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, strengthened long-term growth strategy, and reduced government debt through refinancing and restructuring, lowering LEEFF obligations and extending maturities.

• All collective agreements renegotiated through at least 2027, supporting operational stability and removing strike risk.

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

Financial highlights

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

• Q4 adjusted EBITDA was $71 million (9.3% margin), down from $128 million (16.3% margin) last year, impacted by lower compensation and higher provisions.

• Adjusted net loss for Q4 was $19 million, compared to adjusted net income of $32 million in Q4 2024.

• Full-year cash flows from operations rose 65% to $157 million; free cash flow improved to negative $45 million from negative $122 million in 2024.

• Cash and cash equivalents at year-end were $165 million, down from $260 million, mainly due to government debt repayment and seasonality.

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.

• Free cash flow expected to turn positive in 2026, with CapEx stable and improvement driven by higher EBITDA.

• Winter 2026 yields up 1.4% year-over-year; load factor slightly lower but expected to improve.