Decreased passenger demand for aviation services due to global
travel restrictions and health concerns related to COVID-19
reduced certain of the key financial metrics for the fourth quarter
and year ended December 31, 2020 as
shown below:
Q4 2020 Highlights
- Net income of $9.2 million, or
$0.06 per basic share; a
period-over-period decrease of $27.4
million, offset by a change in unrealized foreign exchange
of $25.3 million.
- Adjusted net income1 of $7.7
million, or $0.05 per basic
share; a decrease of $15.6 million
quarter-over-quarter.
- Adjusted EBITDA1 of $82.0
million; a decrease of $6.7
million over fourth quarter 2019.
- Liquidity of approximately $201.0
million. As part of its liquidity strategy, Chorus
successfully amended the repayment terms of certain of its loan
agreements in the fourth quarter as outlined in the capital
discussion below.
- Chorus purchased and started earning leasing revenue on five
CRJ900s, bringing the total to eight delivered under the CPA in
2020.
- Delivered final two of five new Airbus A220-300 aircraft to
airBaltic of Latvia.
- Collected approximately 60% of lease revenue billed in the
fourth quarter; a 10% improvement over third quarter 2020.
2020 Annual Highlights
- Net income of $41.5 million, or
$0.26 per basic share; a
period-over-period decrease of $91.7
million.
- Adjusted net income of $64.0
million, or $0.40 per basic
share; a decrease of $30.9 million
year-over-year.
- Adjusted EBITDA of $347.5 million
increased by $5.7 million
period-over-period, primarily due to additional aircraft leasing
revenue offset by the impact of COVID-19 on results.
HALIFAX, NS, Feb. 18, 2021 /CNW/ - Chorus Aviation Inc.
('Chorus') (TSX: CHR) today announced fourth quarter and
year-end 2020 financial results and an update on the impact of the
COVID-19 pandemic on the business.
"The COVID-19 crisis brought a deep, global reduction in
passenger demand and onerous travel restrictions, imposing
significant financial hardship on our customers. The crisis
forced us to pivot from offense to defense; shifting from our plans
of organic growth to building liquidity and protecting the balance
sheet," stated Joe Randell,
President and Chief Executive Officer, Chorus.
"Overall, the resiliency of our business model and the
dedication of our team delivered respectable financial performance
despite the unprecedented challenges the aviation industry
worldwide is experiencing. Year-over-year adjusted EBITDA was
relatively consistent due primarily to the fixed fee nature of our
contract with Air Canada and modest growth in aircraft leasing
revenue."
"We closed 2020 with approximately $200
million in liquidity and we anticipate this to be relatively
stable to the end of this year. Preserving liquidity remains
a priority given the duration and ultimate impact of the pandemic
on our industry are unknown. We understand that the financial
losses airlines are incurring are not sustainable in the long term.
We continue to work with Air Canada and our leasing customers to
help them manage the economic pressures they are facing as a
consequence of the sustained reduction in demand for passenger air
travel. We are confident that air travel will return, but given the
uncertainty of when, we continue to take the steps necessary to
protect the company."
"The health and safety of our employees and customers are major
areas of focus. I continue to be amazed at the resiliency of our
team and I sincerely thank them for doing all possible to maintain
the safety and integrity of our operations. Many of our
smaller and regional communities are without air service and I
certainly appreciate the hardship and uncertainty we all
face. With over half of our employees on inactive status,
this situation needs urgent attention. We've been very active
advocating for our industry with key government stakeholders to
ensure the sustainability of regional aviation services is top of
mind when making these policy decisions. The air industry
needs sector support given the circumstances. I look forward
to resuming service and providing critical links to the rest of
Canada and the world through the
Air Canada network, and we are eager to do so. I'm hopeful
our government will soon introduce its plan to assist our vital
sector given its importance to the social fabric of Canada and any economic recovery," concluded
Mr. Randell.
Liquidity
As of December 31, 2020, Chorus' liquidity was
approximately $201.0 million
including cash of $165.7 million and
$35.3 million of available room on
its operating credit facility. Liquidity decreased from the third
quarter by approximately $17.0
million primarily due to the equity funding on two
previously committed A220-300s acquired in the fourth quarter as
well as working capital requirements.
In 2020, Chorus successfully implemented the following measures
as part of its liquidity strategy by:
- Renegotiating certain of the debt facilities repayment terms in
December 2020 as outlined in the
Capital section below.
