Chorus Aviation announces strong third quarter earnings

Consistent quarterly profitability since 2006

HALIFAX, Nov. 13, 2014 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR.B CHR.A) today announced its third quarter 2014 earnings.


  • EBITDA1 of $56.2 million.
  • Operating income of $39.4 million.
  • Adjusted net income1 of $29.0 million.
  • Adjusted net income per share1 of $0.24 per basic share.
  • Net income of $11.3 million.
  • Net income per share of $0.09 per basic share.

For the third quarter 2014, Chorus reported EBITDA of $56.2 million compared to $55.8 million in the same quarter 2013, an increase of $0.4 million. Operating income was $39.4 million, $0.2 million higher than the same period 2013. Adjusted net income of $29.0 million or $0.24 per basic share was up by $1.3 million or $0.01 per basic share over the third quarter 2013. Chorus incurred $3.3 million in employee separation program costs in the third quarter versus $0.7 million in the same period in 2013. Chorus has invested $20.5 million in employee separation since the inception of this cost savings program in the first quarter of 2013.

“I’m pleased to share strong financial and operational results again this quarter,” said Joseph Randell, President and Chief Executive Officer, Chorus. “We experienced increases in adjusted earnings per share, operating income and EBITDA over the same period in 2013. The team delivered leading operational performance and our cost reduction initiatives continue to strengthen our bottom line.  Additional shareholder value was created through our normal course issuer bid with the repurchase and cancellation of an additional 252,000 shares in the third quarter.  As of today, we have repurchased for cancellation an aggregate of 4,162,600 since the commencement of our first normal course issuer bid on March 14, 2013.”

For reporting purposes, at each quarter end, Chorus converts its US denominated aircraft debt into equivalent Canadian dollars based on the prevailing exchange rate.  Chorus manages its exposure to currency risk on such long-term debt by billing related lease payments under the Capacity Purchase Agreement (‘CPA’) with Air Canada in the underlying currency (US dollars) related to the aircraft debt. In the third quarter of 2014, Chorus had an unrealized foreign exchange loss of $17.8 million versus an unrealized foreign exchange gain of $8.3 million in the same period of 2013.

Financial Performance –Third Quarter 2014 Compared to Third Quarter 2013

Operating revenue increased from $432.3 million to $432.6 million, representing an increase of $0.3 million or 0.1%. Controllable revenue increased by $8.0 million or 3.0%.  $7.4 million of this increase resulted from rate increases made pursuant to the CPA. The remaining increase of $3.8 million resulted from a favourable US dollar exchange rate.  These increases were offset by decreased billable block hours of $2.6 million, and a $0.6 million decrease in incentives earned under the CPA.

Pass-through revenue decreased by $8.6 million or 5.4% from $160.9 million to $152.2 million, which included a decrease of $8.8 million related to reduced airport and navigation fees and terminal handling services. (Effective January 1, 2014, Air Canada entered into a commercial agreement with the Greater Toronto Airport Authority (‘GTAA’) that encompasses Chorus’ Air Canada Express operations. GTAA costs related to landing, terminal and other airport user fees, which are treated as pass-through costs under the CPA, are now paid directly by Air Canada pursuant to this agreement.) These decreases were offset by a favourable US dollar exchange rate of $0.6 million. The sale of consignment inventory was the primary factor in other revenue increasing by $0.9 million.

Operating expenses increased from $393.0 million to $393.2 million, an increase of $0.2 million. An unfavourable US dollar exchange rate compared to the same period in 2013 increased operating expenses by $3.5 million. Controllable costs increased from $232.1 million to $240.9 million, an increase of $8.8 million or 3.8%. $2.9 million of this controllable cost increase is attributable to an unfavourable US dollar exchange rate. Pass-through costs decreased from $160.9 million to $152.2 million, a decrease of $8.6 million or 5.4%.

Salaries, wages and benefits increased by $1.5 million from $102.2 million to $103.6 million. Adjusted salaries, wages and benefits (adjusted by removing employee separation program costs and capitalized major maintenance overhaul labour costs), which includes pension, incentive compensation and other employee benefits, decreased by $2.7 million.  Employee separation program costs incurred during the three months ended September 30, 2014 were $3.3 million, an increase of $2.5 million over the same period of 2013.  These costs include employee separation program costs of $0.6 million in 2014 related to the commencement of outsourcing of passenger handling services under the applicable collective agreement. Salaries and wages were also affected by a decrease in labour costs being capitalized on owned aircraft for major maintenance overhauls of $1.6 million.

Aircraft maintenance expense increased by $3.7 million from $39.1 million to $42.8 million. The increase was generated by an unfavourable US dollar exchange rate on certain maintenance material purchases of $1.6 million, increased other maintenance costs of $1.9 million, and fewer maintenance costs being capitalized as a result of reduced major maintenance overhauls of $0.7 million.  These increases were offset by decreased Block Hours of $0.5 million

Other expenses increased by $1.7 million from $30.1 million to $31.8 million. The increase was the result of increased general overhead expenses.

Non-operating expenses increased by $23.4 million from a non-operating income of $4.4 million to a non-operating expense of $19.0 million. The weakening of the Canadian dollar during the quarter contributed to a foreign exchange loss of $16.0 million compared to a foreign exchange gain of $7.8 million in the same period last year. Interest expense related to long-term debt increased by $0.6 million.

EBITDA was $56.2 million compared to $55.8 million in 2013, an increase of $0.4 million or 0.7%, producing an EBITDA margin of 13.0%.

