Thank you. Bonjour et bienvenue à cet appel trimestriel de Transat.

Hello, everyone, and thank you for joining us for our third quarter earnings call ended July 31st, 2026. Annick Guérard, President and CEO, and Jean-François Pruneau, our Chief Financial Officer, will provide an overview of the quarter and comment on the current operational situation and commercial plan.

Jean-François will also discuss our financial results in detail. We'll then take questions from financial analysts.

Questions from journalists will be taken offline after the call. The conference call will be conducted in English, but questions may be asked in French or English.

As usual, our supplementary disclosure has been updated and is available on our website in the Investor section. Jean-François may refer to it when he presents the results.

Our comments and discussions today may include forward-looking information regarding Transat's outlook, objectives, and strategy that are based on assumptions and subject to risks and uncertainties. Forward-looking statements represent Transat's expectations as of September 10th, 2026, and therefore are subject to change after today.

Our actual results may differ materially from any stated expectations. Please refer to forward-looking statements in Transat's third quarter news release available on transat.com and on SEDAR+.

With that, I would like to turn the call over to Annick for opening remarks.

Merci, Andréan. Bonjour et merci d'être avec nous ce matin.

Good morning, and thank you for joining us. Our third quarter results were significantly impacted by persistently high fuel prices, which outweighed the progress achieved across the business and placed considerable pressure on profitability.

At the same time, demand for our product remained resilient. Revenue and traffic grew, and our transatlantic network continued to perform well despite a highly competitive environment.

While fuel prices remain outside of control, our response is not. We are actively managing capacity, costs, liquidity, and network deployment to mitigate the impact and position the business for recovery.

On July 27, we closed financing of up to $150 million under the Government of Canada's Liquidity for Airline Sector Resilience Facility, or LASR program. This facility is now fully drawn and strengthens our liquidity position as we navigate a period of sustained fuel price volatility.

The federal government has also made available an additional $250 million in funding, providing further flexibility as fuel prices remain elevated well beyond initial expectations. Jean-François will cover the financial details shortly.

Beyond the immediate fuel pressures, we remain firmly focused on strengthening Transat's long-term earnings profile. Our objective is to broaden our sources of revenue, deepen customer loyalty, expand our premium offering, and capture more value for each booking.

Our new loyalty program remains on track for launch toward the end of 2026. The program is designed to strengthen customer retention, increase engagement, and create additional revenue opportunities across our ecosystem.

The beta launch is already underway with over 23,000 members enrolled to date, and member engagement outperforming our initial expectations. In parallel, we are advancing a comprehensive cabin reconfiguration program, with the first modernized aircraft scheduled to enter service in the second half of 2027.

The upgrade of our cabins will increase premium seating capacity, support ancillary revenue growth, and enhance the overall customer experience. Together, these initiatives are designed to diversify our revenue base, strengthen margins, and improve the structural earnings profile of the business over time.

Turning to our operating metrics. Third quarter capacity increased by 6% year over year.

Load factor was slightly below last year, while yield declined by 1%. As bookings progressed through the summer, the competitive environment intensified.

This placed pressure on yield and significantly limited our ability to recover higher fuel costs through fares. Nevertheless, transatlantic yield increased by 0.6% in the context of 8% capacity growth.

While this performance did not offset the increase in fuel costs, it demonstrates the underlying resilience of our core transatlantic network. Our South program continued to be affected by the situation in Cuba, with a cumulative revenue impact of $116 million.

Turning to our operational and commercial update. Of our 41 aircrafts at quarter end, four were grounded due to the ongoing Pratt & Whitney GTF engine issues, one more than anticipated when planning our summer program.

These disruptions continued to impact our operations throughout the quarter. Despite these constraints, we continued to execute our network strategy with discipline.

Our focus remains on selective growth in markets where our brand, fleet, and partnerships provide a clear competitive advantage and attractive long-term potential. This summer, we launched new non-stop services from Montreal to Agadir, Reykjavik, and Dakar, as well as from Toronto to Tirana.

