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CIBC Lowers Transat Price Target to $2.00, Keeps Underperform Rating

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CIBC Capital Markets trimmed its price target on the shares of Transat A.T (TRZ.TO) by $0.20 to $2.00 and maintained its underperform rating after the air carrier reduced its May-October program due to fuel price volatility and regional supply constraints.

The changes imply a ~6% reduction in planned available seat miles (ASMs), driven primarily by frequency adjustments on certain Europe and Caribbean routes, CIBC notes, adding that Transat has also extended its Cuba suspension to October.

"While TRZ does have a fuel hedging policy in place (with more than half of Q2/F26 fuel consumption currently hedged and some additional coverage extending into the summer period), this provides only partial near-term insulation given the magnitude of recent fuel price volatility."

Transat's more limited ability to redeploy capacity to other markets given its network reach and greater exposure to price-sensitive leisure demand, may constrain fare recovery when compared with mainline carriers, CIBC adds.

Price: $2.65, Change: $-0.03, Percent Change: -1.12%

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