Continued strong profitability since 2006
HALIFAX, Nov. 14, 2013 /CNW/ - Chorus Aviation Inc. ("Chorus") (TSX: CHR.B CHR.A CHR.DB) today issued its third quarter 2013 earnings.
"We are pleased to report adjusted net income of $27.7 million for the
third quarter of 2013, one of our highest in any quarter since
converting from an income fund to a corporate structure on December 31,
2010," stated Joseph Randell, President and Chief Executive Officer,
Chorus. "Further, we generated $55.8 million in EBITDA, an increase of
$4.3 million or 8.2% over the third quarter of 2012. The growth in
EBITDA during the quarter was primarily attributable to the addition of
six new Q400 aircraft to the fleet in the first quarter of this year
which coincided with the retirement of the last CRJ-100 aircraft.
During the past four years we have replaced a total of 32 50-seat CRJ
aircraft with 21 new and more efficient 74-seat Q400s."
"Standardized Free Cash Flow was $30.8 million during the quarter and
has been positive for the past two quarters since the Q400 delivery
program was completed in March 2013," continued Mr. Randell. "This has
been a contributing factor to our improving liquidity position which
included approximately $150.0 million in cash at the end of the third
quarter. Our continued attention to safety, operational excellence and
responsible fiscal management are pillars of our solid foundation and
contributed to these strong financial results."
"We achieved the best on-time arrival performance of Canada's primary
airlines during the quarter, and October marked our eleventh
consecutive month in this leading position," said Randell. "Our
operational expertise has allowed us to build an airline with superior
scope and scale, and has earned us a reputation for safe, reliable and
efficient service. I commend our employees for their continued focus on
safety and operational excellence."
Q3 2013 HIGHLIGHTS
Operating revenue of $432.3 million.
EBITDA1 of $55.8 million; EBITDA margin of 12.9%.
Operating income of $39.3 million.
Net income of $36.0 million, or $0.29 per basic share.
Adjusted net income1 of $27.7 million, or $0.23 per basic share.
Standardized free cash flow1 of $30.8 million.
Billable Block Hours of 98,668.
Financial Performance -Third Quarter 2013 Compared to Third Quarter 2012
Operating revenue decreased from $435.6 million to $432.3 million,
representing a decrease of $3.4 million or 0.8%. Passenger revenue,
excluding pass-through costs, increased by $1.8 million or 0.7%
primarily as a result of rate increases made pursuant to the Capacity
Purchase Agreement ('CPA') with Air Canada, a higher US dollar exchange
rate and a $1.0 million increase in incentives earned under the CPA
with Air Canada; offset by decreased CPA Billable Block Hours.
Pass-through costs reimbursed by Air Canada decreased from $166.1
million to $160.9 million, a decrease of $5.2 million or 3.1%, which
included a decrease of $2.3 million related to fuel costs.
Operating expenses decreased from $399.3 million to $393.0 million, a
decrease of $6.3 million or 1.6%. Controllable Costs decreased by $1.1
million, or 0.5%, and pass-through costs decreased by $5.2 million or
Salaries, wages and benefits decreased by $3.7 million, primarily as a
result of a reduction in the number of full time equivalent employees,
a 3.4% decrease in Block Hours, and higher capitalized salaries and
wages related to major maintenance overhauls; offset by voluntary
employee severance costs related to flight crew and maintenance
employees, wage and scale increases under new collective agreements,
and increased pension expense resulting from a revised actuarial
Depreciation and amortization expense increased by $1.3 million,
primarily related to the purchase of Q400 aircraft, increased capital
expenditures on aircraft rotable parts and other equipment, and
increased major maintenance overhauls; offset by certain assets having
reached full amortization and a change in the estimated residual value
of the Dash 8-100 and 300 aircraft.
Aircraft maintenance expense decreased by $1.1 million as a result of a
$0.9 million reduction reflecting the cessation of Thomas Cook activity
as of the comparative quarter, and decreased Block Hours of $2.2
million; offset by increased other maintenance costs of $0.2 million
and an increase in the US-dollar exchange rate on certain material
purchases of $1.8 million.
