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[Foreign Language] Good morning, ladies and gentlemen. Welcome to the Transat conference call. [Foreign Language] This call is being recorded. [Foreign Language]
I would now like to turn the meeting over to Mr. Christophe Hennebelle, Vice President, Corporate Affairs. Mr. Hennebelle, [Foreign Language], please go ahead.
Thank you, Frank. Hi, everyone, and welcome to the Transat conference call for the presentation of the financial results of the third quarter ended July 31, 2022. I'm here with Annick Guerard, President and CEO; and Patrick Bui, CFO. Annick will provide our comments and observations on the situation and on the operational and commercial plans for the future before Patrick reviews the financial results in more details.
We will then answer questions from financial analysts. As usual, questions from journalists will 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 these forward looking
[Technical Difficulty]
[Foreign Language]
Okay. Where did you lose me? Okay. I'll continue there. Can you hear me now, Frank?
Yes, we can.
Okay. Today's call contains forward-looking statements. There are risks that actual results will differ materially from those contemplated by these forward-looking statements. For additional information on such risks, we invite you to consult our filings with the Canadian Securities Commission. Forward-looking statements represent Transat's expectations as at September 8, 2022, and accordingly, are subject to change after such date. However, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.
Finally, we may refer to IFRS or 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 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 annual reports and our investor presentation.
With that, let me turn the call over to Annick for opening remarks.
Good morning, everyone. Our third quarter of 2022 was characterized by the stabilization of our operations, constant efforts to optimize our fleet utilization and by an encouraging return to profitability in July. I will share with you the highlights of the past quarter.
Our revenues at $508 million or 73% of those of the same quarter in 2019. Our customers have clearly decided to travel again and the surge in traveler number that we have seen since the previous quarter is now well established. Our load factors have increased month after month. On the Atlantic market, for instance, they increased by 10 points every month from 68% in May to 88% in July. Our capacity will reach 92% of 2019 level in Q4 against 82% in the third quarter. At the moment, we're still taking significant bookings for the rest of the summer. We're also seeing strong booking trends for this upcoming winter, both on South and European destinations and prices remain above 2019 level.
After 2 years of deprivation, we believe that travel has become for many a necessity rather than a discretionary expense. The need to get away and reconnect with the world has become essential. Moreover, savings and consumption levels remain high, which leads us to be confident about future demand. Of course, we remain cautious given the uncertainty surrounding the economy, and this drives us to take a moderate and disciplined approach towards our growth.
Our return to operations after the pandemic was not easy. And like all industry players, we have been impacted by the complicated restart of the entire global aviation ecosystem. Thanks to outstanding commitment by our teams and cautious planning, including careful management of our capacity, we have succeeded in limiting the impact on our passengers, and we were able to operate 96% of our total capacity. That said, every delay, every misplaced luggage and every long waiting time at our customer care center that affects our clients is unacceptable to us.
We, again, sincerely apologize to every customer who lately has flown on our wings and we have not received a flawless service to which they are accustomed. We are continuing to dedicate all our energy every day to reducing the impact of disruptions, and we're moving closer every day to a normal seamless operational situation.
The beginning of Q3 saw the reopening of several transatlantic routes that we have suspended for 2 years. This strong recovery in activity over a very short period of time resulted in slight loads below our historical averages for the month of May and June. During those 2 months, we recalled our employees still on furlough and retrain our crews so that we are not able to operate at full capacity. That effort, of course, apart from contributing to the operational hiccups mentioned, also put pressure on our cost. These factors were gradually resolved in July when operations return to full capacity and our overall load factor reached 87.7%. Increased fuel price cost us about $103 million this quarter when compared to 2021 levels.
On the other hand, sales prices are up, reflecting the extra demand and the consumers' willingness to pay more for their trip. As we expect fuel prices to remain high, we are continuing to make every effort to mitigate the impact of that cost increase on our bottom line. We're continuing to roll out our strategic plan. In the third quarter, we have made a headway on the network and fleet management fronts. First, we have operationalized our first codeshare agreement with WestJet and signed another code share agreement with Porter Airlines, a first phase, which will take effect in the fall.
