22 replies to this topic

[malcolm]

Another bright light in Canadian Aviation.

  

Quote

Chorus Aviation Inc. finishes 2011 with positive results

Improved financial performance over 2010
Consistent quarterly profitability since 2006
HALIFAX, Feb. 20, 2012 /CNW/ - Chorus Aviation Inc. ("Chorus") (TSX: CHR.B CHR.A CHR.DB) today announced its fourth quarter and year end 2011 earnings, with a fourth quarter net income of $22.7 million or $0.18 per share, and adjusted net income1 of $19.6 million or $0.16 per share.

Q4 2011 HIGHLIGHTS
• Operating revenue of $407.7 million.
• Free Cash Flow1 of $29.4 million, or $0.24 per share.
• Operating income of $25.3 million.
• Net income of $22.7 million, or $0.18 per share.
• Adjusted net income1 of $19.6 million, or $0.16 per share.
YEAR END HIGHLIGHTS
• Operating revenue of $1.7 billion.
• Free Cash Flow1 of $106.8 million, or $0.87 per share.
• Operating income of $102.0 million.
• Net income of $68.1 million, or $0.55 per share.
• Adjusted net income1 of $71.7 million, or $0.58 per share.
"I'm pleased once again to report strong operational and financial results for both the last quarter and the year 2011," said Joseph Randell, President and Chief Executive Officer, Chorus. "We experienced a 22 percent increase in net earnings year-over-year due to increased flying volumes and a decrease in our unit costs due to good cost control. Looking back over the year, we completed our first full season of the Thomas Cook Canada operation and had a seamless startup of the second season. The best way to characterize 2011 is to say it was a demonstration of our ability to execute on a growing and changing operational plan."

"As always, safety was our priority and the dedication of our employees resulted in a steady improvement in operational performance, including the seamless transition of ten Q400s into the Jazz fleet," Mr. Randell went on to say.  "Looking ahead, we will complete the remaining five deliveries on the Q400 fleet which we expect will have a future positive impact on key financial metrics such as EBITDA and Free Cash Flow while at the same time offer an improved product for passengers and a lower unit cost for our customer."

Financial Performance -Fourth Quarter 2011 Compared to Fourth Quarter 2010
Operating revenue increased from $392.7 million to $407.7 million, representing an increase of $15.0 million or 3.8%.  The increase in operating revenue was primarily due to a $4.1 million or 2.7% increase in pass-through costs from $154.3 million to $158.4 million, which included $9.6 million related to fuel; offset by a decrease in airport and navigational fees and deicing. Passenger revenue, excluding pass-through costs, increased by $11.1 million or 4.7% primarily as a result of a higher US dollar exchange rate, a $2.5 million increase in incentives earned under the Capacity Purchase Agreement (CPA) with Air Canada, and rate increases made pursuant to the CPA which includes two additional Covered Aircraft added to the fleet; offset by a decrease in Billable Block Hours. Other revenue decreased by $0.2 million.

Total operating expenses increased from $374.6 million to $382.4 million, an increase of $7.8 million or 2.1%.  Controllable costs increased by $3.7 million, or 1.7%, primarily as a result of costs associated with capacity growth, including $0.8 million associated with the introduction of the Q400 aircraft, consisting of crew salaries and benefits, and training costs.

Salaries, wages and benefits increased by $9.4 million due to the increased number of full time equivalent employees required to facilitate capacity growth, wage and scale increases under new collective agreements, increased pension expense resulting from a revised actuarial valuation, and increased incentive compensation expense.

Non-operating income amounted to $2.7 million, representing an increase of $12.8 million.  This change was mainly attributable to a foreign exchange gain of $5.8 million (of which $3.1 million was related to an unrealized foreign exchange gain on long-term debt and finance leases) arising as a result of the change in value of the Canadian dollar relative to the US dollar, the absence in this quarter of any loss on derivative liabilities; offset by increased interest expense.

EBITDA1 was $38.0 million compared to $28.3 million in 2010, an increase of $9.7 million or 34.3%.  Free Cash Flow was $29.4 million, an increase of $8.9 million or 43.4% from $20.5 million.