- Utilizing the Canada Emergency
Wage Subsidy ('CEWS') program in Jazz and Voyageur and netting the
$120.5 million government grant
against salaries, wages and benefits expense in 2020. Although Jazz
received CEWS of $115.6 million, this
grant did not contribute to Jazz's operating income as it was
either passed onto Air Canada as a reduction in Controllable Costs
or paid to inactive employees. The CEWS received for active
employees of $63.1 million reduced
the amount of the Controllable Cost Guardrail receivable from Air
Canada.
- Suspending dividend payments and the Dividend Reinvestment Plan
('DRIP') following the payment of the March
2020 dividend on April 17,
2020. This measure saved approximately $40.0 million in dividend payments in 2020. On an
annual basis this measure is estimated to save approximately
$55.0 million in annual cash
payments, assuming a DRIP participation rate of 29%.
- Suspending all incremental aircraft lease portfolio
acquisitions beyond those committed.
- Reducing non-essential maintenance and other capital
expenditures as a result of reduced flying and other business
activity in Jazz and Voyageur.
- Implementing pay reductions for members of the management and
administrative team and Board of Directors in 2020.
- Offering voluntary employee separation program packages during
the year to reduce overhead costs in Jazz.
Chorus currently expects its liquidity to be relatively stable
to the end of 2021 as it continues with measures to manage
liquidity based on the continuation of the reduction of
non-essential capital expenditures, reduction of overhead costs and
the utilization of the CEWS by Jazz and Voyageur for the remainder
of the program, contingent upon qualification.
Fourth Quarter 2020 Summary
In the fourth quarter of 2020, Chorus reported adjusted EBITDA
of $82.0 million, a decrease of
$6.7 million relative to the fourth
quarter of 2019.
The Regional Aircraft Leasing ('RAL') segment's adjusted EBITDA
decreased by $7.8 million primarily
due to a $3.6 million expected credit
loss provision and lower lease margins attributable to off-lease
aircraft partially offset by additional aircraft earning leasing
revenue.
The Regional Aviation Services ('RAS') segment's adjusted EBITDA
increased by $1.1 million.
The fourth quarter results were impacted by:
- a decrease in stock-based compensation of $2.5 million due to the change in the share price
inclusive of the change in fair value of the Total Return
Swap;
- an increase in aircraft leasing under the CPA primarily related
to additional revenue of $3.1 million
earned from two incremental Dash 8-300s and eight incremental
CRJ900s in 2020 versus 2019; and
- a decrease in general administrative expenses; offset by
- a decrease in capitalization of major maintenance overhauls on
owned aircraft operated under the CPA of $1.9 million over the previous period;
- a reduction in other revenue due to a decrease in third-party
maintenance repair and overhaul ('MRO') activity and reduced
contract flying resulting from the economic impact of COVID-19;
and
- an expected credit loss of $0.6
million.
Adjusted net income was $7.7
million for the quarter, a decrease of $15.6 million due to:
- a $6.7 million decrease in
adjusted EBITDA as previously described;
- an increase in depreciation of $3.0
million primarily related to additional aircraft;
- an increase in net interest costs of $3.8 million primarily related to the 5.75%
Unsecured Debentures added in December
2019, new credit facilities and additional aircraft debt;
and
- an increase of $6.0 million in
realized foreign exchange and unrealized foreign exchange losses on
working capital; offset by
- a $3.5 million decrease in
adjusted income tax expense resulting from a reduction in
EBT1 of $9.3 million
offset by tax recovery on adjusted items of $5.8 million; and
- a decrease in other of $0.4
million.
Net income decreased $27.4 million
due to the previously noted decrease in adjusted net income of
$15.6 million, a general aircraft
impairment provision of $41.6
million, lease repossession costs of $0.5 million, signing bonuses of $0.5 million, and employee separation program
costs of $0.4 million; offset by the
change in net unrealized foreign exchange on long-term debt of
$25.3 million and tax recovery on
adjusted items of $5.8 million.
2020 Year-End Summary
Chorus reported adjusted EBITDA of $347.5
million for 2020, an increase of $5.7
million over 2019.
The RAL segment's adjusted EBITDA increased by $12.9 million which was primarily due to
additional aircraft earning leasing revenue partially offset by an
$8.8 million allowance for expected
credit loss provision and lower lease margins attributable to
off-lease aircraft.
