UPDATE 1-Canadian tour operator Transat forecasts 'inferior' results

Thu Mar 13, 2014 8:31am EDT

March 13 (Reuters) - Canadian tour operator Transat AT Inc said it expected "inferior" results in the current quarter, after a bigger first-quarter loss due to a weak Canadian dollar that pushed up operating expenses.

Low inflation and a possibility of an interest rate cut dragged down the Canadian dollar to a four-and-a-half year low against U.S. dollar on Jan. 31.

"(The weak dollar) resulted in a significant increase in our operating expenses, which was offset only partially by higher selling prices and by our hedging program," Chief Executive Jean-Marc Eustache said in a statement.

The company, which also owns holiday travel airline Air Transat, makes major purchases such as planes and fuel in U.S. dollars.

Transat said its first-quarter operating expenses rose 2.7 percent from a year earlier.

The company said Air Transat's load factor was expected to fall about 2 percent in its "sun destinations" market and about 5 percent in its Transatlantic market in the quarter ending April.

The Montreal-based company offers discounted air fares and vacation packages, competing mainly with WestJet Airlines' WestJet Vacations and Air Canada's Air Canada Vacations.

Air Canada warned in February that adverse weather conditions and weakness in the Canadian dollar were likely to hurt its current-quarter earnings and revenue. The company had also said it was looking to trim costs and raise prices at an appropriate time.

Transat's net loss in the first quarter ended Jan. 31 widened to C$25.6 million ($23.0 million), or 67 Canadian cents per share, from C$15.1 million, or 39 Canadian cents per share, a year earlier.

Total revenue rose 5 percent to C$847.2 million. Revenue from its North American business units increased 4.6 percent, while revenue from its European business units rose 8.7 percent.

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