Chorus Aviation Overview...Sep 17, 2020 · Chorus is a global provider of integrated regional...
Transcript of Chorus Aviation Overview...Sep 17, 2020 · Chorus is a global provider of integrated regional...
TSX: CHR
Chorus is a global provider of integrated regional aviation solutions
September 17, 2020
Chorus Aviation Overview
This presentation contains “forward-looking information” as defined under applicable Canadian securitieslaws. 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 similarterms and phrases, including references to assumptions. Such information may involve but is not limited tocomments 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 futureresults, estimates of amounts not yet determinable and other uncertain events. Forward-looking information,by its nature, is based on assumptions and is subject to important risks and uncertainties. Any forecasts orforward-looking predictions or statements cannot be relied upon due to, among other things, externalevents, changing market conditions and general uncertainties of the business. Such statements involveknown and unknown risks, uncertainties and other factors that may cause actual results, performance orachievements to differ materially from those expressed in forward-looking information. Actual results maydiffer materially from those expressed in this presentation for a number of reasons, including a prolongedduration of the COVID-19 outbreak and/or further restrictive measures to contain its spread, the evolvingimpact of COVID-19 on Chorus’ contractual counterparties, changes in aviation industry and generaleconomic conditions, the continued payment (in whole or in part) of amounts due under the CapacityPurchase Agreement (CPA), Chorus’ ability to pay its indebtedness and otherwise remain in compliance withits debt covenants, the risk of cross defaults under debt agreements and other significant contracts, the riskof asset impairments and provisions for expected credit losses, the delay or non-delivery of the remaining sixnew CRJ900 aircraft to Chorus for operation and lease under the CPA, as well as the risk factors identified inChorus’ most recent Management’s Discussion & Analysis, Annual Information Form and public disclosurerecord available at www.sedar.com.
Forward-looking information disclaimer
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Chorus is a global provider of integrated regional aviation solutions
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Regional aviation is a resilient sector of the aviation industry showing first signs of recovery during economic downturn
Chorus has a predictable revenue stream, with 90%+ of annual revenues secured through long-term contracts and strong relationships
Chorus is differentiated from pure play aircraft leasing competitors due to its ability to provide a full suite of regional aviation services and extensive operational experience
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Highlights
Regional aviation is based on aircraft carrying Up to 150 passengers
Regional Jets
Up to 150 passengers
Bombardier/ Mitsubishi
CRJ-200 to CRJ-1000
Embraer E135 to E190
Airbus A220-300
83%
37%
17%
Turboprops
RegionalJets
NarrowBody
2 main types of regional aircraft
Fly shorter distances than Narrow Body jets
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3,600
2,300
5,900
15,800
4,500
Regional NarrowBody
WideBody
Account for ~22% of the world’s commercial fleet
Regional aircraft are fundamental to efficient air transport networks and link 60% of the world’s communities 1
Jets
TP
1 Official Aviation Guide (2012). 2 FlightGlobal (2019), includes in-service aircraft with more than 20 seats
50% of world passengers fly
<500 miles
Turbo props
Up to 90 passengers
De Havilland Dash 8 – 100 to 400
ATR ATR 42 to ATR 72
% of all flights below 500 miles 1 Worldwide aircraft fleet 2
Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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AppendicesSupplemental information
8AppendicesFinancial statements
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Grow our regional aircraft leasing business through aircraft acquisitions, portfolio acquisitions and potential skyline transactions
Grow our regional aviation services of contracted flying (wet leasing and leasing under the CPA)
Leverage the synergies and technicalexpertise across our lines of business tofurther drive diversification and profit
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Our long-term strategy unchanged by near-term challenges
Chorus’ business
Regional Aviation Services Regional Aircraft Leasing
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Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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AppendicesSupplemental information
8AppendicesFinancial statements
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Contracted flying/wet leasing generates largest revenue stream
Operates scheduled service through a CPA with Air Canada under the Air Canada Express brand
