BY STAFF THE CANADIAN PRESS Posted February 25, 2020
The Transportation Safety Board of Canada is investigating after a suspected fire broke out in the landing gear of an Air Canada Jazz plane as it landed at Montreal-Trudeau International Airport Tuesday morning.
The agency said no injuries were reported and no emergency evacuation of the plane was required.
The Dash 8 aircraft was heading to the gate after arriving from Ottawa at about 6 a.m. when the fire was spotted in the landing gear, according to the TSB.
A spokesperson said airport firefighters were quickly able to put it out, and the plane was then towed to the gate to allow passengers to disembark.
Air Canada characterized the incident as “a failure on one of the ball bearings on one of the wheels,” which caused smoke and sparks.
“In accordance with our procedures, the pilots requested the presence of emergency vehicles as a precaution,” the company said in a statement.
The Canadian Press – Staff Published Tuesday, February 25, 2020
MONTREAL — Air Canada is extending its cancellation of all flights between Canada and China to April 10 due to the COVID-19 epidemic, following the lead of its U.S. counterparts.
The announcement comes nearly a month after the airline first halted direct flights to Beijing and Shanghai from Toronto, Montreal and Vancouver.
It extends the suspension by nearly six weeks, as the virus known as COVID-19 spreads from China to some three-dozen countries, infecting more than 80,000 people and causing at least 2,700 deaths.
Air Canada says it is also scrubbing daily non-stop flights between Toronto and Hong Kong from its schedule until April 30 because of reduced market demand. The carrier says its ongoing daily flight to Hong Kong from Vancouver will accommodate customers originally booked on the Toronto-Hong Kong route.
Air Canada said last week it was bracing for a rough first quarter as the effects of the viral outbreak and the continued grounding of its fleet of Boeing 737 Max jets bite into sales.
It joins all American passenger airlines that typically fly to China in cancelling flights to the mainland into the spring, with U.S. carriers suspending routes until late April.
This report by The Canadian Press was first published Feb. 25, 2020.
DORVAL, QC, Feb. 25, 2020 /CNW/ – The Transportation Safety Board (TSB) is deploying an investigator to the Montréal Trudeau International Airport, Quebec following an incident during the taxi phase of an Air Canada aircraft after landing. The TSB will gather information and assess the occurrence.
MONTREAL, Feb. 24, 2020 /CNW Telbec/ – Air Canada has entered into letters of intent with each of AAR Aircraft Services Trois-Rivières ULC (“AAR”) and Avianor Inc (“Avianor”) regarding long-term agreements for airframe maintenance, subject to completion of its planned merger with Transat, A.T. These long-term agreements would enable each of AAR and Avianor to develop Airframe Maintenance Centres of Excellence in Quebec for the aircraft types within their areas of expertise, both stimulating new investment in aerospace in Quebec and creating more high-quality aircraft maintenance jobs.
The larger combined Airbus A330 fleet of Air Canada and Air Transat would enable Air Canada to move wide-body A330 maintenance work for both airlines from abroad to AAR in Trois-Rivières, in addition to maintaining and expanding AAR’s airframe maintenance work in Quebec on the A320 family, including all new A321 neo aircraft.
In addition, Avianor would establish a new Centre of Excellence for Air Canada’s new Airbus A220 fleet (formerly the Bombardier C-Series) in Mirabel, adjacent to Airbus’ manufacturing facilities.
The letters of intent are subject to completion of final agreements which will include terms generally applicable to airframe maintenance agreements of this scale.
AAR Aircraft Services – Trois-Rivières, Quebec
AAR currently performs airframe maintenance work in Trois-Rivières on Air Canada’s existing Airbus A320 fleet and Embraer E190 fleet (which is being phased out).
Air Canada and AAR have entered into a letter of intent that, subject to completion of the Transat merger by Air Canada, requisite Board of Directors’ approvals and completion of final agreements, evidences the parties’ intent to enter into a 10-year renewable agreement for airframe maintenance of both Air Canada’s and Air Transat’s fleet of Airbus A330 and A320 family of aircraft (including the new A321neo) in Trois-Rivières, Quebec.
AAR intends to make the necessary facility infrastructure investments in Trois-Rivières to accommodate the new wide-body A330 work of the combined Air Canada and Air Transat fleets, given that there would be sufficient volumes of heavy maintenance work to support such an investment and to develop a Centre of Excellence. Through this agreement, it is expected that incremental aerospace jobs will be created in Trois-Rivières and AAR’s new capabilities should enable it to attract airframe maintenance work from other operators of the A330.
“From our very first project in Trois-Rivières, we’ve seen a strong commitment to quality, safety and operational performance,” said Rich Steer, Senior Vice-President, Operations at Air Canada. “With our largest hub a short distance away, we’re excited to have a trusted partner like AAR with a similar commitment to excellence, and also proud to be increasing heavy maintenance work in Quebec, especially on wide-body aircraft. This contract for additional work in Trois-Rivières represents a long-term investment in increased airframe maintenance in Quebec.”
“We are honoured to work closely with a highly regarded carrier like Air Canada for so many years and to be chosen as their maintenance provider for the A330 and A320 family fleet types,” said Chris Jessup, Chief Commercial Officer, AAR Corp. “AAR is proud to support the Canadian economy and to grow our overall footprint in Trois-Rivières, especially for the A330.”
