HALIFAX, NS, Jan. 14, 2021 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) announced that its subsidiary Jazz Aviation LP (‘Jazz’) has been selected as one of Nova Scotia’s Top Employers by Mediacorp Canada Inc.
“Jazz is proud to be headquartered in Nova Scotia, continuously working to create opportunities and provide a diverse and inclusive workplace where employees have the support they need to succeed,” said Randolph deGooyer, President, Jazz. “We are honored to receive recognition from Mediacorp for the tenth time.”
Nova Scotia’s Top Employers is an annual competition that recognizes employers leading their industries in offering exceptional workplaces. Mediacorp’s evaluation of the various candidates is based on the same eight criteria as the national competition: physical workplace; work and social atmosphere; health, financial and family benefits; vacation and time off; employee communications; performance management; training and skills development; and community involvement.
In selecting Jazz for the tenth year in a row, Mediacorp cited a number of employee programs offered by the company, including engagement, reward, retirement planning, internship, mentoring and training initiatives.
HALIFAX, NS, Jan. 7, 2021 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) announced that its subsidiary Jazz Aviation LP (‘Jazz’) was recognized as one of Atlantic Canada’s Top Employers for the tenth consecutive year.
“We are pleased to be recognized as an organization that provides exceptional employee support and development programs as well as forward-thinking workplace policies,” said Randolph deGooyer, President, Jazz. “Making Jazz a great place for our employees to develop and succeed is something we’re very proud of.”
This special designation by MediaCorp Canada Inc. recognizes employers in Atlantic Canada that lead their industries in offering exceptional places to work. Employers are evaluated on their physical workplaces; work and social atmospheres; health; financial and family benefits; vacation and time off; employee communications; performance management; training and skills development and community involvement.
Jazz was recognized for encouraging employees to keep skills sharp throughout their careers with formal mentoring, in-house and online training, as well as idea sharing initiatives which leverage employee experience to increase productivity and improve customer service and operational efficiency. The company helps employees prepare for the future with retirement planning assistance and contribution to a pension plan and seeks to develop an ownership culture through a share purchase program, available to all employees. Exceptional performance is recognized through the Jazz Ensemble Plus program, rewarding employees for achieving operational and customer satisfaction goals.
HALIFAX, NS, Dec. 23, 2020 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) announced today the delivery of two new Airbus A220-300 aircraft to airBaltic of Latvia. The aircraft (MSNs 55094 and 55095) are the final two of five units placed on long-term lease with the airline through a committed sale and leaseback transaction announced on November 20, 2019.
In December 2013, airBaltic became the first operator of the A220-300 aircraft and in May 2020, the carrier re-launched as an all Airbus A220 airline. “airBaltic continues to safely expand its services following the pandemic crisis and is offering flights to more than 65 destinations from all three Baltic countries,” said Vitolds Jakovļevs, Chief Financial Officer, airBaltic. “The aircraft has performed beyond the airline’s expectations, delivering better overall performance and fuel efficiency while offering an excellent flying experience.”
“We applaud airBaltic’s successful resumption and expansion of services across Europe,” stated Joe Randell, President and Chief Executive Officer, Chorus. “The state-of-the-art, Canadian-built A220 aircraft is leading the charge in helping airlines around the world resume operations as travel demand increases with the implementation of rapid testing and distribution of vaccines to limit the spread of COVID-19.”
This story is part of The Big Spend, a CBC News investigation examining the unprecedented $240 billion the federal government handed out during the first eight months of the pandemic.
Air Canada has received the largest amount of government pandemic aid of all publicly traded companies in Canada that have disclosed their finances to shareholders to date, a CBC News investigation has found.
The country’s largest airline reported that it collected $492 million in public funds through the Canada Emergency Wage Subsidy (CEWS) to pay its employees over a period ending Sept. 30, according to Toronto Stock Exchange (TSX) and TSX Venture Exchanges filings.
According to CBC’s findings from information posted to date, that’s roughly four times more than the second-highest sum paid to a publicly traded company through the wage subsidy, which went to Imperial Oil. The Calgary-based energy giant disclosed it received $120 million from CEWS. Linamar, a large automobile parts manufacturer, and Air Transat also received more than $100 million each to help cover salaries.