We've taken delivery of 2 additional A321LRs, which brings us to a total of 12, and we will receive another 5 in 2023 and 2024. The cost per kilometer and resulting CO2 per kilometer of operating an Airbus 321LR on transatlantic routes make it the most efficient aircraft on that market. This week, we finalized an order for 4 A321XLRs 3 firm orders for 2025 and 2026 with an option for 2027. The XLR will bring us the same advantages as the LR, but with an extended range, improving the number of frequencies and destinations such as Venice, Rome and Barcelona. It will also allow us to offer European destination all year long, while reducing the risk compared to A330 operation, specifically during the winter season.
This quarter, we also received Transport Canada approval for Mixed Fleet Flying, allowing our pilots to seamlessly operate all of our aircraft types and thus optimize operation. We are the only airline in North America to have the certification which will notably allow us to increase flexibility of scheduling and training of flight crew improving overall cost efficiency.
We can already measure the impact of our network and fleet redesign as our aircraft utilization this summer is tracking 10% higher than in 2018. It is forecasted to be up by 23% next winter compared to winter of 2019. And we pursue -- as we pursue a moderate and cautious pace of growth in first and foremost at reinforcing our presence on the strongest market.
On the cash front, we announced in July that we had secured $100 million in additional liquidity through the LEEFF program and reached agreement with our lenders to defer our April 2023 maturities, along with the deadline for meeting certain financial covenants. This gives us the additional resilience to see the restart period through if we encounter more turbulence ahead. As Patrick will detail in a moment, we have a significant amount in cash -- of cash in hand and our customer deposits have returned to a level close to that of 2019. I also want to emphasize that last June, we renewed our Travelife certification acquired in 2018.
We passed the audit with flying colors. That is a testimony to our dedication to sustainability, which we intend to reinforce further in the years to come. In addition to our existing offtake agreement with SAF+ Consortium for a major part of the production of electro sustainable aviation fuel, we are now focusing specifically on creating a clear path to decarbonization. In a nutshell, we are looking at the future with ever increasing confidence. We are close to having recovered our volumes while our operations have been rebuilt to scale and we're continuing to fine-tune them to ensure their smooth running ahead. With the cash reserves we need to make us resilient for the future and with a fleet now perfectly suited to our needs, we're continuing to roll out our strategic plan and are now zero in a return to profitability.
Our priorities in the next -- in the near future are clear. First, maximize the use of our fleet, increasing utilization quarter after quarter. Two, be disciplined in our growth by pursuing our development in a sustainable manner in markets where we can maintain a strong presence and have a competitive advantage. Three, optimize revenues from booking of seat and ancillary products. Four, once again offer exceptional service to our customer; and five, develop the best team in the industry. These priorities, along with strategic efforts being made towards reinforcing our network will enable us to return to profitability.
Despite May and June still being heavily impacted by a costly recovery, we ended the quarter with a positive result in July, our first profitable month in 2 years. We are confident that the worst is now behind us and that all the changes we are putting in place will allow us to reach our objectives and bring this company to its full potential.
Patrick will now give you more details about our financials.
Thank you, Annick, and Good morning, everyone. Our third quarter of 2022 started off with a rather soft month of May. While we were reopening many transatlantic routes and ramping up our operations, the fuel price environment was highly volatile with some days peaking at close to USD 7 per gallon. As the quarter progressed, our operations picked up nicely and fuel prices became less volatile, although high culminating in a profitable month of July. Looking forward, despite the price of WTI decreasing, we see crack spreads for which we are unhedged remaining high. All in all, despite coming off their all-time highs, we expect fuel prices to continue impacting our profitability in the fourth quarter. In the meantime, our booking trends remain solid. As you can see in the investor presentation posted online -- since mid-May, booking levels for the summer season have been consistently above 2019 levels on average 9% higher. And as mentioned by Annick, we see strong momentum for the upcoming winter season.