AAR Aircraft Services is a full-service aircraft maintenance, repair and overhaul (MRO) provider, wholly-owned and operated by AAR Corp. with over 290,000 sf of facilities in Trois-Rivières, Quebec and Windsor, Ontario, along with facilities in the United States. AAR took over Premier Aviation’s facilities in Trois-Rivières and Windsor in 2017. Since inception in 2002, the Trois-Rivières facility has experienced a steady growth of clients and services in general maintenance overhaul, modifications, refurbishment and paint requirements. In 2012, the Trois-Rivières facility started to perform MRO services for some of Air Canada’s Embraer fleet, including painting and supporting backshops. AAR expanded Trois-Rivières MRO competencies in 2017 by performing all MRO services on Air Canada’s Airbus A319, A320 and A321 aircraft. In September 2017, Air Canada awarded a 10-year contract to AAR for the maintenance of its 125 Airbus A320 and Embraer E190 single-aisle aircraft at the AAR facilities in Trois-Rivières, contributing to the continuance of 350 specialized jobs. This work was transferred to Quebec from AAR’s Duluth, Minnesota facility.
Avianor Inc. – Mirabel, Quebec
Air Canada and Avianor have entered into a letter of intent that provides for a 10-year agreement for airframe maintenance of Air Canada’s new fleet of Airbus A220 aircraft in Mirabel, Quebec. The agreement is subject to completion of Air Canada’s planned merger with Transat, A.T., and completion of final agreements. Air Canada has a firm order of 45 A220s with options for an additional 30 aircraft. Its initial aircraft entered into service in January 2020.
Avianor is well progressing in its study phase to construct a new 250,000-square-foot hangar in Mirabel in close proximity to the A220 manufacturing facilities of Airbus Canada (formerly the Bombardier facilities) in order to strategically position itself in the heavy maintenance, modification and completion of narrow-body aircraft and other key aircraft programs. The Air Canada work will position Avianor to attract airframe maintenance work from other A220 operators, as well to encourage other suppliers of the A220 to consider establishing operations nearby, thereby contributing to the establishment of a North American centre of excellence in Mirabel.
Air Canada’s Senior Vice-President, Operations, Rich Steer, stated, “We have been very pleased with the work performed in Quebec by Avianor on Air Canada’s fleet over the last years. This contract assures Air Canada of a quality solution for our Airbus A220 heavy maintenance needs in Quebec through Avianor’s extensive and proven capabilities in this field.”
“This extended relationship with Air Canada shows the scale of technical support that Avianor offers in this competitive marketplace. To build great projects we always need to be surrounded by key players such as Air Canada and it goes without saying that we are extremely proud of today’s strategic announcement. We are thrilled to be working with Air Canada, in support of their expanded fleet and are grateful for their confidence. With years in the industry, we are confident in our ability to provide world-class quality, genuine partnerships and proven customer support while allowing ourselves to envision an enviable Centre of Excellence which could eventually regroup a variety of services such as maintenance, engineering, certification, education and training capabilities under one roof,” said Benoit Hudon, President & CEO, Aerospace & Ground Transportation Division of DRAKKAR, majority owner of Avianor.
Avianor was recently acquired by the Drakkar & Partner’s Aerospace & Ground Transportation Division. Avianor specializes in maintenance, modifications and aircraft completion, including a highly skilled internal engineering support team. Avianor has positioned itself as a vertical integrator in the marketplace. The company occupies over 200,000 square feet of hangars, repair shops, fabrication facilities and warehouse space at Mirabel Airport (YMX) and employs more than 350 people.
In November 2019, Avianor reached a highly important milestone and has received Transport Canada (TCCA) approval to add the Airbus A220-100 and A220-300 to its maintenance capability list.
Sean Davidson Multi-Platform Writer, CTV News Toronto Tuesday, February 18, 2020
An Air Canada plane bound for Toronto from New York City has landed safety after experiencing an issue with one of its tires.
TORONTO — An Air Canada plane bound for Toronto was forced to declare a mid-air emergency after one of its wheels fell off during take-off.
Air Canada flight 715 from LaGuardia Airport landed safely after 4 p.m. in Toronto. A spokesperson for Air Canada said the Airbus A319 lost one of its six tires while departing just after 2 p.m. on Tuesday
Air Canada said the pilot declared an emergency to ensure the aircraft had priority for landing when it arrived in Toronto.
There were 120 passengers and five crew members on the plane, Air Canada says.
Emergency crews, which were on standby waiting for the aircraft to land, have investigated the damage.
The airline has not yet said if the missing wheel has been recovered.
EBITDA of $3.636 billion and EBITDA margin of 19 per cent
Record unrestricted liquidity of $7.380 billion and leverage ratio of 0.8
MONTREAL, Feb. 18, 2020 /CNW Telbec/ – Air Canada today reported 2019 EBITDA (earnings before interest, taxes, depreciation, amortization and impairment) of $3.636 billion compared to 2018 EBITDA of $3.213 billion, an increase of $423 million or 13 per cent. The airline reported operating income of $1.650 billion in 2019 compared to operating income of $1.496 billion in 2018.
“I am very pleased to report strong fourth quarter and full year results for 2019, a year in which we generated record revenues in excess of $19 billion and reached record levels of unrestricted liquidity, despite the loss to Air Canada of approximately 25 per cent of our narrow-body fleet for most of the year following the worldwide grounding of the Boeing 737 MAX. These results underscore the airline’s ability to overcome major challenges as well as the deep commitment of Air Canada’s 37,000 strong team, which took care of our customers under extremely complicated operational circumstances. With this backdrop, I am especially proud that we were able to deliver on the outlook we provided for key financial metrics for the year. Our discipline was rewarded by an 87 per cent return on our shares in 2019, which, when added to our returns over the previous nine years, made Air Canada the top performing stock on the TSX for the past decade with a 3,575 per cent return,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada.
