Transat A.T. Inc. had an adjusted operating loss of $79 million in the second quarter as high aviation fuel prices and the suspension of flights to Cuba negatively impacted results. The airline on Thursday reported negative adjusted earnings before interest, taxes, depreciation and amortization ( EBITDA ) of $20.7 million in the quarter ended April 30, a significant decline from adjusted EBITDA of $98.4 million last year. “Following a solid first quarter that continued the positive momentum of fiscal 2025 … second-quarter results were disappointing as factors largely beyond our control severely impacted profitability,” said Transat chief executive Annick Guérard said during the earnings call. The company said the loss was primarily due to surges in fuel prices, owing mainly to the war in Iran and closing of the Strait of Hormuz, which are driving up global energy prices and hitting the airline industry particularly hard. Guérard said the sudden halt of operations in Cuba in early February impacted results by about $25 million, while the industry-wide fuel crisis resulted in a decline of approximately $70 million in March and April. Together, those external factors have resulted in an estimated negative impact of $95 million on adjusted EBITDA, she said. She added that the impact of rising aviation fuel prices persisted through May, bringing additional costs compared to the same period last year. “The quarter, and likely the defining chapter of our year, was shaped by two abrupt external shocks rather than underlying execution issues,” she said. Transat also reported a net loss of $79.0 million or $1.94 per share in the quarter, versus a net loss of $22.9 million or $0.58 per share last year. Revenue for the quarter was $1.03 billion, down 0.3 per cent from the previous year. In a note to clients following the release, National Bank analyst Cameron Doerksen said that Transat warned in mid-May that the surge in jet fuel prices would be reflected in its fiscal Q2 results without much benefit from fuel surcharges or other pricing actions, given that the majority of bookings for the quarter were made prior to the spike in costs. Transat cuts 6% of routes in response to jet fuel crisisPéladeau defeated in push for Air Transat board shakeup The company’s second quarter results were below expectations of between positive $34 million and $65.1 million in adjusted EBITDA. The carrier implemented measures early in the Middle East conflict — including surcharges on new bookings and selective capacity adjustments across its network — to mitigate the impact of higher operating costs but has recently been less effective in doing so. “While surcharges on new bookings were initially well absorbed by consumers and effectively mitigated the impact of rising fuel costs, recent market volatility has weakened pricing power,” said Guérard. She said network capacity has been reduced by six per cent from May to October 2026. While fuel surcharges had a marginal impact on the second quarter results, the carrier anticipates surcharges will gradually mitigate the effect of higher fuel costs, with full effect only expected toward the end of the year. Those operational disruptions and network adjustments brought downward pressure on key metrics in the second quarter, including a 0.7-percentage-point drop in airline unit revenues or yield after five consecutive quarters of growth. To date, load factors for the summer period, which consists of the third and fourth quarter, are 0.6 percentage points higher compared to the same date in fiscal 2025, while yield is 0.6 per cent higher than at this time last year, the company said. For fiscal year 2026, Air Transat expects a four to five per cent increase in capacity, measured in available seat-miles, compared to 2025. • Email: dpaglinawan@postmedia.com