Air Canada said that at the beginning of the COVID-19 pandemic, it employed about 40,000 people — making it one of the “larger private sector employers in Canada” in an industry hit “disproportionately hard” by the pandemic.
“Put simply, we are by far the biggest company in perhaps the worst industry,” Air Canada spokesperson Peter Fitzpatrick wrote in a statement issued to CBC News.
Despite Air Canada receiving hundreds of millions of dollars to pay its workers, the air carrier is in the midst of private negotiations with the federal government on a possible industry-specific support package. Some experts argue the carrier is using travellers’ demands for refunds for cancelled flights as leverage to pressure the government during the negotiations.
John Gradek, a former Air Canada executive and lecturer at McGill University’s global aviation leadership program, claims the airline industry is “bullying” the government into bailing out the sector, arguing that other countries have already done so. He said Air Canada is playing a “shell game” of its own.
“I think it’s a little bit of gamesmanship that’s being played by Air Canada,” Gradek said. “They’re insisting that those refunds will only be processed if the Canadian government, through the Canadian taxpayer, is providing the funds for those refunds. Not a good thing.”
CBC News analyzed data from more than 2,000 publicly traded companies listed on the TSX and TSX venture exchanges and identified 400 businesses that have already filed public disclosures indicating they received taxpayer support.
While the figures reviewed by CBC News indicate Air Canada has received the most taxpayer-funded pandemic support of any company to date, there could still be other companies that have received more and have not yet publicly disclosed the sums.
WestJet, Sunwing, Porter Airlines and Flair Airlines all received the wage subsidy to help cover their payrolls; none of them trade on the TSX and none of them have disclosed to CBC News the amount of money they received. Chorus Aviation, which owns regional airlines Jazz and Voyageur, received almost $97 million through the wage subsidy, according to TSX filings.
In total, the federal government spent $1.4 billion helping Canadian airlines pay up to 75 per cent of employee wages during the pandemic, according to the federal government’s fall economic update, released last week.
‘The biggest company in perhaps the worst industry’
No one from Air Canada would sit for an interview with CBC News. In a media statement, the airline said it received a substantial amount for the wage subsidy because it employs so many people, and “as much as 95 per cent of our revenue disappearing virtually overnight, which is why the government is now looking at specific sectoral support for our industry, just as governments around the world have already done for their airlines.”
“Given this, it is only to be expected that we are a relatively large user of CEWS — our next biggest domestic competitor was less than one-third our size in terms of employees at the outset of COVID,” Fitzpatrick said.
As the pandemic crushes airline industry revenue, passengers — many of them struggling financially — have been angrily demanding that the federal government force airlines to refund them for cancelled flights.
More than 100,000 Canadians have joined petitions calling for government action on refunds, and several class-action lawsuits have been filed against airlines.
Air Canada holding $2.3B in revenue from ticket sales
Air Canada’s president and CEO, Calin Rovinescu, told Bloomberg News earlier this month that despite the financial hit, his airline has already paid back $1.2 billion in refundable airfares.
Rovinescu told Bloomberg on Nov. 18 that he has “no quarrel” at all with refunding customers for non-refundable flights, “assuming that the terms of the support package are adequate and the terms are appropriate and reasonable.”
Air Canada has reported that, as of the end of September, it had $2.3 billion in revenue on hand from ticket sales — about 65 per cent of which came from non-refundable fares.
Gradek argues that Air Canada has the money to pay the refunds but is using it as a bargaining chip in bailout negotiations with the federal government.
“Air Canada does have the cash,” he said, pointing to the airline’s $8 billion in unrestricted liquidity as of September. “Air Canada does not need government funding in order for it to process those refunds.”
No more sectoral support without refunds, says Garneau
Transport Minister Marc Garneau said he has made it clear to airlines that they must pay out the refunds before they can get any more government aid.
“We said very clearly no — until they commit in writing to refund passengers, they will not get a cent from the Canadian government,” he said.
When asked by CBC News whether Ottawa would allow airlines to use taxpayer dollars to refund passengers, Garneau said he would not go into details since the negotiations with the airlines are confidential.
But he did suggest that if airlines meet the government’s requirements for financial support and commit in writing to refunding passengers, carriers could qualify for help. The government has imposed conditions on bailing out air carriers that require them to issue refunds, maintain air connections throughout Canada and honour any orders placed with Canadian aerospace companies.