The RAS segment's adjusted EBITDA decreased by $7.2 million. The 2020 results were impacted
by:
- a reduction in other revenue due to a decrease in third-party
MRO activity, reduced part sales and reduced contract flying
resulting from the economic impact of COVID-19;
- a decrease in capitalization of major maintenance overhauls on
owned aircraft operated under the CPA of $5.9 million over the previous period; and
- an expected credit loss provision of $1.5 million; partially offset by
- a decrease in stock-based compensation of $9.3 million due to the change in the share price
inclusive of the change in fair value of the Total Return
Swap:
- an increase in aircraft leasing under the CPA primarily related
to additional revenue of $9.9 million
earned from two incremental Dash 8-300s and eight incremental
CRJ900s in 2020 versus 2019; and
- a decrease in general administrative expenses.
Adjusted net income was $64.0
million year-to-date, a decrease over 2019 of $30.9 million due to:
- an increase in depreciation of $19.2
million related to additional aircraft;
- an increase in net interest costs of $19.0 million related to additional aircraft
debt, the 5.75% Unsecured Debentures added in December 2019 and on new credit facilities;
- an increase of $1.3 million on
loss of disposal of property and equipment; and
- an increase of $6.9 million in
realized foreign exchange and unrealized foreign exchange losses on
working capital; partially offset by
- a $5.7 million increase in
adjusted EBITDA as previously described;
- a decrease in adjusted income tax expense of $9.3 million resulting from a reduction in EBT of
$19.6 million offset by tax recovery
on adjusted items of $10.3 million;
and
- a decrease in other of $0.4
million.
Net income decreased $91.7 million
over 2019 due to the previously noted decrease of $30.9 million in adjusted net income, a general
aircraft impairment provision of $68.2
million, $3.2 million on lease
repossession costs and increased employee separation program costs
of $2.5 million; offset by tax
recovery on adjusted items of $10.3
million, decreased signing bonuses of $1.5 million under union collective agreements
and the change in net unrealized foreign exchange on long-term debt
of $1.4 million.
Consolidated Financial Analysis
|
|
|
(expressed in
thousands of Canadian dollars)
|
Three months ended
December 31,
|
Year ended
December 31,
|
2020
|
2019
|
Change
|
Change
|
2020
|
2019
|
Change
|
Change
|
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
|
|
|
|
|
|
|
|
Operating
revenue
|
218,166
|
338,606
|
(120,440)
|
(35.6)
|
948,721
|
1,366,447
|
(417,726)
|
(30.6)
|
Operating
expenses
|
219,383
|
287,173
|
(67,790)
|
(23.6)
|
834,174
|
1,165,984
|
(331,810)
|
(28.5)
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
(1,217)
|
51,433
|
(52,650)
|
(102.4)
|
114,547
|
200,463
|
(85,916)
|
(42.9)
|
Net interest
expense
|
(23,493)
|
(19,730)
|
(3,763)
|
(19.1)
|
(90,774)
|
(71,768)
|
(19,006)
|
(26.5)
|
Foreign exchange
gain
|
31,297
|
11,901
|
19,396
|
163.0
|
25,156
|
30,613
|
(5,457)
|
(17.8)
|
Loss on property and
equipment
|
(1,370)
|
(1,665)
|
295
|
17.7
|
(1,946)
|
(1,048)
|
(898)
|
(85.7)
|
|
|
|
|
|
|
|
|
|
Earnings before
income tax
|
5,217
|
41,939
|
(36,722)
|
(87.6)
|
46,983
|
158,260
|
(111,277)
|
(70.3)
|
Income tax recovery
(expense)
|
3,940
|
(5,362)
|
9,302
|
173.5
|
(5,497)
|
(25,100)
|
19,603
|
78.1
|
|
|
|
|
|
|
|
|
|
Net income
|
9,157
|
36,577
|
(27,420)
|
(75.0)
|
41,486
|
133,160
|
(91,674)
|
(68.8)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
81,972
|
88,636
|
(6,664)
|
(7.5)
|
347,454
|
341,719
|
5,735
|
1.7
|
Adjusted
EBT(1)
|
9,578
|
28,646
|
(19,068)
|
(66.6)
|
80,995
|
121,263
|
(40,268)
|
(33.2)
|
Adjusted net
income(1)
|
7,667
|
23,268
|
(15,601)
|
(67.0)
|
64,041
|
94,978
|
(30,937)
|
(32.6)
|
|
(1) These
are non-GAAP financial measures.
