Vacation local travel company Transat AT is facing a barrage of headwinds in 2016, putting more pressure around the company that’s already can’t boost organic growth, based on a new analysis by CIBC.
As an effect, the lending company has downgraded Transat to sector underperform from sector perform and cut its cost target around the stock to $7 from $8.
The cut reflects “the intensifying competition in leisure travel, especially because the scheduled carriers shift capacity from Alberta into Eastern Canada,” analyst Kevin Chiang wrote in a note to clients.
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WestJet Airlines Ltd. revealed the depth in the downturn in oil-dependent Alberta that is effect on airlines if the released disappointing quarterly results this year’s week. WestJet is shifting capacity from Alberta as well as other areas, but expects unit revenue to become seduced by temporary because it discounts fares to stimulate demand.
“While Transat’s direct exposure to Alberta is comparatively small (about nine percent of total origin travellers), we expect that it is facing increasing competition from scheduled carriers since they reallocate their network,” Chiang wrote.
The weakening Canadian dollar, Zika virus and also the possibility of an airplane pilot strike are additional headwinds that could put pressure on Transat’s stock this winter.
Transat’s pilots voted 97 percent towards a strike which will hit the airline right before peak March break season if your deal isn’t reached before.
And numerous Transat’s key winter markets, including South and guatemala and also the Caribbean, are seeing tourism influenced by the outbreak in the mosquito-borne Zika virus.