“It takes a while to do that refunding because there are quite a few passengers, but once the refund agreement is signed — a very specific undertaking by both sides — then they’ll be in a position to receive our assistance as they begin the refunding process,” Garneau said.
Transport Minister Marc Garneau said the government is currently in confidential talks with major airlines about an industry-specific aid package contingent on a number of strict conditions.
‘I’m extremely upset about it’
Air Canada customer Calvin Hill said he feels like a “hostage.”
He and his wife said they can’t afford rent in Medicine Hat, Alta., because they’re out $4,000 for Air Canada flights they never took. They say they’re sleeping in their daughter’s basement.
“I’m extremely upset about it,” Hill said. “Then to find out that the airlines want to turn around and have us Canadian taxpayers bail them out while they refuse to turn around and refund the monies back to us — it’s very upsetting.”
Hill, who retired last year, planned to take the trip of a lifetime to Asia with his wife. Then the pandemic hit and the government told all Canadians to come home in March.
Air Canada wouldn’t allow the couple to board their original flights out of Bangkok to get home due to travel restrictions on one of their layovers, Hill said. As a result, he and his wife had to pay for flights home with another carrier.
Hill claims an Air Canada agent promised to refund their tickets, but he’s still fighting for the money more than eight months later. He said he’s out roughly four months’ rent.
“They’re holding us as people with outstanding vouchers or refunds hostage unless we tell them, ‘Well, you give me a dollar in my left hand and I’ll give you a dollar back in my right hand to pay for it,'” he said. “Which I think is ridiculous.”
Major gap in Canada’s Air Passenger Protection Regulations
Air Canada said it’s offering non-refundable ticket holders travel credits with no expiry date that can be transferred to others or to “convert their booking to Aeroplan points and with an additional 65 per cent bonus.”The airline said this option is in line with direction given by the Canadian Transportation Agency.
Scott Streiner, chair and CEO of the Canadian Transportation Agency, testified in front of MPs last week that there is a gap in Canada’s Air Passenger Protection Regulations that no one saw coming. Canadian airlines are not obligated to refund passengers if cancellations are out of a carrier’s control, he said.
“[The regulations] refund obligation applies exclusively to flight cancellations within airlines controls,” Streiner told the transport committee on Dec 1. “We now know the gap highlighted by the pandemic is significant.”
Streiner said if and when the CTA gets authority to fix that gap, “we’ll fix it.”
In contrast, Air Canada is offering customers who flew out of Europe a refund for non-refundable tickets after “extensive discussions” with European Union members.
Air Canada in talks with government
Air Canada’s third-quarter results report to investors shows the dramatic impact the pandemic has had on the company. The airline says it saw an 88 per cent drop in passenger traffic due to the pandemic and travel restrictions.
The airline did earn $757 million in the third quarter, but that represented an 86 per cent drop of $4.7 billion from its earnings in the same time period in 2019.
Bleeding cash, Air Canada took what it called “the painful step” of cutting half of its workforce in June — 20,000 jobs — and indefinitely suspended 30 domestic regional routes. The carrier also retired some planes early and postponed or cancelled the delivery of some new aircraft, according to the company’s financial records.
Wesley Lesosky is the president of the Air Canada component of CUPE, which represents 6,000 laid-off flight attendants. He said Air Canada should have kept those people employed through the wage subsidy program, as other airlines did.
Lesosky is also the president of the union’s airline division, which represents 15,000 flight attendants at other airlines, including Air Transat, Sunwing and WestJet.
“If the government’s going to give an employer that amount of assistance, which is quite high, it should have conditions tied to it where the workers are actually protected,” he said.
Air Canada, meanwhile, told CBC News that Canada is “somewhat of an outlier among developed nations in not having a targeted, sectoral support program for the aviation industry.”
The carrier points to the International Air Transport Association’s chief economist, who stated recently that more than $160 billion US in government aid has gone to airlines globally.
The U.S. and some European countries have given billions in financial aid to airlines. In some cases, there were strings attached to that aid, such as governments taking equity stakes in the airlines and requiring them to issue refunds.
