Bonjour, mesdames et messieurs , bienvenue à la conférence Transat. Good morning, ladies and gentlemen. Welcome to the Transat conference call. This call is being recorded. I would now like to turn the meeting over to Ms. Andréan Gagné, Senior Director, Public Affairs and Communications. Please go ahead, Ms. Gagné.
Thank you. Hello, everyone, and welcome to the Transat conference call for the presentation of the financial results of the Q3 and the July 31, 2022. I'm here this morning with Annick Guérard, President and CEO, and Patrick Bui, Chief Financial Officer. Annick will provide comments and observations on the current operational situation and commercial plans for the future. Patrick will also review the financial results in more detail. We will then answer questions from financial analysts. Questions from journalists may be handled offline. The conference call will be held in English, but questions may be asked in French or English. As usual, our investors' presentation has been updated and is posted on our website in the Investors section. Patrick may refer to it as he presents the results. Today's call contains forward-looking statements.
There are risks that actual results will differ materially from those contemplated by those forward-looking statements. For additional information on such risks, we invite you to consult our filings with the Canadian Securities Commission and on SEDAR, and are incorporated through this statement. Forward-looking statements represent Transat's expectation as of September 14, 2023, and accordingly are subject to change after such date. However, we disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law. Finally, we may refer to IFRS and non-IFRS financial measures. In addition to IFRS financial measures, we are using non-IFRS measures to assess the corporation's operational performance.
It is likely that the non-IFRS financial measures used by the corporation will not be comparable to similar measures reported by the other issuers, or those used by financial analysts, as their measures may have different definitions. The measures used by the corporation are intended to provide additional information and should not be considered in isolation or as a substitute for IFRS financial performance measures. Additional information on non-IFRS financial measures, such as their definition and their reconciliation with the more comparable IFRS measures, are available in our quarterly reports and our investors' presentation. With that, let me turn the call over to Annick for opening remarks.
Good morning, everyone, and thank you for joining us. We're very pleased with Transat's financial performance in the last quarter, in which we generated record Adjusted EBITDA for a Q3 . We also delivered a net income of CAD 57.3 million, CAD 1.49 per share, representing our first net profit since the end of 2019. Q3 revenues were 6.8% above 2019 pre-pandemic levels, reaching CAD 746 million, while our record Adjusted EBITDA of almost CAD 115 million was nearly 85% higher. In addition, Transat generated a positive free cash flow over the past 12 months. This gives us confidence in our ability to further improve our capital structure by reducing our debt. Patrick will further discuss our financial position in a few minutes.
These impressive results demonstrate strong overall execution, as well as our ability to meet sustained customer demand in a cost-efficient way. They also reflect the strength of our brand as a carrier of choice for leisure travel, which was recently confirmed by winning Skytrax World's Best Leisure Airline award for the fifth time. This award is a result of the hard work and dedication of our 5,000 employees who embrace our values and vision. I thank them all for their contribution. Once again, demand for leisure travel was robust. Together with strong pricing, these favorable market conditions produced a yield 29% above those of 2019. Transat achieved these remarkable results despite available capacity nearly 14% below 2019 levels, showing further strong execution by our team. Demand has remained solid in the early stages of the Q4 .
Booking velocity continues to mirror that of 2019, but at significantly higher prices. Yield is tracking at 26% above 2019 levels. Looking further ahead, early bookings for 2024 winter season suggest that consumer demand should remain healthy. Sales velocity is currently above that of winter 2023, with higher load factors on a comparable basis. More importantly, yield is about 7% higher than last year, which bodes well for the start of the new fiscal year. For the winter, we're looking at a 23% increase in available seat miles compared to last year, as we continue to methodically expand our fleet, while also seeking to maximize productivity by increasing aircraft utilization. From an operational point of view, Transat is ready to deliver this greater capacity.
This includes having the crew to operate the aircraft and all the required workforce to provide customer and logistical support. Supporting this increase, we received these three additional A321LR aircraft during the summer, which are now part of our flight schedule. With this fleet expansion, we plan to operate 40 aircraft during winter 2024, which is 5 more than last year. This enables us to open new promising routes, to relaunch or extend the seasonal character of others, and to increase frequency on our best performing sun destination routes. Regarding new routes, we announced in August a program expansion with direct flights to Lima, Peru, from Montreal and Toronto, starting in December, as we continue to grow our presence in South America.
