Canada’s Transat AT has reported a sharp fall in operating revenue, as lower prices and falling volumes hit the integrated tour operator.

Amid a “highly competitive commercial environment”, Transat posted revenues of $792.6 million for the quarter ended January 31st 2010, compared with $877.3 million for the same period of 2009.

This represents a decline of $84.7 million, or 9.7 per cent.

“The decrease in revenues stems mainly from lower selling prices and volumes,” said Transat president Jean-Marc Eustache.

“Our operating costs decreased significantly, partially offsetting the unfavourable impact of lower prices on our margins, in a highly competitive commercial environment.”

As a result of the fall, the corporation recorded an operating loss of $12.4 million for the quarter, compared with $8.5 million in 2009.

Tough Times Ahead

The trends established over the quarter are also likely to hit financial results over the coming months, confirmed Transat.

Selling prices are inferior to the previous year, and the decrease will only be partially offset by lower fuel prices, hotel costs, other land portion expenses, and air seats costs.

In addition, as in the first quarter, Transat will not be able to fully benefit from the strength of the Canadian dollar in the second quarter, as a result of its foreign exchange hedging positions.

For the second quarter, Transat “expects to record a loss”.

For the summer 2010, it is too early to make a statement on pricing trends, but reservations are superior to the previous year.