HALIFAX, NS, Nov. 2, 2020 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) is proud to announce that its subsidiary, Jazz Aviation LP (‘Jazz’), was named among Canada’s Safest Employers 2020 winning gold in the Public Transportation category. Canada’s Safest Employers awards were announced at a virtual gala event held on October 22.
“We are honoured to be recognized once again as one of Canada’s Safest Employers. It is testimony to our strong safety culture, where all employees share the responsibility of supporting Jazz’s core value of safety first,” said Randolph deGooyer, President, Jazz. “Our collaborative approach plays a vital role in our pursuit of safety excellence.”
This is Jazz’s fourth consecutive year accepting awards at the Canada’s Safest Employers event. Last year, Jazz received the gold award in the Transportation category; in 2018, Jazz was awarded silver in the Transportation and Psychological Safety categories; and in 2017, Jazz won gold in the Transportation category.
Launched in 2011, Canada’s Safest Employers awards recognize companies from across Canada with outstanding accomplishments in promoting the health and safety of their employees. Companies are evaluated on a wide range of occupational safety and health (‘OSH’) elements, including employee training, OSH management systems, incident investigation, emergency preparedness and innovative health and safety initiatives.
HALIFAX, Oct. 23, 2020 /CNW/ – In response to a request from IIROC, Chorus Aviation Inc. (“Chorus” or the “Company”) (TSX: CHR) confirmed today that it has received a preliminary, non-binding acquisition proposal from a third party that is subject to a number of significant conditions. There can be no assurance that any transaction will occur, or as to the timing, structure or terms of any transaction. Chorus does not intend to make further comment unless or until there is a transaction to announce.
HALIFAX, NS, Sept. 21, 2020 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) announced today the delivery of a new Airbus A220-300 aircraft to airBaltic of Latvia. The aircraft (MSN 55086) is the third of five units to be placed on long-term lease with the airline through a committed sale and leaseback transaction. The two remaining aircraft are expected to be delivered later this year.
airBaltic has safely resumed and expanded its services following the pandemic crisis and is now connecting 35 European destinations to its Riga hub. “The recent crisis enabled us to push forward our decision to introduce an Airbus A220-300 single type fleet. It allows us to minimize complexity and benefit from the additional efficiency provided by the aircraft. With a partner like Chorus Aviation, we will continue our growth and add additional jets in the future,” said Martin Gauss, President and Chief Executive Officer, airBaltic.
“We’re very encouraged and pleased to help support airBaltic’s resumption and expansion of services across Europe,” stated Joe Randell, President and Chief Executive Officer, Chorus. “The A220 is leading the pack of aircraft returning to the skies as operators around the world slowly begin to resume flight operations. This state-of-the-art, Canadian-built aircraft has the right economics and passenger appeal to help operators recover from the negative effects caused by the COVID-19 pandemic.”
airBaltic (Air Baltic Corporation AS) is one of the most punctual airlines in the world connecting the Baltic region with over 60 destinations in Europe, the Middle East, and the CIS. airBaltic is a joint stock company that was established in 1995. Its primary shareholder is the Latvian state, which holds 96.14% of the stock, while Lars Thuesen holds 3.86% through his fully-owned Aircraft Leasing 1 SIA. airBaltic operates 22 Airbus A220-300 aircraft. airBaltic has received numerous international awards for excellence and innovative services. In 2017, the airline received the CAPA Regional Airline of the Year award, while in 2018 and 2019 airBaltic received the ATW Airline Industry Achievement Award as the Market Leader of the Year. In addition, in 2019 airBaltic received Sector Leadership Award by Airline Business.
About Chorus Aviation Inc.
Chorus is a global provider of integrated regional aviation solutions. Chorus’ vision is to deliver regional aviation to the world. Headquartered in Halifax, Nova Scotia, Chorus is comprised of Chorus Aviation Capital a leading, global lessor of regional aircraft, and Jazz Aviation and Voyageur Aviation – companies that have long histories of safe operations with excellent customer service. Chorus provides a full suite of regional aviation support services that encompassesevery stage of an aircraft’s lifecycle, including aircraft acquisitions and leasing; aircraft refurbishment, engineering, modification, repurposing and preparation; contract flying; aircraft and component maintenance, disassembly, and parts provisioning.