The early performance of these routes have been very encouraging. As an example, we have already confirmed that our Montreal-Dakar service will operate year-round beginning this winter, supporting our objective of reducing seasonality while developing new traffic flows across the network.

For the upcoming winter season, we are maintaining a conservative approach to capacity growth in light of persistently high fuel prices. Capacity deployment will remain highly disciplined, with a focus on our strongest performing markets and the most attractive opportunities for value creation.

Partnerships also remain central to our strategy, including our growing portfolio of interline and codeshare agreements and our successful joint venture with Porter Airlines. With that, I will turn the call over to Jean-François, who will review our financial results.

Merci, Annick. Good morning, everyone.

This was a challenging quarter, driven mainly by persistently high fuel prices. Revenue and traffic grew, but the increase in fuel costs more than offset that growth and was the main factor behind our results.

Revenues were up 3% in Q3 2026, or $26 million, to $793 million on higher capacity and traffic. Adjusted EBITDA was negative $1 million, compared with positive $81 million in Q3 2025.

The decline was almost entirely attributable to higher fuel costs. Before the contribution under the LASR facility, fuel costs increased $105 million year over year.

The fuel price rose 56% to $3.74 US dollars per gallon, I should say, from $2.40 last year. A $25 million contribution under the LASR facility was recorded as a reduction of fuel expense.

Reported fuel expense was therefore $238 million, up $79 million, or 50%, from $159 million in 2025. Beyond fuel, salaries increased, mainly reflecting the new collective agreement with our pilots and additional hours required to address operational disruptions, including aircraft availability constraints resulting from continuing engine issues.

During the peak summer period, four aircraft remained grounded due to the ongoing Pratt & Whitney GTF engine issues, one more than initially anticipated. Additional unscheduled maintenance events affecting engines on our A330 fleet created further operational pressure.

Together, these events required aircraft substitutions, schedule adjustments, and crew reassignments, contributing to higher overtime and other related costs. We continue to manage the GTF-related pressure through additional leased spare engines and active fleet management.

Additional costs and revenue management inefficiencies are expected to persist until the issue is fully resolved, which is not anticipated before 2028. During the quarter, we recognized $7 million in compensation from Pratt & Whitney as revenue, broadly consistent with the prior year.

However, this compensation once again did not fully offset the financial impact of the ongoing engine-related disruptions. Net loss was $107 million, compared with net income of $400 million last year.

The prior year results included a one-time $345 million gain on the extinguishment of long-term debt related to our government debt refinancing, and is therefore not comparable. Adjusted net loss was $89 million, or $2.18 per share, versus an adjusted net loss of $12 million, or 28 cents per share last year.

Free cash flow was negative $302 million in the quarter, compared with negative $122 million last year, mainly reflecting lower operating profitability and an unfavorable comparison with the prior year quarter, which benefited from $61 million in proceeds from engine sale and leaseback transactions. For the first nine months, free cash flow was positive $4 million, compared with $149 million last year.

Cash used in operating activities was $221 million in the quarter, compared with $105 million last year. Capital expenditures were $21 million, compared with $30 million last year, and for the first nine months, they were $53 million, down from $68 million last year, reflecting a tighter CapEx plan and the deferral of discretionary spending.

Cash and cash equivalents were $243 million as at July 31st, 2026, down from $390 million at the end of Q2 and up from $165 million at the end of fiscal 2025. Cash and cash equivalents in trust or otherwise reserved, mainly related to travel package bookings, were $208 million, up from $194 million at the end of Q2 and down from $430 million at the end of fiscal 2025, reflecting the seasonal nature of our business.

Customer deposits for future travel were $847 million as at July 31st, 2026, compared with $822 million a year earlier. Long-term debt and deferred government grant were $448 million as at July 31st, up from $320 million 3 months earlier.

The increase mainly reflected the initial $125 million LASR drawdown and a $30 million draw on our subordinated working capital facility. Long-term debt and deferred government grant net of cash were $205 million, compared with a net cash position of $70 million 3 months earlier.

