Airline Executive Says Move Makes Fleet 'Adaptable To Seasonal Needs'

Transat A.T. Inc. has signed an agreement with the U.S.-based International Lease Finance Corporation (ILFC) for the long-term (eight-year) leasing of four Boeing B737-800 aircraft. These planes will be introduced in summer 2014 and become the core of Air Transat's permanent narrow-body fleet. They will be used on routes to Mexico, the Caribbean and Florida. The agreement also includes the renewal through 2020 and 2021 of the leases on six Airbus A330 aircraft, including three A330-200s and A330-300s, with improved terms.

The three long-range A330-200s were originally to be phased out of the fleet. Transat and ILFC, however, reached an agreement that will enable Transat to achieve its objective of reducing costs, and that, in the case of these aircraft, will prove more advantageous than the seasonal subcontracting arrangement originally envisioned.

The agreement is in keeping with Transat's previously announced plan to internalize its operations using narrow-body aircraft (it has relied on outside aircraft since 2003), and to deploy a so-called accordion fleet that enables it to adjust the number of narrow- and wide-body jets at its disposal according to seasonal tourism market needs. Generally speaking, Transat has greater need for narrow-body aircraft in winter, when Canadian travellers favour medium-haul sun destinations, and greater need for wide-body jets in summer, when the transatlantic market is busiest.

"This is an important step in the implementation of a fleet that is adaptable to seasonal needs," said Jean-Marc Eustache, President and Chief Executive Officer of Transat, adding: "This deal gives us greater flexibility and a significantly enhanced cost structure. This strategy is key to our future success and to a return to profitability in winter, and will also ensure that we maintain the high quality of our products and our customer experience."

ILFC Chief Executive Officer Henri Courpron commented, "Air Transat has been a long standing customer of ILFC.  We believe in their business strategy and view them as a partner. With this transaction, we will extend and grow the strong relationship between our two companies."

Air Transat's fleet currently consists of nine Airbus A310s and twelve A330s. Transat plans to add additional narrow-body aircraft, mainly on a seasonal basis in winter, to meet demand on its sun destination routes. These measures are part of the plan announced in December 2011 and updated in June 2013, which calls for improvements to Transat's cost structure of $75 million by 2015, and which is unfolding as anticipated. As for the fleet, other changes are planned, notably the replacement of some Airbus A310.

FMI: www.transat.com