Offers charters throughout North America for corporate clients, governments, special interest groups and individuals
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Provides medical, logistical and humanitarian flight operations to blue chip customers globally
Air Canada Express flying
Charter flights
Specialized contracted flying
Chorus is Air Canada’s primary regional partner (pre COVID-19)
Responsibilities under the Capacity Purchase Agreement
Air Canada Jazz
● Purchases capacity
● Manages routes
● Sets flight schedules
● Sets ticket prices
● Conducts marketing
● Assumes commercial risk
● Retains revenues for passenger & cargo transport
● Supply of flying crews
● Airframe maintenance
● Flight operations
● Some airport operations
● General administration
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● Flexibility to respond quickly and efficiently to market changes and opportunities
● Jazz manages Air Canada Express operations at 38 airports across Canada● Source of qualified pilots through Pilot Mobility Program
Benefits for Air Canada
~80%of Air Canada’s regional seat capacity
116 Aircraft currently operated by Jazz
52 Currently leased under the CPA
~690daily flights
90N.A. destinations
Largest Chorus
customer
Strategic Benefits● 6-bay, 80,000 sq. ft. facility, 360 employees
● Performs heavy MRO activities, interior refurbs and LOPA changes, IFE/WIFI installs
● 24/7/365 operation provides flexibility to carriers with industry leading turnaround time
● De Havilland Dash-8 100/200/300/400, Bombardier CRJ 100/200/700/900/1000, Embraer 135/145 Rated
● Transport Canada, FAA and EASA approved
● De Havilland Authorized Service Facility, Bombardier Authorized Service Facility
● Bombardier/De Haviland and Embraer 135/145 regional aircraft● 200 000 sq. ft. facility, ~155 employees
● Performs heavy MRO activities, customized designs and engineering and aircraft modifications
● Transport Canada, FAA and European Aviation Safety Agency approved
● Transport Canada certified Canadian Design Approval Organization
● Supplemental Type Certificates for Dash 8 100/200/300/400s and Dash 7s
● Provides parts provisioning, sales and service for regional aircraft - great complement to MRO activities
Halifax, NS
North Bay, ON
● “Strategic Enabler”
● Provides part sales and component repair for leased aircraft
● Conducts aircraft repossessions, transitions and inspections
● Facilitates part-out of EOL assets
● Provides strategic insight into residual value of potential acquisition opportunities
● Facilitates relationships with airlines that drive other revenue opportunities
Facilities
Maintenance Repair & Overhaul (MRO) and Parts
MRO and Parts
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Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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AppendicesSupplemental information
8AppendicesFinancial statements
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Regional aircraft leasing/dry leasing is an attractive business with solid growth potential
● 50% of global passengers fly on trips shorter than 500 miles● Regional aircraft allow airlines to optimize aircraft size
and reduce per-seat cost
● 70-150 seat fleet expected to grow at ~3.7% per year overthe next 20 years1*
● *Penetration rate of operating leases is still relatively low for regional aircraft (~29%) compared to narrow-body jets (~50%)
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● Economic growth in emerging markets is expected to significantly outpace growth in advanced economies
● Fast growth of the urban middle class in emerging marketswill create opportunities for regional air travel
● Stable technology of regional aircraft reduces volatility in residual value compared to narrow-body aircraft
● Steady historical deliveries
Essential component of commercial aviation
Very resilient demand from a broad user base
Geographically diverse demand
Stable technologyand supply
1 Bombardier Market Forecast 2017-2036*denotes projections prior to COVID-19 pandemic
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Diversification across airlines, geography and aircraft types
Turboprops Regional Jets
Customer Aircraft committed1
Dash 8 ATR CRJ Embraer A220 TBD
Aeromexico 3
airBaltic 5
Air Nostrum 4
Azul Airlines 5
Croatia Airlines 2
Ethiopian Airlines 5
IndiGo 8
Jambojet 3
KLM Cityhopper 1
Malindo Air2 4
Philippine Airlines 3
SpiceJet 5
Wings Air2 1
Undisclosed customer 2
Total third-party 51 19 17 4 6 5
Air Canada 71 52 14 5
Grand total 122 71 17 18 6 5 5
1Chorus value includes 71 aircraft leased under the capacity purchase agreement which include 9 future CRJ900 acquisitions, 5 future ESPs on Dash 8-300 aircraft and 5 future aircraft (type TBD) that will generate revenue under the CPA. Non-CPA aircraft leasing includes all aircraft which have been delivered as well as pending acquisitions and future deliveries for which CAC has received lease commitments.2A member of the Lion Air Group.
