 airline unit revenues (yield) are 1.4% higher year-over-year, though load factors are 0.8 percentage points lower.