In addition, you may recall that we announced earlier this summer year-round service to certain destinations in France, including Lyon and Marseille, and the extension of others deeper into the winter season. To sum up, we're pleased with the overall progress we are making in executing our strategic plan. We look forward to providing you with a more comprehensive update on our plan during our year-end conference call. In conclusion, Q3 results clearly prove that Transat remains on the right path to sustain profitable growth. We're very satisfied with the progress accomplished to this date. Consumer demand remains solid. Despite inflation, Canadians continue to make travel a priority for their well-being. The Canadian airline sector continues to benefit from pent-up demand. The market is still catching up, especially on international travel. Future demand will also be supported by strong immigration, as the Canadian government has increased its immigration targets.
Assuming the economy has a soft landing, we believe the demand will remain strong while carefully looking at supply constraints for the near future. These favorable market conditions should continue to drive solid bookings and healthy pricing. Meanwhile, our teams are continuing to manage our measured expansion strategy while further optimizing our cost structure. In parallel, we're keeping an eye on certain factors that could impact our activities, such as the higher price of fuel, unforeseen delays in aircraft deliveries, and the continuing supply chain challenges, including engine shop visit turnaround times and the inspection situation with Pratt & Whitney. If required, we will rapidly adapt to any situation with the clear objective of protecting our operation and our profitability. Transat is determined to offer its customers the best value proposition and service for their travel experience. We thank them for their confidence.
With that, I turn the call over to Patrick, who will review our financial performance in greater detail.
Thank you, Annick, and good morning, everyone. Our robust Q3 results reflect strong customer demand for international leisure travel, higher pricing, and the disciplined execution of our strategic plan as we continue to move closer to or even surpass operating results of 2019. Total capacity in Q3 of 2023 represented 86% of that offered in 2019. Our yield was 29.1% higher, while the load factor was similar at 88.8%. As Annick mentioned, we delivered adjusted EBITDA of CAD 114.8 million, reaching new heights in profitability for the Q3 , and our free cash flow for the past twelve months was positive.
Based on historical patterns, we expect to consume cash in the Q4 , but we remain in a strong position to generate a positive free cash flow for the full fiscal year. This was one of Transat's key financial objectives, as it puts us in a better position to continue the deleveraging process. On that note, on August 31, we announced the closing of the sale of our land property in Puerto Morelos, Mexico, to Finas Holdings for $38 million. Net proceeds of approximately CAD 50 million from this transaction will be used to reduce debt. With these cash infusion and a better operating environment conducive to a stronger cash flow generation, we are confident about our ability to further reduce our debt as we continue to diligently work on a refinancing plan. Now, let's turn to our Q3 results.
Revenues increased 46.8% to CAD 746.3 million. This increase reflects the full resumption of operations and a strong customer demand. Recall that in the early stages of Q3 2022, Transat's revenues were still recovering from an earlier sharp decline in demand and massive booking cancellations following the emergence of the Omicron variant. Adjusted EBITDA was CAD 114.8 million, representing a 15.4% margin, compared to a loss of CAD 57.8 million last year.
In addition to sustained demand and our focus on cost containment, we benefited from a 23% year-over-year reduction in fuel expenses due to a 41% decrease in fuel prices, partially offset by more aircraft movements due to greater capacity deployments than last year. Net income totaled CAD 57.3 million in Q3 of 2023, compared to a net loss of CAD 106.5 million in Q3 of 2022. Adjusted net income, which excludes items that affect comparability, also significantly improved, reaching CAD 42.3 million, compared to an adjusted net loss of CAD 120.9 million last year. Moving on to the balance sheet. Cash and cash equivalents amounted to CAD 570.6 million at July 31, 2023, up from CAD 411.3 million a year earlier.
Cash and trust were otherwise reserved mainly for travel packages, also improved year-over-year, reaching CAD 293.3 million, up from CAD 244.7 million a year ago. Unrestricted liquidity, which consists of cash and cash equivalents, plus undrawn funds from credit facilities, stood at CAD 670.6 million, which is 31% above last year's level. Customer deposits and deferred revenues amounted to CAD 819.9 million, which constitutes a new all-time high for a Q3 . This figure is up 40% from July 2022. In terms of indebtedness, long-term debt remained at CAD 863.2 million, and we made repayments of CAD 40.4 million on our lease liabilities during the quarter.