Footnote: 13 aircraft being remarketed to third parties, not included above.
Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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AppendicesSupplemental information
8AppendicesFinancial statements
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COVID-19 pandemicimpact to the aviation industry worldwide
● Crisis created significant challenges for aviation and global cancellations impacting all airlines worldwide
● Provincial and federal government-imposed travel restrictions and border closures have unprecedented negative effect on passenger demand for Canadian air travel
● While Chorus is not directly exposed tomarket risks, our revenue is derivedfrom airline customers
● Full impact and duration ofpandemic still unknown
● Regional aircraft fundamentally important to most countries’ domestic transportation networks
Regional aviation is holding up through pandemic
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● Regional aviation generally resuming flying earlier and at a quicker pace than long-haul travel
● With improving traffic trends, there is greater increase in utilization of regional aircraft compared to narrow and widebody aircraft
Global fleet capacity trends through the pandemic
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Deeper cuts and slower recovery on 737s & A320s observed (more in line with ATR72-600s); A220s and E-Jets leading the recovery
Data from Cirium fleets Analyzer. Data valid as of August 20, 2020 and excludes China. Numbers reflect ‘Western” built commercial jets and turboprop aircraft, with primary usage as passenger aircraft and have over 30 seats onboard. 737 Family (all classic, NG & MAX variants), A320 Family(318/19/20/21 & neo), a220(-100/-300), E-Jets (175/190/195 & E2 variants).Widebody aircraft include all Boeing and Airbus types classified as Widebody aircraft using Cirium methodology.
% o
f F
lee
t In
-Se
rvic
e
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20
Widebody Aircraft 737 Family A320 Family A220 (CSeries) EJet Family ATR72-600 DHC8-400
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The regional fleet capacity did not reduce to the same degreeas narrow and wide body fleets
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2000
4000
6000
8000
10000
12000
14000
16000
18000
Regional Aircraft Narrowbody Widebody
Jan-20
Apr-20
Worldwide fleet capacity reductions due to COVID-19
55% Capacity Reduction
39% Capacity Reduction
Nu
mb
er
of
In-S
erv
ice
Air
craf
t
67% Capacity Reduction
Source: Cirium, Fleets AnalyzerNote: Regional aircraft does not include the a220 family of aircraft
Regional aviation shows less volatility through economic cycles
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Regional aviation is a resilient sector in an economic downturn
Indexed aircraft value volatility for narrow-body, turboprop and regional jet aircraft
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85
90
95
100
105
110
115
120
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
● Mainline operators look to contract out more flying to regional partners
● Smaller aircraft are best suited to serve reduced market demand
Turbopropaircraft
Narrow-bodyaircraft
Regional jetaircraft
Source: AVITAS
Growth opportunities in regional aircraft leasing
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Sale-leasebacks have become the dominant channel for financing new acquisitions
Airlines are monetizing their unencumbered aircraft assets through sale-leasebacks
Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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8AppendicesFinancial statements
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Protecting the health and safety of our employees and passengers
Preserving financial liquidity, ~$228 million*
Maintaining strong relationshipswith Chorus’ customer base
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Chorus responded to crisis by focusing on three key priorities
* Based on Q2 2020 report out on August 13, 2020
Chorus is managing the impact of COVID-19
