Transat A.T. shares slipped to their lowest level in years on Thursday after the Montreal-based travel and vacation company reported a $13.2-million loss that was far worse than analysts expected.

Transat said the loss in the second quarter ended April 30 was the equivalent of 35 cents per diluted share before adjustments and 64 cents per share on an adjusted basis.

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Analysts had been looking for Transat's adjusted loss to be about four cents per share. The adjusted loss of $24.5 million compared to a profit of $600,000 or two cents per share a year ago.

Ben Vendittelli of Laurentian Bank Securities said the results are "very negative" and that Transat is showing no signs of progress.

"Management's outlook continues to be negative for the summer season despite the recent collapse in fuel price," he wrote in a research note.

On the Toronto Stock Exchange, Transat shares opened below the previous 52-week high and kept falling. At mid-afternoon, its B shares were down 35 cents, or eight per cent, at $4.01 — the lowest in more than a decade.

Transat said both its North American and European arms had operating losses in the quarter.

Overall revenue for the three months ended April 30 rose by $111 million to $1.2 billion due to $69.5 million of revenues from the acquisition of Quebec's Vacances Tours Mont-Royal and a 4.3 per cent increase in the number of travellers. That was offset by lower selling prices and higher costs.

The company had a pre-tax operating loss (EBITDA) of $26.2 million compared to earnings of $9.2 million last year.

Revenue in Europe falls 3.7%

Revenue at Transat's business units in Europe fell by $7.2 million or 3.7 per cent compared with the same period last year.

Transat said that sales made in France and Canada for European and North African destinations have been difficult, resulting in a $6.6-million operating loss in the quarter.

In its larger North American arm, Transat had a $19.6- million operating loss — in contrast to a year-earlier margin of $9.8 million.

"Selling prices of sun destination packages to Mexico and Caribbean declined sharply in the second half of the quarter, while fuel costs remained higher, with negative impact on margins," Transat president and CEO Jean-Marc Eustache said in a statement.

"We remain focused our previously announced plan to return to profitability, which unfolds as planned."

It was the fourth quarterly loss in a row for the company, which operates a variety of vacation and travel businesses including the Air Transat airline, packaged holiday operators and travel agencies.

The last profitable quarter was a year ago, when Transat AT had $8.7 million of net income, or 23 cents per share, and $1.1 billion of revenue in the three months ended April 30, 2011.

Flight attendants accept wage freeze

The union representing Air Transat's 1,800 flight attendants announced Wednesday that its members had voted to support a temporary wage freeze.

Under the plan, the union agreed to suspend the payments of three annual wage increases of one per cent as well as the payment of a lump sum of 1.5 per cent.

In return, Air Transat agreed to catch up on all salary increases and pay back the money owed by Dec. 15, 2015, at the latest, the union said.

On May 1, Air Transat and the union representing its 420 pilots agreed to a similar deal.

Transatlantic capacity is down four per cent while load factors and pricing are slightly better.

Transat has cut its capacity to the Caribbean and Mexico for the summer season by 13 per cent while load factors are similar to last year with inferior pricing. Vendittelli estimates that this region represents less than 10 per cent of Transat's summer revenues.

Subsequent to quarter end Transat sold a portion of its holdings in asset-backed commercial paper, which had a notional value of $80 million, for a total consideration of $57.4 million

Transat is an integrated international tour operator with more than 60 destination countries and that distributes products in over 50 countries. The holiday travel specialist also operates Air Transat.