Chorus Aviation Announces First Quarter 2019 Financial Results

Delivering regional aviation to the world

Q1 Financial Highlights and Year-to-Date Accomplishments

  • Net income of $33.4 million, inclusive of an unrealized foreign exchange gain of $16.8 million.
  • Adjusted net income1 of $19.0 million, or $0.13 per basic share.
  • Adjusted EBITDA1 of $74.7 million, a decrease of $2.9 million inclusive of the changes under the amended capacity purchase agreement (‘CPA’) and a $7.7 million quarter-over-quarter increase in stock-based compensation due to the strengthening of the share price.
  • Amended and extended the CPA with Air Canada to 2035.
  • Achieved an unprecedented 17-year collective agreement with Jazz pilots.
  • Completed a $97.26 million equity investment by Air Canada to enable fleet modernization and leasing growth.
  • Entered into a firm purchase agreement with Bombardier for nine CRJ900s.
  • Secured US $300.0 million credit facility to support the growth of the Regional Aircraft Leasing segment.
  • Diversified and grew the Regional Aircraft Leasing fleet to 45 regional aircraft acquired at approximately US $960.0 million inclusive of 10 transactions pending completion*.
  • Re-aligned executive team to support further growth and diversification.

HALIFAX, May 8, 2019 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced first quarter 2019 financial results.  

"Our financial performance in the first quarter of 2019 met our expectations with operating income being relatively consistent with the same period in 2018," stated Joe Randell, President and Chief Executive Officer, Chorus. "In the quarter we generated $74.7 million in adjusted EBITDA and net income of $33.4 million, inclusive of an unrealized foreign exchange gain of $16.8 million.

I’m very pleased with the execution of our growth and diversification strategy, which continues to build on the momentum achieved in 2018. Our strengthened partnership with Air Canada was a pivotal development in our transformation, securing Jazz’s place in the Air Canada Express network for an unprecedented 17 years to the end of 2035. The implementation of the amended CPA is progressing well, and we expect Jazz’s fleet modernization to commence with the delivery of five CRJ900s, leased from Air Canada, beginning in June.

In less than five months we’ve grown our third-party leasing portfolio by 11 aircraft and welcomed SpiceJet as a new customer.  India is one of the fastest-growing air travel markets in the world, and we’re pleased to add this award-winning and growing airline to our portfolio of lessees. Once all pending deliveries have been completed, we’ll have grown our portfolio to 45 aircraft acquired at approximately US $960.0 million with nearly US $745.0 million in future contract lease revenue. When combined with the 47 aircraft leased under the CPA, our fleet of leased aircraft has reached 92* aircraft with a net book value of approximately US $1.6 billion.

We’re maturing and building scale as a worldwide lessor.  Our core business with Air Canada is established for the long term; we’re now focusing more deeply on leveraging our vast expertise in regional operations to secure further growth.  The recent re-alignment of our chief executives places further emphasis on strategic and corporate planning to bolster our lines of business.

We are well positioned for the future. I extend my sincere thanks and gratitude to the Chorus team for these significant accomplishments," concluded Mr. Randell.

* Of the 10 pending transactions as at March 31, 2019, three aircraft were received prior to May 8, 2019.


Financial Performance – first quarter 2019 compared to first quarter 2018

In the first quarter of 2019, Chorus reported adjusted EBITDA of $74.7 million a decrease of $2.9 million or 3.7% relative to the first quarter of 2018.

The Regional Aviation Services segment decreased by $9.3 million quarter-over-quarter.  The results of the first quarter of 2019 reflect the 2019 CPA Amendments which reduced the fixed margin and incentive revenue as Chorus moves to market-based compensation rates. These reductions were offset by the implementation of the controllable cost guardrails that mitigated the expected first quarter CPA margin shortfall related to reduced fees.  Beyond the changes related to the amended CPA, the first quarter results were impacted by:

  • increased stock-based compensation of $7.7 million due to the strengthening of the share price;
  • decreased capitalization of major maintenance overhauls on owned CPA aircraft over the previous period; offset by
  • increased aircraft leasing under the CPA.

The decrease in the Regional Aviation Services segment was partially offset by an increase of $6.5 million in the Regional Aircraft Leasing segment related to the growth in aircraft acquired and under lease.

Adjusted net income was $19.0 million for the period, a decrease from 2018 of $7.7 million or 28.6% due to:

  • the $2.9 million decrease in adjusted EBITDA previously described;
  • an increase in depreciation of $3.1 million related to additional aircraft in the regional aircraft leasing segment;
  • an increase in interest costs of $1.9 million related to additional aircraft debt; offset by other of $0.2 million.

Net income was $33.4 million for the period, an increase of $28.2 million over 2018.  The increase was primarily due to the quarter-over-quarter change in unrealized foreign exchange gains on long-term debt of $34.7 million and decreased employee separation program costs of $3.1 million; offset by the previously noted $7.7 million decrease in adjusted net income and one-time signing bonuses of $2.0 million related to changes to the Jazz  pilot collective agreement.


(See cautionary statement regarding forward-looking information below)

On February 4, 2019, the 2019 CPA amendments became effective on a retroactive basis to January 1, 2019. Further information concerning the 2019 CPA amendments and Air Canada’s investment is contained in the Corporation’s Material Change Reports dated January 24, 2019 and February 13, 2019, which are available on SEDAR at The 2019 CPA amendments resulted in a near-term reduction in fixed fees starting in 2019, as Chorus accelerates its transition to market-based rates.  The reduction was implemented by eliminating the Infrastructure Fee per Covered Aircraft and the Fixed Margin per Covered Aircraft which were replaced with a single Fixed Margin. As a result, Fixed Fee revenue in each of 2019 and 2020 is anticipated to be $75.5 million per year as compared to $111.3 million in 2018. In addition, the maximum future available performance incentives reduce from $23.4 million in 2019 and 2020 to an annual average maximum available amount of $3.4 million for the full term of the CPA. The near-term reductions are more than offset over the term of the CPA by incremental contracted revenue secured with the extension of the agreement including fixed fees and aircraft leasing.