● Updated health and safety policies and procedures for travellers and employees in all workplaces, airports, and onboard aircraft (Air Canada’s CleanCare+) to account for new information about COVID-19
● Implemented COVID-19 business continuity plans to enable safe and continued operations, including support of employees working from home where feasible
● Offered voluntary employee separation packages and special leaves of absence to mitigate layoffs
● Discontinued 21 Jazz regional routes and closed eight Jazz-managed stations due to reduced flying under the CPA
● Retired remaining Dash 8-100s and looking to repurpose them
● Delayed delivery of six of nine new CRJ900s until December 2020
● Took delivery and started earning leasing revenue on three new CRJ900s in Q2 2020
Employees and customers Operations
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Aggressive measures to reduce costs, preserve cash and strengthen liquidity position
● Initially reduced manpower by approximately 65%
● Adopted the Canadian Emergency Wage Subsidy (CEWS)
● Reduced salaries of Executives Management and ATS, and Board of Directors’ fees
● Implemented freeze on all non-essential expenses
● Curtailed capital investments
● Suspended dividend payments and dividend reinvestment program (DRIP)
● As at August 13, 2020 available liquidity of $228 million*
● Added and fully drew on a US$100 million unsecured revolving credit facility
● Secured loan payment deferral for up to US$30.4 million
● Secured financing of US$18.0 million on two previously unsecured aircraft
● Received US$3.7 million cash from the sale of a Dash 8-300
Cost reductions/cash preservation Financing and liquidity
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* Based on Q2 2020 report out on August 13, 2020
Chorus continues to focus on its customer base
● Working closely with Air Canada on cost reductions, synergies and the efficient deployment of the schedule
● Executing on our fleet modernization strategy is key as Air Canada endeavours to effectively match capacity and costs with travel demand
● Providing short-term rent reliefs to most of our lessees
● Deferrals are most commonly between three and 12 months, with repayment terms generally over a subsequent period of 12 to 24 months
● Leases are for a fixed term, contain absolute payment obligations on the part of the lessee, and cannot be terminated for convenience
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Air Canada
Aircraft lessees
Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
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Regional Aviation Services
2Chorus’ Business
Contents
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8AppendicesFinancial statements
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Chorus holds defensive position in economic downturn
● Over 90% of revenues embedded in flight operations and aircraft leasing long-term contracts
● ~ C$2.5B in future contracted revenues1*
● Air Canada assumes risks related to commercial aspects● +/- C$2M guardrail on controllable costs● Minimum fleet and aircraft leasing commitments
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● Lower costs and smaller aircraft than mainline carriers● Aircraft leasing provides operational flexibility, reduces
financing requirements and eliminates risk on aircraft residual value
● Rigorous evaluation process● Diversification of aircraft type and geography● Diversification of customer base
● Mature and efficient regional aircraft● Ability to fly, lease, sell, modify, disassemble and part-out
aircraft
Visibility on future revenues and costs
Protected profit margin under CPA
Better suited to serve reduced market demand
Conservative approach to leasing business
Valuable aircraft lifecycle
1 The estimates are based on agreed lease rates in the CPA and certain assumptions and estimates for future market lease rates related to new and extended leases under the CPA as at January 1, 2019. A foreign exchange rate of $1.30 (based on the long-term average historical rate) was used in the calculation of the estimates. The Regional Aircraft Leasing segment's estimates are based on agreed lease rates and assumes no default by lessees.*As reported in Q2 2020 on August 13, 2020.