Off-balance sheet agreements, excluding agreements with suppliers, decreased by more than CAD 180 million during Q3, to reach CAD 896.8 million at the end of July. The decrease was primarily due to the delivery of two Airbus A321LRs and one A321CEO, and to the appreciation of the Canadian dollar against the U.S. dollar during the period. These were partially offset by the impact of higher interest rates on future rents. Turning over to cash flows. Free cash flow was -CAD 52.1 million in Q3 of 2023. It represents a significant improvement from -CAD 96.9 million in Q3 of 2022, mainly stemming from the positive impact of this year's net income on operating cash flow, as opposed to last year's net loss.
It was partially offset by a negative net change in non-cash working capital balances and higher repayment of lease liabilities compared to last year. On a rolling twelve-month basis, Free Cash Flow is positive CAD 152.7 million. As I mentioned earlier, we expect to conclude fiscal 2023 with a positive Free Cash Flow position. Also of note, given our significant improvements in operating profitability and cash flow generation, we have removed the going concern uncertainty from our financial reports. This constitutes another positive step forward on our path to a full recovery. Turning to our outlook, we are raising our fiscal 2023 Adjusted EBITDA margin target to 7.5%-8% on the strength of solid results for the first nine months and our expectations for the Q4 .
Previous range was between 5.5%-7%, and it was initially set at 4%-6% at the beginning of the fiscal year. The lower end of the range is a scenario in which fuel prices stay or increase from the current levels. The upper end of the range is a scenario in which fuel prices recede from the current levels. Given our year-end target and our achievements to date, this implies that our Q4 Adjusted EBITDA will be healthy, but less than our record Q3 performance. Although demand and yields remain solid, we do not expect fuel to be a tailwind this quarter.
Our main assumptions in updating this guidance include moderate growth in Canada's GDP, an exchange rate of 1.35 CAD to $1, an average price per gallon of jet fuel of 4.25 CAD. In summary, we are very pleased with our financial performance so far this year. We are generating a significantly higher yield. This has a direct and positive impact on operating profitability, and we also remain focused on tightly managing our costs. We are confident in our ability to further improve margins and to continue growing free cash flow on a rolling 12-month basis. With this reduced strength, Transat is in a significantly better position to refinance its capital structure. We are actively working on a refinancing plan, and we look forward to sharing the details with you in due time. This concludes my comments. We will now open the call to questions.
Thank you. Ladies and gentlemen, we will now take questions from our analysts. Should you have a question, please press the star followed by the one on your touchtone phone. If you'd like to withdraw your question, please press the star followed by the two. One moment, please, for your first question.
Your first question comes from Kevin Chiang from CIBC. Please go ahead.
Good morning, and congratulations for putting up some strong results here in the fiscal Q3. You know, maybe I'll focus on the capacity growth. You have, I think you talked about 23% for the upcoming season. I get that demand is strong, and you're not seeing any real signs of weakness here, but obviously, there's broader concerns in the economy and maybe over the health of the consumer.
Just maybe if you can frame what looks to be a very large capacity increase, within maybe an economic backdrop, as you pointed out, as being pretty, pretty modest, at least in terms of your assumption, and maybe the risks that you see to maybe over capacitizing the market if you do see a weaker consumer.
Good morning. Yes, for 2024, we continue to methodically expand our fleet, while also seeking to maximize productivity by increasing our aircraft utilization. So we plan to operate 40 aircraft during next winter, which is 5 more than last winter. As we explained, we received 3 additional A321LR this summer, which are now part of the winter schedule. It enables us to open new routes. It allows us as well to relaunch or extend the seasonal character of other and increase frequency on the best performing sun destination. And from an operational point of view, we are very ready to deliver on this greater capacity. That being said, it's +23 ASM compared to last year, but it's +15 compared to 2019.
So, that's important, that's important to say. We continue to see strong booking momentum for next winter. As we've explained, we're ahead in terms of booking curve, ahead of load factor, ahead in yields, so we're pretty much confident, you know, about the fact that the Canadian airline sector continues to benefit from pent-up demand. So with what we see today, despite inflation, we, we're pretty much comfortable that that's the right capacity to deploy to make sure that we position ourselves well in the market and strongly.
That makes sense. And I'm just wondering, as you kind of look at the booking curve now, are you... I get the overall demand environment is strong, but are you seeing any changes in terms of, you know, where people wanna fly to, to maybe reflect, you know, maybe some of the broader concerns that the consumer has? Are you seeing people, you know, fly to maybe less expensive resorts, or has that behavior not changed as you've flown to this winter season versus what you saw last winter when there was an extreme amount of pent-up demand to travel?
Well, no, we haven't seen strong changes versus last year.
Okay.
