Chorus Aviation announces solid first quarter earnings

Delivering regional aviation to the world  

Selected Q1 2018 information:

  • Net income of $5.1 million, or $0.04 per basic share, inclusive of an unrealized foreign exchange loss of $18.0 million.
  • Adjusted net income1 of $26.5 million, or $0.21 per basic share.
  • Increase in Adjusted EBITDA1 of $23.6 million or 43% primarily driven by increased revenue from aircraft leasing.
  • Completed equity raise of approximately $112.0 million in gross proceeds.
  • Completed leasing transaction with Dublin-based CityJet for two CRJ900s.
  • Implemented Dividend Reinvestment Plan offering a 4% discount.
  • Completed the fifth Extended Service Program (‘ESP’) on a Dash 8-300 aircraft.
  • Jazz Airport Services employees, representing approximately 15% of Jazz’s workforce, ratified a new collective agreement with a term to January 2022.

HALIFAX, May 4, 2018 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced solid first quarter financial results for the period ended March 31, 2018.  

"The strong fundamentals of our business delivered solid performance in the first quarter of this year," said Joe Randell, President and Chief Executive Officer, Chorus. "We concentrated on maintaining the momentum achieved in 2017, supporting our vision of delivering regional aviation to the world. Our goal is to acquire new to mid-life, marketable aircraft with brand-name regional airlines that provide a diversified exposure to assets, customers and geographic markets. We were very pleased to welcome Dublin-based CityJet to our growing portfolio of strong regional carriers, bringing our current tally to 10 lessees in less than 16 months.

"In the quarter we successfully completed an equity raise that yielded approximately $107.0 million in net proceeds, bringing the total amount of capital raised to just over $300.0 million since the start of 2017. This capital positions us well to further invest in the growth of our leasing business. We have ongoing active negotiations and continue to have many good opportunities to assess, using our prudent approach.

"Our financial performance in the quarter generated $78.0 million in adjusted EBITDA, a $23.6 million or 43.0% increase over first quarter 2017 due primarily to growth in aircraft leasing.  Adjusted earnings per basic share was $0.21, an increase of $0.08 or 61.5%.

"We were also pleased to complete the fifth extended service program on a Dash 8-300 aircraft that is now contributing to the leasing revenue stream under the CPA with Air Canada. I’d also like to acknowledge our Airport Services group who ratified a new collective agreement that is in effect until January 2022. The Chorus team remains committed to building additional shareholder value and I thank them for their hard work and professionalism,’ concluded Mr. Randell.


Financial Performance – first quarter 2018 compared to first quarter 2017

In the first quarter of 2018, Chorus reported adjusted EBITDA of $78.0 million versus $54.4 million in 2017, an increase of $23.6 million or 43.4%. 

The $23.6 million increase in adjusted EBITDA was primarily driven by:

  • a $13.8 million increase mainly due to the growth in third party regional aircraft leasing;
  • increased aircraft leasing revenue under the Capacity Purchase Agreement (‘CPA’) with Air Canada of $2.3 million;
  • decreased stock-based compensation of $2.2 million;
  • decreased operating costs related to a $1.3 million increase in capitalized labour and maintenance costs on owned aircraft for major maintenance overhauls; and
  • a decrease of $4.9 million in other expenses, offset by a decline of $0.9 million in CPA performance incentive revenue.

Adjusted net income was $26.5 million for the period, an increase from 2017 of $10.4 million, or 64.5%. The change was a result of the $23.6 million increase in adjusted EBITDA previously described, plus a $0.2 million decrease in income taxes, partially offset by:

  • $5.8 million of interest costs related to increased aircraft debt and convertible units; and
  • $7.6 million of additional depreciation primarily related to new aircraft.

Net income was $5.1 million for the period, a decrease of $21.9 million or 81.3% from the same period of 2017. The decrease was due primarily to changes in unrealized foreign exchange losses of $32.2 million, offset by the previously noted $10.4 million increase in the adjusted net income.


(See cautionary statement regarding forward-looking information below)

Chorus is committed to building additional shareholder value by growing regional aircraft leasing revenue, pursuing additional growth opportunities and strengthening the foundational contract flying segment.

Since the start of last year, Chorus has realized net proceeds of $303.0 million through the issuance of convertible debt units in March 2017 and the issuance of common shares1 in March 2018.

When combined with anticipated debt financing at typical ratios of up to three times equity, this capital affords Chorus the ability to invest up to $1.2 billion in the acquisition of aircraft for its leasing business. 

Approximately 50% of this capital has been invested to date and Chorus anticipates investing the balance in 2018 to mid-2019 in new to mid-life aircraft with long-term leases to a diverse group of high quality customers clients located in geographies around the world.

Capital expenditures for 2018, excluding those for the acquisition of aircraft and the ESP, and including capitalized major maintenance overhauls, are expected to be between $44.0 million and $50.0 million. Capital expenditures for ESP and aircraft acquisitions as announced at March 31, 2018, expected to be between $81.0 million and $84.0 million in 2018, and excludes future capital for aircraft acquisitions.  

