Soon it will be Christmas and later it will be year end.That is when companies like Chorus report their annual results.And this blog is expecting a good result for Q4 as well as for 2017.The picture above shows a CRJ-1000 which is the newest of the CRJ series (regional jets) put out by Bombardier.Chorus is very interested in that and all other Bombardier regional jets.
The News
On November 29 Chorus announced that it acquired 2 Bombardier Q400 aircraft that would be leased to Ethiopian Airlines which is about the best airline in Africa.It has a fleet of 95 aircraft with an average age of 5 years. This promises to be a good future customer.Then on December8 it announced that it acquired 2 Embraer 190 aircraft that has already been leased to Aeromexico.This brings the total aircraft leased to third parties at about 15.This adds to the 150 aircraft leased to Air Canada Express. And there are about 5 to 10 aircraft leased to it’s subsidiary Voyageur Airways which does medical and engineering charters.
A Relationship with Bombardier
Chorus has always had a good relationship with Bombardier.Bombardier makes regional jets and Chorus flies them- both Q-400s and CRJ s.Likely Bombardier gives a discount to Chorus on purchases for leases made to third parties. Recently it signed a Smart Parts agreement that will provide Bombardier parts at 3 airports (besides Halifax which is the Chorus headquarters).This allows maintenance of about 150 aircraft at low prices.This is done through their Chorus AvParts subsidiary.And now with their third party leasing they will be acquiring even more regional jets from Bombardier.
And what about the Fourth Quarter?
This blog tries to stay away from financial predictions and stick to the technical side of companies covered here.But in my last blog on Workathon it said that “we expect revenues from the plane leased to Air Canada Express will be as high as in Q1 and Q2″And this blog expects an increase in revenues and earnings in Q4 above the Q3 results.Operating income was $55 million in Q3 and $195 million for 9 months.While adjusted EBITDA was $83 million for Q3 and $195 million for 9 months.So this blog expects operating income of $260 million and adjusted EBITDA of $290 to $300 million in 2017. The difference between operating income and adjusted EBITDA is chiefly due to depreciation. If the prediction is true this result will be about a30-35% increase above 2016.And if this is true then CHR may return to it’s old dividend level at $.60 per share.
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