Chorus earns $41.5 million in 2020 as airlines hemorrhage money, company is no longer in takeover talks
Regional specialist Chorus Aviation has managed the seemingly impossible in this, the industry’s worst year: it turned a profit.
The Halifax-based company flies the majority of Air Canada’s regional fleet, under what’s called a capacity purchase agreement. Chorus specializes in flying De Havilland Dash 8s and CRJs on short-haul routes. It also leases dozens of regional aircraft around the world.
It has found a market niche that is remarkably resilient in the face of COVID-19.
Chorus earned $41.5 million last year, including $9 million in the last three months of the year.
“Overall, the resiliency of our business model and the dedication of our team delivered respectable financial performance despite the unprecedented challenges the aviation industry worldwide is experiencing,” said Chorus President and Chief Executive Officer Joe Randall. “The crisis forced us to pivot from offence to defence; shifting from our plans of organic growth to building liquidity and protecting the balance sheet.”
Hardship and uncertainty
It’s not that Chorus didn’t face challenges in 2020. Profits are down $91 million from 2019. Revenues were down 30% from the previous year and expenses down 28%. The company has laid off about half its workforce, though that is an improvement from earlier in the year. Air Canada has suspended dozens of routes Chorus used to fly. Because of that, in the first three months of 2021, Chorus is flying between 14 and 20% of its usual capacity.
“Many of our smaller and regional communities are without air service and I certainly appreciate the hardship and uncertainty we all face,” said Randell. “This situation needs urgent attention.”
Still, a profit is a profit, especially considering Air Canada lost $4.6 billion in the same period. Chorus and Air Canada are two of the only airlines in Canada that publicly reports earnings. Other carriers are privately held.
“We understand that the financial losses airlines are incurring are not sustainable in the long term,” said Randell. “We continue to work with Air Canada and our leasing customers to help them manage the economic pressures they are facing as a consequence of the sustained reduction in demand for passenger air travel.”
Chorus owns a fleet of 135 aircraft. It uses or has leased all but 13. That’s a big part of what gives the company its stability. Air Canada has to pay at least $64.5 million in 2021 for what’s called a fixed margin. That’s money that comes in, no matter what. On top of that Chorus expects to earn between $15 and $45 million to substantially cover its flying costs.
Chorus also expects to receive about $56 million in lease revenues this year.
Chorus published its 2020 profit report after the Transport Minister reiterated his support for regional aviation. “It’s regional routes, it’s jobs, it’s refunds,” said Omar Alghabra. Those three priorities form the basis of the government’s ongoing negotiations with airlines over a bailout package, he told the Transport Committee. “So all of those aspects are taken into account in the ongoing discussions with the airlines.”
Canada is the only Group of Seven country that has not offered public support for aviation. The Globe and Mail reported Monday negotiations had reached a critical stage. Alghabra would not offer a timeline to reach a deal.
For Randell, help can’t come soon enough.
“The air industry needs sector support given the circumstances,” he said. “I look forward to resuming service and providing critical links to the rest of Canada and the world through the Air Canada network, and we are eager to do so. I’m hopeful our government will soon introduce its plan to assist our vital sector given its importance to the social fabric of Canada and any economic recovery.”
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