WORLD ROUTES: Air Transat Agrees Lease Deal with Transavia France

Canadian carrier Air Transat will operate up to eight additional Boeing 737-800s each winter season to support its operations to Mexico and the Caribbean.  These aircraft, to be leased under a five-year partnership with European leisure carrier Transavia France, will support the four 737-800s its parent Transat AT agreed to acquire from International Lease Finance Corporation (ILFC) on eight-year leases in July this year and which will form the core of Air Transat's permanent narrow-body fleet from summer 2014.

Transat AT has agreed terms with Transavia France, part of the leisure operation of the Air France-KLM, to adopt a so-called "accordion fleet" strategy, which enables it to adjust the number of aircraft to the seasonal needs of the tourism market.  The company will source aircraft for only the winter seasons, acquiring four aircraft for winter 2015, five for 2016, six for 2017, seven for 2018 and eight for 2019.

"We are continuing to move forward with our implementation of a fleet of narrow- and wide-body jets that is adaptable to seasonal needs," said Jean-Marc Eustache, president and chief executive officer, Transat AT.  "This deal gives us greater flexibility and a significantly improved 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."

The agreement is in keeping with Transat's previously announced plan to internalise 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 AT.

Air Transat's fleet currently consists of nine A310s and twelve A330s.  These latest fleet deals 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,” according to company literature.


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