Operating income of $25.3 million for the three months ended December 31, 2011, was up $7.2 million or 40.1% over fourth quarter 2010 from $18.1 million.  Net income for the fourth quarter of 2011 was $22.7 million or $0.18 per share.

Chorus Aviation Inc.'s audited financial statements for the year ended December 31, 2011, and accompanying Management's Discussion and Analysis (MD&A) are available at www.chorusaviation.ca and at www.sedar.com.  A copy may also be obtained on request by contacting Investor Relations at:  investorsinfo@chorusaviation.ca or (902) 873-5094.

[anonymous]

Easy to make money when you have a gold-lined CPA that was signed to give investors a guaranteed return on investment.

[skyline]

The question might be.... why did Milton sign such a gold-lined CPA in the first place. To sell off Jazz..... or set it up on a solid foundation for now? or both?

[seeker]

skyline, on 20 February 2012 - 03:07 PM, said:

The question might be.... why did Milton sign such a gold-lined CPA in the first place. To sell off Jazz..... or set it up on a solid foundation for now? or both?

Are you new around here?  

[malcolm]

skyline, on 20 February 2012 - 03:07 PM, said:

The question might be.... why did Milton sign such a gold-lined CPA in the first place. To sell off Jazz..... or set it up on a solid foundation for now? or both?

Re gold lined, are they doing the work for more or less than if it had been kept in house????   Perhaps Dagger or the Bean can tell us but my gut feeling is that the overall cost to AC is less than if they had continued to staff and operate what Jazz (Chorus)  took on.  

[skyline]

Are you new around here?
Nope... in this business for over 35 years and on this forum for several. What makes you think I'm way out?

[seeker]

skyline, on 20 February 2012 - 04:36 PM, said:

Are you new around here?
Nope... in this business for over 35 years and on this forum for several. What makes you think I'm way out?

Oh, just because Milton's evil machinations have exposed and discussed many times.  I think it's pretty much been established that the reason for the "generous" CPA agreement with Jazz was to increase the value of the Jazz IPO and expedite the transfer of  money out of Air Canada (and out of the country!) and into the hands of the investment banks and Milton himself.

[skyline]

You might be right seeker.... you might be right.
I still think RM and CR had this planned out a long time ago. Off shore might be new though. Hoping I'm wrong, but I smell something really bad in the air.

[Thebean]

Unlike any of the other CPA airlines operating in North America, Chorus does not provide RPM's in it's statements so it is impossible to compare much of their performance on an " apples to apples"  with the rest of the industry.

It is possible to calculate their ASL with the info in the MD&A. It's 372.7 miles with an average capacity of 57.9 seats per departure with a casm including interest of 26.43 cents.

Interestingly, even with the addition of 10 Q400's over the course of the back 2/3rds of 2011, Chorus's interest expense increased only $1.47m over 2009 numbers.

Their aircraft rent expense dropped from $135.7m to $106.5m, even though the fleet grew from 134 aircraft to 139 aircraft.

Depreciation increased from $30.7m to $44.1m and unrestricted cash has dropped from $223.6m to $108.07m.

The average age of the fleet is now 15.6 years, up from 14.6 years in 2009.

The Dash 8 100's are pushing an average of 24 years old and the Dash 8-300's are averaging 21.5 years old.

That's a total of about 64 airframes that are going to have to be replaced, one would assume, over the next 5 or so years.

As is always the case in the industry, interesting times ahead.

Edited by Thebean, 21 February 2012 - 12:33 PM.

[seeker]

skyline, on 20 February 2012 - 05:08 PM, said:

.... I smell something really bad in the air.

Amen Brother, you got that right.

[malcolm]

Thebean, on 20 February 2012 - 05:41 PM, said:

Unlike any of the other CPA airlines operating in North America, Chorus does not provide RPM's in it's statements so it is impossible to compare much of their performance on an " apples to apples"  with the rest of the industry.

It is possible to calculate their ASL with the info in the MD&A. It's 372.7 miles with an average capacity of 57.9 seats per departure with a casm including interest of 26.43 cents.