Layoffs are part of effort to eliminate about 65% of Chorus Aviation’s staff
CBC News · Posted: Sep 01, 2020
Chorus Aviation Inc. has laid off about 100 employees at its maintenance site in Halifax, according to Unifor Local 2002, the union that represents some of the company’s workforce.
The job losses are part of sweeping cuts Chorus is making across the country that will see it eliminate about 65 per cent of its staff, almost 3,200 employees. The layoffs were announced earlier this year after the COVID-19 pandemic led to a massive reduction in air travel.
A spokesperson from the company, which is headquartered in Halifax and leases aircraft to regional airlines, said the staff reductions were gradual and some took effect last week. The employees who lost their jobs were placed on inactive status a few months ago.
Euila Leonard, a spokesperson with Unifor, said the layoffs are all maintenance engineers working at the Halifax Stanfield International Airport for Jazz Aviation, which is operated by Chorus.
Leonard said there are traditionally about 350 maintenance employees at the Halifax location.
“The work continues at the Halifax site and as things start to turn around in the sector, I would anticipate a return to the pre-COVID staffing levels with the Jazz maintenance group,” she said.
Leonard said it’s a difficult time for all the workers in the aviation sector as travel restrictions continue.
“We could see this industry turn around, [but] it’s incumbent on the government to get involved and help let the public know it’s safe to travel,” she said. “We need to open up our borders sooner rather than later.”
Net income of $29.2 million, or $0.18 per basic share; a period-over-period decrease of $9.7 million due to the global economic impact of COVID-19 on its results, partially offset by a change in unrealized foreign exchange of $6.3 million.
Adjusted net income1 of $21.6 million, or $0.13 per basic share; a decrease of $2.5 million quarter-over-quarter due to the economic impact of COVID-19 noted above.
Adjusted EBITDA1 of $91.0 million; an increase of $5.3 million over second quarter 2019 primarily generated by the growth in aircraft leasing.
Liquidity, inclusive of available credit, was $189.0 million as at June 30, 2020.
Aircraft transactions completed post the second quarter further increased liquidity by $39.0 million, bringing total liquidity to $228.0 million.
Third-party leasing revenue collected in July grew to 38%, up from approximately 28% in June 2020.
HALIFAX, NS, Aug. 12, 2020 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced second quarter 2020 financial results and an update on the impact of COVID-19.
“The global aviation industry continues to be significantly challenged by the effects of the COVID-19 epidemic. Our focus remains on ensuring the safety of our employees and passengers and maintaining ample liquidity. The team has dramatically reduced costs, curtailed capital investment and raised new funding. With $228 million in liquidity, we are well positioned to manage through an extended recovery period and to participate in the growth of the aviation industry in the future,” stated Joe Randell, President and Chief Executive Officer, Chorus.
“The COVID-19 crisis, provincial and federal government-imposed travel restrictions and border closures continue to have a devastating effect on passenger demand for Canadian air travel. While these may have been necessary in the beginning, Canada’s federal and interprovincial travel restrictions are now one of the most severe in the world. The mandatory two-week quarantine requirement in Nova Scotia, as an example, makes doing business very difficult. The Canadian and provincial governments need to look to other G20 countries that have implemented safe, thoughtful, practical and science-based approaches to strategically easing travel restrictions in order to enable business and economies to restart and succeed within this new normal. Unlike other countries, Canada has not provided sector support to the aviation industry.”
“Since the start of this crisis, we’ve had to make very difficult but necessary decisions, including the reduction to our workforce by approximately 65%, or almost 3,200 employees. At the end of the second quarter, Air Canada announced the discontinuation of 21 Air Canada Express regional routes operated by Jazz, and the closure of eight Jazz-managed stations at regional airports. I am saddened by the impact these service cancellations have on our employees, suppliers and the affected communities many of which have lost their only link to Canada’s domestic and global air service networks. These are unprecedented times; I respect and understand the tough choice our partner, Air Canada, has had to make. Without regional air service, many businesses, academia and tourism operators will struggle. Action needs to be taken by government to ensure Canada has an efficient and accessible air transportation network across our vast country.”
“While the industry remains challenged and fragile, we are encouraged by some positive signs of a resurgence. As expected, regional aircraft have been affirmed as fundamentally important to most countries’ domestic transportation networks. Regional aviation is generally resuming flying earlier and at a quicker pace than long-haul travel. For example, in the second quarter our Air Canada Express operation flew approximately 9% of the block hours flown in the same period last year; however, we expect this to increase to be between 20% and 30% for the balance of this year compared to 2019. Approximately 50% of our third-party leased fleet is now flying with the number of flight hours up from the low points of this past spring.”