|
Outlook
(See cautionary statement regarding
forward-looking information below)
The COVID-19 pandemic and resulting government restrictions have
created unprecedented challenges for the passenger aviation
industry around the world. Even though Chorus' business model does
not directly expose it to the market risks ordinarily faced by
airlines, substantially all its source revenue is derived from
airline customers, through its CPA and its leasing of aircraft to
airline customers globally. The full extent of the duration and
therefore the impact of this pandemic are unknown. Chorus continues
to work with Air Canada and its customers to assist as they manage
the economic pressures they face.
Regional Aviation Services:
Jazz expects to operate between approximately 14% and 20% of its
capacity in the first quarter of 2021 compared to the first quarter
of 2020.
In January 2021, approximately 50%
of Jazz employees were furloughed, which is down from its lowest
point of 65% in the second quarter of 2020 due to an increase in
flying operations. Contingent upon qualification, Jazz plans to
utilize the CEWS for the remainder of the program's availability,
which has been extended to the end of June
2021.
Jazz earns a Fixed Margin which was set for 2020 as an aggregate
amount irrespective of the number of Covered Aircraft and
thereafter is based on the number of Covered Aircraft under the
CPA. The Fixed Margin under the CPA for 2021 is currently fixed at
not less than $64.5 million compared
to $74.2 million earned in 2020.
As of December 31, 2020, the Controllable Cost Guardrail
receivable from Air Canada was $44.2
million. Chorus expects the receivable to be between
$15.0 million and $45.0 million in 2021.
Chorus started earning leasing revenue on five additional
CRJ900s delivered under the CPA near the end of the fourth quarter
of 2020, bringing the total CRJ900 aircraft received in 2020 to
eight. Chorus received the ninth CRJ900 in February 2021.
Voyageur continues to perform overseas humanitarian flights and
cargo services, and the air ambulance operation in New Brunswick. Voyageur's contract flying,
charter sales and MRO services revenues all improved over the third
quarter of 2020 and the momentum is expected to be sustained in
2021. Parts sales operations experienced lower demand during the
quarter due to the impact of COVID-19. Voyageur currently
represents less than 10% of Chorus' consolidated revenue and net
income.
Regional Aircraft Leasing:
Chorus has received requests from substantially all its RAL
segment customers for some form of temporary rent relief, as they
cope with an unprecedented reduction in demand for passenger air
travel. With the exception of the rent relief agreements that
include lease term extensions, the arrangements typically provide
short-term rent relief of between three and twelve months, with
repayment terms approximating two years. Chorus Aviation Capital's
('CAC') gross lease receivable was $56.3
million (US $44.2 million) as
of December 31, 2020 and is not
estimated to materially change by the end of the 2021. CAC's gross
lease deferral receivable exposure is partially mitigated by
security packages held of approximately US $19.0 million. Chorus collected approximately 60%
of lease revenue billed in the fourth quarter from its lessees,
excluding repossessed aircraft, a 10-percentage point improvement
over the third quarter of 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.
Capital:
In December 2020, Chorus amended
the terms of a warehouse credit facility used for aircraft
acquisitions to, among other things, cancel the remaining available
credit under the facility (and the associated commitment fees),
leaving the balance outstanding under the facility at US
$127.9 million (CAD $162.8 million).
In December 2020, Chorus amended
the terms of the US $100.0 million
unsecured revolving credit facility obtained in April 2020, to replace a bullet repayment of the
entire facility at maturity in April
2022 with repayment over eight equal instalments of
principal and interest starting in July
2022 and ending in April
2024.
In December 2020, Chorus amended
the loan deferral program repayment terms from 12 months to 18
months beginning in January 2021.
Chorus' loan deferral program with its largest lender allowed it to
defer scheduled payments under certain aircraft loans to the end of
2020 so long as the lease rent under the corresponding leases was
deferred. The balance deferred as of December 31, 2020 was US
$28.9 million.
In December 2020, Chorus also
amended the terms of its aircraft loans with its largest lender in
order to remove the remarketing period deadline in respect of
aircraft repossessed up to April 24,
2021. This eliminates the requirement to repay the principal
amount of the loans prior to maturity if the aircraft are not
re-leased by the end of the remarketing period so long as Chorus
continues to make the regularly scheduled principal and interest
payments and otherwise complies with the loan terms (refer to note
2 to the following table).
