WestJet Faces Fuel Crisis as Transat Posts $79M Q2 Loss, June 11

Transat A.T. Inc. reported a $79 million net loss in the second quarter ended April 30, more than triple its $23 million loss a year earlier. Soaring jet fuel prices and the suspension of flights to Cuba cost the airline $95 million in adjusted earnings. WestJet, Air Canada, and other Canadian carriers face identical pressures as global fuel costs remain elevated.

Fuel Costs and Geopolitical Shock Drive Losses

Jet fuel prices roughly doubled in March after the Iran war and closure of the Strait of Hormuz, hitting airlines across the industry. Transat CEO Annick Guérard said fuel costs alone accounted for $70 million of the $95 million impact on adjusted earnings. The remaining $25 million came from the indefinite suspension of Cuba flights, which represented about 9% of Air Transat’s operations and was a key revenue source for Quebec-based tourism.

Pricing Power Weakens as Demand Slows

Transat initially passed fuel costs to customers through surcharges and higher fares, which were well absorbed early in the quarter. However, recent market volatility weakened pricing power, forcing the airline to cut fares and remove fees. Summer fares remain up 4.5 percent on average from last year, but booking momentum has slowed significantly.

Government Loan Program Offers Temporary Relief

The Canadian government announced a Liquidity for Airline Sector Resilience facility on Monday, allowing carriers to borrow up to $150 million each. Transat plans to apply for the full amount. The airline also adjusted flight schedules and capacity across its network to mitigate costs. However, fuel price pressures persisted through May, bringing additional costs compared to the same period last year.

Industry-Wide Pressure on Canadian Carriers

WestJet, Air Canada, and Air Transat all suspended Cuba operations indefinitely due to fuel supply issues at Havana airport. The coordinated halt signals how severely the fuel crisis and geopolitical tensions are constraining airline operations. Transat’s adjusted EBITDA fell to negative $20.7 million in Q2, down from positive $98.4 million a year earlier, reflecting the scale of the industry shock.

Final Thoughts

Canadian airlines face severe near-term headwinds from fuel costs and geopolitical disruption. Government loans provide temporary relief, but demand weakness and persistent fuel prices limit recovery prospects for WestJet and peers.

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