Of course, on our side, we have deployed more capacity on the transatlantic market, which is performing very well for next winter. So, we're pleased about that. We've extended some of our programs, you know, out of Ontario on the French regions. So that's going very well. And otherwise, on the southern destinations, we're still seeing strong demand for five-star, four-and-a-half-star packages. So that's encouraging as well.
No, that is. Maybe just last one for me, you know, again, you know, obviously strong yield performance as well. Just wondering, and I know this might be difficult to kind of parse out, but if you had to look at some of your internal initiatives as driving yield, whether it's, you know, your broader revenue management program, ancillary services, you know, maybe some of the adjustments to your product offering as you've kind of come out of the pandemic versus, you know, just the mismatch between demand and supply, driving fares higher.
Is there a way to think about how much of this yield you think might be sticky, you know, for lack of a better word, just based on internal initiatives that you're pursuing or have been pursuing, as you've been kind of building through this recovery?
Well, it's difficult to say, but one thing's for sure is that, and we talked about that during previous quarters, we've improved our revenue management practices with the implementation of PROS, the airline revenue management tool that is one of the best in the market. We've changed the team as well. We have high qualified people with high skills in revenue management, and we strongly believe that this has made a big difference this summer and for the years to come.
Thank you for taking my questions. Best of luck as you close out the fiscal year here. Thank you.
Thank you.
Your next question comes from Cameron Doerksen, from National Bank Financial. Please go ahead.
Yeah, thanks. Good morning. I guess maybe my first question is just around, I guess, the change in the margin expectations here for the full year. I'm just kind of trying to square this because, you know, it feels like even the high end of your new full year margin target is pretty conservative, even if, you know, we assume that the fuel price that's spiked higher recently has, you know, stays the same for the rest of the course. Maybe you could just detail a little bit more about what your expectations are for Q4. Is there something around, you know, where you're hedged relative to Q3?
Just if any additional, you know, sort of color you can provide here, because it does feel like your implied Q4 is, you know, maybe significantly weaker than Q3, which, given the booking trends, doesn't really seem to be, you know, what I would have expected.
Yeah. Good morning, Cameron. I'll take that one. From a demand perspective, we still see Q4 being a constructive demand environment, and as Annick said, we see that continuing into the new year. You're correct also in pointing out that Q4, we're expecting Q4 to be weaker than Q3. There's a host of reasons, but we'll generally bucket that in two categories. One, I think we need to recognize the exceptional performance in Q3, so we're coming off of a very, very strong Q3 . And the second factor, and you wouldn't be surprised to hear, is that in Q4, we have entered into a fuel environment that is much more volatile, higher than Q3.
We are hedged against a sustained increase in prices, but yet again, it's not a perfect hedge either, so there are implications on the cost side. So when you look at those two factors, that explains the delta between Q3 and Q4.
Okay. Are you able to, I guess, detail where you're hedged and what percentage of your fuel needs are hedged for Q4?
Yeah. So generally, as we previously said, you know, it's a quite volatile environment, so we have, we're happy to have a robust hedging program. If you look at Q4, we're roughly 70% hedged on fuel needs and consumption. And roughly speaking, from a jet fuel perspective, we're hedged at approximately $2.85, around that range, for Q4. We're also hedged, as I mentioned, on going forward. We're going to roll this book forward into 2024 at a lower strike price. And we're also hedged on the U.S. dollar compared to Canadian dollar.
Okay. Okay, that's helpful. Maybe just my second question just around, I guess, and you mentioned this on the opening remarks, just around the engine issues with the GTF engines that are used on the A321neo LRs. Have you gotten any indication from RTX that this is going to be any issue for your fleet? Maybe you can just describe what kind of your expectations there, and then, you know, what scenarios you're planning for.
Yeah. So of course, we're, we're well aware of the situation. We've been working closely with Pratt & Whitney to better assess the challenges, the issues. But based on our understanding so far, the impact we estimate will be minimal and manageable for 2024, and this will give us the time to work on contingency plans for 2025. So we'll be in a better position to understand the impact once Pratt & Whitney has issued its service bulletin. So we're still in discussion and waiting to hear more from them.
Okay. So if there is an issue where you have to take engines off the plane for an extended period, it's more of a 2025 event, not 2024?
Yeah. So we have, and we need to consider as well that we have spare engines. So we are able to... We will be able to mitigate, at least for 2024, most of the impacts.
How many aircraft would potentially be impacted?
We're looking... We don't know exactly yet. It's regarding the A321LRs, so we're still waiting for to hear more information, to receive more information. We don't know the exact number, what we're talking about at this point.
