Those Magnificent Men in their Flying Machines

Getting to Europe involves the joys (and agonies) of trans-Atlantic flight. Over the last few years, I used Air Canada’s (AC/A-T) business class, when my former employer was paying, and found the lie-flat beds and professional service an enjoyable experience. Paying for the flights on one’s own dollar makes business class out of reach, as the cost each way with taxes can easily reach $4,000.

This year, on the recommendation of a friend who frequently flies to the US and is a British Airways Gold card holder, I tried BA Premium Economy, which has a separate cabin, with free drinks and dedicated staff, although the seats and meals are the same as ordinary Economy. The cabin was full going over and almost empty returning, although that was during low season in February. BA uses the new Terminal 5 at London Heathrow, although it was so busy when we landed that we had to park off terminal and be bussed over. For $1,800 return per person, it was a reasonably priced compromise between basic economy and business, although I’m not sure how often I’d want to do overnight flights and the price for high season is another $300-400 estra.

However, the airline that we as a family have used most often over the last half dozen years has been Transat (TRZ/B-T), the largest Canadian holiday specialist airline and travel company. While its economy class was notorious for lack of legroom, until it took out a couple of rows 2 years ago to increase its seat pitch to 32 inches, all of its A310 and A330 aircraft have 20 or 21 business class seats, called Club Class, which cost around $1500-2000 (inc. taxes) return for the Toronto-London Gatwick route. While an old fashioned business class seat, essentially a recliner with a leg-rest, it does provide ample legroom, free and edible meals and drinks, and the luxury of separate check-in and extra baggage allowance. Furthermore, Transat provides direct flights once or twice a week to regional destinations from Toronto such as Exeter, Newcastle and Manchester in England and Toulouse, Marseilles and Bordeaux in France (the latter usually through its Montreal headquarters).

As an investment, Transat has been disappointing for the last few years, down -60% against -40% for ACE Aviation(ACE.B-T), Air Canada’s  holding company and a 40% gain for budget operator Westjet (WJA-T), as despite its rock solid balance sheet with over $275 m in cash and almost no debt (although there is$630 m odd in aircraft leases), increased competition on its winter routes to the Caribbean and Mexico and rising jet fuel prices have reduced its profits. Also, some of its cash was invested in Canadian Asset Backed Commercial Paper (ABCP), the market for which froze in 2007 and on which it had to take a write-down of one third. Nonetheless, it has consistently remained profitable through the 2008-09 recession, is upgrading its fleet with new A330s, and has survived for 40 years without going bankrupt in one of the most competitive industries. It also is one of the more reasonably priced and comfortable ways to cross the Atlantic from Canada.

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