Since the start of 2017, Chorus has raised net proceeds of CA $401.0 million in capital from both the issuance of convertible units and shares**, which if levered at 3:1 provides approximately $1.6 billion of investment capital.  As at March 31, 2019, Chorus has invested approximately 75% of this capital. As of May 8, 2019, Chorus’ total committed available capital was approximately 90%. Chorus anticipates committing the remaining balance by early 2020 in new to mid-life aircraft with long-term leases to a diverse group of high-quality customers located around the world. 

Capital expenditures for 2019, excluding those for the acquisition of aircraft and the Extended Service Program (‘ESP’), and including capitalized major maintenance overhauls, are expected to be between $34.0 million and $40.0 million. Aircraft related acquisitions and the extended service program capital expenditures in 2019 are expected to be between $428.0 million and $433.0 million. This excludes any potential additional investments in third-party aircraft beyond what has been announced to date. As a result of the fleet changes associated with the 2019 CPA amendments, the eight ESPs planned for 2019 has reduced to four. The remaining seven ESPs will be completed by 2022.

**Shares refers to Chorus’ Class A Variable Voting Shares and Class B Voting Shares 

Investor Conference Call / Audio Webcast

Chorus will hold an analyst call at 10:00 a.m. ET on Wednesday, May 8, 2019 to discuss the first quarter 2019 financial results. The call may be accessed by dialing 1-888-231-8191. The call will be simultaneously audio webcast via: 
This is a listen-in only audio webcast.  Media Player or Real Player is required to listen to the broadcast; please download well in advance of the call.

The conference call webcast will be archived on Chorus’ website at under Reports > Executive Management Presentations.  A playback of the call can also be accessed until midnight ET, May 16, 2019 by dialing toll-free 1-855-859-2056, and passcode 6896463#.


This news release references several non-GAAP financial measures to supplement the analysis of Chorus’ results.  These measures are provided to enhance the reader’s understanding of our current financial performance.  They are included to provide investors and management with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a consistent basis for comparison between periods.  These non-GAAP measures are not recognized measures under GAAP, and therefore they are unlikely to be comparable to similar measures presented by other companies. A reconciliation of these non-GAAP measures to their nearest GAAP measure is provided in the Management’s Discussion and Analysis dated May 7, 2019.

Adjusted net income and Adjusted net income per Share are used by Chorus to assess performance without the effects of unrealized foreign exchange gains or losses on long-term debt and finance leases related to aircraft, foreign exchange gains or losses on cash held on deposit for investment in the regional aircraft leasing business, one-time signing bonuses, employee separation program costs and strategic advisory fees.  Chorus manages its exposure to currency risk on such long-term debt by billing the lease payments within the CPA in the underlying currency (US dollars) related to the aircraft debt.  These items are excluded because they affect the comparability of our financial results, period-over-period, and could potentially distort the analysis of trends in business performance.  Excluding these items does not imply they are non-recurring due to ongoing currency fluctuations between the Canadian and US dollar.

EBITDA is defined as earnings before net interest expense, income taxes, and depreciation and amortization and is a non-GAAP financial measure that is used frequently by companies in the aviation industry as a measure of performance.  Adjusted EBITDA (EBITDA before one-time signing bonuses, employee separation program costs, strategic advisory fees and other items such as foreign exchange gains or losses) is a non-GAAP financial measure used by Chorus as a supplemental financial measure of operational performance.  Management believes Adjusted EBITDA assists investors in comparing Chorus’ performance by excluding items, which it does not believe will occur over the longer-term (such as one-time signing bonuses, employee separation program costs and strategic advisory fees) as well, which items that are non-cash in nature such as foreign exchange gains and losses.

Adjusted EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statements of cash flows, forming part of Chorus’ financial statements.

About Chorus Aviation Inc.

Headquartered in Halifax, Nova Scotia, Chorus was incorporated on September 27, 2010. Chorus’ vision is to deliver regional aviation to the world. Chorus has been leasing its owned regional aircraft into Jazz’s Air Canada Express operation since 2011, and established Chorus Aviation Capital to become a leading, global provider of regional aircraft leases. Chorus also owns Jazz Aviation LP and Voyageur Aviation Corp. – companies that have long histories of safe and solid operations that deliver excellent customer service in the areas of contract flying operations, engineering, fleet management, and maintenance, repair and overhaul.  Together, the Chorus group of companies can provide a full suite of regional aviation support services. Chorus Class A Variable Voting Shares and Class B Voting Shares trade on the Toronto Stock Exchange under the trading symbol ‘CHR’.


Consolidated Financial Analysis


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These are non-GAAP financial measures – refer to Section 17 for disclosures on Non-GAAP financial measures.


Forward-Looking Information

This news release contains ‘forward-looking information’. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "potential", "project", "will", "would", and similar terms and phrases, including references to assumptions. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those indicated in the forward-looking information. Actual results may differ materially from results indicated in forward-looking information for a number of reasons, including those identified in Chorus’ public disclosure record available at and the risk factors identified in Chorus’ Annual Information Form dated February 21, 2019. Statements containing forward-looking information in this news release represent Chorus’ expectations as of the date of this news release (or as of the date they are otherwise stated to be made) and are subject to change after such date. Chorus disclaims any intention or obligation to update or revise such statements to reflect new information, subsequent events or otherwise, unless required by applicable securities laws.


SOURCE Chorus Aviation Inc.