“The agility and consistency that we displayed in 2019 gives me confidence that we will successfully execute on the several key opportunities now before us. This includes the launch of our new loyalty program later this year, which we expect will be the best airline loyalty program in the world. We also look forward to completing our proposed merger with Transat A.T., which was approved by nearly 95 per cent of Transat shareholders last summer and now remains subject to applicable regulatory approvals. This is a wholly Canadian solution that will secure jobs and result in more travel options and benefits for both airlines’ customers and other stakeholders.
“We start 2020 with uncertainty from the on-going Boeing 737 MAX grounding and the constraints it imposes, as well as emerging economic and geopolitical risks and route suspensions resulting from the COVID-19 virus. However, our strong balance sheet, globe-spanning network that diversifies our revenue sources, brand strength as North America’s Best Airline as rated by Skytrax, young fleet, dedicated and talented employees and nimble management team equip us to respond effectively to any challenges that come our way. Our dedicated and professional team is highly motivated to deliver service excellence to our loyal customer base, and I thank both groups for contributing to our strong 2019 results in the face of adversity,” said Mr. Rovinescu.
Full Year 2019Income Statement Highlights
Air Canada began consolidating Aeroplan’s financial results on the date of the acquisition of Aeroplan, January 10, 2019.
In 2019, on a capacity increase of 1.8 per cent, record system passenger revenues of $17.232 billion increased $1.071 billion or 6.6 per cent from 2018. The increase in system passenger revenues was driven by a yield improvement of 4.6 per cent and traffic growth of 1.9 per cent. System yield improved due to the constrained capacity resulting from the grounding of the Boeing 737 MAX aircraft as well as a generally improved pricing environment, mainly in North America. The yield increase also included additional revenues from Aeroplan flight redemptions and other revenues subsequent to the Aeroplan acquisition.
In 2019, operating expenses of $17.481 billion increased $974 million or 6 per cent from 2018. Air Canada’s cost per available seat mile (CASM) increased 4.1 per cent from 2018. The airline’s adjusted CASM(1) increased 6.1 per cent from 2018. These increases reflected, in large part, the impact of the Boeing 737 MAX aircraft grounding, which resulted in a system ASM increase of 1.8 per cent versus planned system ASM growth of approximately 4.8 per cent, in addition to higher costs associated with replacement aircraft, and on-going operating expenses, including depreciation and pilot wages that continued to be incurred in relation to the Boeing 737 MAX aircraft despite their grounding. Given that the Aeroplan loyalty business was not consolidated in Air Canada’s financial results in 2018, for a more meaningful comparison of the cost performance of the on-going airline business, Air Canada’s adjusted CASM for the fourth quarter and full year 2019 excludes the operating expenses of Aeroplan. Air Canada estimates that, had it operated the 36 Boeing MAX aircraft as originally planned during 2019, adjusted CASM would have reflected an increase of approximately 2.5 per cent when compared to 2018.
Air Canada’s full year 2019 EBITDA margin of 19.0 per cent met the target margin of approximately 19.0 per cent projected in Air Canada’s news release dated October 29, 2019. Air Canada estimates that its 2019 EBITDA margin would have been approximately 30 basis points higher at 19.3 per cent, when excluding two fourth quarter one-time items, each of which similarly contributed to this impact: (a) a one-time negative impact on revenue arising from Air Canada’s transition, in mid-November, to a new passenger service system, and (b) higher than expected stock-based and other compensation expenses resulting from an increase in Air Canada’s share price and from higher accruals in respect of employee profit sharing programs.
Full year 2019 net income amounted to $1.476 billion or $5.44 per diluted share compared to 2018 net income of $37 million or $0.13 per diluted share. The year 2019 included foreign exchange gains of $499 million while 2018 included foreign exchange losses of $578 million. Air Canada recorded a loss on disposal of assets of $188 million in 2018. Air Canada reported adjusted net income(1) of $917 million or $3.37 per diluted share in 2019 compared to adjusted net income of $738 million or $2.67 per diluted share in 2018.
Fourth Quarter 2019Income Statement Highlights
In the fourth quarter of 2019, Air Canada reported EBITDA of $665 million ompared to fourth quarter 2018 EBITDA of $619 million, an increase of $46 million or 7 per cent. As discussed above, the fourth quarter of 2019 was impacted by two one-time items which had the effect of reducing EBITDA by approximately $60 million. The airline reported fourth quarter 2019 operating income of $145 million compared to fourth quarter 2018 operating income of $179 million.
In the fourth quarter of 2019, on a capacity increase of 3.3 per cent, record system passenger revenues of $3.975 billion increased $199 million or 5.3 per cent from the fourth quarter of 2018. The increase in system passenger revenues was driven by traffic growth of 2.9 per cent and a yield improvement of 2.3 per cent. The yield improvement in the fourth quarter of 2019, particularly in North America, was in part due to the constrained capacity resulting from the grounding of the Boeing 737 MAX aircraft. The yield growth also reflected additional revenue from Aeroplan flight redemptions and other revenues.
In the fourth quarter of 2019, operating expenses of $4.284 billion increased $236 million or 6 per cent from the fourth quarter of 2018. Air Canada’s CASM increased 2.5 per cent from the fourth quarter of 2018. The airline’s adjusted CASM increased 5.5 per cent over the fourth quarter of 2018. These increases reflected, in large part, the impact of the Boeing 737 MAX aircraft grounding which resulted in a system ASM increase of 3.3 per cent versus planned system ASM growth of approximately 4.6 per cent. The grounding also resulted in higher operating costs driven by the factors discussed in “Full Year 2019 Income Statement Highlights” above.