As Annick noted, on July 27, we closed our financing under the LASR facility administered by the Canada Emergency Enterprise Funding Corporation. The facility provides up to $150 million, which we have now drawn in full.

It matures in July 2030 and bears interest at 3.91%. Since March, the cumulative additional fuel costs we have absorbed amounts to approximately $175 million.

Beyond the LASR facility, the federal government has agreed to extend an additional $250 million loan under the existing LEEFF agreement, further supporting our liquidity as we work through this period. This multi-draw loan matures in 2035 and bears interest of 1.22% for the first 3 years and 3% thereafter.

We will stay disciplined on both capacity and expenses, supported by the additional liquidity from our recent financing agreements. Back to you, Annick, for closing remarks before the Q&A.

Thank you, Jean-François. In closing, high fuel prices placed significant pressure on our third quarter results, but demand for our product remained resilient, supporting continued revenue and traffic growth.

Looking ahead, fourth quarter load factor is currently 0.6 percentage points ahead of the same time last year, while yield is broadly in line. Capacity increase is 2% year over year, measured in available seat miles.

We are maintaining a disciplined approach to capacity, costs, and liquidity, while continuing to execute the strategic initiatives that will strengthen Transat's long-term growth. Finally, I would like to sincerely thank the Government of Canada for its support.

The financing strengthens our liquidity position and provides additional flexibility as we navigate the current difficult environment. I also want to acknowledge the incredible work of our employees.

In a period marked by significant challenges and uncertainty, they have continued to serve our customers with commitment and resilience. Thank you all.

While near-term conditions remain challenging, we are taking the actions necessary to strengthen Transat's earnings power, enhance resilience, and position the company for the future. This concludes our remarks, and we are now ready for questions.

Merci, mesdames et messieurs. Si vous désirez poser une question, s'il vous plaît appuyez sur l'étoile suivie du 1 sur votre clavier téléphonique.

Pour retirer votre question, appuyez sur l'étoile suivie du 2. Un moment, s'il vous plaît, pour votre première question.

Thanks, and good morning. Wanted to dig into the yield performance in the third quarter and your outlook for the fourth quarter.

If I look at the airlines across the continent, most have reported 10% plus yield in their calendar second quarters, and they are talking about stronger yield in the third quarters for them. I understand you have some exposure to Cuba, which probably is higher than what these other airlines might have, but still, do you see any surprises or any incremental pockets of weakness in your network that explains the gap in your yield performance versus the peers?

Good question. We compete in a segment where customers are highly price sensitive, and this summer's environment was particularly challenging with industry capacity growth and exceptionally intense promotional activity across the Canadian market.

In that context, our ability to fully pass higher fuel costs through fares was constrained. The reality that we are facing is that our economy segment, which is of course predominant, when we look at our performance in that segment, it is not materially different from that of our competitors or legacy carriers.

The key difference lies above the economy cabin. Legacy carriers have premium and loyalty revenue streams that have more than compensated for higher fuel costs across their networks.

Unfortunately, we do not have those same levers at scale today. This is exactly what our loyalty program and cabin transformation initiative are designed to address.

Makes sense. Thanks for that, Annick.

Then, Jean-François, perhaps on the balance sheet side, you guys have tapped in fully on the LASR facility and also signed up the incremental LEEFF loan facility. Can you help us understand, in light of the fuel price environment today—and obviously, we're seeing a little bit more pressure in the last few weeks or days with the Iran situation—do you think these loans you have capped here would be enough to satisfy the liquidity needs you might have for the next several months, or you may have to re-look at some other options?

That's a difficult one, obviously related to the fuel markets, on which we have no control. That being said, when we look at the forward fuel price curve, we're going to be okay.

We feel that the amount of money that we are able to get from the federal government and the additional funding that we're getting now will be sufficient. That situation obviously is dynamic, is volatile, and I don't know precisely where fuel prices will be in a month, in two months, or a year from now.

Okay. Based on the current forward curve, you feel like you're at the comfortable position as well?

Absolutely. Based on the forward curve, we'll definitely be fine.

Yeah. Okay.