As of December 31, 2020, Chorus
had 13 aircraft off-lease. The aggregate scheduled principal
payments on long-term debt, associated with these off-lease
aircraft was as follows:
|
|
|
|
Aircraft
Type
|
Number of
Aircraft
|
Total
Debt
|
Remarketing
Period
|
|
|
(US$
Millions)
|
|
Dash 8-400
|
2
|
10.2
|
March 2,
2021
|
Dash 8-400
|
3
|
Nil
|
Not
Applicable
|
CRJ900
|
2
|
30.8
|
Indefinite(1)
|
ATR72-600
|
6
|
66.3
|
Indefinite(1)
|
Total
|
13
|
107.3
|
|
(1)
|
Loans with
remarketing period exemptions provided Chorus continues to make the
regularly scheduled principal and interest payments and otherwise
comply with the loan terms.
|
The following table provides the number of closed and
pending/delayed transactions(1) announced to-date:
|
|
|
|
|
|
|
|
|
Completed
Transactions
|
Pending/Delayed
Transactions(1)
|
Committed
Transactions
|
Customer
|
2016 -
Q3 2020
|
Q4
2020
|
Total
|
Q1
2021
|
Q2 2021 and
thereafter
|
2016 -
Q3 2020
|
Increase
(Decrease)
|
Total 2016 -
2020(2)
|
|
|
|
|
|
|
|
|
|
Aeromexico
|
3
|
|
3
|
|
|
3
|
|
3
|
Air
Nostrum
|
4
|
|
4
|
|
|
4
|
|
4
|
airBaltic
|
3
|
2
|
5
|
|
|
5
|
|
5
|
Azul
Airlines
|
5
|
|
5
|
|
|
5
|
|
5
|
Croatia
Airlines
|
2
|
|
2
|
|
|
2
|
|
2
|
Ethiopian
Airlines
|
5
|
|
5
|
|
|
5
|
|
5
|
Indigo
|
8
|
|
8
|
|
|
8
|
|
8
|
Jambojet
|
3
|
|
3
|
|
|
3
|
|
3
|
KLM
Cityhopper
|
1
|
|
1
|
|
|
1
|
|
1
|
Malindo
Air
|
4
|
|
4
|
|
|
4
|
|
4
|
Philippine
Airlines
|
3
|
|
3
|
|
|
3
|
|
3
|
SpiceJet
|
5
|
|
5
|
|
|
5
|
|
5
|
Wings Air
|
1
|
|
1
|
|
|
1
|
|
1
|
Undisclosed
customer
|
—
|
|
—
|
|
2
|
2
|
|
2
|
Aircraft to be
remarketed(3)
|
13
|
|
13
|
|
|
13
|
|
13
|
|
|
|
|
|
|
|
|
|
Total Regional
Aircraft Leasing
|
60
|
2
|
62
|
—
|
2
|
64
|
—
|
64
|
|
|
|
|
|
|
|
|
|
Total Regional
Aviation Services(4)
|
57
|
5
|
62
|
1
|
8
|
71
|
—
|
71
|
|
|
|
|
|
|
|
|
|
Chorus Total
Aircraft
|
117
|
7
|
124
|
1
|
10
|
135
|
—
|
135
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All pending
acquisitions and lease commitments are subject to satisfaction of
customary conditions precedent to closing including receipt of
financing for the aircraft.
|
(2)
|
Total announced
transactions as of February 18, 2021.
|
(3)
|
CAC is actively
remarketing 13 off-lease aircraft resulting from lease
terminations.
|
(4)
|
The RAS segment's
commitments include the following pending transactions: At
December 31, 2020, there was one CRJ900 (received February
2021), three Dash 8-300 ESPs planned for between 2021 - 2022, and
five 75-78 seat aircraft, all of which are intended to earn leasing
revenue under the CPA.