Okay. Okay, that's helpful. I'll pass the line. Thanks very much.
Your next question comes from Konark Gupta from Scotiabank. Please go ahead.
Thanks, operator. Good morning, everyone, and I echo the congratulations on a pretty good set of results. The first question I wanted to ask about was on the yield. When looking at the page 7 of your presentation, it seems like the yield has been down then up recently. How should we understand this? Does it reflect like a brief period of discounting to stimulate demand, followed by maybe the fuel-driven fare increases?
Well, the yield for the Q3 was, as we mentioned, 29% higher than Q3. Q4 is still currently at +26%, which is very strong. And as we explained, early indication, but it's very early still for winter, indicate that we're still ahead of +7%. So it's still growing, so the increases in yield are still growing. Of course, in terms of stimulating winter bookings, we always have strong promotions during spring, early summer. So this affects, on a short period, our yields, of course, but we always see this from one year to the other. But overall, yields are increasing, so we're pretty satisfied with that.
Okay, now, thanks. And, is there any big lag effect in adjusting the yield or fares for fuel? I mean, I think you guys are seeing some rebound in the fuel price now. I mean, obviously, you're hedged and all that, but the industry is seeing the same thing. Can you adjust the fares a little bit higher here, you think, in this macro environment? Or you think, you know, demand is kind of a little bit fragile if you raise fares?
... Yeah, I think what's driving prices, it's really, you really need to think about the demand and supply environment. You know, you won't be surprised to hear that demand remains very strong, and at the same time, you know, there are some constraints on the supply side. So we'd say, you know, in this cycle, really the supply-demand factor is driving higher yields. And this, you know, even if fuel prices recede, as we see in Q3, you know, looking even forward to Q3 when fuel prices were lower, yield still remains pretty strong.
I could add with that, that as pent-up demand is still unsatisfied, and it will be for a couple of years, and with the supply-demand on balance, we think that yield could stay up for some years now, from now.
Okay. No, that's helpful. Thank you. And then, on the balance sheet side, seems like you're still kind of ending the covenant holiday in October. And it seems like the interest rate on some debt maturities will increase in the coming months. What's your most immediate priority, Patrick, to repay the high yield debt with the incremental cash you have on hand now with the hotel proceeds and all that? Or do you want to refinance the debt for longer maturity curve?
Yeah. So, priority number one, and it's really linked to capital structure, is really improving the financial performance of the company from a margin perspective, and mostly from a cash flow generation perspective. So for us, you know, the best remedy to achieving a more sustainable capital structure is really simply generating a better cash flow profile. So, as we mentioned, we're looking to be cash flow positive for the full year. So we're definitely on the right track with respect to that. Secondly, you would have seen, we've sold the land in Mexico. The transaction's closed, so the proceeds are with us.
And in terms of priority, we'd like to repay the senior facilities that are close to CAD 200 million, which are higher yielding, higher yielding debt. So that's a priority when you think about the tranches, the tranches of debt. And then in parallel, you know, as we've said in the past, we're actively working on a refinancing plan. You know, we'll share more details at the right time, but one thing I note is when you look at the progression of the company with respect to its margin profile, financial profile, cash flow profile, we're certainly in a better position today to be working on a refinancing plan with conditions that are more, that are better to transact as compared to, to a year ago.
So, you mentioned something about covenants. I also believe in your question that some covenants are coming online in Q4. There's no concerns whatsoever with those covenants. We should be meeting them very easily, Konark.
That's great. I'll turn the line. Thank you.
Your next question comes from Benoit Poirier, from Desjardins. Please go ahead.
Yeah. Good morning, Annick. Good morning, Patrick, and congratulations for the very strong results.
Thank you.
Thank you.
Yeah. Quick one. You talk about, obviously, the engine issues, and I was curious to know a little bit more about the contingency plan, and the potential maybe to contract out more planes, assuming that some engines need to be retired. I assume that there's enough supply in terms of contingency.
Yeah. What... I've mentioned, we're still assessing the situation, but in terms of contingencies, we will look at potentially flying more of our A330, flying more of our A321LRs. We also use, as you know, ACMIs. When we need more airplanes, we might order earlier aircraft that we had planned to have later in future years. We're looking as what. And we use spare engines, so there's different, at this point, where we're very comfortable with the different plans that we're putting in place. And so it's gonna take. And we have time, we have time to plan because so not everything's gonna happen in. We have a year ahead before we need to make those put their contingency plan in place.
