Travel industry waiting to see if storms force change in winter destinations

Air Transat
Air Transat

Airlines scurrying to evacuate customers from Caribbean islands in the destructive path of hurricane Irma say it’s not yet clear if the storm will have lasting impact on next winter’s sun vacation options.

“We aren’t yet in a position to discuss this,” said WestJet spokeswoman Lauren Stewart. “It sounds like the islands that have been affected are still assessing damage. In addition to that, the hurricane’s path continues.”

The Calgary-based airline has joined Air Canada and Air Transat in sending airplanes south to bring customers home.

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The deadly hurricane that carried 298 kph winds caused massive damage as it barrelled through Barbuda, Antigua, St. Maarten and Puerto Rico.

It was causing flooding as it tracked north of Dominican Republic and Haiti on the way to Cuba and Florida.

“We have very little information today on the impact that the hurricanes may have on the rest of the season on our sun routes next winter,” Denis Petrin, chief financial officer of Transat A.T. said during a conference call Thursday to discuss its quarterly results.

About 60 per cent of its seats to sun destinations are for travel to Dominican Republic, Cuba and other parts of the Caribbean.

The Montreal-based company (TSX:TRZ) said it is trying to be very flexible to accommodate passengers whose holiday plans are affected by the storm. It will divert travellers to other destinations that aren’t impacted or give them credit to travel at another time of the year.

Chief executive Jean-Marc Eustache said the immediate financial impact is not huge, but costs will increase if there are new hurricanes every few days.

He noted that it’s not the first time that island hotels have faced hurricanes.

“Five years ago was a very tough season for hurricanes and at the end of the day everything was there to send the customers,” he told analysts.

The executive director of the Canadian Association of Tour Operators says some resorts will definitely be impacted by the storm.

“But history shows that they are amazingly resilient and capable to rebound quickly,” said Pierre LePage.

He said Canadians wanting to escape the cold winter will look to other destinations, such as Mexico, if the one they were considering is heavily damaged.

“It will affect some resorts but it certainly won’t affect the business model that our tour operators utilize,” LePage added in an interview.

Shares of Transat plummeted 9.2 per cent at $9.15 on the Toronto Stock Exchange even though it profits nearly tripled during the summer.

The company said its third-quarter net income soared to $26.6 million, from $9.4 million a year earlier, while revenue grew 10.5 per cent to $733.2 million.

Transat said higher revenue was driven by an 8.7 per cent increase in travellers on transatlantic routes, its main market for the third quarter.

But the travel company said major storms in the Caribbean and surrounding countries could hurt its forecast that adjusted operating income in the fourth quarter will be similar to 2015, and up from last year.

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