In the first quarter of 2021, Chorus Aviation announced a net loss of $38.1 million, a decrease of $20.8 million due to one-time restructuring costs related to the 2021 capacity purchase agreement (CPA) amendments with Air Canada of $81.8 million, which was offset by the changes in unrealized foreign exchange of $45.4 million and income taxes.
Chorus Aviation’s adjusted net income was $15.7 million for the quarter, a drop of $8.1 million compared to the year-ago period primarily due to the impact of COVID-19.
The company has liquidity of $171.3 million.
In the first quarter period, Chorus Aviation collected approximately 62% of lease revenue billed in the first quarter consistent with fourth quarter 2020 collections.
Also during the reporting period, the company completed a public offering and concurrent private placement for gross proceeds of $145.1 million.
Chorus has also remarketed three Dash 8-400s to two new leasing customers, Sky Alps of Italy (two aircraft) and one Dash 8-400 to National Jet Express, a subsidiary of Australian aviation operator, Cobham Aviation Services, and secured a three-year contract with Purolator for air cargo charter services, executing on Chorus’ growing capabilities in this market segment.
“I am proud and encouraged by our accomplishments so far this year,” commented Joe Randell, President and Chief Executive Officer, Chorus. “While our industry continues to be challenged by the negative effects of COVID-19, we have made considerable progress towards ensuring we emerge from the pandemic in the strongest position possible.”
“In March we revised our CPA with Air Canada to our mutual benefit. The two primary highlights are the transfer of 25 Embraer 175 aircraft to Jazz, and the introduction of a cap on the controllable cost guardrail receivable. … As our work with Air Canada on recovery plans continues, these revisions further strengthen our relationship and provides significant network efficiencies and planning flexibility – elements that are vital as service resumptions are implemented. The new cap on the controllable cost guardrail reduces our financial exposure and minimizes draws on our working capital. Finally, the recent support of the Canadian government to Air Canada was a welcomed announcement as it helped preserve regional services across our nation.”
“While there remains uncertainty, our industry is starting to experience some encouraging signs of renewed travel demand, most particularly in regional and short-haul markets. This was evidenced by our recent long-term lease agreements with two new leasing customers, Sky Alps of Italy, and Cobham Aviation Services of Australia. The aircraft, three Dash 8-400s, were repossessed by Chorus in 2020 and underwent reconfiguration and return-to-service work at Voyageur and Jazz Technical Services.”
“Although we paused our growth and diversification strategy in 2020 to focus on liquidity, it remains a corporate priority. Our capital raise in April was over-subscribed and generated gross proceeds of $145.1 million, thus enabling us to improve our balance sheet and prudently seek growth opportunities.”
The Regional Aircraft Leasing segment's adjusted EBITDA decreased by $9.5 million primarily due to lower lease margins attributable to off-lease aircraft, a $2.5 million expected credit loss provision and a lower US dollar exchange rate partially offset by additional aircraft earning leasing revenue. The segment's adjusted EBITDA increased by $4.9 million. Net loss increased $20.8 million due to the decrease in adjusted net income of $8.1 million, one-time restructuring costs related to the 2021 CPA Amendments of $81.8 million and a change in net lease repossession costs of $7.0 million; offset by the change in net unrealized foreign exchange on long-term debt of $45.4 million, tax recovery on adjusted items of $21.3 million, decreased impairment of $5.9 million in the RAL segment and decreased employee separation program costs of $3.5 million, exclusive of the cost attributable to the pilot early retirement program.
