Chorus Aviation Inc. announces solid third quarter 2011 financial results

Consistent quarterly profitability since 2006

HALIFAX, Nov. 7, 2011 /CNW/ – Chorus Aviation Inc. ("Chorus") (TSX: CHR.B CHR.A CHR.DB) today announced its third quarter 2011 earnings with a net income of $13.9 million or $0.11 per share, and on an adjusted basis of $21.5 million or $0.17 per share.


  • Operating revenue of $411.7 million.
  • Free Cash Flow1 of $29.1 million.
  • Operating income of $31.1 million.
  • Net income of $13.9 million, or $0.11 per share.
  • Adjusted Net income1 of $21.5 million, or $0.17 per share.

"I'm pleased with our operations and financial performance in the third quarter," said Joseph Randell, President and Chief Executive Officer, Chorus. "We continued to generate positive operating income and cash flows from operations in the third quarter. Our fleet renewal program is progressing on schedule and we now have seven Q400s in the fleet."

Mr. Randell went on to say, "We were honoured to receive two prestigious awards in October, true testaments to our employees commitment to excellence.  The Canadian Council for Aviation and Aerospace's Outstanding Corporate Member award recognized the avid support and leadership of our Maintenance and Engineering division.  Not only has our participation in this organization benefited our operating arm, Jazz, by improving our internal quality process, but our contribution extends to other members as well."

"We were also the recipient of the regional award of the Canada's 10 Most Admired Corporate Cultures of 2011 program, as presented by Waterstone Human Capital.  It is truly gratifying to be recognized amongst Canada's leading organizations.  Our culture is one that delivers – and our employees take tremendous pride in the product and service they deliver.  I'm immensely proud of their accomplishments," Mr. Randell continued.

Financial Performance – Third Quarter 2011 Compared to Third Quarter 2010

Operating revenue increased from $379.1 million to $411.7 million, representing an increase of $32.6 million or 8.6%.  The increase in operating revenue was primarily due to a $26.6 million or 19.8% increase in pass-through costs from $134.2 million to $160.8 million, which included $24.9 million related to fuel. Passenger revenue, excluding pass-through costs, increased by $5.5 million or 2.3% primarily due to a 3.1% increase in Billable Block Hours; offset by a lower US dollar exchange rate, which had the translation effect of decreasing mark-up revenue by $0.5 million. Other revenue increased by $0.5 million.

Total operating expenses increased from $352.1 million to $380.6 million, an increase of $28.5 million or 8.1%.  Controllable costs increased by $1.9 million, or 0.9%, primarily as a result of costs associated with capacity growth, including $0.4 million associated with the Q400 aircraft introduction consisting of crew salaries and benefits, and training costs.

Salaries, wages and benefits increased by $7.1 million, due to the increased number of full time equivalent employees required to facilitate capacity growth, wage and scale increases under new collective agreements, increased pension expense resulting from a revised actuarial valuation, and increased compensation expense related to Chorus' employee share ownership purchase plan.

Non-operating expenses amounted to $12.6 million, representing an increase of $15.8 million.  This change was mainly attributable to a foreign exchange loss of $10.1 million (of which $7.6 million was related to an unrealized foreign exchange loss on long-term debt and finance leases) arising as a result of the change in value of the Canadian dollar relative to the US dollar, the absence in this quarter of any gain on derivative liabilities and increased interest expense.

EBITDA1 was $43.0 million compared to $37.4 million in 2010, an increase of $5.6 million or 15.0%.  Free Cash Flow was $29.1 million, down $0.7 million or 2.3% from $29.8 million.

Operating income of $31.1 million for the three months ended September 30, 2011, was up $4.1 million or 15% over third quarter 2010, while net income of $13.9 million was down by $16.3 million due to the previously described changes in non-operating expenses and a deferred income tax expense of $4.6 million.

Chorus Aviation Inc.'s unaudited interim financial statements for the period ended September 30, 2011, and accompanying Management's Discussion and Analysis (MD&A) are available at and at  A copy may also be obtained on request by contacting Investor Relations at: or (902) 873-5094.

Investor Conference Call / Audio Webcast

Chorus will hold an analyst call at 9:30 a.m. ET on Tuesday, November 8, 2011 to discuss the third quarter 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's Investor Relations website at  A playback of the call can also be accessed until midnight ET, November 15, 2011, by dialing (416) 849-0833 or toll-free 1- 855-859-2056, and passcode 18512501# (pound key).

1 Non-GAAP Financial Measures

EBITDA (earnings before interest, taxes, depreciation, amortization and obsolescence) is a non-GAAP financial measure commonly used throughout all industries to view operating results before interest expense, interest income, depreciation and amortization, gains and losses on property and equipment and other non-operating income and expenses.  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 on working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statement of cash flows which form part of the financial statements.

Pre-conversion distributable cash was a key performance indicator used by management to evaluate the ongoing performance of Jazz Air Income Fund.  Distributable cash is not a measure which is commonly utilized in respect of a public corporation. Management believes, however, that it is a term with which its shareholders are familiar and has provided Free Cash Flow as a proxy for previously reported distributable income.  Free Cash Flow is calculated in the same manner as distributable cash.

Adjusted net income and adjusted earnings per share are calculated by adjusting net income and basic earnings per share by the amount of any unrealized foreign exchange gains and losses. During the third quarter of 2011, Chorus recorded $7.6 million in unrealized foreign exchange losses on long-term debt and finance leases.  This adjustment more clearly reflects earnings from an operating perspective.

Caution regarding forward-looking information

This news release should be read in conjunction with Chorus' unaudited interim consolidated financial statements for the period ended September 30, 2011 and MD&A dated November 7, 2011, filed with Canadian Securities regulatory authorities (available at

Certain statements in this news release may contain statements which are forward-looking statements. 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 or Thomas Cook Canada Inc., 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, 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 dividend 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 7, 2011, 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 Aviation Inc.

Chorus Aviation Inc. ("Chorus") was incorporated on September 27, 2010 and is a dividend-paying holding company which owns Jazz Aviation LP, Chorus Leasing I Inc. (which owns the Q400 aircraft) and 7503695 Canada Inc. (which holds Chorus' investment in Latin American Regional Aviation Holdings Corp., which in turn holds a 75% indirect equity interest in South American regional carrier, Pluna).

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

About Jazz Aviation LP

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.

There are three airline divisions operated by Jazz Aviation LP:  Air Canada Express, Thomas Cook Canada and Jazz.

Air Canada Express:  Under a capacity purchase agreement with Air Canada, 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. Jazz currently operates scheduled passenger service on behalf of Air Canada with over 770 departures per weekday to 83 destinations in Canada and in the United States with a fleet of Canadian-made Bombardier aircraft.

Thomas Cook Canada:  Jazz operates Boeing 757-200 aircraft on behalf of Thomas Cook Canada in the winter season to various destinations in the Caribbean, Mexico and Central America from Canadian gateways.

Jazz: Under the Jazz brand, the airline offers charters throughout North America with a dedicated fleet of five 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.

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