“The prolonged uncertainty and instability triggered by the pandemic has caused most aircraft lessors around the world to provide rent deferrals to lessees and to review asset valuations. Our assessment of the economic impact of COVID-19 on Chorus Aviation Capital’s overall leasing portfolio with a net book value of $1.5 billion, led to a non-cash impairment provision of $9.5 million in the quarter, representing less than 1% of Chorus’ leased aircraft portfolio.”
“Overall, our portfolio of leased aircraft is holding up well. Approximately 28% of lease revenue was collected in the second quarter and subsequently increased to approximately 38% in July. Although the industry remains under significant stress, we are encouraged by the improving traffic trends and the utilization of regional aircraft when compared with other aircraft types.”
“We recognize the revitalization of the regional sector will be protracted, sporadic and will extend well into 2021 and beyond. We are taking all reasonable measures to protect and preserve our company and the value we’ve created for our shareholders. I extend my gratitude to all our employees who have done tremendous work to ensure we weather this crisis. Their continued commitment, resilience and focus on safety have been critical,” concluded Mr. Randell.
Second Quarter Summary
In the second quarter of 2020, Chorus reported adjusted EBITDA of $91.0 million, an increase of $5.3 million over the second quarter of 2019.
The Regional Aircraft Leasing segment’s adjusted EBITDA increased by $8.2 million primarily related to the growth in aircraft earning leasing revenue partially offset by a $1.1 million expected credit loss provision related to management’s assessment of its lessees’ credit risk.
The Regional Aviation Services segment’s adjusted EBITDA decreased by $2.9 million. The second quarter results were impacted by:
a reduction in other revenue due to a decrease in third-party maintenance, repair and overhaul (‘MRO’) activity, lower aircraft part sales, and reduced contract flying in Voyageur due to the economic impact of COVID-19;
decreased capitalization of major maintenance overhauls on owned aircraft operated under the capacity purchase agreement (‘CPA’) between Jazz and Air Canada of $2.9 million over the previous period; and
expected credit loss and inventory provisions of $1.3 million in Voyageur; partially offset by
decreased stock-based compensation of $2.6 million due to the change in the Share price inclusive of the change in fair value of the Total Return Swap;
increased aircraft leasing under the CPA; and
decreased general administrative expenses.
Adjusted net income was $21.6 million for the quarter, a decrease of $2.5 million due to:
an increase in depreciation of $5.9 million primarily related to additional aircraft in the Regional Aircraft Leasing segment;
an increase in net interest costs of $3.2 million primarily related to the 5.75% Unsecured Debentures, the unsecured revolving credit facility and additional aircraft debt in the Regional Aircraft Leasing segment; and
a decrease of $1.8 million due to a loss of $0.4 million versus a gain of $1.4 million on disposal of property and equipment; partially offset by
a $5.3 million increase in adjusted EBITDA as previously described;
a $2.5 million decrease in income tax expense resulting from a reduction in EBT1 combined with a decrease in certain provincial tax rates and non-deductible expenses of $5.0 million offset by a tax recovery on adjusted items of $2.5 million; and
a decrease of $0.6 million in realized foreign exchange and unrealized foreign exchange losses on working capital.
Net income decreased $9.8 million due to the previously noted $2.5 million decrease in adjusted net income, $9.5 million on impairment provisions and $8.0 million on lease repossession costs; offset by the change in net unrealized foreign exchange on long-term debt of $6.3 million, tax recovery on adjusted items of $2.5 million and decreased employee separation program costs of $1.4 million.
Chorus reported adjusted EBITDA of $179.6 million year-to-date, an increase of $19.2 million over 2019.
The Regional Aircraft Leasing segment’s adjusted EBITDA increased by $24.7 million which was primarily due to the growth in aircraft earning leasing revenue partially offset by a $1.1 million expected credit loss provision related to management’s assessment of its lessees’ credit risk.
