Chorus Aviation Inc. · TSX:CHR
Chorus Aviation — Investor Presentation (May 2016)
31 slides from Chorus Aviation's investor presentation, May 2016
Slide 1: Chorus Aviation Investor Presentation May 2016
Joe Randell President and Chief Executive Officer Jolene Mahody Executive Vice President and Chief Financial Officer Nathalie Megann Vice President, Investor Relations and Corporate Affairs May 2016
Slide 2: Disclaimer
Disclaimer CAUTION REGARDING FORWARD-LOOKING INFORMATION Certain information in this presentation, and statements made during this presentation may be forward-looking. These forward- looking statements are identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate
Slide 3: Corporate profile
Corporate profile Market summary Ticker symbols TSX: CHR.B*, CHR.A* *to be consolidated to CHR May 24, 2016 Shares outstanding(1) 122.2 million Market capitalization(2) ~$780 million Monthly dividend / $0.04 per share / ~7.5% Dividend yield (3) (1) Outstanding Chorus shares as of April 30, 2016 was
Slide 4: Chorus Aviation Inc. Canada's largest regional airline
Chorus Aviation Inc. Canada’s largest regional airline Why invest in Chorus Aviation? Jazz Aviation operations Voyageur Aviation Corp. Focus areas and growth opportunities 4
Slide 5: Why invest in Chorus
Why invest in Chorus Long-term Capacity Purchase Agreement (CPA) limits exposure to many variable costs and provides flexibility to grow and diversify. Cash flows generated from CPA are expected to support future investment and annual dividend of $0.48 per share – over $846 million paid in divid
Slide 6: Financial performance indicators
Financial performance indicators Revenue Adjusted EBITDA(1) In C$ millions In C$ millions FY Ending December 31 FY Ending December 31 $1,711 $204 $209 $1,664 $1,672 $1,666 $184 $187 $1,545 $146 FY2011A FY2012A FY2013A FY2014A FY2015A FY2011A FY2012A FY2013A FY2014A FY2015A Operating Income Adjusted
Slide 7: First quarter 2016 financial results
First quarter 2016 financial results Chorus Aviation Inc. Period ended March 31, 2016 Q1 – 2016 Q1 – 2015 ($ million) Operating Revenue 320.6 375.1 Adjusted EBITDA (1) 45.4 28.0 Adjusted EBITDA (1), excluding other items 50.9 40.1 Operating Income 26.8 15.9 Adjusted Net Income (1) 14.8 8.9 Adjusted
Slide 8: Chorus Aviation Inc. Canada's largest regional airline
Chorus Aviation Inc. Canada’s largest regional airline Why invest in Chorus Aviation? Jazz Aviation operations Voyageur Aviation Corp. Focus areas and growth opportunities 8
Slide 9: Jazz – Canada's regional airline
Jazz – Canada’s regional airline 9
Slide 10: Air Canada Express
Air Canada Express Jazz flies for Air Canada as Air Canada Express – Operates ~ 70% of Air Canada’s regional capacity 11-Year Capacity Purchase Agreement (CPA) Three types of missions for Air Canada: – Smaller markets with lesser demand – High density markets at off-peak times – Point-to-point
Slide 11: Fleet simplification and modernization
Fleet simplification and modernization 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 (CRJ900s) and turboprops (Q400s) Aircraft 2015 2016 2017 2018 2019 2020 2021 2022
Slide 12: CPA: benefits to Chorus
CPA: benefits to Chorus Unlocking the value in the fleet New Q400s: Dash 8 Classics: Existing Q400s: Leveraging Chorus Balance Unlocking Value Solidifying Value Sheet to Enhance Value Reduction of 19 Dash 8- Enable return for Chorus Minimum addition of 13 new 100s prior to 2020 enables investm
Slide 13: Chorus compensation under the CPA
Chorus compensation under the CPA Fixed Performance Aircraft Fees Incentives Leasing Fixed margin per covered Achieving established Chorus-owned Q400 aircraft aircraft targets: leased into Jazz’s Air – Controllable on-time Canada Express operation Fixed infrastructure fee per performance (5
Slide 14: Compensation under the CPA
Compensation under the CPA (unaudited) For the calendar For the twelve Average for Average for year ended months ended calendar years calendar years December 31, March 31, 2016 2016-2020 2021-2025 (expressed in millions of Canadian dollars) 2015 (1) CPA Fixed Fee Compensation 109.7 109.7 111.3 64.9
Slide 15: Cost management under the CPA
Cost management under the CPA Controllable Revenue (controllable costs) General overhead, salaries, wages and benefits Depreciation and amortization on aircraft and parts Type of costs Aircraft maintenance Materials and supplies Set annually, based on projected annual block hours, flying h
Slide 16: Cost management under the CPA