Perfect. That's it for me.

Thank you, guys.

Sure.

Yeah. Thanks.

Good morning. Wanted to ask, I guess, about the capacity plans.

You mentioned some of the initiatives you're taking to kind of improve the premium yields, but that obviously is not something that's going to impact you significantly in the near term. I guess most airlines when they face higher fuel prices in the past have significantly cut capacity.

I'm just wondering why add any capacity in Q4 just given where fuel prices are? It seems like the only way you're going to get yields up is to reduce some of the capacity.

The increase in capacity in Q4 is very limited. It's below 2%, we're keeping a conservative approach.

When we look at the upcoming winter, there won't be any capacity increase. Looking at the overall patterns that we're seeing, we feel comfortable with the capacity that has been deployed.

Okay. Maybe you could just expand a little bit, I guess, on the big premium cabin upgrades that you're doing.

I'm just wondering when it's kind of all said and done, how much bigger of an increase in premium seating will you have on average on your aircraft versus what you have today? I'm just trying to get a sense of how this could improve the yield profile as we look ahead a couple of years.

That's part of our strategic initiatives. Unfortunately, we cannot disclose the number at this point.

This is something that we're going to be able to share later on as we deploy the new cabins.

Okay. All right.

I'll pass the line. Thanks very much.

thank you very much. Good morning.

I just want to return to to Cam's question actually for a minute, just thinking about the fourth quarter capacity and the 2%. How do you approach that?

Like, do you have the ability to actually reduce that capacity, or once you start selling, because you've sold some of these seats that, will be provided in the fourth quarter months months and months ago, do you actually sort of have the ability or or can you cancel those flights, or do you take those actions? I guess where I'm going with this is if you were to sort of decide on the ideal Q4 capacity today, would it still be at 2% growth, or is part of that because you've you've already sold some of these these seats and these flights, months and months ago at a lower fuel price environment?

I just want to clarify. In terms of seats, we are below 2% compared to last year, and the 8 ASM or plus 2%, and this is strictly due to the removal of Cuba.

We are not doing any increase in the market. To respond your questions, as we move along through a season, we always adjust capacity based on performance to make sure that we protect the highest margin as possible.

The clean-up has been done for Q4. If you recall, at the beginning of spring, we reduced 6% capacity for the whole summer, and then we made other adjustments throughout the summer.

Based on the fleet that we have, we've done all the actions that were required to maintain a conservative capacity.

That's helpful. Then just thinking about the yield and the year-over-year yield comparisons.

Obviously, your trip length and your route mix can influence yield. Can you just maybe give us a sense for, on an apples-to-apples basis across the network, what are actual fares for you in Q4 at this point, and maybe Q3 as well?

How have fares changed year-over-year on a route-comparable basis?

When we look at the fares for Q4, we're looking at an increase of 6%. When we look at Q3, we had 4.8%.

You need to understand that the mix in the network changed in important fashion with the removal of Cuba. When we look at yield, of course, this is much more laid out on longer distance since Cuba represents shorter distances.

We're okay with the increase in PMSC. However, when you look at the unit revenues, it doesn't cover for the loss of Cuba.

That was a highly performing market, especially in summer, but as well at the end of last winter.

That's helpful.

We're looking at next winter. Of course, Cuba won't be there anymore, we have adjusted to make sure that the capacity for South destination is well balanced.

Of course, Dominican Republic will play a big role. Performance so far is very high, and trying to redistribute this capacity to maximize performance for next winter.

That's helpful. Thank you.

Just I guess my last question, I'm just wondering if you can expand a little bit on the increased competition that was called out in the Q2 report as well. Sounds like it's continued, if not even increased a little bit more over the course of the summer.

Wondering if you can talk about what form that is taking. Is that competitors kind of putting more capacity on than you think is warranted?

Is that competitors being more aggressive with pricing or maybe not pushing pricing higher to offset fuel costs? Just wondering if you can talk about what form that increased competition is taking this summer.

It's both actually. There was big increases on the Atlantic market, and combined with the fact that when we introduced the fuel surcharges, demand went down.