From a financing perspective, our focus in the past few months has been on building the resiliency and flexibility required to navigate through these yes, improving but chaotic times. On July 29, we secured an additional $100 million facility with the Government of Canada with a contingent $50 million facility. As we always do, we will manage our cash very diligently with the objective of minimizing usage of this new facility. Furthermore, we have deferred the maturity dates on 2 facilities by 1 year, so from April 2023 to April 2024 and the date by which the company must meet certain financial covenants by 1 year, October 2022 to October 2023. These extensions will provide further runway and flexibility as we focus on our strategic plan. Including the additional voucher facility and amendments announced last March, we are confident we came to the right solutions, and we consider our objective of delivering near-term financial flexibility as complete.
We can now turn our attention to optimizing the capital structure and planning for deleveraging. We believe deleveraging will come from a combination of improved profitability/cash generation, improved working capital dynamics and refinancing with instruments that will reduce our financial burden. With respect to cash burn, as we mentioned during our prior quarterly call, cash burn increased during the shoulder period, May and June, but stabilized during the month of July. For the quarter, our cash burn was $67 million, but immediately after the cutoff date of July 31, we received funds from our credit card processors totaling $45 million related to revenues in our third quarter.
Earlier this week, we announced a partnership with Nuvei, a Montreal-based payment processor who will not only expand payment options we can offer to our customers, but also improve the management of our working capital by delivering funds to us in a frictionless, timely and secure manner. Finally, in the quarter, as you may have seen in our press release, we came to a favorable agreement with the Canada Revenue Agency on the tax treatment with respect to the deductibility of losses on asset-backed commercial paper. This is a dispute that dates back to 2007, 2008. We expect provincial tax authorities to follow suit and inclusive of interest, this could translate into receiving close to $22 million by the end of the calendar year.
And now with respect to our Q3 results. Revenue stood at $508 million, up from $13 million in 2021. As a reminder, in Q3 of 2021, we only had 2 days of operations. Our third quarter revenues were driven by the recovery of our activities with capacity heading towards 2019 levels. The gradual return of demand, combined with higher fuel prices contributed to an increase in our average selling price. Adjusted EBITDA was negative $58 million for the quarter compared with negative $51 million in 2021.
The significant increase in fuel prices greatly dampened the improvement in our performance by $103 million. However, strong pricing partially offset the higher fuel costs. Our costs during the quarter also included costs relating to ramping up our operations for the summer peak as well as costs associated with flight disruptions. Adjusted net loss was $121 million compared with $116 million last year. And as per our financial statements, net loss was $106 million compared to $138 million last year, a $32 million improvement. This includes a $50 million gain related to the revaluation of the liability related to warrants compared to a revaluation loss of $9 million in 2021.
Our Q3 loss also included a foreign exchange gain of $2 million, mainly from the favorable exchange effect on lease liabilities related to aircraft compared to a foreign exchange loss of $16 million in 2021 and a $7 million loss related to the change in fair value of field-related and other derivatives compared to a $2 million gain in 2021.
And now with respect to our balance sheet. As at July 31, the corporation's cash and cash equivalents remained solid at $411 million with undrawn facilities of $100 million for a total unrestricted liquidity of $511 million. Cash and trust and otherwise reserved totaled $213 million, while deposits for future travel stood at $586 million. After reimbursing more than $500 million of travel credits in the past 18 months, we were able to rebuild 96% of our pre-pandemic client's deposits, so that's comparing to Q3 2019, reflecting the strong recovery in demand.
The draw downs on our credit facilities totaled $863 million compared to $859 million last quarter. So virtually no additional drawings in the quarter saved $4 million for administrative purposes. And obviously, our new $100 million facility remains undrawn. Lease liabilities stood at $1,047 million, which includes 12 A321LRs, 2 of which were delivered during the quarter.
Our balance sheet agreements, excluding agreements with suppliers, stood at $749 million, which is an undiscounted figure, mainly related to the 5 Airbus A321LRs yet to be delivered as at July 31. And as Annick mentioned, includes the recently signed agreement for the delivery of 4XLRs, under firm orders and 1 option.
So in summer, we capped off Q3 on a positive note with a strong showing in July. Despite heightened fuel prices, leading indicators, whether booking levels or client deposits suggest the business has strong momentum. Thank you.
Frank, we are now ready to take questions.
[Operator Instructions] [Foreign Language] Our first question comes from Konark Gupta with Scotiabank.
