Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chorus Aviation Inc (CHRRF, Financial) reported a strong financial performance with an adjusted EBITDA of $54 million for the third quarter and $159 million year-to-date.
- The company successfully improved its leverage ratio to 3.0, down from 3.3 at the beginning of the year, indicating better financial health.
- Chorus Aviation Inc (CHRRF) announced the renewal of its normal course issuer bid, reflecting confidence in the undervaluation of its shares and commitment to shareholder returns.
- The company extended six Q400 CPA aircraft leases with Air Canada out to 2026, strengthening its relationship with a key customer.
- Voyager, a subsidiary of Chorus Aviation Inc (CHRRF), demonstrated significant growth with record part sales and a 16% increase in revenue year-to-date.
Negative Points
- The sale of the regional aviation leasing segment (RAIL) will result in the loss of earnings from this segment, which could impact overall profitability.
- The company faces challenges in maintaining its aircraft maintenance, materials, supplies, and services costs, which have been trending down but remain a significant expense.
- Chorus Aviation Inc (CHRRF) is not currently focused on third-party leasing, which may limit potential revenue streams from this area.
- The company is undergoing a significant transition with the sale of the RAIL segment, which may pose integration and operational challenges.
- There is uncertainty regarding the future of aircraft leases with Air Canada, as the company plans to sell aircraft rather than engage in third-party leasing.
Q & A Highlights
Q: In the third quarter, the aircraft maintenance, materials, supplies, and services line is down compared to previous quarters. Is there any seasonality or specific reason for this trend?
A: Gary Osborne, CFO: Generally, the costs have been trending down, but there's no specific seasonality involved. These costs are related to the aircraft under the CPA, driven by engines and heavy checks.
Q: Can you provide more details on the Free Agent program and the Academy Partnership program at the CET unit? How do they differ from the current pilot training path?
A: Colin Copp, CEO: The current path is a cadet program where students are committed to a partner airline from day one. The Free Agent program allows students to choose from various airlines, providing flexibility and allowing airlines to manage their hiring needs.
Q: Voyager's growth is impressive. Can you elaborate on where this growth is coming from and if it will continue at the same rate into 2026?
A: Colin Copp, CEO: Voyager's growth is driven by its USM side and in-service support for defense contracts. We expect growth beyond 2026, focusing on these areas, particularly defense-related work.
Q: What is the capital intensity of Voyager's growth? Will it require significant CapEx?
A: Gary Osborne, CFO: We don't anticipate significant CapEx for Voyager's growth. The working capital has been steady, and we expect good returns without major capital investments.
Q: Regarding the leasing business with Air Canada, how are discussions on lease renewals progressing, and would you consider third-party leases if Air Canada goes in a different direction?
A: Colin Copp, CEO: Third-party leasing is not our focus, but we aim to make the best financial decisions for our fleet. Our preference is to sell aircraft, but we might consider leases to facilitate sales.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