Interestingly, even with the addition of 10 Q400's over the course of the back 2/3rds of 2011, Chorus's interest expense increased only $1.47m over 2009 numbers.

Their aircraft rent expense dropped from $135.68m to $106.47m, even the fleet grew from 134 aircraft to 141 aircraft.

Depreciation increased from $30.7m to $44.1m and unrestricted cash has dropped from $223.6m to $108.07m.

The average age of the fleet is now 15.6 years, up from 14.6 years in 2009.

The Dash 8 100's are pushing an average of 24 years old and the Dash 8-300's are averaging 21.5 years old.

That's a total of about 64 airframes that are going to have to be replaced, one would assume, over the next 5 or so years.

As is always the case in the industry, interesting times ahead.

Thanks for the insight.  Cheers Malcolm
PS. still would be interesting if somehow the currents costs of AC could be factored into the equation ....  but that would be hard to do with some of the puzzle missing.

Re replacement coming up, seems to be the flavour of the day.

ANALYSIS: Addressing the stagnation in North America's airline industry

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By:   London
02:03 20 Feb 2012
Source:





For more than two decades, the global aviation industry has been absorbing a structural shift in the geography of its business. However, the various waves of "local difficulties" which have arisen from oscillating combinations of economic, terrorism-related, health, business model or even geological shifts have perhaps served as a regular distraction on the true scale of these underlying regional changes.
Core aviation supply in North America has not only failed to grow in the past 15 years, it has actually declined. This stagnation has occurred during a period when total world aviation supply (as measured by departing seats) has averaged 3% compound annual growth, the Asia Pacific region nearly 5% each year, and the Middle East more than 7% a year. It has also been a period when US GDP grew by an annual average of 2.3%.
The implications for the airline industry in North America seem profound. The statistics describe the supply side of a business that appears to be effectively at a standstill, with all that implies for airline services, connections, competition, manufacturing, finance, leasing, customer service, employment, future careers and so on.
The reality is, of course, that more and more passengers have been packed in to those available seats in North America during the past decade and a half. Therefore, there has been traffic growth and, consequently, considerable airline productivity growth, and the industry production side has effectively "rearranged the furniture". However, that furniture also does appear to be getting rather old.
Flightglobal's Ascend fleet database shows how, for both narrowbody and widebody categories, North America has a significantly older inventory of aircraft than other regions, and that comes after a prolonged retirement programme. That programme was driven, not least, by the impact of higher fuel prices on operating costs. While the Middle East appears to have a similar age profile on narrowbodies, the fleet total is much less, and the main Middle East fleet growth has been on widebodies.


In general, Asia-Pacific has less than half the number of large jets more than 20 years old than North America has. With more than one-third of North America's fleet being more than 15 years old, the backlog of fleet investment that appears to be needed - even to match an unlikely "no growth" scenario for the future - is already substantial.
When we consider that in international markets these older fleets are competing head to head with increasingly younger, more efficient aircraft - on long-haul routes to North America from Europe and Asia in particular - the challenge becomes even more apparent. On North American domestic services, many airlines are in the same position, so customer choice is limited. No such rules, however, apply in markets overseas, as we see the Emirates Airbus A380 flying full in to New York. Passengers, particularly those paying business fares, are quick to identify better, newer products and services and move their business accordingly.

http://www.flightglo...ndustry-368509/
The aggregate analysis of capacity and fleet by continental regions does, of course, hide the significant differences which exist between individual countries and airlines. Some airlines in North America can boast a fleet to rival some of those in Asia, and some airlines in the Middle East have older aircraft than some North American fleets.
Nonetheless, the quandary for the large and stagnant North American aircraft market is clear - where now? The investment in new and technically improved fleet, at current fuel prices and maintenance cost levels, has a cost/ benefit justification. But in a stuttering economy, with capital at a premium, and with an uncertain demand outlook following 15 years of no production growth, there are perhaps more questions than answers.

[John S.]

malcolm, on 20 February 2012 - 07:15 PM, said:

. . .
PS. still would be interesting if somehow the currents costs of AC could be factored into the equation ....  but that would be hard to do with some of the puzzle missing.