The Regional Aviation Services segment’s adjusted EBITDA decreased by $5.5 million. The 2020 results were impacted by:
a reduction in other revenue due to a decrease in third-party MRO activity, lower aircraft part sales, and reduced contract flying in Jazz and Voyageur due to the economic impact of COVID-19;
decreased capitalization of major maintenance overhauls on owned CPA aircraft of $1.3 million over the previous period; and
expected credit loss and inventory provisions of $1.3 million in Voyageur; partially offset by
decreased stock-based compensation of $5.2 million due to the change in the Share price inclusive of the change in fair value of the Total Return Swap and
increased aircraft leasing under the CPA.
Adjusted net income was $45.5 million year-to-date, an increase over 2019 of $2.9 million due to:
a $19.2 million increase in adjusted EBITDA as previously described;
a decrease in income tax expense of $2.9 million resulting from a reduction in EBT combined with a decrease in certain provincial tax rates and non-deductible expenses of $5.9 million offset by a tax recovery on adjusted items of $3.0 million; and
a decrease of $2.0 million in realized foreign exchange and unrealized foreign exchange losses on working capital; partially offset by
an increase in depreciation of $11.7 million primarily related to additional aircraft in the Regional Aircraft Leasing segment and impairment on aircraft;
an increase in net interest costs of $7.6 million primarily related to additional aircraft debt in the Regional Aircraft Leasing segment, the 5.75% Unsecured Debentures and the unsecured revolving credit facility; and
a decrease of $1.8 million due to a loss of $0.4 million versus a gain of $1.4 million on disposal of property and equipment.
Net income decreased $60.5 million over 2019 due to the change in net unrealized foreign exchange on long-term debt of $48.8 million, $15.5 million on non-cash impairment provisions, $2.0 million on lease repossession costs net of the Flybe security package recovered, and increased employee separation program costs of $2.1 million; offset by the previously noted increase of $2.9 million in adjusted net income, tax recovery on adjusted items of $3.0 million and decreased signing bonuses of $2.0 million related to the Jazz pilot collective agreement.
Year-to-date and first quarter operating revenue and expense increased by $8.1 million and $8.0 million, respectively due to a reclassification of the impairment on aircraft and repossession costs from revenue, which previously offset the related security packages recovered, to depreciation, amortization and impairment and other expenses.
Other includes gain on disposal of property and equipment.
These are non-GAAP financial measures.
(See cautionary statement regarding forward-looking information below)
The COVID-19 pandemic and resulting government restrictions have created unprecedented challenges for the aviation industry and global cancellations are impacting airlines around the world. Substantially all Chorus’ revenue is derived from airline customers, through its CPA and its leasing of aircraft to airline customers globally; therefore, Chorus is exposed to the challenges facing the air passenger industry. Currently, the full duration and impact of this pandemic on aviation are unknown.
Regional Aviation Services:
Since March 31, 2020, Jazz implemented significant permanent and temporary employee reductions impacting 65% of its workforce. Contingent upon qualification, Jazz plans to utilize the Canada Emergency Wage Subsidy for the remainder of the program to December 31, 2020.
Jazz expects to operate between approximately 20% to 30% of its capacity in the third and fourth quarters of 2020 compared to the same periods in 2019.
In accordance with the CPA, the Fixed Margin does not vary with the number of aircraft and is fixed for 2020 based on agreed annual amounts.
As of June 30, 2020, the Controllable Cost Guardrail receivable from Air Canada was $17.6 million. Chorus expects the receivable to be between $20.0 million and $40.0 million to the end of 2020.
Due to the economic impact of COVID-19, Chorus delayed the delivery of six of the nine planned CRJ900 deliveries until December 2020. Chorus began earning leasing revenue from the three delivered CRJ900s in June 2020.
Voyageur continues to provide overseas humanitarian flights and cargo services, and the air ambulance operation in New Brunswick. Voyageur’s MRO and parts sales operations experienced lower demand during the quarter due to the impact of COVID-19. Contingent upon qualification, Voyageur plans to utilize the Canada Emergency Wage Subsidy for the remainder of the program to December 31, 2020. MRO services demand has subsequently increased necessitating the return of employees previously on temporary layoff. Voyageur currently represents less than 10% of Chorus’ consolidated revenue and net income.
