Shares of Chorus Aviation, which operates 131 aircraft for Air Canada under the Jazz brand, fell by nearly 10% on Wednesday following a warning that the company may have to cut its dividend, after an arbitration panel ruled in favor of Air Canada in a cost dispute.
Chorus said that a three-member arbitration panel has selected Air Canada's method of determining component unit cost drivers over Chorus's model, which compares its cost growth to that of a group of similar operators. The panel agreed, however, that some cost adjustments will be made in Chorus's favor, Chorus said.
Chorus did not disclose the financial impact of the panel's decision, saying it needed clarification and would provide an update later. Any award will be retroactive to 2010.