You would think that someone could figure out the math in the equation.

For starters:
The pilots at Jazz earn less than at AC.
The F/A's at Jazz earn less than at AC.
The dispatchers at Jazz earn less than at AC.
The maintenance folks at Jazz earn less than at AC.
The office staff at Jazz earn less than at AC.
The middle management at Jazz earn less than at AC.
The senior management at Jazz earn less than at AC.
However, the ramp crews at AC stations are still AC so they earn the AC wages.

Put that all that plus operational experience into the equation and see how the investors are doing.

[conehead]

John S., on 21 February 2012 - 05:43 AM, said:

The maintenance folks at Jazz earn less than at AC.

Wrong.

[rudder]

The CHR financial metrics are not traditional so analysis must be conducted from a different perspective. For example, CHR declared increased YOY revenues simply because the cost of fuel went up (it is a pass through cost in the CPA which is 100% recoverable). Many line items are blended so that the margin on the Thomas Cook work which is not public cannot be broken out.

[John S.]

conehead, on 21 February 2012 - 06:12 AM, said:

Wrong.

REALLY?

If you include pay, benefits, travel benefits, holiday time, meal and tool allowance, overtime rules, and everything else in the two contracts you still say Jazz pays more?

If that is true than I have been misinformed and will stand corrected.

[boestar]

Bean:
Problem is the Jazz fleet did not Grow.  For ever Q400 arriving a Crj is leaving plus the ones that left last year.  The overall CPA fleet remains unchanged.

[13820]

John S., on 21 February 2012 - 10:22 AM, said:

REALLY?

If you include pay, benefits, travel benefits, holiday time, meal and tool allowance, overtime rules, and everything else in the two contracts you still say Jazz pays more?

If that is true than I have been misinformed and will stand corrected.

This is part of the problem. All these add-ons make it hard to compare one company to another.
Personally I don't think you can include travel benefits.
We need hard numbers to make a comparison, they are hard to find.
WestJet AMEs just agreed to a new payscale. Hard to tell if it is a good deal with all these convoluted pay increments.

Edited by 13820, 21 February 2012 - 11:43 AM.

[Thebean]

boestar, on 21 February 2012 - 11:28 AM, said:

Bean:
Problem is the Jazz fleet did not Grow.  For ever Q400 arriving a Crj is leaving plus the ones that left last year.  The overall CPA fleet remains unchanged.

http://phx.corporate...l-reportsAnnual  

2011 -  page 6 shows 139 aircraft including 43 CRJ's
2010 -  page 8 shows 134 aircraft including 48 CRJ's
2009 -  page 32 shows 134 aircraft including 54 CRJ's

The total includes the 6 757-200's.

Between 2009 and 2011, maintenance expense was down 7%, aircraft rents were down 21.5%, interest expense up almost 30% and wages and benefits were up 16%, almost identical to the 16.6% increase in ASM capacity over the period.

Edited by Thebean, 21 February 2012 - 12:31 PM.

[Dork]

John S., on 21 February 2012 - 05:43 AM, said:

You would think that someone could figure out the math in the equation.

For starters:
The pilots at Jazz earn less than at AC.
The F/A's at Jazz earn less than at AC.
The dispatchers at Jazz earn less than at AC.
The maintenance folks at Jazz earn less than at AC.
The office staff at Jazz earn less than at AC.
The middle management at Jazz earn less than at AC.
The senior management at Jazz earn less than at AC.
However, the ramp crews at AC stations are still AC so they earn the AC wages.

Put that all that plus operational experience into the equation and see how the investors are doing.

LOL..then send all the bills and write them off under a CPA thru AC and presto....had a great year.

Dork

May The Farce Be With You...

[conehead]

John S., on 21 February 2012 - 10:22 AM, said:

REALLY?

If you include pay, benefits, travel benefits, holiday time, meal and tool allowance, overtime rules, and everything else in the two contracts you still say Jazz pays more?

Absolutely on all counts, Jazz Maintenance has equal or better wages and benefits than Air Canada Maintenance.