So I just wanted to confirm, I think you guys said July ended up profitable for you, but positive net cash flow. So I'm just wondering, what is the magnitude of the operating margin you saw in July on adjusted basis? And what kind of margins would you be expecting for the remaining summer?
Yes. So we don't -- not to deviate from the question, but we don't provide monthly figures. We do report them on a quarterly basis. We did this time, exceptionally provide color on a month-to-month basis to show the progression during the quarter, but we don't provide monthly figures, Konark.
Okay. No, worries Patrick. But if you can provide any color directionally, how should we think about the next 4, 5 months. So you have August and September being still strong months of the summer. And then October, November are shoulder months. So would you expect the profitability, assuming fuel stays flat, profitability should be higher in August, September and lower October, November?
Yes. So the way we dissect it, if you look at July, we considered in our peak season. So July is again profitable from an EBITDA perspective, net income and from a cash perspective. You look at Q4, I mean, you wouldn't be surprised to hear that August is also considered a month in our peak season. So August, in many respects, look at July in terms of level of activity. September, October is the start of what we qualify as our shoulder season. And so level of activity is a little bit more subdued there.
And when you think about cash conversion, these are 2 months where we do pay large payables from the summer, but also in terms of cash, all the bookings we take is a disproportionate mix in packages of packages. And so a lot of the cash does remain in trust. So in terms of fuel, we think fuel has become less volatile. But when you look at the trend, if the WTI is decreasing, crack spreads have remained quite elevated. And so we expect that to continue and at least in our planning for the fourth quarter and hope to have nice dynamics in terms of pricing to alleviate some of the pressure on the elevated crack spreads.
Then moving on to the future beyond summer for the winter outlook. So it sounds like from your disclosures that the sun market revenue is tracking ahead of 2019 at this point. What are you expecting or what are you seeing early on in terms of revenue or demand for transatlantic, domestic or transporter markets you have in the winters?
So yes, we saw a similar pace on average for winter compared to 2019. The sun market is going well with higher pricing, and we are seeing strong demand as well on the European market. In terms of domestic and transborder, this is a more a last-minute market. So right now, we are pacing a similar trend than a little bit behind versus 2019. At the same time, we have more capacity in the market. So we are being careful, especially with the last minute trend in terms of bookings that we've seen over the last year. So, so far, so good. We are confident that we're going to have a good venture. However, of course, there are things that we do not control including what would happen if restrictions would be put at the frontiers, the borders by the Canadian government in case of a surge of a COVID. And probably, this will not happen. And if it doesn't, we should be okay for next winter.
Okay. And a last one before I am done or, what is the intention behind getting another $100 million credit facility under LEEFF? I know you haven't drawn anything on that, but it seems just like adding your financial flexibility. Is there anything you plan for using this facility for?
Yes, it's a good question and a fair question. Again, when you look forward, these are unprecedented times. What lies ahead in the fall, hard to say. And so it's important that we have all the resiliency that is necessary. As I mentioned in my opening remarks, we do manage cash very carefully. We have some scenarios of the future that may pull on that line of credit. But again, it is additional debt, and we want to manage cash carefully. And our intent is to minimize as much as possible usage on that facility.
Yes. And with what we see right now in the pent-up demand in the upcoming months, we believe that we will not have to use it, but we want to be careful and cautious. We never know what's going to happen with COVID. So we had it on our side in case.
Our next question comes from Benoit Poirier with Desjardins Securities.
Yes. Just to come back on the cash burn, how should we be thinking in terms of burn rate for the upcoming quarter? And maybe if you could provide more color about the timing to achieve a positive cash generation on a quarterly basis, that would be great?
Yes. So the -- what we could say for Q4, and I might slightly sound like a broken record, Benoit. But August, again, peak season. And so you could look at July. And July, we stabilized the cash burn and arguably marginally positive. If you enter September and October, those are sales shoulder months. Nothing special this year or during the pandemic. We've never been cash flow positive during September and October. You can expect some cash burn in September, October. So now we're talking about seasonality and really month-to-month. When you look at an annual basis, what we've been saying and we're staying on that path is we expect to be cash flow positive by 2024 at the latest. And so we do still have a few bumpy quarters ahead. And this is why we have an elevated cash position as we stand today. This is also why we have an additional flexibility with $100 million. But to return on a steady state cash flow positive annual basis, you'd have to look more to 2024 at the latest, Benoit.
