Chorus Aviation issues third quarter earnings – Adjusted net income of $27.7 million, $0.23 per share

Continued strong profitability since 2006

HALIFAX, Nov. 14, 2013 /CNW/ – Chorus Aviation Inc. ("Chorus") (TSX: CHR.B CHR.A CHR.DB) today issued its third quarter 2013 earnings.

"We are pleased to report adjusted net income of $27.7 million for the third quarter of 2013, one of our highest in any quarter since converting from an income fund to a corporate structure on December 31, 2010," stated Joseph Randell, President and Chief Executive Officer, Chorus. "Further, we generated $55.8 million in EBITDA, an increase of $4.3 million or 8.2% over the third quarter of 2012. The growth in EBITDA during the quarter was primarily attributable to the addition of six new Q400 aircraft to the fleet in the first quarter of this year which coincided with the retirement of the last CRJ-100 aircraft. During the past four years we have replaced a total of 32 50-seat CRJ aircraft with 21 new and more efficient 74-seat Q400s."

"Standardized Free Cash Flow was $30.8 million during the quarter and has been positive for the past two quarters since the Q400 delivery program was completed in March 2013," continued Mr. Randell. "This has been a contributing factor to our improving liquidity position which included approximately $150.0 million in cash at the end of the third quarter. Our continued attention to safety, operational excellence and responsible fiscal management are pillars of our solid foundation and contributed to these strong financial results."

"We achieved the best on-time arrival performance of Canada's primary airlines during the quarter, and October marked our eleventh consecutive month in this leading position," said Randell. "Our operational expertise has allowed us to build an airline with superior scope and scale, and has earned us a reputation for safe, reliable and efficient service. I commend our employees for their continued focus on safety and operational excellence."


  • Operating revenue of $432.3 million.
  • EBITDA1 of $55.8 million; EBITDA margin of 12.9%.
  • Operating income of $39.3 million.
  • Net income of $36.0 million, or $0.29 per basic share.
  • Adjusted net income1 of $27.7 million, or $0.23 per basic share.
  • Standardized free cash flow1 of $30.8 million.
  • Billable Block Hours of 98,668.

Financial Performance -Third Quarter 2013 Compared to Third Quarter 2012

Operating revenue decreased from $435.6 million to $432.3 million, representing a decrease of $3.4 million or 0.8%. Passenger revenue, excluding pass-through costs, increased by $1.8 million or 0.7% primarily as a result of rate increases made pursuant to the Capacity Purchase Agreement ('CPA') with Air Canada, a higher US dollar exchange rate and a $1.0 million increase in incentives earned under the CPA with Air Canada; offset by decreased CPA Billable Block Hours. Pass-through costs reimbursed by Air Canada decreased from $166.1 million to $160.9 million, a decrease of $5.2 million or 3.1%, which included a decrease of $2.3 million related to fuel costs.

Operating expenses decreased from $399.3 million to $393.0 million, a decrease of $6.3 million or 1.6%. Controllable Costs decreased by $1.1 million, or 0.5%, and pass-through costs decreased by $5.2 million or 3.1%. 

Salaries, wages and benefits decreased by $3.7 million, primarily as a result of a reduction in the number of full time equivalent employees, a 3.4% decrease in Block Hours, and higher capitalized salaries and wages related to major maintenance overhauls; offset by voluntary employee severance costs related to flight crew and maintenance employees, wage and scale increases under new collective agreements, and increased pension expense resulting from a revised actuarial valuation.

Depreciation and amortization expense increased by $1.3 million, primarily related to the purchase of Q400 aircraft, increased capital expenditures on aircraft rotable parts and other equipment, and increased major maintenance overhauls; offset by certain assets having reached full amortization and a change in the estimated residual value of the Dash 8-100 and 300 aircraft.

Aircraft maintenance expense decreased by $1.1 million as a result of a $0.9 million reduction reflecting the cessation of Thomas Cook activity as of the comparative quarter, and decreased Block Hours of $2.2 million; offset by increased other maintenance costs of $0.2 million and an increase in the US-dollar exchange rate on certain material purchases of $1.8 million.

Aircraft rent decreased by $1.8 million primarily as a result of the return of CRJ100 aircraft; offset by a higher US dollar exchange rate.

Other expenses increased by $1.8 million primarily due to increased professional and consulting fees; offset by decreased general overhead expenses.

Non-operating income decreased by $2.9 million. This change was mainly attributable to a decrease of $2.9 million in foreign exchange (of which $1.7 million was related to a decrease in unrealized foreign exchange gain on long-term debt and finance leases) and a gain related to the sale of Chorus' office and hangar facility in London, Ontario of $1.3 million; offset by increased interest expense related to Q400 aircraft financing of $0.2 million.

EBITDA1 was $55.8 million compared to $51.5 million in 2012, an increase of $4.2 million or 8.2%, producing an EBITDA margin of 12.9%. Standardized free cash flow was $30.8 million.

Operating income of $39.3 million was up $2.9 million or 8.0% over third quarter 2012 from $36.4 million.

Net income for the third quarter of 2013 was $36.0 million or $0.29 per basic share, a decrease of $0.9 million or 2.5% from $36.9 million or $0.30 per basic share. On an adjusted basis, net income was $27.7 million or $0.23 per basic share, an increase of 3.0% or $0.01 per basic share from $26.9 million or $0.22 per basic share. A reconciliation of these measures to their nearest GAAP measure is provided in Chorus' Management's Discussion and Analysis dated November 13, 2013.

Benchmarking Arbitration

Final arguments were presented by the parties in September 2013 and as of November 13, 2013 the final award from the arbitration panel had not been received.  Chorus continues to anticipate receiving the arbitration panel's decision in this quarter and remains confident in its position that there should be no change to the current mark-up on controllable costs under the CPA as a result of this arbitration.

Chorus Aviation Inc.'s unaudited interim condensed consolidated financial statements for the period ended September 30, 2013 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 Thursday, November 14, 2013 to discuss the third quarter 2013 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 ET, November 21, 2013, by dialing (416) 849-0833 or toll-free 1- 855-859-2056, and passcode 76544558# (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.

Standardized Free Cash Flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less total capital expenditures and dividends.

Adjusted net income and adjusted earnings per share are calculated by adjusting net income by the amount of any unrealized foreign exchange gains and losses on long-term debt and finance leases. During the third quarter of 2013, Chorus recorded an $8.3 million gain in unrealized foreign exchange on long-term debt and finance leases. These adjustments more clearly reflect earnings from an operating perspective.

Caution regarding forward-looking information

This news release should be read in conjunction with Chorus' unaudited interim condensed consolidated financial statements for the period ended September 30, 2013 and MD&A dated November 13, 2013 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, 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 14, 2013, 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. was incorporated on September 27, 2010 and is a dividend-paying holding company which owns Jazz Aviation LP and Chorus Leasing III Inc.

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

For more information, visit

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 two airline divisions operated by Jazz Aviation LP:  Air Canada Express 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. In the third quarter of 2013, Jazz operated scheduled passenger service on behalf of Air Canada with approximately 790 departures per weekday to 53 destinations in Canada and to 25 destinations in the United States. With a fleet of 122 Canadian-made Bombardier aircraft, Jazz flies more daily flights to the most Canadian destinations than any other carrier.

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.

For more information, visit

SOURCE Chorus Aviation Inc.