Air Transat Q3 2026 EBITDA Slips Negative on 56% Fuel Surge

Air Transat's adjusted EBITDA swung into negative territory during the third quarter of 2026, driven by a 56% surge in jet fuel prices that erased profitability despite steady travel demand, according to an Investing.com report.

"This is exactly what our loyalty program and cabin transformation initiatives are designed to address," said Annick Guérard, Chief Executive Officer, Transat, in a Yahoo Finance earnings call summary.

Adjusted EBITDA fell to negative $1 million for the quarter, dropping sharply from positive $81 million in the third quarter of 2025. The quarter closed with a net loss of $107 million, contrasting with a net income of $400 million in the prior-year period, which had benefited from a one-time $345 million gain on the extinguishment of long-term debt.

Fuel Expenses and Financing Strains

Reported fuel expenses reached $238 million, or $138 million net of financial support. This represented a 50% increase from $159 million in the same period last year, fueled by jet fuel prices rising to $3.74 per gallon from $2.40 a year earlier.

To manage liquidity pressures, Transat fully drew $150 million under the LASR facility, which matures in July 2030 at a 3.91% interest rate. The carrier also secured an additional $250 million multi-draw loan under its existing LEEFF agreement, maturing in 2035 with a 1.22% interest rate for the first three years and 3% thereafter.

Engine Groundings and Fleet Impacts

Operational headwinds extended beyond fuel costs as supply chain disruptions continued to affect the airline's aircraft utilization. At the close of the quarter, four of the airline's 41 aircraft were grounded due to Pratt & Whitney GTF engine issues, exceeding internal expectations by one aircraft.

Associated costs and capacity constraints from the engine inspections are expected to persist until 2028. These grounded assets limit network flexibility during peak travel windows, amplifying the financial impact of high operating costs.

Loyalty Program Progress and Fleet Initiatives

Transat is pursuing structural changes to improve margins and customer retention as cost pressures linger across the commercial aviation sector. A beta launch of the airline's new loyalty program is underway, capturing over 23,000 enrolled members ahead of a full public rollout scheduled for the end of 2026.