Welcome!

News Feed Item

Chorus Aviation announces strong second quarter earnings

Consistent quarterly profitability since 2006

HALIFAX, Aug. 14, 2014 /CNW/ - Chorus Aviation Inc. ('Chorus') (TSX: CHR.B CHR.A) today announced its second quarter 2014 earnings.

Q2 2014 HIGHLIGHTS

  • EBITDA1 of $50.7 million, up 5.7%.
  • Operating income of $34.3 million, up 8.1%.
  • Adjusted net income1 of $22.2 million, up 3.6%.
  • Adjusted net income per share1 of $0.18 per basic share, up 5.9%.
  • Net income of $36.5 million.
  • Net income per share of $0.30 per basic share.

For the second quarter 2014, Chorus reported EBITDA of $50.7 million compared to $48.0 million in the same quarter 2013, an increase of $2.7 million. Operating income was $34.3 million, $2.6 million higher than the same period 2013. Adjusted net income of $22.2 million or $0.18 per basic share was up by $0.8 million or $0.01 per basic share over the second quarter 2013. Chorus incurred $4.5 million in employee separation program costs in the second quarter versus $2.2 million in the same period in 2013. Chorus has invested $17.2 million in employee separation since the inception of this cost savings program in the first quarter of 2013.

"Chorus continues to generate positive operating income and cash flows from operations, and I'm pleased to report strong earnings and operational performance again this quarter," said Joseph Randell, President and Chief Executive Officer, Chorus. "The transition to a monthly dividend policy enacted last month, the full redemption of the outstanding $20.2 million in convertible debentures and the repurchase of over 1.7 million shares under our normal course issuer bid have created additional shareholder value, and our efforts in this regard will continue. I commend our team of outstanding professionals for delivering exceptional performance while supporting our cost reduction efforts."

For reporting purposes, at each quarter end, Chorus converts its US denominated aircraft debt into equivalent Canadian dollars based on the prevailing exchange rate. Chorus manages its exposure to currency risk on such long-term debt by billing related lease payments within the Capacity Purchase Agreement ('CPA') with Air Canada in the underlying currency (US dollars) related to the aircraft debt. In the second quarter of 2014, Chorus had an unrealized foreign exchange gain of $14.3 million versus an unrealized foreign exchange loss of $13.5 million in the same period of 2013.

Financial Performance –Second Quarter 2014 Compared to Second Quarter 2013

Operating revenue increased from $410.3 million to $417.8 million, representing an increase of $7.5 million or 1.8%. Controllable revenue increased by $9.0 million or 3.5%. This increase occurred primarily as a result of rate increases made pursuant to the CPA of $5.8 million, a favourable US dollar exchange rate of $5.2 million, and a $0.3 million increase in incentives earned under the CPA with Air Canada. These increases were offset by decreased CPA Billable Block Hours of $2.3 million.

Pass-through revenue decreased by $2.1 million or 1.4% from $148.7 million to $146.6 million, which included a decrease of $8.7 million related to airport and navigation fees and terminal handling services. (Effective January 1, 2014, Air Canada entered into a commercial agreement with the Greater Toronto Airport Authority ('GTAA') that encompasses Chorus' Air Canada Express operations. GTAA costs related to landing, terminal and other airport user fees, which are treated as pass-through costs under the CPA, are now paid directly by Air Canada pursuant to this agreement.) This decrease was offset by an increase of $7.3 million related to fuel costs driven primarily by an increase in jet fuel prices. The sale of consignment inventory was the primary factor in other revenue increasing by $0.6 million.

Operating expenses increased from $378.6 million to $383.6 million, an increase of $5.0 million. Controllable costs increased from $229.9 million to $237.0 million, an increase of $7.0 million or 3.1%. Pass-through costs decreased from $148.7 million to $146.6 million, a decrease of $2.1 million or 1.4%.

Salaries, wages and benefits increased by $2.7 million from $100.7 million to $103.4 million. Adjusted salaries, wages and benefits (adjusted by removing employee separation program costs and capitalized major maintenance overhaul labour costs), which includes pension, incentive compensation and other employee benefits, decreased by $0.9 million after incurring an increase in stock based compensation of $0.8 million due to a change in accounting policy. Employee separation program costs incurred during the three months ended June 30, 2014 were $4.5 million, an increase of $2.3 million over the same period of 2013. These costs include employee separation program costs of $2.1 million in 2014 related to the commencement of outsourcing of passenger handling services under applicable collective agreements. Salaries and wages were also affected by fewer labour costs being capitalized as a result of reduced major maintenance overhauls on owned aircraft of $1.4 million.