Okay, that's great color, Annick. And in terms of capacity, obviously, you stated the 23% increase with four more planes this winter. And looking at the peers, it looks like the winter is bullish, but when we look at Air Canada, Flair, and Lynx, which they will be increasing, offering also by a significant amount of seats. So it seems that the industry is getting more disciplined, maybe, but how would you say the market dynamics evolve overall? You made great color about the pent-up demand that will be there for a few years, but what makes you confident that the industry will stay disciplined given the increased capacity and new players in the Canadian market?
... Yeah. So of course, we're looking at more precisely in the markets where we operate, so especially in Quebec, Maritimes, and Ontario. We see big increases in Western Canada with WestJet, Sunwing, Flair has developed in Western Canada as well. On our side, we're focusing on our key niche routes. This is where we are deploying most of our capacity, where we know we can win, both on South and Europe. So we don't see overcapacity for next winter. We're pretty much comfortable that our program's gonna be able to generate, you know, good results. And it's still. There's still movements happening in the market right now. And we saw movements, you know, in even during summer over the last months as some players, lack of aircraft.
So we'll see what's gonna happen. There's still movement, and we'll see. But overall, we see that there's an imbalance between demand and offer.
That, that's great. And assuming obviously, a very solid yield for this upcoming winter and also taking into account-
Yeah.
The capacity increase, how should we be thinking about the margin outlook for fiscal year 2024, given that you raised the profile to 7.5%-8%? Just wondering what could be achievable, let's say, with still a very constructive outlook for fiscal year 2024, given what you could report in fiscal year 2023.
Yeah, Benoit, we as we previously guided, we think this company will achieve double-digit margin in the medium term. If we're thinking precisely about 2024, we're looking forward to sharing more color on our next quarterly call. But obviously, when you look at where we'll end up this year, again, we're talking about 7.5%-8%, and then, you know, you could draw the line between there and where we'll achieve. But we'll provide greater color, Benoit, as we enter Q4.
Okay. Last one for me. There's been some reports that Canadian airlines are having trouble hiring pilots. Can you talk more about how this compares versus historical range?
Yes. Well, pilot shortage, of course, is an ongoing challenge for the industry. On our side, we are actively hiring pilots primarily to support our growth ambition, of course, and to fill in for upcoming retirements over the next years. Things are going well so far. In addition, we are also currently reviewing and revamping our pilot recruitment and training programs to make them more attractive, more competitive. But so far, we've been able to manage this challenge, which, as I said, is an industry challenge.
Okay, perfect. Thank you very much for the time, and congrats again.
Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Tim James from TD Cowen. Please go ahead.
Thank you, and good morning, everyone. Just wanna think about capacity for fiscal 2024. Just in general terms, do you see the allocation of capacity by market next year tracking somewhat in line with what you will do for fiscal 2023? And I'm thinking specifically about the pie graphs that are on page 6 of the current presentation, where you show some destination, transatlantic, transborder, and domestic, and you give kind of the share of capacity. If we kind of look forward to fiscal 2024, would that pie graph and the allocation of capacity look pretty similar? Or do you see, you know, one particular market attracting greater growth in capacity when you think about next year?
Yes. Well, we're seeing. When we look at the share per market, we're seeing a very similar picture to 2019. So we haven't seen big changes from one market to the other. It's pretty similar.
So for example, I know, like, you know, transborder is running your transborder capacity, and I know it's very small. I'm just using that as an example here. But transborder capacity is up dramatically versus 2019, at least in Q3 it was. You know, sun destination is up 20%, transatlantic is down 19%. So the allocation is clearly in this quarter somewhat different than it was in 2019. Is the current allocation kind of continuing forward, or do you think these differences versus 2019 will kind of be eliminated as we go into fiscal 2024?
Well, the domestic and the US market are very small for us, so any changes in percentage, of course, is not extremely meaningful. Our main focus is really, and it has been since we've relaunched the operation post-pandemic, to increase first on the Atlantic market, which is our key market, our most profitable market, and this is where we will be increasing in terms of percentage. This is where our growth will be for next year and the upcoming years. We're also increasing our presence in the South Market, especially in shoulder season, to reduce seasonality and increase overall aircraft utilization. So everything, in the way we deploy capacity, everything is around making our network and the use of our assets more efficient, and this is how we make our decisions around the network development.
Okay, great. Thank you very much.
There are no further questions at this time. I will turn the call back over to the presenters for closing remarks.
Well, very well. Thank you, everyone. Let me remind you that our Q4 results will be released on December 14, 2023. Thank you, and have a nice day.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.