|
Capital expenditures in 2021, including capitalized major
maintenance overhauls but excluding expenditures for the
acquisition of aircraft and the ESP, are expected to be between
$32.0 million and $38.0 million. Annual related acquisitions and
ESP capital expenditures in 2021 are expected to be between
$100.0 million and $110.0 million
(1)
|
|
|
(expressed in thousands of Canadian dollars)
|
|
Actual
|
|
Year
ended
|
Year
ended
|
Planned
2021(1)
|
December 31,
2020
|
December 31,
2019
|
$
|
$
|
$
|
Capital expenditures,
excluding aircraft acquisitions and ESP
|
12,000 to
15,000
|
11,727
|
31,547
|
Capitalized major
maintenance overhauls(2)
|
20,000 to
23,000
|
7,529
|
14,444
|
Aircraft related
acquisitions and ESP
|
100,000 to
110,000
|
386,881
|
829,710
|
|
132,000 to
148,000
|
406,137
|
875,701
|
(1)
|
The 2021 plan
includes one ESP and one CRJ900 in the RAS segment as well as two
ATR72-600s for the RAL segment all of which have been converted
using a foreign exchange rate of 1.2732, the December 31, 2020
closing day rate from the Bank of Canada. It excludes any potential
additional investments in third-party aircraft, beyond these
already committed. All pending acquisitions and lease commitments
are subject to satisfaction of customary conditions precedent to
closing.
|
(2)
|
Planned 2021, Actual
2020 and 2019, includes $18.4 million, $6.1 million, and $12.0
million, respectively that will be and have been included in the
Controllable Costs.
|
Further, capitalized terms used but not defined in the Outlook
section have the meanings given to them in the MD&A which is
available on Chorus' website (www.chorusaviation.com) and
SEDAR (www.sedar.com).
Acquisition Proposal Update
On October 23, 2020, in response
to a request from the Investment Industry Regulatory Organization
of Canada, Chorus confirmed that
it had received a preliminary, non-binding acquisition proposal
from a third party that was subject to a number of significant
conditions. That proposal is no longer being considered. However,
Chorus is having discussions with the same party regarding a
potential investment.
Investor Conference Call / Audio Webcast
Chorus will hold an analyst call at 9:00 a.m. ET on Friday, February 19, 2021 to discuss the fourth
quarter and year-end 2020 financial results. The call may be
accessed by dialing 1-888-231-8191. The call will be simultaneously
audio webcast via:
https://produceredition.webcasts.com/starthere.jsp?ei=1419394&tp_key=844653550e
This is a listen-in only audio webcast.
The conference call webcast will be archived on Chorus' website
at www.chorusaviation.com under Investors > Reports
> Executive Management Presentations. A playback of the
call can also be accessed until midnight
ET, February 26, 2021 by
dialing toll-free 1-855-859-2056, and using passcode
7798468#.
1NON-GAAP FINANCIAL MEASURES
This news release references several non-GAAP financial measures
to supplement the analysis of Chorus' results. Chorus uses
certain non-GAAP financial measures, described below, to evaluate
and assess performance. These non-GAAP measures are generally
numerical measures of a company's financial performance, financial
position or cash flows, that include or exclude amounts from the
most comparable GAAP measure. As such, these measures are not
recognized for financial statement presentation under GAAP, do not
have a standardized meaning, and are therefore not likely to be
comparable to similar measures presented by other public
entities.
Adjusted Net Income, Adjusted EBT and Adjusted EBITDA
Due to the economic impact of COVID-19 on the global airline
industry, Chorus revised its definition of Adjusted net income in
the second quarter of 2020 to include impairment provisions and
lease repossession costs net of security packages recovered and the
applicable tax expense (recovery) caused by the pandemic to
facilitate transparency and comparability of its results.
Adjusted net income and Adjusted net income per Share are used
by Chorus to assess performance without the effects of unrealized
foreign exchange gains or losses on long-term debt and lease
liability related to aircraft, signing bonuses, employee separation
program costs, impairment provisions, lease repossession costs net
of security packages recovered, strategic advisory fees and the
applicable tax expense (recovery). Chorus manages its exposure to
currency risk on such long-term debt by billing the lease payments
within the CPA in the underlying currency (US dollars) related to
the aircraft debt. These items are excluded because they affect the
comparability of Chorus' financial results, period-over-period, and
could potentially distort the analysis of trends in business
performance. Excluding these items does not imply they are
non-recurring due to ongoing currency fluctuations between the
Canadian and US dollar.