The whole market, Canadian market, competitors, everybody, started to launch promotions, and it never ended. It was promotions, one after the other.

We've never seen such a highly competitive network. There was promotion one after the other the whole summer, and it continues.

This is what has affected the overall yield especially in the economy segment, unfortunately, which prevented ourselves from passing on the increase in fuel to customers. It continues.

Okay. Thank you very much, Annick.

That's really helpful.

Thanks, and good morning, everyone. Just related to your premium cabin upgrade, could you talk a little bit about the incremental CapEx required on those, and what are the most attractive regions to introduce those new cabins at first glance?

Okay. I'm going to answer the second part first.

The most attractive markets for those are primary markets in Europe that we do year-round, such as Paris, London, Portugal, and then you have longer stage like Athens, Greece, and Rome. These are the primary markets where we plan to deploy the highest level, I would say, of premium cabin.

That's it. Then we have some aircraft as well do not have what we call our Club Class.

We want to standardize as well because we see big demand in Club Class. On some aircraft, we're going to increase that class; on some, we're going to introduce that class.

The goal is really to maximize revenues per client as much as possible, it's going to touch the whole fleet.

Okay. That's great.

In terms of CapEx, obviously we're not in a position to provide any guidance for next year CapEx. That being said, the introduction of the new cabin reconfiguration starting at second half of next year will have a minimal impact on CapEx year over year.

The bulk of it will really be in 2028.

Okay. That's great color.

For this upcoming winter, Annick, you talked about the potential capacity that's going to be flat. Could you talk about the pricing you've seen lately?

You talked about the promotions that was quite high in the last few months. What about the pricing environment that you've seen lately for this upcoming winter?

Yes. We're starting to see yields rebounding in a more stable picture, I would say, especially on the South program heading into the fall and winter.

Again, given the current economic volatility and uncertainty, we are taking a very highly disciplined and conservative approach to capacity deployment, no growth for next winter. Far, we see strong demand for South destination.

Load factor, still early to comment, but load factor is similar to last year, and yields are up year over year.

Okay. Would it be enough to cover for the fuel increase that is currently seen?

Not yet.

Yeah. Okay.

That's great color. Obviously, you were successful to secure a $250 million term credit facility agreement at attractive rates.

There's $170 million less. You talked about the visibility you have on the forward curve.

Any other options at your disposal aside the $170 million less that you might be looking at?

That's under the analysis as we speak. We feel very confident with the forward curve today, but we might have, maybe, to find other solutions if fuel prices don't improve.

Like I said, very difficult to predict, but we feel very confident today with the market environment that we're seeing in front of us.

Okay. Any changes in terms of hedging policy or things that you're looking at from a fuel standpoint?

No.

It obviously benefited in Q3, our fuel price or fuel expense would have risen more than what we've seen essentially without hedging, it has been beneficial in Q3. Our program is ongoing, we're hedged about 65%, I would say, on the fuel side for Q3, and a bit less for the first half of 2027.

That's great. Okay.

Thanks for the color.

Hi. Thanks for taking my question.

Maybe just one from me. You spoke about the soft launch of your new loyalty program and that's tracking ahead of expectations.

Can you give us any additional color on what sort of contribution you might expect from the loyalty program as we look out into 2027 and the longer term, or if anything has changed given the launch seems to be going better than anticipated? Thank you.

Yeah. For 2027, the contribution will be minimal, obviously.

It will be fully launched by the end of 2026. In the first years, obviously, we're more on the earn side than the burn side.

We expect, in fact, that this product, or this new offering, will mature over a period of 3 years, and that's where we're going to start to see a material contribution.

Great. Then just anything we should be aware of in terms of any initial investments that are needed for the loyalty program, and I'll jump back in the queue.

In terms of investment, you said? Almost nothing.

It's all behind us, and it's been minimal. It's really essentially IT expense.

Perfect. Thank you.

Thank you, Julie. Thank you, everyone.

As a reminder, our 2026 fourth quarter results will be released in December. Thank you, and have a good day.