Record fourth quarter 2019 net income amounted to $152 million or $0.56 per diluted share compared to a fourth quarter 2018 net loss of $360 million or $1.33 per diluted share. The fourth quarter of 2019 included foreign exchange gains of $92 million while the fourth quarter of 2018 included foreign exchange losses of $444 million. Air Canada reported adjusted net income(1) of $47 million or $0.17 per diluted share in the fourth quarter of 2019 compared to adjusted net income of $55 million or $0.20 per diluted share in the fourth quarter of 2018.
Financial and Capital Management Highlights
At December 31, 2019, unrestricted liquidity (cash, cash equivalents and short and long-term investments, and undrawn lines of credit) amounted to a record $7.380 billion (December 31, 2018 – $5.725 billion).
At December 31, 2019, net debt of $2.841 billion decreased $2.373 billion from December 31, 2018, reflecting an increase in cash, cash equivalents and short and long-term investment balances of $1.694 billion and a decrease in long-term debt and lease liabilities (including current portion) of $679 million. At December 31, 2019, Air Canada’s leverage ratio was 0.8, in line with the leverage ratio not exceeding 1.0 projected in Air Canada’s news release dated October 29, 2019. This compares to a leverage ratio of 1.6 at December 31, 2018.
In 2019, net cash flows from operating activities of $5.712 billion increased $2.242 billion from 2018. In 2019, free cash flow of $2.075 billion increased $748 million from 2018 and was higher than the free cash flow of between $1.3 billion and $1.5 billion projected in Air Canada’s new release dated October 29, 2019. The higher than expected free cash flow was due to a combination of factors, including higher cash from operations, a lower than projected level of capital expenditures due to certain projects being deferred to 2020, and to an initial settlement payment from Boeing as further described below.
For the 12 months ended December 31, 2019, return on invested capital (ROIC(1)) was 15.5 per cent, in line with the ROIC of between 15.5 per cent and 16.0 per cent projected in Air Canada’s news release dated October 29, 2019. Air Canada’s ROIC at December 31, 2019 was significantly higher than Air Canada’s weighted average cost of capital of 7.0 per cent.
Air Canada has been in discussions with Boeing and is seeking to settle the terms of an arrangement in relation to the grounding of the Boeing 737 MAX aircraft. Until such time as an arrangement is finalized, information regarding the outstanding purchase commitments for aircraft is subject to change. An initial settlement payment contemplated by the arrangement was made to Air Canada during the fourth quarter of 2019, with any further amounts subject to finalization of the arrangement. The compensation is accounted for as an adjustment to the purchase price of current and future deliveries and will flow through Air Canada’s consolidated statement of operations as reduced depreciation expense over the life of the aircraft, and as a reduction to additions to property and equipment on the consolidated statement of cash flow.
Normal Course Issuer Bid
In 2019, Air Canada purchased, for cancellation, a total of 9,082,487 shares at an average cost of $41.64 per share for aggregate consideration of $378 million. At December 31, 2019, a total of 17,877,551 shares remained available for repurchase under Air Canada’s issuer bid which is scheduled to expire May 30, 2020.
In addition to the Additional Guidance and Major Assumptions noted below, Air Canada’s 2020 first quarter and full year outlook in relation to both EBITDA and ASM capacity growth assumes that Air Canada’s mainland China and Hong Kong services will be fully recovered by the third quarter of 2020 and that the Boeing 737 MAX aircraft will gradually return to service commencing late in the third quarter of 2020.
First Quarter 2020
As noted above, the Boeing 737 MAX aircraft will not fly during the first quarter of 2020, as compared to 24 Boeing 737 MAX aircraft operating for the majority of the first quarter of 2019. In addition, due to the impact of recent service suspensions to mainland China and from Toronto to Hong Kong, combined with a higher proportion of projected annual operating expense increases in both aircraft maintenance and employee benefits in the first quarter of 2020 (as described below), Air Canada expects first quarter 2020 EBITDA to be approximately $200 million lower than the first quarter of 2019.
Full Year 2020
For the full year 2020, Air Canada projects an EBITDA margin of approximately 19 per cent, which would result in a small increase in EBITDA versus the reported EBITDA of $3.636 billion in 2019.
For the full year 2020, Air Canada expects ASM capacity to increase 1 to 2 per cent when compared to the full year 2019.
For the full year 2020:
Aircraft Maintenance Expense
Air Canada expects aircraft maintenance expense to increase by approximately $150 million from the full year 2019, with one-third of the increase expected to be incurred in the first quarter of 2020. The projected increase includes the impact of additional Airbus A330 aircraft in the operating fleet (which are under power-by-the-hour arrangements) and a higher volume of engine maintenance activity year-over-year.
Employee Benefits Expense
Air Canada expects employee benefits expense to increase by approximately $105 million from the full year 2019, with one-third of the increase expected to be incurred in the first quarter of 2020. The projected increase is mainly driven by lower discount rates related to pension and post-employment benefits.
Depreciation and Amortization
Air Canada expects depreciation and amortization expense to increase by approximately $35 million from the full year 2019. The projected increase primarily reflects aircraft acquisitions.
In addition to the above assumptions relating to the return to service of Air Canada’s Boeing 737 MAX aircraft and the recovery of Air Canada’s mainland China and Hong Kong services, Air Canada is making the following assumptions in preparing and making forward-looking statements. As part of its 2020 assumptions, Air Canada assumes:
Modest Canadian GDP growth for the first quarter and full year 2020.
That the Canadian dollar will trade, on average, at C$1.33 per U.S. dollar in the first quarter and for full year 2020.
That the price of jet fuel will average 71 CAD cents per litre in the first quarter and 74 CAD cents for the full year 2020.
That six of 12 undelivered Boeing 737 MAX aircraft originally scheduled for delivery in 2019 will be delivered in 2020 with the remaining six delivered in 2021, and that 14 undelivered Boeing 737 MAX aircraft originally scheduled for delivery in 2020 will be delivered in 2021.