Aircraft rent decreased by $1.8 million primarily as a result of the
return of CRJ100 aircraft; offset by a higher US dollar exchange rate.
Other expenses increased by $1.8 million primarily due to increased
professional and consulting fees; offset by decreased general overhead
Non-operating income decreased by $2.9 million. This change was mainly
attributable to a decrease of $2.9 million in foreign exchange (of
which $1.7 million was related to a decrease in unrealized foreign
exchange gain on long-term debt and finance leases) and a gain related
to the sale of Chorus' office and hangar facility in London, Ontario of
$1.3 million; offset by increased interest expense related to Q400
aircraft financing of $0.2 million.
EBITDA1 was $55.8 million compared to $51.5 million in 2012, an increase of
$4.2 million or 8.2%, producing an EBITDA margin of 12.9%. Standardized
free cash flow was $30.8 million.
Operating income of $39.3 million was up $2.9 million or 8.0% over third
quarter 2012 from $36.4 million.
Net income for the third quarter of 2013 was $36.0 million or $0.29 per
basic share, a decrease of $0.9 million or 2.5% from $36.9 million or
$0.30 per basic share. On an adjusted basis, net income was $27.7
million or $0.23 per basic share, an increase of 3.0% or $0.01 per
basic share from $26.9 million or $0.22 per basic share. A
reconciliation of these measures to their nearest GAAP measure is
provided in Chorus' Management's Discussion and Analysis dated November
Final arguments were presented by the parties in September 2013 and as
of November 13, 2013 the final award from the arbitration panel had not
been received. Chorus continues to anticipate receiving the
arbitration panel's decision in this quarter and remains confident in
its position that there should be no change to the current mark-up on
controllable costs under the CPA as a result of this arbitration.
Chorus Aviation Inc.'s unaudited interim condensed consolidated
financial statements for the period ended September 30, 2013 and
accompanying Management's Discussion and Analysis (MD&A) are available
at www.chorusaviation.ca and at www.sedar.com. A copy may also be obtained on request by contacting Investor
Relations at: email@example.com or (902) 873-5094.
Investor Conference Call / Audio Webcast
Chorus will hold an analyst call at 9:30 a.m. ET on Thursday, November
14, 2013 to discuss the third quarter 2013 results. The call may be
accessed by dialing 1-888-231-8191. The call will be simultaneously
audio webcast via: www.newswire.ca/en/webcast/detail/1236449/1362077 or in the Investor Relations section at www.chorusaviation.ca. This is a listen-in only audio webcast. Media Player or Real Player is
required to listen to the broadcast; please download well in advance of
The conference call webcast will be archived on Chorus' Investor
Relations website at www.chorusaviation.ca. A playback of the call can also be accessed until midnight ET,
November 21, 2013, by dialing (416) 849-0833 or toll-free 1-
855-859-2056, and passcode 76544558# (pound key).
1 Non-GAAP Financial Measures
EBITDA (earnings before interest, taxes, depreciation, amortization and
obsolescence) is a non-GAAP financial measure commonly used throughout
all industries to view operating results before interest expense,
interest income, depreciation and amortization, gains and losses on
property and equipment and other non-operating income and expenses.
Management believes EBITDA assists investors in comparing Chorus'
performance on a consistent basis without regard to depreciation and
amortization, which are non-cash in nature and can vary significantly
depending on accounting methods and non-operating factors such as
historical cost. EBITDA should not be used as an exclusive measure of
cash flow because it does not account for the impact on working capital
growth, capital expenditures, debt repayments and other sources and
uses of cash, which are disclosed in the statement of cash flows which
form part of the financial statements.
STANDARDIZED FREE CASH FLOW
Standardized Free Cash Flow is defined as cash flows from operating
activities, as reported in accordance with GAAP, less total capital
expenditures and dividends.
