Chorus Aviation wins battle with Air Canada

Chorus Aviation has won a lengthy battle with Air Canada over the markups its charges on flights, but the larger war over long-term cost reductions in an increasingly competitive market remain unresolved.

MONTREAL — Chorus Aviation has won a lengthy battle with Air Canada over the markups its charges on flights, but the larger war over long-term cost reductions in an increasingly competitive market remain unresolved.

An arbitration panel on Tuesday supported Chorus’s contention that there was no justification for changing the current 12.5 per cent markup on how much its Jazz subsidiary receives from Air Canada. The ruling relieves Chorus from paying retroactive payments to the country’s largest airline (TSX:AC.B).

The two sides have battled over the permitted growth of controllable costs — including salaries and wages, maintenance and overhead — under their capacity purchase agreement or CPA. Both sides agreed to compare or benchmark Jazz costs in 2009 and later in 2015 to those of a specified group of similar operators in the U.S.

Chorus CEO Joseph Randell said the ruling means the company, which sells most of its fleet capacity to Air Canada, can “now move forward with certainty.”

“Our long-term partnership with Air Canada continues to be a core component of our business and we believe this ruling provides us with additional flexibility to continue to operate as an industry leader and deliver value for all our stakeholders,” he said in a news release.

The company plans to maintain its current 30 cents per share annual dividend as it review alternatives to enhance shareholder value.

Analysts said the ruling wasn’t a surprise, but Chorus continues to face the challenge of reducing costs, competition from WestJet’s Encore regional service and Air Canada’s threat to find an alternative carrier to Jazz service to the United States.

Randell said Chorus understands Air Canada’s desire to reduce costs and has “developed a framework of strategic options” to address Jazz’s cost structure. But unless the two sides can agree on changes, terms of the CPA remain in force until Dec. 31, 2020.

Chorus and Air Canada will begin negotiations next year to set CPA rates for 2015 to 2017.

“In line with Air Canada’s priority for cost reduction and sustainable profitability, Air Canada will both work with Jazz to explore cost reduction initiatives and continue to pursue its regional airline diversification strategy that includes the request for proposal process underway for certain existing U.S. regional transborder routes,” Air Canada said in a release.

Chorus’ (TSX:CHR.B) shares surged more than 28 per cent after the company announced its arbitration win.

Just Posted

Red Deer church donates to Safe Harbour

It was all about helping those in need at Safe Harbour in… Continue reading

Former firefighter with PTSD sues Syncrude over suspended benefits, dismissal

CALGARY — A lawsuit filed by a former firefighter and paramedic against… Continue reading

Call for tighter bail rules after Saudi sex-crime suspect vanishes

HALIFAX — Mohammed Zuraibi Alzoabi may have hoped to quietly disappear from… Continue reading

Democrats aren’t buying Trump’s shutdown-ending ‘compromise’

WASHINGTON — In a bid to break the shutdown stalemate, President Donald… Continue reading

Updated: Red Deer welcomes 2019 Canada Winter Games Team Alberta

About 250 Alberta athletes are participating in the Games

Students seen mocking Native Americans could face expulsion

One 11-minute video of the confrontation shows the Haka dance and students loudly chanting

Curtain rising Sunday night on total lunar eclipse

CAPE CANAVERAL, Fla. — The celestial curtain will be rising soon on… Continue reading

At 30-day mark, shutdown logjam remains over border funding

WASHINGTON — Thirty days into the partial government shutdown, Democrats and Republicans… Continue reading

Holocaust victims buried after remains found in UK museum

LONDON — The remains of six unidentified Holocaust victims were buried in… Continue reading

Giuliani: ‘So what’ if Trump and Cohen discussed testimony

WASHINGTON — President Donald Trump’s lawyer Rudy Giuliani left open Sunday the… Continue reading

Photos: Rocks fly at 37th Annual Oilmen’s Bonspiel

Twenty-nine teams gathered at the Pidherney Curling Centre in Red Deer for… Continue reading

Death toll reaches 79 in Mexico fuel pipeline fire horror

TLAHUELILPAN, Mexico — People in the town where a gasoline explosion killed… Continue reading

With Trump out, Davos chief eyes fixing world architecture

DAVOS, Switzerland — The founder of the World Economic Forum says U.S.… Continue reading

Mexican pipeline explosion kills 71, leaves nightmare of ash

TLAHUELILPAN, Mexico — Gerardo Perez returned Saturday to the scorched field in… Continue reading

Most Read