Transat’s new CEO set to pilot airline’s postpandemic reinvention

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Annick Guérard has long wanted to run an airline. Just not like this. Not amid a global pandemic that has devastated the airline industry and grounded the company she sought to lead, burdening it with a massive debt, new government oversight and zero revenue as takeover talks swirl.

“Arriving in the midst of a pandemic was not the plan, I have to be honest, but the leadership succession process had been in place for several years,” said Ms. Guérard, who was named chief executive officer of Transat AT Inc . in May, replacing retiring founder Jean-Marc Eustache.

She is wasting no time in forging her pared-down vision that refocuses the Montreal-based tour operator as an airline. Gone are the ambitions for a Mexican beach resort; there will be less emphasis on tours and the travel agency.

“This is where we see the most profitable segment for our business in the future,” Ms. Guérard said in an interview.

Ms. Guérard was a transportation engineer who worked as a management consultant for Transat 20 years ago, restructuring the maintenance division and the airline’s operations. She never left.

“I got passionate about it,” Ms. Guérard said. “I left my other job and jumped into the airline industry.”

Ms. Guérard is the first woman to lead a Canadian airline, and one of the few female CEOs in a country where women hold just 17 per cent of executive jobs, according to a 2020 study by law firm Osler, Hoskin & Harcourt. As the head of a company where 62 per cent of employees are women, she said she is proud to set an example for others. But she wishes her rise to the top was not notable for her gender.

“When we will not be applauding any more the appointment of a woman, I think we will have made progress,” Ms. Guérard said. “I think the big problem is the image that we have of leadership is still too deeply modelled in male typical behaviour … in negotiation, taking charge, calling shots, very focused on individual performance more than a team performance.

“Fortunately or unfortunately, every time a woman is named as the leader of a company, people are very happy. I think it gives a model to a lot of women and it gives hope to a lot of women,” Ms. Guérard said. “It gives them hope for their daughters, it gives hopes for my daughters, as well, that eventually there’s going to be a much more balanced world in the corporate environment.

More women are needed in leadership roles to show that it’s possible to change and to trust a woman at the top of a company, she said.

“Fortunately, I had enough people that trusted me here at Transat to be able to move up. So that was a good thing. And of course I’m going to do everything I can to do the same on my side.”

She describes her leadership style as collaborative.

“My priority is to surround myself with people of character to form a solid, cohesive team that will work in the same direction,” she said.

Ms. Guérard became Transat’s president and general manager in 2013 before taking the operating chief job in 2017, responsible for the daily operations of the airline. But she takes charge at a low point in Transat’s 35-year history.

The airline halted flights at the end of January after the federal government called for an end to service to Mexico and the Caribbean and imposed new travel restrictions. Transat has idled more than 4,000 of its 5,000 employees.

Transat said on Thursday morning it lost $69-million in the three months ending April 30, or $1.84 a share. For a quarter in which Transat’s planes were grounded, revenue fell by 98.7 per cent to $7.6-million.

Flights will resume on July 30, but 2022 promises to be another tough year, Ms. Guérard said.

The pandemic sent the value of Air Canada’s proposed takeover plunging to $190-million from $720-million. The two airlines agreed in April to abandon the deal after the European regulator signalled it was unlikely to approve it.

Gestion MTRHP Inc., an investors group led by Pierre Karl Péladeau, has made a cash offer of $5 a share for Transat. The talks are continuing, Ms. Guérard said, declining to elaborate.

On a conference call with analysts on Thursday, Ms. Guérard laid out Transat’s “prudent” restart for the airline, adding routes gradually to capitalize on demand from travellers visiting family and friends.

She said shedding planes and the expected sale of a Mexican hotel property valued at US$38-million will leave Transat a simpler company focused on leisure air travel that will enable it to be profitable with less revenue.

She said Air Transat will at first focus on Montreal, Quebec City and Toronto, with flights to the United States. Domestic connections to the Western provinces, and flights to international destinations will follow. The airline has pared its fleet to two models from four, the Airbus A330 and A321, simplifying operations and reducing costs.

Transat will no longer lease seasonal planes in the winter, and will make more use of the 30 aircraft it owns.

Benoit Poirier, a stock analyst at Desjardins Financial, said Transat’s slow restart means it will not benefit from any recovery in demand for air travel until late in 2021.

Transat has accepted a taxpayer bailout worth as much as $700-million, a deal that lets it refund $310-million in airfares for flights cancelled in the pandemic while allowing the federal government to own as much as 20 per cent of the company.

Peter Letko, vice-president of Letko Brosseau and Associates, Transat’s largest shareholder, said restarting an airline is an expensive, time-consuming venture that must be done carefully to ensure profitability.

“I think the challenge for all airline executives now is moving back toward some normalcy as people get vaccinated and they start to reactivate their business,” Mr. Letko said by phone. “My hat’s off to them – this is a big challenge. Get your pilots ready, the equipment, all the support staff including those on board and the whole chain of people that supply an airline. It’s a huge job.”

Mr. Letko has for years pushed underperforming Transat to boost profits by charging more for airfares, and urged management to turn away takeover offers he sees as too cheap. In April, he dismissed the takeover from Mr. Péladeau.

Cameron Doerksen, a stock analyst at National Bank, said Transat is unlikely to receive an offer worth more than $5 a share. The company’s focus on the airline will put it in more direct competition with dominant carriers Air Canada and WestJet Airlines Ltd., Mr. Doerksen said in a note to clients.

Ms. Guérard signalled Transat is up to that challenge. “Those airlines have been our competitors for years,” she said. “We are already in that business. What we wanted to do is to be able to focus on the core business, use the right tools [and] the right people to be able to better fight against those competitors.”

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