Aircraft maintenance expense increased by $4.0 million from $37.9 million to $41.9 million partially as a result of an unfavourable US dollar exchange rate on certain maintenance material purchases of $2.7 million and increased other maintenance costs of $2.6 million.  These increases were offset by decreased Block Hours of $1.3 million

Other expenses decreased by $0.8 million from $32.0 million to $31.2 million. The decrease was the result of reduced general overhead expenses.

Non-operating income increased by $27.8 million from a non-operating expense of $19.2 million to a non-operating income of $8.6 million. The strengthening of the Canadian dollar during the quarter contributed to a foreign exchange gain of $11.8 million compared to a foreign exchange loss of $13.0 million in the same period last year. During the quarter, Chorus redeemed the remaining balance of the convertible debentures, which accounted for a decrease in interest accretion of $0.3 million and a decrease in interest expense of $1.5 million. Interest expense related to long-term debt decreased by $0.8 million due to planned principal repayments. Chorus met employment conditions required in order to obtain the maximum annual forgiveness of a portion of the forgivable loan from the province of Nova Scotia, and as such $0.5 million was recorded in other income.

EBITDA was $50.7 million compared to $48.0 million in 2013, an increase of $2.7 million or 5.7%, producing an EBITDA margin of 12.1%.

Operating income of $34.3 million was up $2.6 million or 8.1% over second quarter 2013 from $31.7 million

Net income for the second quarter of 2014 was $36.5 million or $0.30 per basic share, an increase of $28.6 million from $7.9 million. On an adjusted basis, net income was $22.2 million or $0.18 per basic share, an increase of $0.8 million from $21.4 million. A reconciliation of these non-GAAP measures to their nearest GAAP measure is provided in Chorus' Management's Discussion and Analysis dated August 13, 2014.

Investor Conference Call / Audio Webcast

Chorus will hold an analyst call at 9:30 a.m. ET on Thursday, August 14, 2014 to discuss the second quarter 2014 results. The call may be accessed by dialing 1-888-231-8191. The call will be simultaneously audio webcast via: http://www.newswire.ca/en/webcast/detail/1380327/1530997 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 call.

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 AT, August 22, 2014, by dialing toll-free 1- 855-859-2056, and passcode 68175247# (pound key).

1 Non-GAAP Financial Measures
EBITDA
EBITDA (net income before net interest expense, income taxes, depreciation, amortization and other items such as asset impairment and foreign exchange gains or losses) is a non-GAAP financial measure used by Chorus as a supplemental financial measure of operational performance. 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 of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statement of cash flows, forming part of the financial statements.  

ADJUSTED NET INCOME
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 finance leases related to aircraft. Chorus manages its exposure to currency risk on such long-term debt by billing the lease payments within the CPA in the underlying currency related (US dollars) to the aircraft debt. These items are excluded because they affect the comparability of our 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. While employee separation program costs have not been included within our definition of adjusted net income, it is shown separately to facilitate transparency and comparability.

Forward Looking Statements

This news release should be read in conjunction with Chorus' unaudited interim condensed consolidated financial statements for the period ended June 30, 2014, and MD&A dated August 13, 2014 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, environmental factors, 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 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 August 14, 2014, 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 securities regulations.

About Chorus
Headquartered in Halifax, Nova Scotia, Chorus was incorporated on September 27, 2010 and is a dividend-paying holding company with various interests including Jazz Aviation Holdings Inc. and Chorus Aviation Holdings Inc.

Jazz Aviation Holdings Inc. holds all of Chorus' business interests associated with the CPA with Air Canada which includes Jazz Aviation LP ('Jazz'), Jazz Aircraft Financing Inc. ('JAFI'), and Jazz Leasing Inc. ('JLI').  JAFI and JLI were established for the sole purpose of acquiring and financing Q400 aircraft and related equipment, and leasing them to Jazz for use in the CPA. 

Chorus Aviation Holdings Inc. is a holding company to facilitate diversification of Chorus' business, such as the establishment of Chorus Airport Services Inc. which provides airport handling services.

