MONTREAL — Transat AT Inc. says it has sold a piece of land in Mexico to resort company Finest Resorts for US$38 million.
The travel company says the sale is part of its plan to focus on its airline business as it tries to return to profitability after more than three years of losses.
Transat noted it announced in 2018 that it bought the land as part of the development of a hotel subsidiary which it discontinued in 2021.
It says proceeds of the sale of the property in Puerto Morelos will be used to repay debt, which totalled $1.92 billion at the end of its second quarter on April 30.
Finest Resorts owns and operates Finest Playa Mujeres in Cancun, Mexico, and Finest Punta Cana, in the Dominican Republic.
The sale is expected to close in Transat's fourth quarter.
The deal will bring the company annual savings of about $6 million, "which is significant," Desjardins analyst Benoit Poirier said in a note to investors.
"Transat is starting to approach a turning point," Poirier said.
However, he said that "additional signs of execution" on a long-term strategic plan are needed, given Transat's "elevated indebtedness" and fuel price volatility.
This report by The Canadian Press was first published July 10, 2023.
Companies in this story: (TSX:TRZ)
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