Slide 1: Chorus Aviation Inc. Investor Presentation March 2018
Se chorus aviation inc. INVESTOR PRESENTATION March 2018
Slide 2: Caution regarding forward-looking information
Caution regarding forward-looking information Certain information in this presentation may contain ‘forward-looking information’ as defined under applicable Canadian securities legislation. Forward-looking information typically contains words such as “anticipate”, “believe”, “could”, “should”, “esti
Slide 3: Chorus at a Glance
CHORUS AT A GLANCE TSX: CHR Ticker symbol ~ 125 million Outstanding shares ~ $1 billion Market capitalization % chorus aviation inc. ~ $1.4 billion Operating revenue - 2017 ~ $286 million Adjusted EBITDA - 2017 (1) Outstanding Chorus shares as of March 20, 2018 137,106,491 Consistently profitable si
Slide 4: Growth Strategy | Chorus lines of business
GROWTH STRATEGY | Chorus lines of business Focused on providing a full suite of regional airline services to customers around the world aviation inc. Regional Contracted flying Maintenance, repair aircraft leasing operations and overhaul (MRO) % AIR CANADA ce) chorus 4 EXPRESS 4 JS aviation capital
Slide 5: Regional Aircraft Leasing
Regional Aircraft Leasing chorus Delivering regional aviation to the world 5
Slide 6: Chorus Aviation Capital
CHORUS AVIATION CAPITAL = Established in January 2017 "Fairfax Financial invested $200 million in Chorus through a private placement of convertible debt units. = New subsidiary is building a global, regional aircraft leasing platform - further advancing Chorus’ growth and diversification strategy. "
Slide 7: Key Strategies
KEY STRATEGIES Young Modern Aircraft " Acquire new technology, high demand, fuel efficient, marketable aircraft = Use sale leasebacks to cement airline relationships * Use skyline purchases, to achieve excellent pricing Diversified High Quality Customers * Build geographical and product diversity =
Slide 8: CAC Strategic Vision
CAC STRATEGIC VISION Opportunity Chorus believes there is a significant opportunity to develop a large and profitable leasing platform by capitalizing on its unique expertise in the regional airline market. Chorus is targeting the regional segment because: = Accelerating global passenger growth and
Slide 9: Regional Aircraft: A highly attractive leased asset
REGIONAL AIRCRAFT: A highly attractive leased asset Resilient Demand Expectations with a Broad User Base — The 70-130 seat fleet is expected to grow ~4-5% per year over the next 20 years — ~20% to 25% regional aircraft manufactured are leased vs. -40% to 50% narrow-body aircraft - solid growth poten
Slide 10: Sources of Supply for CAC Transactions
SOURCES OF SUPPLY FOR CAC TRANSACTIONS Portfolio . a a Acquisition Purchase of existing assets and leases from existing Lessors Airline Sale a . oo Lenactral Sale and leaseback of existing or future aircraft deliveries Skyline Leases = Direct purchase from manufacturers for subsequent lease to airli
Slide 11: Average age of aircraft ~3 years with average lease terms of ~7 years
Average age of aircraft ~3 years with average lease terms of ~7 years . The information above includes forward-looking information (refer to slide 2 – “Caution regarding forward-looking information”)
Slide 12: Chorus Has Become a Significant Player in Regional Aircraft Leasing
CHORUS HAS BECOME A SIGNIFICANT PLAYER IN REGIONAL AIRCRAFT LEASING Portfolio Value (US$ mm) 6,000 5,400 5,000 4,000 3,000 2,700 2,000 1,100 1,050 : 800 1,000 700 700 | Bom on om 5 | xn ff : = - NAC GECAS Chorus Avolon DAE ELIX FALKO CDB Avation GOAL Leasing S ; Source; 2017 Airline Business survey,
Slide 13: Contracted Flying Operations
Contracted Flying Operations choru: Delivering regional aviation to the world aviation i 13
Slide 14: Air Canada Express | Responsibilities
AIR CANADA EXPRESS | Responsibilities Air Canada Air Canada Express - operated by Jazz = Purchases capacity = Provides crews, airframe maintenance, flight operations, some airport operations, and general administration = Manages routes = Scope of operation * Sets flight schedules » -680 daily flight
Slide 15: Revenue Generation under the CPA
REVENUE GENERATION UNDER THE CPA Fixed Performance Fees Incentives = Minimum fleet = Achieving established established for term of targets: CPA — Controllable on-time - performance = Fixed margin per covered = — Controllable flight = aircraft completion — Passengers arriving with = Fixed infrastruct