Chorus is traded on the Toronto Stock Exchange under the trading symbols of CHR.A and CHR.B

For more information, visit www.chorusaviation.ca

About Jazz
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. As the largest regional airline in Canada, Jazz has a proven track record of industry leadership and exceptional customer service, and has leveraged that strength to deliver value to all its stakeholders. Jazz operates more flights and flies to more Canadian destinations than any other airline.  As of June 30, 2014, had a workforce of approximately 4,320 professionals highly experienced in the challenging and complex nature of regional operations. Jazz employees are an integral part of communities across our nation with 20% of our workforce based in Atlantic Canada, 46% based in Central Canada, 33% based in Western Canada, and 1% in Northern Canada.

Under a capacity purchase agreement with Air Canada, using the Air Canada Express brand, 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 second quarter of 2014 Jazz operated scheduled passenger service on behalf of Air Canada with approximately 773 departures per weekday to 53 destinations in Canada and to 18 destinations in the United States. With a fleet of 122 Canadian-made Bombardier aircraft, Jazz flies more daily flights to more Canadian destinations than any other airline.

Under the Jazz brand, the airline offers charters throughout North America with a dedicated fleet of three 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.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Most DevOps journeys involve several phases of maturity. Research shows that the inflection point where organizations begin to see maximum value is when they implement tight integration deploying their code to their infrastructure. Success at this level is the last barrier to at-will deployment. Storage, for instance, is more capable than where we read and write data. In his session at @DevOpsSummit at 20th Cloud Expo, Josh Atwell, a Developer Advocate for NetApp, will discuss the role and value...
CloudEXPO New York 2018, colocated with DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
SYS-CON Events announced today that DatacenterDynamics has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY. DatacenterDynamics is a brand of DCD Group, a global B2B media and publishing company that develops products to help senior professionals in the world's most ICT dependent organizations make risk-based infrastructure and capacity decisions.
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busi...
DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
@DevOpsSummit at Cloud Expo, taking place November 12-13 in New York City, NY, is co-located with 22nd international CloudEXPO | first international DXWorldEXPO and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time t...
Today, we have more data to manage than ever. We also have better algorithms that help us access our data faster. Cloud is the driving force behind many of the data warehouse advancements we have enjoyed in recent years. But what are the best practices for storing data in the cloud for machine learning and data science applications?
"When you think about the data center today, there's constant evolution, The evolution of the data center and the needs of the consumer of technology change, and they change constantly," stated Matt Kalmenson, VP of Sales, Service and Cloud Providers at Veeam Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
New competitors, disruptive technologies, and growing expectations are pushing every business to both adopt and deliver new digital services. This ‘Digital Transformation’ demands rapid delivery and continuous iteration of new competitive services via multiple channels, which in turn demands new service delivery techniques – including DevOps. In this power panel at @DevOpsSummit 20th Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, panelists examined how DevOps helps to meet the de...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science" is responsible for guiding the technology strategy within Hitachi Vantara for IoT and Analytics. Bill brings a balanced business-technology approach that focuses on business outcomes to drive data, analytics and technology decisions that underpin an organization's digital transformation strategy.
A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to great conferences, helping you discover new conferences and increase your return on investment.
Headquartered in Plainsboro, NJ, Synametrics Technologies has provided IT professionals and computer systems developers since 1997. Based on the success of their initial product offerings (WinSQL and DeltaCopy), the company continues to create and hone innovative products that help its customers get more from their computer applications, databases and infrastructure. To date, over one million users around the world have chosen Synametrics solutions to help power their accelerated business or per...
DXWorldEXPO LLC announced today that ICOHOLDER named "Media Sponsor" of Miami Blockchain Event by FinTechEXPO. ICOHOLDER gives detailed information and help the community to invest in the trusty projects. Miami Blockchain Event by FinTechEXPO has opened its Call for Papers. The two-day event will present 20 top Blockchain experts. All speaking inquiries which covers the following information can be submitted by email to [email protected] Miami Blockchain Event by FinTechEXPOalso offers sp...
Sanjeev Sharma Joins November 11-13, 2018 @DevOpsSummit at @CloudEXPO New York Faculty. Sanjeev Sharma is an internationally known DevOps and Cloud Transformation thought leader, technology executive, and author. Sanjeev's industry experience includes tenures as CTO, Technical Sales leader, and Cloud Architect leader. As an IBM Distinguished Engineer, Sanjeev is recognized at the highest levels of IBM's core of technical leaders.