Based on 2017-2018 winter schedule, the 2018 summer schedule and updated planning assumptions from Air Canada, Billable Block Hours under the CPA for 2018 are expected to be between 360,000 and 375,000 hours based on 116 Covered Aircraft as at December 31, 2018. The actual number of Billable Block Hours for 2018 may vary from this anticipated range due to many factors.


1 ‘Common 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 11:00 a.m. ET on Friday, May 4, 2018 to discuss the first quarter 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 12, 2018 by dialing toll-free 1-855-859-2056, and passcode 3566599#.


This news release references several non-GAAP 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 Management’s Discussion and Analysis (‘MD&A’) dated May 3, 2018.

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, 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. During the first quarter of 2017, Chorus revised its definition of Adjusted net income to exclude the signing bonuses, employee separation program costs, and strategic advisory fees to facilitate transparency and comparability as these items can fluctuate from period to period. In addition, Chorus revised its definition of Adjusted net income to exclude foreign exchange gains or losses on US dollar denominated cash held on deposit for investment in the regional aircraft leasing business. This item is excluded as it relates to a foreign exchange gain or loss on proceeds from the Convertible Units that were converted to US dollars and will be used to invest in long-term and primarily US dollar denominated assets, whose related income is expected to be earned over time. (Refer to Section 20-Forward-looking information)

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 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 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.

During the first quarter of 2017, Chorus revised its definition of Adjusted EBITDA to include signing bonuses, employee separation program costs and strategic advisory fees to facilitate transparency and comparability as these items can fluctuate from period to period. 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


Various Financial Measures


Three months ended March 31,





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Operating income





Non-operating (expenses) income





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Income tax expense





Net income





Add (Deduct) items to get to Adjusted net income(1)

Unrealized foreign exchange loss (gain)





Foreign exchange gain on cash held for deposit




Employee separation program









Adjusted net income(2)





Add (Deduct) items to get to Adjusted EBITDA(1)

Net interest expense





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Depreciation and amortization





Foreign exchange loss





(Gain) loss on disposal of property and equipment









Adjusted EBITDA(2)






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.


This is a non-GAAP measure.  Refer to Section 16 – Non-GAAP Financial Measures.


Forward-Looking Information

This news release should be read in conjunction with Chorus’ unaudited interim condensed and consolidated financial statements for the period ended March 31, 2018, and MD&A dated May 3, 2018 filed with Canadian Securities Administrators (available at

This news release contains ‘forward-looking information’ as defined under applicable Canadian securities legislation. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such information may involve but is not limited to comments with respect to strategies, expectations, planned operations or future actions. Examples of forward-looking information can be found in this news release under the heading "2018 Outlook", and the discussion throughout this news release of Chorus’ expectations for Chorus Aviation Capital’s market potential.

Forward-looking information relates to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and other uncertain events. Forward-looking information, by its nature, is based on assumptions, including those described below, and is subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, external events, changing market conditions and general uncertainties of the business. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed in the forward-looking information. Results indicated in forward-looking information may differ materially from actual results for a number of reasons, including, without limitation: risks relating to Chorus’ economic dependence on and relationship with Air Canada; risks relating to the airline industry (including the international operation of aircraft in developing countries and areas of unrest); aircraft leasing (including the financial condition of lessees, availability of aircraft, access to capital, fluctuations in aircraft market values, competition and political risks); the failure of Chorus or any other party to satisfy conditions precedent to the closing of anticipated transactions; energy prices, general industry, market, credit, and economic conditions (including a severe and prolonged economic downturn which could result in reduced payments under the CPA); increased competition affecting Chorus and/or Air Canada; insurance issues and costs; supply issues and costs; the risk of war, terrorist attacks, aircraft incidents and accidents; fraud, cybersecurity attacks or other criminal behaviour by internal or external parties; epidemic diseases, environmental factors or acts of God; changes in demand due to the seasonal nature of Chorus’ business or general economic conditions; the ability to reduce operating costs and employee counts; the ability of Chorus to secure financing; the ability of Chorus to attract and retain the talent required for its existing operations and future growth; the ability of Chorus to remain in good standing under and to renew and/or replace the CPA and other important contracts; employee relations, labour negotiations or disputes; pension issues and costs; currency exchange and interest rates; debt leverage and restrictive covenants contained in debt facilities; uncertainty of dividend payments; managing growth; changes in laws; adverse regulatory developments or proceedings in countries in which Chorus and its subsidiaries operate or will operate; pending and future litigation and actions by third parties. For a further discussion of risks, please refer to Chorus’ Annual Information Form dated February 14, 2018. The statements containing forward-looking information in this discussion represent Chorus’ expectations as of May 4, 2018, and are subject to change after such date. However, Chorus disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

About Chorus 
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 2009, and has established Chorus Aviation Capital Corp. to become a leading, global provider of regional aircraft leases and support services. Chorus also owns Jazz Aviation and Voyageur Aviation –  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. Chorus Class A Variable Voting and Class B Voting Shares trade on the Toronto Stock Exchange under the trading symbol ‘CHR’.


SOURCE Chorus Aviation Inc.