Slide 16: Cost Management under the CPA
COST MANAGEMENT UNDER THE CPA Controllable revenue (costs) and pass-through costs ~75% Controllable costs % chorus aviation inc. Controllable costs Type of costs General overhead, salaries, wages and benefits Depreciation and amortization on aircraft and parts Aircraft maintenance Materials and supp
Slide 17: Jazz's Competitiveness under the CPA
JAZZ’S COMPETITIVENESS UNDER THE CPA Focused on increasing market competitiveness and growing services provided to Air Canada through a differentiated fleet and service offering = Industry-leading collective agreements expire end of 2025 = Pilots, Flight Attendants, Maintenance, Dispatchers = Pilots
Slide 18: Voyageur Airways
VOYAGEUR AIRWAYS = Fleet of 17 owned aircraft (15 Bombardier manufactured) *" Contract flying services * Flight and cabin crew * Maintenance personnel * On-site manager * Missions * Medical, logistical and humanitarian * Other commercial contracts in Canada, Africa and Europe = Flight operations * V
Slide 19: Maintenance, Repair and Overhaul (MRO) and Parts
Maintenance, Repair and Overhaul (MRO) and Parts chorus Delivering regional aviation to the world aviation 19
Slide 20: Maintenance, Repair and Overhaul (MRO) and Parts
MAINTENANCE, REPAIR AND OVERHAUL (MRO) AND PARTS © = Separate division under Jazz (©) = Authorized Service Facility for Bombardier Commercial Aircraft = Stand alone profit centre = Focused on traditional heavy maintenance on own and Acluson of Sowa third-party operated Bombardier aircraft = Operatin
Slide 21: New Opportunities MRO Services
New Opportunities MRO Services
Slide 22: Creating Value through Growth and Diversification
CREATING VALUE THROUGH GROWTH AND DIVERSIFICATION Pursuing growth . Growing aircraft opportunities for Advancing business Strengthening leasing revenues Voyageur in diversification leveraging Jazz’s competitiveness inside/outside CPA MRO and parts our regional aviation expertise Se chorus Delivering
Slide 23: Contact
CONTACT Nathalie Megann Vice President, Investor Relations and Corporate Affairs nmegann@chorusaviation.ca (902) 873-5094 % chorus Delivering regional aviation to the world 23 aviation inc.
Slide 24: Appendices
APPENDICES = Regional aircraft leasing growth opportunity = Private placement with Fairfax Financial = Q4 and YE 2017 Income Statement = Q4 and YE 2017 Balance Sheet = CPA fleet modernization plan by type and year = Jazz fact sheet = 2017 Jazz industry recognition = Voyageur fleet % chorus Deliverin
Slide 25: Regional Aircraft Leasing Growth Opportunity
Regional Aircraft Leasing Growth Opportunity
Slide 26: Chorus Aviation Capital Executive Team
Chorus Aviation Capital Executive Team Steven Ridolfi, President SVP, Strategy, Mergers and Acquisitions, Bombardier President, Business Aircraft, Bombardier President, Regional Aircraft, Bombardier Cameron Mountenay, Chief Financial Officer * VP, Structured Finance, Bombardier * VP, Finance and Con
Slide 27: Chorus Aviation Capital Executive Team
Chorus Aviation Capital Executive Team Rory McQueen, Vice President, Finance and Capital Markets VP, Capital Markets, Lease Corporation International (LCI) Head of Treasury, Vistajet Director, Structured Finance, Bombardier Director, Aircraft Finance, Bank of Scotland Jim Murphy, Vice President, Tra
Slide 28: World annual traffic and operating lease market share
World annual traffic (trillion RPK) Net Profit / Loss ($bn) % Revenues 16.0 ICAO Airbus 14,000 45% $40 8% total traffic GMF 2016 ~40% 14.0 40% 12,000 $30 6% ~34% 35% 12.0 ~30% ~9,500 $20 4% % on Operating Lease 10,000 Number of Aircraft 30% 10.0 $10 2% 8,000 ~22% 25% ~6,800 8.0 $0 0% 6,000 ~17% ~5,2
Slide 29: Flights 2012 by aircraft type and distance
3.0 Turboprop (TP) 14,900 2.5 Regional Jet (RJ) 61-120 Passengers Narrow Body (NB) Flights 2012 (million) 2.0 1.5 83% of NB flights are beyond 500 km 5,900 1.0 63% of RJ61-120 flights are beyond 5,000 TP 500 km RJ 0.5 83% of TP flights are below 500 km 0.0 TP Narrow Body Wide Body Regional Aircraft
Slide 30: Regional aircraft leasing is not core for many commercial aircraft lessors