The assumptions related to the Boeing 737 MAX aircraft and the recovery of the mainland China and Hong Kong businesses also apply to the 2021 financial guidance discussed below.
Investor Day Targets
The financial guidance provided in Air Canada’s news release dated February 28, 2019 for 2021 with respect to annual EBITDA margin and annual ROIC, as well as the cumulative free cash flow over the 2019-2021 period, remains in place. The targets are as follows:
Annual EBITDA margin of 19 to 22 percent
Annual ROIC of 16 to 20 percent
Cumulative free cash flow of $4.0 billion to $4.5 billion over the 2019 to 2021 period (As noted above, Air Canada generated free cash flow of $2.075 billion in 2019.)
It is premature to assess what the impact of Air Canada’s planned acquisition of Transat A.T. would be, and it is therefore not factored into Air Canada’s guidance.
The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and is based on a number of assumptions (including those provided above) and subject to a number of risks. Please see the section below entitled “Caution Regarding Forward-Looking Information”.
Net income of $36.6 million, or $0.23 per basic share, a period-over-period increase of $34.4 million.
Adjusted net income1 of $23.3 million, or $0.15 per basic share, a decrease of $12.0 million due to expected reductions resulting from the 2019 amendments to the Capacity Purchase Agreement (‘CPA’) (the ‘2019 CPA Amendments’) offset by growth in the Regional Aircraft Leasing segment.
Adjusted EBITDA1 of $88.6 million, a decrease of $3.4 million.
Increased the committed leased fleet to 64 aircraft, representing growth of 60% year-over-year.
Added new aircraft type through a sale leaseback transaction with airBaltic for five new Airbus A220-300s.
Added Croatia Airlines as a new airline customer to the leasing portfolio.
Extended three aircraft lease agreements with Aeromexico Connect and completed an additional sale leaseback transaction with IndiGo for two new aircraft.
Completed the Extended Service Program (‘ESP’) on three additional Dash 8-300s, bringing the total number of ESP aircraft generating leasing revenue under the CPA to 13.
Established a regional aircraft parts depot in Dubai, UAE, enhancing Chorus’ ability to market its parts provisioning and sales offering internationally.
Full-Year 2019 Financial Highlights and Accomplishments
Net income of $133.2 million, or $0.85 per basic share, a period-over-period increase of $65.7 million.
Adjusted net income1 of $96.2 million, or $0.61 per basic share, a decrease of $26.1 million due to expected reductions resulting from the 2019 CPA Amendments offset by growth in the Regional Aircraft Leasing segment.
Adjusted EBITDA1 of $341.7 million, an increase of $1.2 million.
Increased adjusted EBT1 in the Regional Aircraft Leasing segment to 22% of overall adjusted EBT.
Amended and extended the CPA with Air Canada to December 31, 2035.
Jazz pilots ratified their collective agreement with no strike or lockout provisions for the extended term of the CPA.
Completed Air Canada investment for gross proceeds of $97.26 million and raised gross proceeds of $86.3 million through a public offering of 5.75% Unsecured Debentures to support the growth of Chorus.
Executed a purchase agreement for nine CRJ900s that will earn leasing revenue under the CPA starting in 2020.
Completed the first sale of three leased Dash 8-400s, generating net proceeds, after debt repayment, of US $25.0 million for reinvestment in the Regional Aircraft Leasing segment.
Received numerous awards as a top employer in Canada, and named among Canada’s Safest Employers 2019, taking gold in the Transportation category.
HALIFAX, Feb. 12, 2020 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced fourth quarter and year-end 2019 financial results.
“2019 was a transformative year for Chorus creating significant value for all of our stakeholders. On total revenues of $1.4 billion, we generated adjusted EBITDA of $341.7 million.
We secured and strengthened our partnership with Air Canada by amending and extending the CPA for a further 17 years, providing a minimum of $2.5 billion in contracted revenues with opportunities to increase further. This was a critical accomplishment as it laid a strong, long-term foundation from which we continue to build and diversify our company. Air Canada’s $97.26 million investment in Chorus equity, which included a five-year hold period, further aligns our organizations and is a strong endorsement of our growth and diversification strategy.
Our group of companies performed very well, and most importantly, did so safely and with operational integrity. We carried just under 11 million passengers under the Air Canada Express brand, secured new contracted flying missions in several international markets, and established an aircraft parts depot in Dubai.
We made significant advancements in maturing our business to become a worldwide provider of regional aviation solutions. We successfully raised $183.5 million in capital and secured a US $300 million warehouse facility to support our expansion in regional aircraft leasing. We now have a committed portfolio of 64 aircraft, a 60% increase over 2018, placed with 16 customers. We’re pleased with the returns we’re generating in our leasing business, which is delivering strong and consistent margins. Together with the aircraft we have leased under the CPA our committed portfolio comprises 1352,3 aircraft with approximately US $2.1 billion2,3,4 in future contracted lease revenue, making Chorus one of the world’s largest regional aircraft lessors.
We remain confident that we can expand our leasing portfolio by up to 20 aircraft per year funded through a combination of debt and cash from operations. The timing of these future transactions will not occur on a consistent basis; however, we expect the majority will be executed in the second half of this year. The expected growth in aircraft leasing will more than offset planned fixed fee reductions in the CPA in 2020 and beyond.
I extend my thanks and gratitude to the Chorus team for making 2019 a standout year in our history, and I look forward to the many new, exciting milestones we’ll achieve together,” stated Joe Randell, President and Chief Executive Officer, Chorus.
Fourth Quarter Summary
In the fourth quarter of 2019, Chorus reported adjusted EBITDA of $88.6 million, a decrease of $3.4 million or 3.7% relative to the fourth quarter of 2018.
