Air Transat will bring its medium-haul operations in-house in 2014 and add Boeing 737s to its fleet, the Montreal-based charter operator says.
The carrier eventually plans to permanently operate five narrowbodies with six aircraft flying seasonally during the winter period.
Cash-strapped Transat is expecting the move to garner operational cost savings of about Canadian dollar (C$) 8 million ($7.9 million) in 2013, C$15 million in 2014 and C$30 million annually past 2015 from moving their flying in-house.
"Internalising medium-haul operations has several advantages, including increased control over our aviation operations, the implementation of a more competitive cost structure and having Air Transat cabin crews on all of our flights," says Jean-Marc Eustache, Transat's president and chief executive in a release.
Transat has been using charter operators for 737 service from Canada to destinations in Mexico, the Caribbean and Florida. The carrier signed a five-year contract with CanJet Airlines for 737-800 charter flying in 2009, which lasts through April 2014. Prior to that, WestJet had contracted with Transat for 737 flying.
Transat says it will continue to maintain a relationship with CanJet after the contract expires in 2014.
The charter airline cut capacity in the Canadian sun market by about 10% during the second quarter of 2013 compared to the same period in 2012 during the fiscal year ending 31 October.
Transat's management is working to return the carrier to profitability through a programme that includes shrinking its Airbus widebody fleet. In March, the carrier told investors it would reduce its fleet of 12 Airbus A330s to 11 aircraft and reduce its fleet of nine Airbus A310s to six aircraft.
Transat recorded an operating loss of C$21 million in the first quarter of its 2013 fiscal year.
In December 2011, Transat introduced a cost-savings programme to cut costs, boost revenue and become more efficient. It expects those measures to contribute C$20 million to C$25 million to its margin in 2012, C$35 million to C$40 million in 2013 and C$50 million in 2014.
Transat could not be reached for comment by press time.
Source: Air Transport Intelligence news