Regional aircraft leasing is not core for many commercial aircraft lessors Commercial Aircraft Leasing Focus - Focus on larger aircraft allows for faster deployment of capital - Core OEM relationships with Airbus and Boeing - Core customer relationship with mainline airlines - Regional aircraft port
Slide 31: The Fairfax Investment
The Fairfax Investment * $200 million investment in Chorus (200,000 convertible debt units at $1,000/unit) + $1,000 secured debenture + 121.21212121 warrants «Debentures Interest rate of 6.00% per annum Secured by Dash 8-100 and Dash 8-300 aircraft, plus real estate; security released if Fairfax dis
Slide 32: Revenue generation under the CPA
Revenue generation under the CPA (1) CPA revenue for 2016-2020 is not contingent upon fleet size while 2021-2025 has a portion (unaudited) adjusted downward as the remaining Dash 8 100 For the calendar For the twelve Average for Average for aircraft reach their retirement dates. The revenue year end
Slide 33: Jazz Fleet Modernization Plan
Jazz Fleet Modernization Plan The Chorus fleet will transition to more efficient, larger aircraft with significant fleet simplification = Jazz will transition to a mix of larger, newer technology regional jets (CRJ9O0Os) and turboprops (Q400s) Aircraft Type 2015 2016 2017 2018 2019 2020 2021 2022 20
Slide 34: Contracted Flying Operations | Summary
Contracted Flying Operations | Summary Long history in flying operations with strong industry relationships - competitive advantage Va Jazz Aviation Jazz is Air Canada’s primary regional supplier, -70% of their regional capacity Minimum of 96 aircraft under the CPA in 2025 Larger Q400s and CRJ-900s
Slide 35: Maintenance Repair and Overhaul (MRO) and Parts | Summary
Maintenance Repair and Overhaul (MRO) and Parts | Summary Jazz Technical Services (JTS) JTS provides opportunity to grow as separate profit centre New, industry-leading maintenance collective agreement Traditional heavy maintenance 24/7 operation enabling quick aircraft turnaround times Facility has
Slide 36: Jazz Fact Sheet
Jazz Fact Sheet Corporate Fact Sheet Aircraft type Number Capacity Head office Halifax Regional offices Vancouver Bombardier Q400 Calgary NextGen Toronto Montreal a Halifax (Operations Centre) a ae - 21 7S Bombardier CRJ-900 Destinations served 74 destinations across Canada and the . a US. = ale 10
Slide 37: Jazz Industry Recognition
Jazz Industry Recognition =" Canada’s Safest Employers 2017 - gold in the Transportation category = Jazz received top Airline Reliability Performance Awards for dispatch reliability: * Q400 Aircraft Programs for North America * CRJ100/200 Aircraft Programs for North America * CRJ700/900/1000 Aircraf
Slide 38: Voyageur Fleet
Voyageur Fleet Aircraft Number Aircraft Type 7 Passenger charter Bombardier CRJ-200LR Dy i = 6 Passenger charter Bombardier Dash 8-300 —"s 2 Passenger charter o a Bombardier Dash 8-100 2 Air ambulance Beechcraft King Air 200 chorus”~ aviation inc. Delivering regional aviation to the world 38
Slide 39: Income Statement | Q4 and YE 2017
Income Statement | Q@4 and YE 2017 chorus” aviation inc. For the years ended December 31, 2017 and 2016 (expressed in thousands of Canadian dollars, except earnings per share) 2017 2016 $ $ Operating revenue Passenger 1,279,818 1,251,856 ther Z 4.99% 1,355.14) 1,276,854 Operating expenses Salaries,
Slide 40: Income Statement | Q4 and YE 2017 (cont'd)
Income Statement | Q@4 and YE 2017 (cont’d) MW chorus’ aviation inc. For the years ended December 31, 2017 and 2016 (expressed in thousands of Canadian dollars, except earnings per share) 2017 2016 $ $ Non-operating income (expenses) Interest revenue 2,246 578 Interest expense (45,757) (22,667) (Los
Slide 41: Balance Sheet Q4 and YE 2017
Balance Sheet Q4 and YE 2017 (cont’d) chorus”~ aviation inc. As at December 31, 2017 2016 $ $ Assets Current assets Cash 71,249 23,491 Restricted cash 20,383 5,671 Accounts receivable - trade and other 77,397 75,058 Inventories 51,543 49,657 Prepaid expenses and deposits 12,920 10,591 Income tax rec
Slide 42: Balance Sheet | Q4 and YE 2017 (cont'd)
Balance Sheet | Q4 and YE 2017 (cont’d) As at December 31, 2017 2016 $ $ Liabilities Current liabilities Accounts payable and accrued liabilities 216,197 173,656 Current portion of obligations under finance leases 2,762 5,099 Current portion of long-term incentive plan 5,844 6,567 Current portion of