The Regional Aircraft Leasing segment’s adjusted EBITDA increased by $12.3 million primarily related to the growth in aircraft earning leasing revenue. The sale of three Dash 8-400s resulted in net cash proceeds of US $25.0 million and produced a strong internal rate of return since the acquisition of these aircraft. This disposal also produced an accounting loss related to the wind-up of the special purpose entities that lowered adjusted EBITDA and adjusted net income by $3.4 million and $1.3 million, respectively.
In line with expectations, the Regional Aviation Services segment’s adjusted EBITDA decreased $15.8 million. The decrease reflects the 2019 CPA Amendments which reduced the Fixed Margin and Performance Incentive revenue when Chorus moved to market-based compensation rates. Beyond the changes related to the 2019 CPA amendments, fourth quarter results were impacted by:
increased stock-based compensation of $6.0 million due to the change in the share price inclusive of the reduction related to the change in fair value of the Total Return Swap which was implemented in the fourth quarter of 2019: and
decreased capitalization of major maintenance overhauls on owned CPA aircraft over the previous period of $1.2 million.
Adjusted net income was $23.3 million for the quarter, a decrease of $12.0 million due to:
the $3.4 million decrease in adjusted EBITDA previously described;
an increase in depreciation of $6.6 million primarily related to additional aircraft in the Regional Aircraft Leasing segment;
an increase in net interest costs of $5.3 million primarily related to additional aircraft debt in the Regional Aircraft Leasing segment; and
an increase in non-operating costs of $2.5 million primarily related to the loss on disposal of an engine of $1.2 million and a change in foreign exchange losses of $0.8 million; offset by
a $5.7 million decrease in income tax expense resulting from lower adjusted EBT.
Net income increased $34.3 million primarily due to the change in net unrealized foreign exchange gains on long-term debt of $46.2 million offset by the previously noted $12.0 million decrease in adjusted net income.
Chorus reported adjusted EBITDA of $341.7 million for 2019, an increase of $1.2 million over 2018.
The Regional Aircraft Leasing segment’s adjusted EBITDA increased by $42.4 million was primarily due to the growth in aircraft earning leasing revenue.
In line with expectations, the Regional Aviation Services segment’s adjusted EBITDA decreased by $41.3 million, which reflect the 2019 CPA Amendments which reduced the Fixed Margin and Performance Incentive revenue when Chorus moved to market-based compensation rates. These reductions were partially offset by the implementation of the Controllable Cost Guardrail that mitigated the expected CPA margin shortfall resulting from reduced fees. Beyond the changes related to the 2019 CPA Amendments, 2019 results were impacted by:
increased stock-based compensation of $15.0 million due to the change in the share price inclusive of the reduction related to the change in fair value of the Total Return Swap which was implemented in the fourth quarter of 2019;
decreased capitalization of major maintenance overhauls on owned CPA aircraft of $1.9 million over the previous period; offset by
increased aircraft leasing under the CPA.
Adjusted net income of $96.2 million, decreased over 2018 by $26.1 million due to:
an increase in depreciation of $18.5 million primarily related to additional aircraft in the Regional Aircraft Leasing segment;
an increase in net interest costs of $15.5 million primarily related to additional aircraft debt in the Regional Aircraft Leasing segment; and
an increase in non-operating costs of $5.6 million primarily related to foreign exchange losses of $4.2 million in addition to a loss on disposal of property and equipment of $0.5 million; partially offset by
the $1.2 million increase in adjusted EBITDA previously described; and
a decrease in income tax expense of $12.2 million resulting from lower adjusted EBT.
Net income increased $65.7 million over 2018 due to the change in net unrealized foreign exchange gains on long-term debt of $90.8 million and decreased employee separation program costs of $3.1 million; offset by the previously noted decrease of $26.1 million in adjusted net income and increased signing bonuses of $2.0 million related to the Jazz pilot collective agreement.
(See cautionary statement regarding forward-looking information below)
The 2019 CPA Amendments became effective on a retroactive basis to January 1, 2019. Further information concerning the 2019 CPA Amendments and the Air Canada Investment is contained in the Chorus’ Material Change Reports dated January 24, 2019 and February 13, 2019, which are available on SEDAR at www.sedar.com. The 2019 CPA Amendments resulted in a reduction in fixed fees starting on January 1, 2019, as Chorus moved to market-based rates under the CPA. The reduction was implemented by eliminating the Infrastructure Fee per Covered Aircraft and the Fixed Margin per Covered Aircraft (as this term was defined in the CPA) which were replaced with a single Fixed Margin. As a result, fixed fee revenue in each of 2019 and 2020 is anticipated to be $75.2 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.
Aircraft leasing revenue under the CPA, which is included in the Regional Aviation Services segment, is expected to grow with the delivery of nine committed CRJ900s in 2020, three ESPs to be completed in 2020 and two remaining ESPs by 2022. The Regional Aircraft Leasing segment’s future revenue is expected to grow in 2020 and at a minimum Chorus will have 60 aircraft equivalent earning revenue during the year versus 43 in 2019.
With the addition of the aircraft under both the Regional Aircraft Leasing segment and the aircraft leasing revenue under the CPA, Chorus’ estimated future contracted lease revenue is approximately US $2.1 billion4. When the CPA fixed margin revenue of US $0.6 billion is included with the total future contracted revenue, Chorus’ future revenue approximates US $2.7 billion4. (see footnote 4 in the following table)
Capital expenditures in 2020, including capitalized major maintenance overhauls but excluding expenditures for the acquisition of aircraft and the ESP are expected to be between $38.0 million and $44.0 million. Aircraft related acquisitions and the ESP capital expenditures in 2020 are expected to be between $442.0 million and $452.0 million.
