Chorus Aviation is confident in the potential for growing its regional aircraft leasing business, with plans to invest $600 million by mid-2019 in aircraft acquisitions.
Chorus has already invested approximately $600 million of a $1.2 billion capital and plans to invest the rest of the balance by the middle of next year in new to mid-life aircraft with long-term leases to customers around the world.
Joe Randell, president and chief executive officer for Chorus said: “We continue to build our regional aircraft leasing business and have executed new term sheets with various customers for the acquisition of several regional aircraft that are either currently on lease or will be placed on lease pursuant to sale and lease back transactions.”
The term sheets remain subject to the negotiation and execution of definitive agreements with further details to follow as transactions are finalised.
“The pipeline of opportunities is strong, and I’m confident in the growth potential of our leasing business,” Randell commented.
In the quarter Chorus completed its sixth extended service programme on a Dash 8-300, which Randell says is now generating leasing revenue under the capacity purchase agreement (CPA) with Air Canada and the seventh aircraft is currently in production.
Randell continued: “We won new flying contracts utilising CRJ 200 aircraft in Sudan and the Democratic Republic of Congo. Customer demand for our parts division, Avparts, is encouraging. We recently acquired two Dash 8 – 300s to build our available parts inventory and have parted out 10 aircraft to date. We generate healthy margins on this business and see potential for growth.”
Alongside the plans for growing the leasing business, Chorus also revealed its results for the second quarter of 2018, reporting an adjusted EBITDA of $84.6 million over $65.8 million in the same period in 2017, an increase of $18.8 million or 28.6%.
The lessor said the increase was primarily driven by a $14.9 million increase due to the growth in third party regional aircraft leasing, as well as increased aircraft leasing revenue under the CPA, decreased stock-based compensation and a decrease of other expenses.
Adjusted net income was $29.4 million for the period, an increase from 2017 of $2.5 million, or 9.3%.
However Chorus saw net income in the second quarter drop by $24.9 million or 60.6% from the same period in 2017 to $16.2 million. The company said the decrease was primarily due to quarter-over-quarter change in foreign exchange of $31.3 million, offset by the $2.5 million increase in the adjusted net income and decreased employee separation programme costs of $3.9 million.
For the six months ended 30 June 2018, Chorus reported adjusted EBITDA of $162.6 million, up from $120.3 million in 2017 an increase of 35.2%.
Adjusted net income was $55.9 million for the period, an increase from 2017 of $12.9 million or 29.9%, while net income was $21.2 million for the period, a decrease of $46.8 million or 68.8% from the same period of 2017.
Image: Chorus Aviation’s wholly owned subsidiary Jazz Aviation operates three airline divisions; Air Canada Express (under a capacity purchase agreement), Jazz Technical services and Jazz.
Written by: Kimberley Young
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