Okay. And could you speak a little bit more about the Nuvei partnership and what it brings to Transat. I'm just wondering whether it opens up the airline to a younger generation and whether it helps on the cybersecurity and pro detection given some issues we've seen with some other companies.
Yes. Look, I mean, we maintain a lot of partnerships. We have many credit card processors in our ecosystem. We have many sales channels. We value the current partnerships that we have today. But as any company, we're always on the lookout for the most, if I could say, innovative players in the industry. Nuvei has struck us as someone who could innovate. So what that means is providing new payment solutions to our customers. When you think about Apple Pay, Google Pay, PayPal, that type of payments that caters to the younger generation for sure.
Nuvei happens to be a local company like us and certainly something that we like and appreciate. But from another perspective as well during the pandemic, and it's nothing directly related to us, but a lot of credit card processors slowed down remittances to the companies just during the pandemic. And we think Nuvei will can accelerate and help us in the management of our working capital, deliver the cash on a frictionless, timely manner. And you mentioned as well in a secure manner. And so we believe that Nuvei has what it takes to process payments in a secure manner in an environment where we all understand it's a big focus.
Okay. Perfect. And we've seen new regulation from the CTA effective September 8 that will require carriers to either refund passenger or repo them if a flight is canceled or delayed by 3 hours or more. So just wondering how does this impact the business moving forward?
Yes. This was -- this will not impact our business moving forward because we already apply all those measures and compensations internally. We've been back to normal operations since last fall of 2021, and we apply all these regulations already.
Okay. And last one for me. We've seen a lot of new low-cost carriers start to appear in Canada, obviously, trying to penetrate the market. So just wondering if you could provide some color about what would prevent against losing market share in the longer term? And whether you've seen a new dynamic with those, obviously, new players?
Yes. Of course, we're always watching what these guys are doing. We are monitoring very closely the development within Canada. So we're talking Flair, Swoop, Lynx, Jetlines -- their development right now is mainly concentrated in the domestic market, and therefore, the impact on Air Transat is limited in the short term. They do not operate on the international market for now. However, Flair and Swoop, so must be closely monitored at this point. They began to expand into the U.S. and the South market. But we have what it takes where we have, we believe… the rules that they are planning to deploy. We have definitely a competitive advantage in terms of market presence and market shares. And so we'll see what the future will reserve for us if they will be able to penetrate the Canadian market.
The Canadian market is very different from the U.S. and the European in terms of density. They are success factors that are [ required ] to be able to succeed at the ULCC and LCC. But we take this, of course, seriously. And in the short midterm, we don't see a strong impact.
Our next question comes from Tim James with TD Securities.
Okay. Forgive me if you covered this, I had to miss a couple of minutes of the call here. But I guess, first of all, the last-minute booking trend that you reported here, does that actually help or hurt your average selling price?
Well, we see less and less -- we still see less booking trends on -- especially on domestic and transborder as for Europe and South we are getting back to similar trends that we had pre-pandemic. In terms of overall performance, it hasn't -- we have been customized over the last year to be able to deal to deal with those last minute trends, and we have adjusted the way we do revenue management overall. However -- so we haven't seen a negative effect to that. What it requires, though, is to be much more patient before making any program changes. So we need to be patient. We need to anticipate that bookings will -- will come later. However, we've been able, over the last -- especially over the last 3 months to yield on almost every flight that we have had. So we have adjusted our historical curves of bookings for this summer. However, as we see this moving into the future, we are coming back to similar trends that we had prepandemic. So we will readjust our curves again.
And so does that move back towards normalized booking curves. Does that does that bias your average selling price lower? I guess maybe the ultimate question is are you getting higher selling prices to -- on closer in bookings or higher selling prices on bookings that are further out or in [ group and further ] advanced?
It doesn't -- it's not a question of maximizing overall revenues on board depending on the different classes. So we start the pricing low and we yield up to departure by anticipating the number of bookings that will be made in the different periods. So it doesn't change the way we do that and the -- I would say, the performance -- overall revenue management performance that we have improved over the last 2 years and the tools that we are putting in place, we are able to cope with any changes that are happening right now, the market and optimize revenues, both on seats and [ then selling ] revenues.