See cautionary statement regarding forward-looking information on slide 2
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Chorus is well positioned to manage through the COVID-19 pandemic due to our current liquidity, make-up of our debt, and the financial strength of Air Canada
Chorus sees future opportunity to grow its regional aviation leasing business as airlines look to sale and leasebacks for future aircraft financings
Chorus has a predictable revenue stream, based on long-term contracts, that is less sensitive to passenger supply/demand dynamics; however, counterparty risk remains
Chorus is well positioned for recovery
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Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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AppendicesSupplemental information
8AppendicesFinancial statements
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Consolidated Statements of Income For the three and six-month periods ended June 30, 2020 and 2019
(expressed in thousands of Canadian dollars, except earnings per share)
Operating revenue 184,214 332,520 542,238 676,387
Operating expenses
Salaries, wages and benefits 54,205 114,738 190,180 242,700 Depreciation, amortization and impairment 48,970 33,552 92,998 65,802 Aircraft maintenance materials, supplies and services 12,380 47,442 61,599 106,769 Airport and navigation fees 4,362 42,385 42,750 82,679 Terminal handling services 1,324 4,719 6,330 10,843 Other 29,290 39,323 68,006 77,114
150,531 282,159 461,863 585,907
Operating income 33,683 50,361 80,375 90,480
Non-operating (expenses) income
Interest revenue 43 691 709 1,487 Interest expense (21,411) (18,890) (42,284) (35,427)(Loss) gain on disposal of property and equipment (390) 1,430 (374) 1,466 Foreign exchange gain (loss) 18,467 11,576 (20,965) 25,826
(3,291) (5,193) (62,914) (6,648)
Income before income taxes 30,392 45,168 17,461 83,832
Income tax (expense) recovery (note 9)
Current income tax 2,229 (2,220) (3,069) (4,440)
Deferred income tax (3,456) (4,007) (2,521) (7,004)
(1,227) (6,227) (5,590) (11,444)
Net income 29,165 38,941 11,871 72,388
Earnings per share, basic 0.18 0.25 0.07 0.47
Earnings per share, diluted 0.18 0.24 0.07 0.46
Three months ended June 30, Six months ended June 30,2020 2019 2020 2019
$ $ $ $
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Unaudited Consolidated Statements of Financial Position(expressed in thousands of Canadian dollars)
AssetsCurrent assetsCash 153,410 87,167 Accounts receivable – trade and other (note —) 111,393 68,666 Inventories 79,965 61,843 Prepaid expenses and deposits 7,837 11,150 Current portion of lease receivables 3,284 4,558 Income tax receivable 1,806 1,323
357,695 234,707
Restricted cash 40,126 26,690 Lease receivables 7,865 8,637 Property and equipment 2,676,339 2,592,327 Intangibles 1,660 1,799 Goodwill 7,150 7,150 Deferred income tax asset 542 2,784 Other long-term assets 80,585 71,600
3,171,962 2,945,694
Liabilities
Current liabilities Accounts payable and accrued liabilities 142,800 177,575 Current portion of lease liabilities 4,128 5,785 Current portion of long-term incentive plan 1,956 6,549 Current portion of long-term debt 196,097 164,554 Dividends payable — 6,487 Income tax payable 1,458 10,114
346,439 371,064
Lease liabilities 9,384 10,531 Long-term debt 1,876,781 1,658,576 Deferred income tax liability 192,665 192,315 Other long-term liabilities 129,754 108,215
2,555,023 2,340,701
Equity 616,939 604,993
3,171,962 2,945,694
$ $
June 30, December 31,2020 2019
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Segmented informationThree months ended June 30, 2020(expressed in thousands of Canadian dollars)
Operating revenue 145,640 38,574 184,214 302,382 30,138 332,520 Operating expenses 111,497 39,034 150,531 267,306 14,853 282,159
Operating income (loss) 34,143 (460) 33,683 35,076 15,285 50,361
Net interest expense (9,544) (11,824) (21,368) (8,293) (9,906) (18,199)Foreign exchange gain (loss) 17,574 893 18,467 11,601 (25) 11,576 Other (loss) gain (390) - (390) 1,430 - 1,430
Earnings (loss) before Income tax 41,783 (11,391) 30,392 39,814 5,354 45,168 Income tax (expense) recovery (3,514) 2,287 (1,227) (5,639) (588) (6,227)
Net income 38,269 (9,104) 29,165 34,175 4,766 38,941
Total
$ $ $ $ $ $
Regional Aircraft Leasing
Regional Aviation Operations
Regional Aircraft Leasing Total Regional Aviation
Operations
For the three months ended June 30, 2020 For the three months ended June 30, 2019