Due to the economic impact of COVID-19 on the global airline
industry, Chorus revised its definition of Adjusted EBT and
Adjusted EBITDA in the second quarter of 2020 to include impairment
provisions and lease repossession costs net of security packages
recovered to facilitate transparency and comparability of its
results. Adjusted EBT and EBITDA should not be used as an exclusive
measure of cash flow because it does not account for the impact of
working capital growth, capital expenditures, debt repayments and
other sources and uses of cash, which are disclosed in the
statements of cash flows, forming part of Chorus' financial
statements.
EBT is defined as earnings before income tax. Adjusted EBT (EBT
before signing bonuses, employee separation program costs,
impairment provisions, lease repossession costs net of security
packages recovered, strategic advisory fees and other items such as
foreign exchange gains and losses) is a non-GAAP financial measure
used by Chorus as a supplemental financial measure of operational
performance. Management believes Adjusted EBT assists investors in
comparing Chorus' performance by excluding items, which it does not
believe will reoccur over the longer-term (such as signing bonuses,
employee separation program costs, impairment provisions, lease
repossession costs net of security packages recovered and strategic
advisory fees) as well as items that are non-cash in nature such as
foreign exchange gains and losses.
EBITDA is defined as earnings before net interest expense,
income taxes, depreciation, amortization and impairment and is a
non-GAAP financial measure that is used frequently by companies in
the aviation industry as a measure of performance. Adjusted EBITDA
(EBITDA before signing bonuses, employee separation program costs,
strategic advisory fees, impairment provisions, lease repossession
costs net of security packages recovered net of security packages
recovered and other items such as foreign exchange gains or losses)
is a non-GAAP financial measure used by Chorus as a supplemental
financial measure of operational performance. Management believes
Adjusted EBITDA assists investors in comparing Chorus' performance
by excluding items, which it does not believe will re-occur over
the longer-term (such as signing bonuses, employee separation
program costs, impairment provisions, lease repossession costs net
of security packages recovered and strategic advisory fees) as well
as items that are non-cash in nature such as foreign exchange gains
and losses. Adjusted EBITDA should not be used as an exclusive
measure of cash flow because it does not account for the impact of
working capital growth, capital expenditures, debt repayments and
other sources and uses of cash, which are disclosed in the
statements of cash flows, forming part of Chorus' financial
statements.
Forward-Looking Information
This news release includes
'forward-looking information'. Forward-looking information is
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 information may
involve but is not limited to comments with respect to strategies,
expectations, planned operations or future actions. Forward-looking
information relates 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
information, by its nature, is based on assumptions, including
those referenced below, and is subject to important risks and
uncertainties. Any forecasts or forward-looking predictions or
statements cannot be relied upon due to, among other things,
external events, changing market conditions and general
uncertainties of the business. Such statements involve known and
unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements to differ materially
from those indicated in the forward-looking information.
Examples of forward-looking information in this news
release include the discussion in the Outlook section, as well as
statements regarding expectations as to Chorus' future liquidity
and financial strength and contracted revenues, the recovery of
domestic air traffic in Canada and
around the world, Chorus' future growth and the completion of
pending transactions referenced in the Outlook section. Actual
results may differ materially from results indicated in
forward-looking information for a number of reasons, including a
prolonged duration of the COVID-19 outbreak and/or further
restrictive measures to contain its spread, the evolving impact of
COVID-19 on Chorus' contractual counterparties, changes in aviation
industry and general economic conditions, the continued payment (in
whole or in part) of amounts due under the CPA, the risk of
disputes under the CPA, Chorus' ability to pay its indebtedness and
otherwise remain in compliance with its debt covenants, the risk of
cross defaults under debt agreements and other significant
contracts, the risk of asset impairments and provisions for
expected credit losses, a failure to conclude transactions
(including potential financings) referenced in this news release,
as well as the factors identified in the Risk Factors section of
Chorus' Annual Information Form dated February 18, 2021 and in Chorus' public
disclosure record available at www.sedar.com. The forward-looking
statements contained in this news release represent Chorus'
expectations as of the date of this news release (or as of the date
they are otherwise stated to be made) and are subject to change
after such date. Chorus disclaims any intention or obligation to
update or revise such statements to reflect new information,
subsequent events or otherwise, except as required by applicable
securities laws. Readers are cautioned that the foregoing factors
and risks are not exhaustive.
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
encompasses every 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.
Chorus Class A Variable Voting Shares and Class B Voting Shares
trade on the Toronto Stock Exchange under the trading symbol 'CHR'.
www.chorusaviation.com
SOURCE Chorus Aviation Inc.