Capitalized terms used but not defined in the Outlook section have the meanings given to them in Management’s Discussion and Analysis (the ‘MD&A’) dated February 12, 2020, which is available on Chorus’ website (www.chorusaviation.com) and SEDAR (www.sedar.com).
The following table provides the number of closed and pending transactions announced to-date:
(expressed in millions of US dollars, except number of aircraft)
‘If the system were working properly, people wouldn’t be feeling this level of frustration’
Sophia Harris · CBC News · Posted: Feb 12, 2020
Canada’s new air passenger regulations mandating compensation for delayed or cancelled flights are off to a bumpy start.
After CBC News posted a story Sunday about complaints from passengers recently denied compensation, more than 50 people have written in, detailing their cases and questioning why their requests for compensation were rejected by the country’s major airlines.
While it’s hard to pinpoint the root causes, it’s clear something has gone off-course with the new rules, said Canadian Automobile Association (CAA) spokesperson Ian Jack, whose organization took part in the consultation process.
“If the system were working properly, people wouldn’t be feeling this level of frustration,” said Jack. “The carriers need to get better at this and the government needs to get better at enforcing the rules.”
On Tuesday, the federal government weighed in on the issue, advising disgruntled passengers to file a complaint with Canada’s airline watchdog, the Canadian Transportation Agency (CTA).
“I encourage Canadians who feel that they did not get an adequate response, where they feel that their rights were not respected, to go to the Canadian Transportation Agency,” said Transport Minister Marc Garneau.
What are the complaints?
The federal government’s new regulations took effect on Dec. 15, mandating that large airlines — such as Air Canada and WestJet — pay up to $1,000 in compensation for a delay that’s within the airline’s control and not safety-related.
Passengers are required to file individual compensation claims with the airlines. But the travellers who contacted CBC say the reasons their compensation requests were rejected either didn’t make sense or didn’t match their version of events.
Most of the complaints involve Air Canada, Canada’s largest airline, which carried more than 50 million passengers in 2018. Air Canada said it fully intends to abide by the new regulations and deals directly with its customers.
Air Canada passengers ‘baffled’ by reasons they were denied compensation for flight delays | CBC News
Air Canada passengers ‘baffled’ by reasons they were denied compensation for flight delays | CBC…Several Air Canada passengers told CBC News they question the airline’s reason why they were denied compensation for delayed flights. According to new federal rules, large airlines must pay up to…cbc.caMA@racer_27
This EXACT same thing happened to me too! Was told flight was cancelled due to crew constraints, now they say it’s safety issue. Filed complaint with @CTA_gc but nothing yet. Would you know what other options to pursue Sophia? I really am mad at @AirCanada, will keep pursuing it!
One passenger from Ottawa, who didn’t want her name published, sent CBC News documents showing that Air Canada denied her compensation for a delayed flight last month, but paid her husband — on the same flight — $1,000.
Kristin Radtke, of Edmonton, had a similar experience. She was denied compensation for a six-hour delay on Christmas Day, but her fiancé received $700.
Greg Holden, of Thunder Bay, Ont., sent documents showing that Air Canada denied him the mandated $1,000 compensation for a 13-hour delay of a Toronto-to-Las Vegas flight on Jan. 17.
The delay forced Holden to spend the night at the airport.
At the time, Air Canada blamed the mishap on “aircraft maintenance.” But when Holden filed his claim, Air Canada turned him down, stating the delay was instead due to “bad weather,” which is considered out of the airline’s control and doesn’t warrant compensation.
“It was clear skies,” said Holden, who is fighting his case. “If there were logical answers, I would likely be more able to accept what happened. But right now, nothing from start to finish has made any sense.”
Growing pains are to be expected with the new regulations, said the National Airlines Council of Canada, a trade association that represents Air Canada, WestJet and Air Transat.
“Bear in mind the regulations are complex and relatively new, and both consumers and industry are adjusting to the new requirements,” CEO Mike McNaney said in an email.
Many flights actually won’t qualify for compensation, he said. “Frequently, delays are caused by issues beyond an airline’s control.”
Regardless of the cause, Ian Jack said passengers deserve a satisfactory explanation that doesn’t leave them questioning the airline’s decision.
“It’s up to the carriers to properly communicate, unless they want to be inundated with complaints.”
Echoing the transport minister’s comments, consumer advocate John Lawford agrees that dissatisfied passengers should file a complaint with the CTA. They might not only win compensation, he said, but it also will give the agency an indication of what may be going wrong.
“If there are standard kinds of excuses that are being pushed out by the airlines, I think that’s an enforcement matter for CTA, and that with time, they will read the riot act to the companies,” said Lawford, who is executive director of the Public Interest Advocacy Centre.
Jack said the CTA needs to release data on the complaints received and the outcomes, so that everyone can assess the situation.
“The next step here is to get more of this information into the public realm, so all of us — watchdogs, media and travellers themselves — can judge whether the system is working the way it should.”
The CTA said it has received an “unprecedented” 9,757 complaints for all airline issues to date, starting from when the first phase of the air passenger regulations took effect on July 15, 2019.
That seven-month period represents an almost 28 per cent increase from the 7,650 complaints the CTA received in its previous entire fiscal year, running from April 1, 2018 to March 31, 2019.
Due to the high volume of complaints, the CTA said it will soon post an “online dashboard” to provide information about the number of complaints it has received, broken down by airline.
Airline says it abides by new federal rules that impose penalties up to $1,000
Sophia Harris · CBC News · Feb 09, 2020
Kristin Radtke was stunned when Air Canada rejected her compensation request for a six-hour flight delay when travelling from Edmonton to Montreal on Christmas Day.
