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February 15, 2018

Chorus Aviation has strong year, momentum

HALIFAX--Chorus Aviation Inc. announced solid year-end and fourth quarter financial results for fiscal year ended December 31, 2017.

"I'm very pleased with the significant progress made in 2017 towards our vision of delivering regional aviation to the world," said Joe Randell, President and Chief Executive Officer, Chorus. "The successful launch of Chorus Aviation Capital and its rapid build to a global business has propelled the value of Chorus' portfolio of leased aircraft to over one billion dollars and demonstrated the strength of our growth and diversification strategy. We have been methodical and deliberate in deploying the $200 million gross proceeds from our convertible debt unit financing with Fairfax Financial. Within a relatively short period of time we've concluded leasing agreements with eight well-established regional carriers in eight countries located on six continents. We have strong momentum.

"Our expertise in aircraft engineering, maintenance, repair and overhaul coupled with our experience in all other areas of regional operations is what differentiates us from the competition. We're demonstrating our ability to leverage and capitalize on the entire lifecycle of an aircraft – from its origination, to conducting modifications and engineering to accommodate customer needs, including life extension programs on aircraft – to repurposing aircraft and marketing them for flying contracts or disassembly for parts provisioning.

"From a financial point of view, our contract flying and maintenance, repair and overhaul businesses performed according to our expectations and contributed to increases in all key financial metrics including growth in adjusted EBITDA and adjusted net earnings of 15 and 12 percent respectively year over year. I am grateful to our employees for their hard work and for recognizing the power of our vision.

"We finished 2017 on a very positive note when we returned to the S&P/TSX Composite Index – a strong endorsement of our strategy to transform our organization to a worldwide leader in providing regional aviation services. The focus in 2018 will be relatively consistent with 2017 – to execute on our foundational businesses in Jazz and Voyageur, and to leverage our industry relationships and expertise as we continue to build Chorus Aviation Capital," concluded Mr. Randell.

2017 Strategic Accomplishments

The Chorus group of companies accomplished several strategic initiatives in support of its corporate objectives to grow and diversify the business, and improve its cost competitiveness. Highlights of 2017 included:

Regional Aircraft Leasing

By the end of 2017, Chorus Aviation Capital completed the acquisition of 21 aircraft and leased them to brand name regional carriers based in eight countries on six continents. These aircraft have an average age of less than three years and have an average leasing term greater than seven years. Together with the 43 aircraft leased under the Capacity Purchase Agreement ('CPA') with Air Canada, Chorus' leased fleet of 64 aircraft is worth over one billion dollars.
To date CAC has acquired:

>four CRJ1000s leased to Air Nostrum;
>three ATR 72-600s leased to Flybe:
>three ATR 72-600s leased to Virgin Australia;
>three Bombardier Q400s leased to Falcon Aviation Services;
>one Embraer 190 leased to KLM Cityhopper;
>three Embraer 190s leased to Aeromexico Connect;
>two Embraer 195s leased to Azul Brazilian Airlines; and
>two Q400 aircraft leased to Ethiopian Airlines.
>Aircraft leasing under the CPA increased by $16.9 million or 17.1% with the addition of five new CRJ900s, five Q400s and four Dash 8-300s (post completion of an extended service program).
>Contract Flying

Operated over 230,000 Air Canada Express flights carrying just under 11 million passengers on behalf of Air Canada. Commenced new contract flying missions in Sweden, Denmark and Aruba. Transitioned a significant portion of the workforce to new industry competitive wage scales; urrently 52% of Jazz pilots are operating under the new collective agreement. Added 10 efficient aircraft (five CRJ900s, five Q400s) and removed six less efficient aircraft (three CRJ200s, three Dash 8-100s). Available seat miles increased by approximately 3% over 2016.

Completed the world's first Extended Service Program ('ESP') on a Dash 8-300 aircraft. The ESP extends the life of the aircraft by approximately 15 years. Four ESPs were conducted and a minimum of 12 additional aircraft are scheduled to undergo the program by the end of 2019.

Became an Authorized Service Facility for Bombardier Commercial Aircraft at the MRO base in Halifax.
Executed on third-party maintenance contracts and increased the number of heavy maintenance lines at the Halifax facility from three to five lines.

Engineered a Supplemental Type Certificate and converted two former Jazz Dash 8-100 aircraft to Package Freighters and leased them to a third party. This conversion was the first of its kind with a Dash 8-100.

Parted out seven aircraft to support strong market demand for part sales.

Demonstrated strong technical capabilities through maintenance and engineering contracts including inflight entertainment and wireless GOGO installations, cabin seat reconfigurations of CRJ705 and Q400 aircraft, and the refurbishment of certain aircraft interiors.
Dividend Reinvestment Program ('DRIP')

Effective February 1, 2018 Chorus implemented a DRIP that allows Chorus to offer a discount of up to 5% from the average market price for shares purchased under the DRIP. Chorus is currently offering a discount of 4%. Details are provided at http://chorusaviation.ca/dividend-reinvestment-plan.

The DRIP provides shareholders who are resident in Canada the opportunity to purchase additional Chorus shares using cash dividends paid on shares enrolled in the DRIP. All shares purchased under the DRIP are newly issued by the Corporation from treasury, and the proceeds received by Chorus are used for general corporate purposes. Some of the benefits of participating in the DRIP include the current discount of 4%, the convenience of automatic reinvestment, savings from not having to pay brokerage fees or other service charges for shares purchased under the DRIP, and the ability to acquire fractional shares.

 

 

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