Operating income of $39.4 million was up $0.2 million or 0.4% over third quarter 2013 from $39.3 million

Net income for the third quarter of 2014 was $11.3 million or $0.09 per basic share, a decrease of $24.8 million from $36.0 million. On an adjusted basis, net income was $29.0 million or $0.24 per basic share, an increase of $1.3 million from $27.7 million. A reconciliation of these non-GAAP measures to their nearest GAAP measure is provided in Chorus’ Management’s Discussion and Analysis dated November 12, 2014.

Investor Conference Call / Audio Webcast

Chorus will hold an analyst call at 9:30 a.m. ET on Thursday, November 13, 2014 to discuss the third quarter 2014 results.  The call may be accessed by dialing 1-888-231-8191.  The call will be simultaneously audio webcast via: or in the Investor Relations section at 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’ Investor Relations website at  A playback of the call can also be accessed until midnight AT, November 21, 2014, by dialing toll-free 1- 855-859-2056, and passcode 14007303.

1 Non-GAAP Financial Measures
EBITDA (net income before net interest expense, income taxes, depreciation, amortization and other items such as asset impairment and foreign exchange gains or losses) is a non-GAAP financial measure used by Chorus as a supplemental financial measure of operational performance. Management believes EBITDA assists investors in comparing Chorus’ performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost.  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 statement of cash flows, forming part of the financial statements.  

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.  Chorus manages its exposure to currency risk on such long-term debt by billing the lease payments within the CPA in the underlying currency related (US dollars) 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.  While employee separation program costs have not been included within our definition of adjusted net income, it is shown separately to facilitate transparency and comparability.

Forward Looking Statements

This news release should be read in conjunction with Chorus’ unaudited interim condensed consolidated financial statements for the period ended September 30, 2014, and MD&A dated November 12, 2014 filed with Canadian Securities regulatory authorities (available at

Certain statements in this news release may contain statements which are forward-looking. These forward-looking statements are 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 statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions.

Forward-looking statements relate 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 statements, by their nature, are based on assumptions, including those described below, and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to differ materially from those expressed in the forward-looking statements. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks relating to Chorus’ relationship with Air Canada, risks relating to the airline industry, energy prices, general industry, market, credit, and economic conditions, competition, insurance issues and costs, supply issues, war, terrorist attacks, epidemic diseases, environmental factors, acts of God, changes in demand due to the seasonal nature of the business, the ability to reduce operating costs and employee counts, secure financing, employee relations, labour negotiations or disputes, restructuring, pension issues, currency exchange and interest rates, leverage and restructure covenants in future indebtedness, dilution of Chorus shareholders, uncertainty of payments, managing growth, changes in laws, adverse regulatory developments or proceedings, pending and future litigation and actions by third parties. The forward-looking statements contained in this discussion represent Chorus’ expectations as of November 12, 2014, and are subject to change after such date. However, Chorus disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

About Chorus
Headquartered in Halifax, Nova Scotia, Chorus was incorporated on September 27, 2010 and is a dividend-paying holding company with various interests including Jazz Aviation Holdings Inc. and Chorus Aviation Holdings Inc.

Jazz Aviation Holdings Inc. holds all of Chorus’ business interests associated with the CPA with Air Canada which includes Jazz Aviation LP (‘Jazz’), Jazz Aircraft Financing Inc. (‘JAFI’), and Jazz Leasing Inc. (‘JLI’).  JAFI and JLI were established for the sole purpose of acquiring and financing Q400 aircraft and related equipment, and leasing them to Jazz for use in the CPA. 

Chorus Aviation Holdings Inc. is a holding company to facilitate diversification of Chorus’ business, such as the establishment of Chorus Airport Services Inc. which provides airport handling services.

Chorus is traded on the Toronto Stock Exchange under the trading symbols of CHR.A and CHR.B

For more information, visit

About Jazz
Jazz Aviation LP has a strong history in Canadian aviation with its roots going back to the 1930s. Jazz is wholly owned by Chorus Aviation Inc. and continues to generate some of the strongest operational and financial results in the North American aviation industry. As the largest regional airline in Canada, Jazz has a proven track record of industry leadership and exceptional customer service, and has leveraged that strength to deliver value to all its stakeholders. Jazz operates more flights and flies to more Canadian destinations than any other airline.  As of September 30, 2014, Jazz had a workforce of 4216 professionals highly experienced in the challenging and complex nature of regional operations. Jazz employees are an integral part of communities across our nation with 20% of our workforce based in Atlantic Canada, 46% based in Central Canada, 33% based in Western Canada, and 1% in Northern Canada.

Under a capacity purchase agreement with Air Canada, using the Air Canada Express brand, Jazz provides service to and from lower-density markets as well as higher-density markets at off-peak times throughout Canada and to and from certain destinations in the United States.  In the third quarter of 2014 Jazz operated scheduled passenger service on behalf of Air Canada with approximately 766 departures per weekday to 54 destinations in Canada and to 18 destinations in the United States. With a fleet of 122 Canadian-made Bombardier aircraft, Jazz flies more daily flights to more Canadian destinations than any other airline.

Under the Jazz brand, the airline offers charters throughout North America with a dedicated fleet of three Bombardier aircraft for corporate clients, governments, special interest groups and individuals seeking more convenience.  Jazz also has the ability to offer airline operators services such as ground handling, dispatching, flight load planning, training and consulting.

For more information, visit


SOURCE Chorus Aviation Inc.