She thought her case was a slam-dunk because her fiancéand travel partner had already filed a claim on Jan. 1 for the same flight — and received $700. But when Radtke filed her claim almost two weeks later, Air Canada replied that her trip delay was due to a safety-related “technical fault” and didn’t warrant compensation.
“I’m just baffled,” said Radtke, who lives in Edmonton. “We’re two identical passengers.”
She’s one of a half-dozen Air Canada passengers CBC News interviewed who question why they were denied compensation for delayed flights which took off after Dec. 15.
The federal government introduced new regulations on Dec. 15, mandating that large airlines — such as Air Canada and WestJet — must pay up to $1,000 in compensation for a flight delay or cancellation that is within the airline’s control and not safety-related.
Air Canada spokesperson Peter Fitzpatrick told CBC News the airline’s policy is to abide by the new regulations. He said he couldn’t comment on the three customer cases detailed in this story because they’re “under appeal.”
Which reason is it?
Radtke believes she deserves compensation not only because her fiancégot cash, but also because when the couple’s original flight was cancelled and had to be rebooked, Air Canada sent a text alert stating the culprit was “crew constraints.”
According to the new regulations, flight delays caused by staffing issues are generally considered within an airline’s control and eligible for compensation. But when Radtke filed her claim, she was told her trip delay was caused instead by a safety-related technical issue.
“It’s either crew constraints or it isn’t,” she said. “How can the reason for a flight cancellation change?”
Radtke filed a complaint with Air Canada on Jan. 22. Despite repeated calls and emails to the airline, she’s still waiting for a response, she said.
“We kind of feel like we’re being stonewalled. It’s just immensely frustrating.”
Hey @AirCanada you’ve denied our compensation request saying the delay was weather related, but we have your original flight notification texts saying delay was due to technical difficulties. Now your customer service has stopped replying to emails. What do you suggest now??
@AirCanada how are scheduling issues out of your control for your flights? Where does your accountability start?
Air Canada passenger Melissa Nickerson is also unhappy with the airline’s decision in her case. She and her husband were travelling from Chicago home to Calgary on Dec. 30 when their flight was cancelled and rebooked, resulting in a delay of more than 13 hours.
According to the new rules, large airlines must pay passengers $1,000 for applicable flight delays longer than nine hours.
When their flight was cancelled, Nickerson and her husband got meal vouchers which stated the cancellation was “controllable.” Air Canada also sent a text alert blaming the mishap on “crew constraints.”
But when Nickerson filed for compensation, the airline rejected her claim, stating that her trip delay was instead due to a safety-related “technical fault.”
“I was disappointed,” said Nickerson. “They were quoting a delay reason that had nothing to do with our flight.”
She filed a complaint with Air Canada on Jan. 22 and is still waiting for a response.
“I was expecting this should be an easy process and it’s cut and dried that I’d be getting compensation,” she said.
Jennifer Janssen was so upset with the explanation Air Canada gave her for a delayed flight, she filed a suit against the airline last month in small claims court.
“I was like, ‘This doesn’t seem right,'” said Janssen, who lives in Hamilton.
On Jan. 1, her flight from Gander, N.L., to Toronto was delayed by more than nine hours due to “crew availability,” according to Air Canada.
But when she filed for compensation for herself and her travel partner, the airline turned Janssen down, stating the delay was due to safety-related “scheduling issues.”
“It’s vague and it leaves a lot open to interpretation,” she said. “They’re leaving information out somewhere.”
Canadian Automobile Association spokesperson Ian Jack said it’s hard to know if an airline’s explanation is valid when it’s lacking in detail.
“People do deserve a cogent, logical response — if there is one. Otherwise the carriers are just going to see a lot of complaints going to the [Canadian Transportation Agency],” said Jack, whose organization took part in the consultation process for the new regulations.
Walker had expected $400 for the delay, as laid out in the new rules. However, WestJet denied his compensation request, stating the culprit was “flight crew member delays from previous day events and outside of WestJet’s control.”
Similar to other passengers, Walker finds the explanation unsatisfactory.
“It seems suspicious,” said Walker who lives in Winnipeg. “The reason they’re still giving is that it’s a flight crew delay, which is actually within their control.”
WestJet told CBC News it follows the new regulations and declined to comment on Walker’s case.
The CTA said in an email that when passengers file a complaint about a flight delay, the airline involved will have to demonstrate why the delay doesn’t warrant compensation.
“If it were discovered that an airline had misrepresented the cause of a delay to the CTA, this would be taken very seriously.”
MONTREAL, Feb. 6, 2020 /CNW Telbec/ – Air Canada has introduced a new payment option for customers by enabling them to use PayPal when purchasing tickets online at aircanada.com in Canada. The popular online payment system offers a secure and convenient means to buy tickets, with customers able to pay for their flights with their preferred payment method – bank account, credit cards or Visa Debit card – linked to their PayPal account.
“Air Canada’s strategy is to continually provide customers the opportunity to make their purchase using their preferred method of payment. We are therefore pleased to announce our agreement with PayPal, the popular online payment system that is secure, fast and convenient to use. Having now made PayPal available for ticket sales in Canada, we will look to expand the program to other markets as opportunities arise,” said Keith Wallis, Senior Director, Payments and Distribution, at Air Canada.
“We’re excited to add Air Canada—our first airline partner in Canada—to a growing fleet of airlines across the globe that leverage our global e-commerce platform to expand their reach,” said Paul Parisi, PayPal Canada President. “Our two companies share the same goal to provide a great checkout experience for travellers, so they spend less time buying tickets online and more time enjoying their trip.”
PayPal has more than 300 million active users worldwide.