Okay. My next question, I'm just wondering if you could talk about any kind of regional trends you're seeing or maybe just a destination basis, any destinations that are showing particular strength, any that may be sort of lagging the recovery and any thoughts you have around that and the future for some of those destinations.
We are seeing very strong demand. We've seen a very strong demand and pickup on European destination, Mediterranean experience, including Greece, Portugal, of course, France, Italy. So these have been very strong, like always, and you have Paris and London that keep being among the most popular destinations. What we've seen differently, I would say this year is a little bit more demand for self-destination. I think that following 2 years of pandemia, people wanted to go and relax in this out. So we saw a surge in the demand for [ sub ] destination.
And the other thing that we're seeing is because we've opened the U.S. market with San Francisco and LA, as well during summer. So the demand for those 2 destinations between Montreal and those 2 definitions were they very good. So this is something, of course, that we would like to continue. But basically, to answer your question, we are seeing the same trends in terms of overall demand than what we were seeing pre-pandemic. There are still some restrictions. Yes. Go ahead.
Sorry, no, you were going to mention some restrictions that are still impeding some destinations. [ Can you ] get that, right?
Yes, there are still some restrictions in place, travel restrictions in place in about 7 to 8 destination, including Canada, which makes it a little bit harder for people, for instance, to travel to Canada. It's complicated. We need to be fully vaccinated and what the definition of being fully vaccinated varies from one country to the other. There are tests that are required in certain destination as well. So that doesn't help in terms of stimulating demand, but more and more as we saw with the U.K. and France over the summer, people -- the countries are relaxing those measures. And hopefully, this will be done in Canada and the U.S. as well shortly.
Okay. And then just my last question, just wondering if you can provide any detail on the timing of the remaining 5 A321 deliveries. You mentioned they're in '23, and I assume you mean calendar '23 and calendar '24. Just sort of could you talk about which half of the year in those years and how many you expect just to give us a bit of a sense of the more specific timing?
Yes. So in terms of the A321LR, we have a just a moment. So we have one that will -- 2 that will arrive next winter. So in the February of 2023, April of 2023, one in May 2023. And then there's going to be 2 additional one, December 23 and January 24. So these are the current dates. However, we need to take into consideration that there's almost always delays that we are negotiating and pushing back. But it's the nature of the industry right now. We can count about maybe 2 or 3 months of delays for each of these deliveries. So that's for the LRs. We might have some additional LRs for 2024. These are being negotiated right now. We had planned to bring XLR for 2024, but the XLR will not be ready, will not be out of the manufacturer in 2024 as it was planned. And therefore, we will take one [indiscernible] 2 XLRs at the end of '25 and 1 LR in mid or for summer 2026 and an option for beginning of 2027.
Our next question comes from Cameron Doerksen with National Bank Financial.
I guess I want to come back to the, I guess, the pricing question, particularly around the upcoming winter. It does sound like pricing is looking pretty solid there. But I'm wondering if you can maybe give us some idea of -- based on the current jet fuel price, how much of that sort of cost headwind are you able to recover from pricing based on what you're seeing so far in the winter bookings?
Yes. I mean, rule of thumb, Cameron, roughly speaking, we could -- we estimate that we could recuperate anywhere between 30% to 40% of the increase in fuel prices through -- sorry, 30% to 40% of the cost increase through higher pricing. So that's what we're seeing and that's what we're expecting going forward.
Okay. That's helpful. And I guess I want to -- maybe a little more detailed question or I just want to get a sense of kind of the cost structure for Transat now that things are kind of fully recovered. I'm not looking for any specific numbers per se. But now that you're kind of back to a level of capacity that you were at in 2019, maybe you can sort of talk about what line items in your cost structure have significantly changed versus 2019? Sort of -- obviously, you've got a more efficient aircraft fleet. But beyond that, what other, I guess, significant structural costs have you taken out of the company? And then maybe you can talk about it in more specifics to the line item by line item.
