Canadian lessor Chorus Aviation has reported a fourth quarter (Q4) 2022 profit of $45.9 million and an annual profit of $51.9 million, with the "year-over-year increase" coming to $72.4 million.
For the quarter, adjusted earnings per share were $0.11 with earnings [EBIDTA] up $39.1 million to $129.5 million. For the full year, EBIDTA was up $111.6 million to $441 million. Free cashflow for the year came to $371.3 million, up over $200 million compared to 2021.
The company's finalised the $843.7 million acquisition of Falko during 2022. In connection with the acquisition, Chorus issued $30 million of Series 1 Preferred Shares and $74 million Common Shares and Common Share purchase warrants to an affiliate of Brookfield Special Investments Fund. The company began "transitioning to an asset light leasing model with opportunistic asset sales" during the year, which generated $152.3 million.
During the final quarter, Chorus said $5.5 million in revenue was added due to an increase in parts sales and contract flying but "partially offset" by a decrease in third-party MRO activity. An increase in aircraft leasing revenue of $2.7 million was primarily due to a higher US dollar exchange rate but was offset by a decrease in capitalisation of major maintenance overhauls on owned aircraft of $0.4 million.
Earnings were also boosted by claims recoveries in the Virgin Australia and Aeromexico bankruptcies and increased lease revenue from CACIL’s re-leased aircraft, Chorus reported.
"The 2022 year was truly transformational for Chorus. With the acquisition of Falko, Chorus became the world’s largest aircraft lessor focused on regional aviation and further diversified its earnings through the addition of asset management services, including fund management on behalf of third-party investors," said Joe Randell, president and chief executive.
"Falko provides a proven aircraft trading platform which enables us to more readily monetise our on-balance sheet assets. Fund management is a far more efficient strategy for our leasing business and allows Chorus to deleverage its balance sheet and free up embedded capital," Randell added.
Looking ahead to the rest of 2023, Chorus said it has the key elements to successfully execute on its strategy to transition to an asset light leasing model while growing its contractual fund management business"
The company said it aims to launch a a new investment fund managed by Falko, with "a minimum of $500 million in capital commitments and (management fees and economic terms commensurate with those in Falko’s prior fund".