Cost management under the CPA Pass-through costs Incurred by Chorus under the CPA Pass-through costs Passed through to Air Canada and fully reimbursed Airport fees Type of costs Navigation fees Terminal handling fees Services provided by Air Canada at no cost to Chorus include: Exclusion
Slide 17: Industry-leading collective agreements
Industry-leading collective agreements Pilots – Agreement expires December 31, 2025 – Greater flexibility with cost competitive structure – Flow of pilots to Air Canada – DB pension replaced by DC pension (new hires) – No strike or lockout Flight Attendants, Maintenance and Dispatchers – Agreeme
Slide 18: Value drivers from the CPA
Value drivers from the CPA Predictable compensation levels to support investments and dividend Strengthened relationship with Air Canada Increased market competitiveness Secured long-term labour agreements to 2025 Reduced reliance on fixed fees per covered aircraft Solid foundation from which to gro
Slide 19: Jazz beyond 2025
Jazz beyond 2025 Long-term cost competitive product Industry-leading Improved safety and labour cost operational competitiveness performance Geographic Renewed airports relationship with infrastructure Air Canada Flexibility with Minimum of 96 size and scope efficient of Jazz regional aircraft opera
Slide 20: Chorus Aviation Inc. Canada's largest regional airline
Chorus Aviation Inc. Canada’s largest regional airline Why invest in Chorus Aviation? Jazz Aviation operations Voyageur Aviation Corp. Focus areas and growth opportunities 20
Slide 21: Voyageur Aviation Corp.
Voyageur Aviation Corp. A logical extension of our business Transport Canada approved air operator and MRO Specialized aviation services – Contract flying – Advanced maintenance and engineering International reach Founded nearly 50 years ago Headquartered in North Bay, ON Share several c
Slide 22: Voyageur business segments: Contract flying operations
Voyageur business segments: Voyageur Airways - Contract flying operations ~70% of revenues derived from contract flying operations Medical, logistical and humanitarian flight operations serving blue chip clients Transport Canada approved air operator and maintenance organization Fixed-base o
Slide 23: Voyageur Airways fleet of 17 aircraft
Voyageur business segments: Voyageur Airways - Contract flying operations - 17 aircraft Aircraft Number Aircraft Type Passenger 7 charter Bombardier CRJ 200LR Passenger 6 charter Bombardier Dash 8 300 Passenger 1 charter Bombardier Dash 8 100 Passenger 1 charter De Havilland Dash 7 2 Air ambulance B
Slide 24: Voyageur Aerotech: specialty maintenance and engineering
Voyageur business segments: Voyageur Aerotech - Specialty maintenance and engineering Maintenance, repair and overhaul (MRO) services for customers worldwide Specialized on all models of Bombardier regional aircraft – Transport Canada, FAA and European Aviation Safety Agency approved – Design Ap
Slide 25: Chorus Aviation Inc. Canada's largest regional airline
Chorus Aviation Inc. Canada’s largest regional airline Why invest in Chorus Aviation? Jazz Aviation operations Voyageur Aviation Corp. Focus areas and growth opportunities 25
Slide 26: Focus areas and growth opportunities
Focus areas and growth opportunities Other opportunities Aircraft leasing and Engineering trading and MRO services Flying operation 26
Slide 27: Thank you
Thank you Nathalie Megann Vice President, Investor Relations and Corporate Affairs nmegann@chorusaviation.ca (902) 873-5094 27
Slide 28: Balance Sheet – Q1 2016
Balance Sheet — Q1 2016 chorus > aviation inc. As at March 31, December 31, 2016 2015 $ $ Assets Current assets Cash 13,886 32,677 Restricted cash 1,829 1,829 Accounts receivable — trade and other 87,571 81,357 Inventories 47,854 45,942 Prepaid expenses and deposits 15.696 15,718 Total current asset
Slide 29: Balance Sheet – Q1 2016 (cont.)
Balance Sheet – Q1 2016 (cont.) 29
Slide 30: Voyageur transaction and acquisition highlights
Voyageur transaction and acquisition highlights Chorus acquired all of the issued and outstanding shares of 519222 Ontario Limited, the holding company that owned Voyageur Airways Overview (‘Voyageur’) and its related companies from Max Shapiro. Transaction closed May 1, 2015. Purchase price r
Slide 31: Value proposition summary
Value proposition summary Creates a new growth platform for Chorus Logical extension of the Chorus contract flying business model and is a cultural fit. Specialty contract flying services growth potential internationally and domestically diversifies risk profile providing higher profitability ma