So overall, well, you just mentioned it in terms of fuel consumption per aircraft per kilometers. Of course, we've been [indiscernible] since we have a younger, more efficient suite. The mix is fine because will allow us to reduce the number of pilots that are required in the time that is required to be [ multiple ] on training. We have reduced significantly our overall fixed cost structures in terms of informing to be able to cover the same level of capacity in the market. And overall, we are able, and so if you look at the upcoming [ nature ], we will be able to offer a capacity of reaching 88% -- 98% for 2019 winter level with 17 aircraft left -- so in terms of fleet derivation where we'll talk about [indiscernible], it is definitely something that is shown as big improvement for.
The other thing is that when we talk about the fleet, we used to have a fleet that was much more older and now in all in terms of maintenance stuff with a younger fleet, of course, for decreasing, and we see this results every month, we are able to reduce the maintenance costs, technical costs that are associated with the freight. We have less -- well, moving up this summer, but we should have less regular operations due to a better flight [ risk or ] reliability. Now this was out of our control during this summer. But moving forward [ in every month fleet remain ], the fleet reliability will be up. And this, of course, will decrease our overall cost.
Okay. No, that's helpful. And you mentioned the ability to fly, I guess, nearly the 2019 capacity level with the fewer aircraft. What about, I guess, total employment level? I mean if we compare the, I guess, sort of go-forward employment level versus 2019, how many fewer employees can you run the business with?
We were saying 10% less. With same capacity. That's an average right now. We are finalizing our number. It might be a little more than that, but that's right now in our estimates, we're at 10% less.
Our next question comes from Kevin Chiang with CIBC World Markets.
Just 2 quick ones for me. Maybe this goes to Patrick. Unrestricted liquidity at $511 million. Just wondering what you think your available liquidity, though, is I assume you wouldn't want to burn through -- you don't look at that full $411 million as that's fully available to you. You probably want some sort of minimum or minimum level or a buffer. Is there a way to think of how much of that $511 million is fully available to Transat?
Yes. I mean that's a very difficult question for any company. What is the minimum-minimum you could go. But when you look at our cash, right, the unrestricted liquidity, I mean that -- we have a lot of cash also that we put it as in the restricted area. So a lot of our cash is, if I could say, pointed out and earmarked as restricted. So when you look at our cash balance, a lot of what's left there is unrestricted in many measures -- and obviously, we have -- you look at our balance sheet as of Q3.
There's a lot of cash that's in receivables as well as we point out. So a lot of that cash will be converted as well in our unrestricted cash portion. Now how low -- if your question is how low can we go in the cash balance, I mean that's -- that's a very difficult question to ask. But we feel a substantial portion of that is unrestricted. Again, number one, because we've already restricted a bunch of cash on our balance sheet. And number two, we have a lot of receivables on our cash as well.
That's helpful. I appreciate answering also a difficult question there. Maybe if I could take [ Tim's ] question and just look at it more if I just kind of narrow into a key KPI, which is your margins. If I just look at your EBITDA margins pre 2019 and use that as a proxy for your IFRS-16 adjusted EBITDA margins. You're talking like in that 5%, 6%, 7% range, I suspect you need that to be much higher to kind of aggressively delever and convert more cash off these earnings. Is there a way to think about where you think margins can go to based on some of the initiatives you've laid out there, Annick, the fleet, the labor efficiency, some of the supplier renegotiations? Is there a way to think of what that margin profile could be when things do stabilize from a network perspective and from maybe a fuel cost perspective.
Yes. Look, it's -- that's a fair question. Obviously, if we need to delever margins need to go to be above what we've seen in recent years and to an additional extent be above what Transat has seen in the past. That is the purpose of our strategic plan that we're refocusing on the airline, reviewing our cost structure, the way we operate as a business, so on and so forth. So we don't guide at this point what is the full EBITDA potential, we think of this business. But you could assume with our strategic plan that once it is executed, that margin apples-to-apples basis will be above what Transat has ever experienced in terms of EBITDA margin.
Okay. That's helpful. And then glad to hear the network disruption you're using and good July there.
There are no further questions at this time.
So let me thank everyone and remind you that our fourth quarter results will be released on the 15th of December 2022. Thanks, and have a nice day.
That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. [Foreign Language]