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Segmented informationSix months ended June 30, 2020(expressed in thousands of Canadian dollars)
Operating revenue 453,476 88,762 542,238 620,377 56,010 676,387 Operating expenses 394,331 67,532 461,863 557,942 27,965 585,907
Operating income 59,145 21,230 80,375 62,435 28,045 90,480
Net interest expense (18,316) (23,259) (41,575) (17,245) (16,695) (33,940)Foreign exchange (loss) gain (21,407) 442 (20,965) 26,006 (180) 25,826 Other (loss) gain (374) - (374) 1,466 - 1,466
Earnings (loss) before Income tax 19,048 (1,587) 17,461 72,662 11,170 83,832 Income tax (expense) recovery (6,366) 776 (5,590) (10,149) (1,295) (11,444)
Net income (loss) 12,682 (811) 11,871 62,513 9,875 72,388
For the six months ended June 30, 2020 For the six months ended June 30, 2019
Total
$ $ $ $ $ $
Regional Aviation Operations
Regional Aircraft Leasing Total Regional Aviation
OperationsRegional Aircraft
Leasing
Conclusion6Managing the impact of COVID-19
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COVID-19 impact on industry
4Regional Aircraft Leasing
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Regional Aviation Services
2Chorus’ Business
Contents
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1
AppendicesSupplemental information
8AppendicesFinancial statements
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The Chorus Story: An Integrated Model
Chorus Aviation is a global provider of integrated regional aircraft solutions
Dry LeasingWet Leasing MRO Opportunities
Leasing Opportunities
Part Sales & Component Repair
Older Assets for Part Out
Wet to Dry Lease Opportunities
Maintenance Data Technical Support
Customer Leads - Wet Leasing & Part Sales
End of Life Assets
Aircraft Repossessions
Aircraft Inspections
Aircraft Transitions
Core Segments
Strategic Enabler
RelationshipsCommon Customers, Suppliers and OEMS
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Technical Expertise
● Guarantees ~$2.5B in contracted revenue over 17 years1
● $1.6B from aircraft leasing● $0.86B from fixed fees
● $97.26M equity investment by Air Canada in Chorus● 60% of investment proceeds to purchase
larger aircraft for CPA fleet● 40% of investment proceeds to acquire aircraft
for the leasing business
● Modernization of Air Canada Express fleet● Acquisition of 9 new CRJ-900s will generate
lease revenue under CPA● Acquisition of 5 aircraft (type TBD) in 2025
● Margin risk on controllable costs reduced to a maximum of $2M/year
Amended/extended CPA with Air Canada to 2035
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Provides long-term certainty and stability1 Over the 17-year term of the CPA (January 2019 to December 2035), the revenue estimates are based on agreed aircraft lease rates in the CPA and certain assumptions and estimates for future market lease rates related to new and extended leases under the CPA. A foreign exchange rate of 1.30 (based on the long-term historical average rate which is reviewed and adjusted annually) was used in the calculation of the estimates. See cautionary statement regarding forward-looking information on slide 2
● Committed ~C$2.5B in contracted revenue (2019-2035)
● Aircraft leasing● C$1.6B in contracted revenue● Average fleet age of 8.3 years
with average lease term of 8.4 years
● Potential for additional lease extensions/renewals beyond 2025
● Opportunity to lease additional aircraft in the future
● Fixed Fees● C$858M in contracted revenue● Controllable revenue based on
block hours, flight hours, cycles and passengers carried
● Pass-through costs, such as airport, navigation, and terminal handling fees are fully reimbursed by Air Canada
● Maximum available performance incentives will average ~C$3.4M annually over the term 3
● +/- C$2M guardrail on controllable costs
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1 Revenue numbers and change numbers are for the term of the total time period indicated in each column2 Includes contracted aircraft leasing for 2036 and beyond estimated at C$19M3 These are variable in nature and are not included in the contracted revenue figuresSee cautionary statement regarding forward-looking information on slide 2
Minimum Contracted Revenue in CPA1 (C$M)
2019-2020Significant
fleet transition
2021-2025Min. 105 aircraft
2026-2035Min. 80 aircraft TOTAL
266
748577
1,610
151
308399
858
Fixed fee Aircraft leasing
$417
$1,056 $976
$2,468
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Chorus and Air Canada are true allies with an amended/extended CPA to 2035