Regional Aircraft Leasing:
Chorus has received requests from substantially all its Regional Aircraft Leasing segment customers for some form of temporary rent relief, as they cope with an unprecedented reduction in passenger demand. The period of relief most commonly spans three to 12 months with repayment terms typically between 12 and 24 months. As of June 30, 2020, Chorus Aviation Capital’s lease deferral receivable was $38.4 million. These deferrals are estimated to increase Chorus’ trade receivables to approximately $60.0 million by the end of the year. Chorus received $10.4 million or approximately 28% of lease revenue billed in the second quarter from its lessees. Chorus received approximately 38% of its lease revenue billed in July 2020. Consistent with market norms, these leases are generally for a fixed term, contain an absolute payment obligation on the part of the lessee, and cannot be terminated early for convenience.
Subsequent to June 30, 2020, Chorus extended a loan deferral program, with its largest lender, that allows Chorus to defer scheduled payments under certain aircraft loans to the end of the year for those lessees so long as the rent under the corresponding leases is deferred. Repayment of the deferrals is required over the course of the subsequent 12 months. The balance deferred as of June 30, 2020 was US $12.8 million and the total amount that could be deferred by December 31, 2020 is estimated to be up to US $30.4 million. Details are provided in the Outlook section of Chorus’ Management’s Discussion and Analysis (‘MD&A’) dated August 12, 2020.
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 $23.0 million and $29.0 million. Aircraft related acquisitions and ESP capital expenditures in 2020 are expected to be between $481.0 million and $487.0 million1.
The following table provides the number of closed and pending and/or delayed transactions announced to date:
2016 – Q1 2020
Q4 2020 and thereafter
2016 – Q1 2020
Total 2016 – 2020(2)
Aircraft to be remarketed
Total Regional Aircraft Leasing
Total Regional Aviation Services(6)
Chorus Total Aircraft
As of August 12, 2020, there were 64 committed aircraft in the Regional Aircraft Leasing segment. These lease commitments are subject to satisfaction of customary conditions precedent to closing including receipt of financing for the aircraft.
Total announced transactions as of August 12, 2020.
On June 30, 2020, Aeromexico filed for voluntary Chapter 11 petitions in the United States in order to implement a financial restructuring.
On April 17, 2020, CityJet entered an examinership process in Ireland. CAC is in the process of repossessing two CRJ900s previously on lease to CityJet pursuant to a negotiated termination agreement which provides for the early termination of the leases and return of the aircraft to CAC.
Virgin Australia entered into voluntary administration on April 20, 2020. Chorus has recently been advised by the administrators of Virgin Australia that the airline intends to terminate its lease agreement with CAC for the three ATR72-600s and work with CAC to facilitate an orderly return of the aircraft.
The Regional Aviation Services segment’s commitments include the following pending and delayed transactions: six CRJ900s, four Dash 8-300s that will undergo the ESP planned for between 2020 – 2022, and five 75-78 seat aircraft, all of which are intended to earn leasing revenue under the CPA. All pending acquisitions and lease commitments are subject to satisfaction of customary conditions precedent to closing.
HALIFAX, NS, June 30, 2020 /CNW/ – Chorus Aviation Inc. (TSX: CHR) (‘Chorus’) provides the following comment on Air Canada’s announcement earlier today regarding the discontinuation of service to certain regional markets.
Air Canada has announced the discontinuation of 30 regional routes, 21 of which are operated by Jazz Aviation LP (‘Jazz’), and the closure of eight stations at regional airports, all of which are managed by Jazz. Details of the route suspensions and station closures are provided in Air Canada’s news release.
“The COVID-19 crisis and provincial and federal government-imposed travel restrictions and border closures are having a significant negative effect on passenger demand for Canadian air travel,” commented Joe Randell, President and Chief Executive Officer, Chorus. “I am saddened by the impact today’s announcement will have on our employees, suppliers and the affected communities, but respect and understand the difficult choice our partner, Air Canada, has had to make.”
Jazz and Air Canada are parties to a capacity purchase agreement (the ‘CPA’) with a term extending through the end of 2035. Under the CPA, Air Canada purchases substantially all of Jazz’s fleet capacity and pays certain fixed margin fees, performance incentives and compensation for operating costs (including aircraft lease rents) and makes all decisions with respect to marketing that capacity. Jazz’s compensation does not vary with flight activity and remains unchanged with this announcement.