ADJUSTED NET INCOME
Adjusted net income and adjusted earnings per share are calculated by
adjusting net income by the amount of any unrealized foreign exchange
gains and losses on long-term debt and finance leases. During the third
quarter of 2013, Chorus recorded an $8.3 million gain in unrealized
foreign exchange on long-term debt and finance leases. These
adjustments more clearly reflect earnings from an operating
Caution regarding forward-looking information
This news release should be read in conjunction with Chorus' unaudited
interim condensed consolidated financial statements for the period
ended September 30, 2013 and MD&A dated November 13, 2013 filed with
Canadian Securities regulatory authorities (available at www.sedar.com).
Certain statements in this news release may contain statements which are
forward-looking. These forward-looking statements are identified by the
use of terms and phrases such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "predict", "project",
"will", "would", and similar terms and phrases, including references to
assumptions. Such statements may involve but are not limited to
comments with respect to strategies, expectations, planned operations
or future actions.
Forward-looking statements relate to analyses and other information that
are based on forecasts of future results, estimates of amounts not yet
determinable and other uncertain events. Forward-looking statements, by
their nature, are based on assumptions, including those described
below, and are subject to important risks and uncertainties. Any
forecasts or forward-looking predictions or statements cannot be relied
upon due to, amongst other things, changing external events and general
uncertainties of the business. Such statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements to differ materially from
those expressed in the forward-looking statements. Results indicated in
forward-looking statements may differ materially from actual results
for a number of reasons, including without limitation, risks relating
to Chorus' relationship with Air Canada, risks relating to the airline
industry, energy prices, general industry, market, credit, and economic
conditions, competition, insurance issues and costs, supply issues,
war, terrorist attacks, epidemic diseases, acts of God, changes in
demand due to the seasonal nature of the business, the ability to
reduce operating costs and employee counts, secure financing, employee
relations, labour negotiations or disputes, restructuring, pension
issues, currency exchange and interest rates, leverage and restructure
covenants in future indebtedness, dilution of Chorus shareholders,
uncertainty of dividend payments, managing growth, changes in laws,
adverse regulatory developments or proceedings, pending and future
litigation and actions by third parties. The forward-looking statements
contained in this discussion represent Chorus' expectations as of
November 14, 2013, and are subject to change after such date. However,
Chorus disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required under applicable
About Chorus Aviation Inc.
Chorus Aviation Inc. was incorporated on September 27, 2010 and is a
dividend-paying holding company which owns Jazz Aviation LP and Chorus
Leasing III Inc.
Chorus is traded on the Toronto Stock Exchange under the trading symbols
of CHR.A, CHR.B and CHR.DB.
For more information, visit www.chorusaviation.ca
About Jazz Aviation LP
Jazz Aviation LP has a strong history in Canadian aviation with its
roots going back to the 1930s. Jazz is wholly owned by Chorus Aviation
Inc. and continues to generate some of the strongest operational and
financial results in the North American aviation industry.
There are two airline divisions operated by Jazz Aviation LP: Air
Canada Express and Jazz.
Air Canada Express: Under a capacity purchase agreement with Air Canada,
Jazz provides service to and from lower-density markets as well as
higher-density markets at off-peak times throughout Canada and to and
from certain destinations in the United States. In the third quarter of
2013, Jazz operated scheduled passenger service on behalf of Air Canada
with approximately 790 departures per weekday to 53 destinations in
Canada and to 25 destinations in the United States. With a fleet of 122
Canadian-made Bombardier aircraft, Jazz flies more daily flights to the
most Canadian destinations than any other carrier.
Jazz: Under the Jazz brand, the airline offers charters throughout North
America with a dedicated fleet of five Bombardier aircraft for
corporate clients, governments, special interest groups and individuals
seeking more convenience. Jazz also has the ability to offer airline
operators services such as ground handling, dispatching, flight load
planning, training and consulting.
For more information, visit www.flyjazz.ca.
SOURCE: Chorus Aviation Inc.
For further information:
Manon Stuart (902) 873-5054 Halifax, Nova Scotia firstname.lastname@example.org
Debra Williams (905) 671- 7769 Toronto, Ontario email@example.com
Nathalie Megann (902) 873-5094 Halifax, Nova Scotia firstname.lastname@example.org