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Chorus Aviation Inc. (“Chorus”) has issued its third quarter 2013 earnings.
“We are pleased to report adjusted net income of $27.7 million for the third quarter of 2013, one of our highest in any quarter since converting from an income fund to a corporate structure on Dec. 31, 2010,” stated Joseph Randell, president and chief executive officer, Chorus. “Further, we generated $55.8 million in EBITDA, an increase of $4.3 million or 8.2 per cent over the third quarter of 2012. The growth in EBITDA during the quarter was primarily attributable to the addition of six new Q400 aircraft to the fleet in the first quarter of this year which coincided with the retirement of the last CRJ-100 aircraft. During the past four years we have replaced a total of 32 50-seat CRJ aircraft with 21 new and more efficient 74-seat Q400s.”
“Standardized Free Cash Flow was $30.8 million during the quarter and has been positive for the past two quarters since the Q400 delivery program was completed in March 2013,” continued Mr. Randell. “This has been a contributing factor to our improving liquidity position which included approximately $150.0 million in cash at the end of the third quarter. Our continued attention to safety, operational excellence and responsible fiscal management are pillars of our solid foundation and contributed to these strong financial results.”
“We achieved the best on-time arrival performance of Canada’s primary airlines during the quarter, and October marked our eleventh consecutive month in this leading position,” said Randell. “Our operational expertise has allowed us to build an airline with superior scope and scale, and has earned us a reputation for safe, reliable and efficient service. I commend our employees for their continued focus on safety and operational excellence.”
Q3 2013 HIGHLIGHTS
-Operating revenue of $432.3 million.
-EBITDA of $55.8 million; EBITDA margin of 12.9 per cent.
-Operating income of $39.3 million.
-Net income of $36.0 million, or $0.29 per basic share.
-Adjusted net income of $27.7 million, or $0.23 per basic share.
-Standardized free cash flow of $30.8 million.
-Billable Block Hours of 98,668.
Financial Performance -Third Quarter 2013 Compared to Third Quarter 2012
Operating revenue decreased from $435.6 million to $432.3 million, representing a decrease of $3.4 million or 0.8 per cent. Passenger revenue, excluding pass-through costs, increased by $1.8 million or 0.7 per cent primarily as a result of rate increases made pursuant to the Capacity Purchase Agreement (‘CPA’) with Air Canada, a higher US dollar exchange rate and a $1.0 million increase in incentives earned under the CPA with Air Canada; offset by decreased CPA Billable Block Hours. Pass-through costs reimbursed by Air Canada decreased from $166.1 million to $160.9 million, a decrease of $5.2 million or 3.1 per cent, which included a decrease of $2.3 million related to fuel costs.
Operating expenses decreased from $399.3 million to $393.0 million, a decrease of $6.3 million or 1.6 per cent. Controllable Costs decreased by $1.1 million, or 0.5 per cent, and pass-through costs decreased by $5.2 million or 3.1 per cent.
Salaries, wages and benefits decreased by $3.7 million, primarily as a result of a reduction in the number of full time equivalent employees, a 3.4 per cent decrease in Block Hours, and higher capitalized salaries and wages related to major maintenance overhauls; offset by voluntary employee severance costs related to flight crew and maintenance employees, wage and scale increases under new collective agreements, and increased pension expense resulting from a revised actuarial valuation.
Depreciation and amortization expense increased by $1.3 million, primarily related to the purchase of Q400 aircraft, increased capital expenditures on aircraft rotable parts and other equipment, and increased major maintenance overhauls; offset by certain assets having reached full amortization and a change in the estimated residual value of the Dash 8-100 and 300 aircraft.
Aircraft maintenance expense decreased by $1.1 million as a result of a $0.9 million reduction reflecting the cessation of Thomas Cook activity as of the comparative quarter, and decreased Block Hours of $2.2 million; offset by increased other maintenance costs of $0.2 million and an increase in the US-dollar exchange rate on certain material purchases of $1.8 million.
Aircraft rent decreased by $1.8 million primarily as a result of the return of CRJ100 aircraft; offset by a higher US dollar exchange rate.
Other expenses increased by $1.8 million primarily due to increased professional and consulting fees; offset by decreased general overhead expenses.
Non-operating income decreased by $2.9 million. This change was mainly attributable to a decrease of $2.9 million in foreign exchange (of which $1.7 million was related to a decrease in unrealized foreign exchange gain on long-term debt and finance leases) and a gain related to the sale of Chorus’ office and hangar facility in London, Ont., of $1.3 million; offset by increased interest expense related to Q400 aircraft financing of $0.2 million.
EBITDA was $55.8 million compared to $51.5 million in 2012, an increase of $4.2 million or 8.2 per cent, producing an EBITDA margin of 12.9 per cent. Standardized free cash flow was $30.8 million.
Operating income of $39.3 million was up $2.9 million or 8.0% over third quarter 2012 from $36.4 million.
Net income for the third quarter of 2013 was $36.0 million or $0.29 per basic share, a decrease of $0.9 million or 2.5 per cent from $36.9 million or $0.30 per basic share. On an adjusted basis, net income was $27.7 million or $0.23 per basic share, an increase of 3.0 per cent or $0.01 per basic share from $26.9 million or $0.22 per basic share.
