Chorus Aviation brushes off CRJ sale concerns, stresses leasing growth abroad

The head of Chorus Aviation Inc. is playing down questions about how the sale of Bombardier Inc.’s CRJ Series aircraft will affect the company’s leasing business, which continued to make strides last quarter.

Joe Randell noted Tuesday that Mitsubishi Heavy Industries Ltd., which bought the floundering regional jet program from Bombardier in June, scooped up the maintenance and marketing activities for the CRJ — though not its manufacturing operations — as part of the $550-million deal.

“It’s fully supported by Mitsubishi, and I think that will be the case for decades in the future,” Randell said on a conference call with investors.

Chorus, which leases planes across the globe and provides regional service for Air Canada, signed an agreement in February for nine more CRJs to bolster a total leasing fleet that currently sits at 40 planes.

The nine regional jets will join the five CRJs already under lease to Air Canada via Chorus subsidiary Jazz Aviation LP, which inked a deal earlier this year to continue to provide Canada’s biggest airline with regional service through to 2035.

“Our contracted leasing revenues for the CRJs are actually pretty healthy and long-term,” Randell said. “.125It’s.375 primarily in North America, but we’re not at all panicked about the residual value at this time.”

Chorus’s regional leasing business, launched in early 2017, also has six CRJs under long-term leases to European airlines.

Chorus continued to expand its leasing business last quarter, announcing new transactions on 11 planes to bring its portfolio — excluding Air Canada — to 56 aircraft. The portfolio is valued at US$1.1 billion, on top of future contracted leasing revenue of about US$815 million.

Randell stressed Chorus’s leasing inroads and growth potential in Asian markets. Six of the 11 aircraft — all ATR 72s — it secured lease deals for last quarter were for IndiGo, a low-cost Indian airline. The other five planes — Q400 turboprops — will go to U.K.-based regional airline Flybe, placing the two carriers among Chorus’s biggest customers aside from Air Canada.

“The growth in the business — the demand for new airplanes in particular — has largely been in Asia,” Randell said.

Chorus’s regional leasing segment has deals with more than a dozen airlines on all six continents. Forty of the 56 planes in its portfolio have been delivered, and the company expects the vast majority of the rest to take flight by the end of the year.

The agreement with Air Canada in January quelled concerns about the company’s future after Air Canada announced last year it would expand its Rouge fleet and fly the lower-cost airplanes on Canadian regional routes — Jazz’s traditional territory.

In its latest quarter, Chorus reported a profit of $38.9 million, boosted by unrealized foreign exchange gains on its long-term debt.

The regional aviation company says the profit for the quarter ended June 30 was up from a profit of $16.2 million in the same quarter last year when it recorded a loss on foreign exchange.

Revenue totalled $332.5 million, down six per cent from $353.9 million in the second quarter last year.

On an adjusted basis, the Halifax-based company earned $24.7 million or 19 cents per share for the quarter, down from an adjusted profit of $29.5 million or 21 cents per share a year ago.

Chorus missed quarterly profit expectations of $27.5 million, according to financial markets data firm Refinitiv.

Companies in this story: (TSX:CHR, TSX:AC)

Just Posted

Alberta to face mild recession in 2019, bounce back in 2020

The Canadian economy is showing improvement, but Alberta economy is doing the… Continue reading

Vandal(s) smash front doors of Red Deer museum

Facility was closed briefly until repairs were done

Memorial plaques stolen from benches in downtown Red Deer parks

City staff found at least 25 metal plaques disappeared last weekend

No representation from supervised consumption service on new panel concerning: Turning Point in Red Deer

The executive director of Turning Point says she’s “a bit disappointed” in… Continue reading

Red Deer seeking further public input on transit network improvements

Proposed new routes, improved frequency, connectivity and accessibility are all part of… Continue reading

Your community calendar

Thursday The Red Deer and District Garden Club hosts its annual Flower… Continue reading

Canadian banks to report ‘solid’ quarter amid trade tensions, strong employment

TORONTO — Trade uncertainty may weigh on the Canadian banks’ upcoming financial… Continue reading

Manufacturing sales beat forecasts in June despite falling 1.2%, says StatCan

Canadian factory activity beat expectations in June as manufacturing sales fell 1.2… Continue reading

Michael B. Jordan, Jamie Foxx among stars set for intimate onstage TIFF chats

TORONTO — Michael B. Jordan, Jamie Foxx, and Kerry Washington are among… Continue reading

Could we be any more excited? ‘Friends’ fans nuts for merch

NEW YORK — See your “Friends” on the big screen. Deck out… Continue reading

Xavier Dolan on directing his idols and making tough choices in ‘John F. Donovan’

TORONTO — Growing up in the outskirts of Montreal, actor-filmmaker Xavier Dolan… Continue reading

California freeway crossing to give wildlife room to roam

LOS ANGELES — Like many urban singles, the mountain lion P-22 lives… Continue reading

Liberals granting more leeway to would-be Venezuelan immigrants, refugees

OTTAWA — The federal Liberals are easing immigration and refugee rules for… Continue reading

Most Read