---

Highlights:

• Generated strong Free Cash Flow of $32.4 million for the period ended September 30, 2024 primarily derived from operating cash flows.
• Leverage Ratio improved to 3.0 at September 30, 2024 due primarily to long-term debt repayments of $93.6 million since December 31, 2023.
• Net income of $18.4 million.
• Net income from continuing operations of $19.8 million.
• Adjusted Earnings available to Common Shareholders of $11.9 million.
• Adjusted Earnings available to Common Shareholders of $0.06 per Common Share, basic.
• Adjusted EBITDA of $53.9 million.
• Previously-announced sale of Chorus’ Regional Aircraft Leasing (RAL) segment is expected to significantly improve all of Chorus’ key adjusted metrics on a pro forma basis as follows:
  • Pro Forma Adjusted Earnings available to Common Shareholders per Common Share, basic, from continuing operations $0.08 and 0.25 for the three and nine months ended September 30, 2024, respectively;
  • Pro Forma Leverage Ratio of 1.5x at September 30, 2024; and
  • Pro Forma Free Cash Flow of $36.7 million and $104.0 million for the three and nine months ended September 30, 2024, respectively.
• Post-quarter end, announced fulfilment of all regulatory conditions to the completion of the RAL sale.
• Today, announced renewal of Chorus’ Normal Course Issuer Bid (NCIB) for Common Shares.

HALIFAX, NS, Nov. 6, 2024 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced its third quarter 2024 financial results.

“Throughout the quarter, Chorus’ businesses generated healthy cashflows, and achieved ongoing improvements in our key financial metrics and delivered in line with expectations,” said Colin Copp, President and Chief Executive Officer, Chorus. “Our aviation services businesses delivered strong earnings, including those from Jazz’s Capacity Purchase Agreement (CPA) with Air Canada. Voyageur reported an increase in its revenue over the prior quarter, demonstrating continued growth in its parts sales and specialty business lines.”

“At the end of the third quarter, Chorus improved its Leverage Ratio to 3.0 from 3.3 at December 31, 2023, while generating Free Cash Flow of $32.4 million,” said Mr. Copp. “Further, after announcing the agreement to sell Chorus’ RAL business, we took several steps during the third quarter towards the completion of the transaction, including the satisfaction of all regulatory conditions. The transaction is expected to close by the end of this year.”

“Post-closing, the transaction positions us well to accelerate value for our shareholders and provide the financial flexibility to deliver on our core strengths in aviation services,” commented Mr. Copp. “On a pro forma basis, we expect to see significant improvements in our financial measures, including Leverage and Free Cash Flow after debt repayments.”

“These improvements will enable us to implement a return of capital program for our shareholders and fund steady growth, post-completion of the sale,” said Mr. Copp. “Ahead of that, and in line with our ongoing focus on shareholders, today, we also announced the renewal of our Normal Course Issuer Bid (NCIB) for our Common Shares, reflecting our belief that Chorus’ shares remain under-valued, offering an attractive investment and use of available funds.”

Third Quarter Summary

In the third quarter of 2024, Chorus reported Adjusted EBITDA from continuing operations of $53.9 million, a decrease of $3.1 million compared to the third quarter of 2023 primarily due to:

• a decrease in aircraft leasing revenue under the CPA of $4.3 million primarily due to a change in lease rates on certain aircraft; and
• an increase in general administrative expenses attributable to increased operations; partially offset by
• an increase in other revenue of $10.3 million primarily due to Voyageur’s increased revenue in parts sales, contract flying and MRO activity; and
• an increase in capitalization of major maintenance overhauls on owned aircraft of $2.0 million.

Adjusted Net Income from continuing operations was $11.9 million for the quarter, a decrease of $2.3 million compared to the third quarter of 2023 primarily due to:

• a $3.1 million decrease in Adjusted EBITDA as previously described; and
• an increase in depreciation expense of $3.5 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; partially offset by
• a decrease of $2.5 million in income tax expense;
• a decrease in net interest costs of $1.6 million; and
• a positive change in foreign exchange of $0.2 million.
• Net income from continuing operations decreased $19.1 million compared to the third quarter of 2023 primarily due to:
• the previously noted decrease in Adjusted Net Income of $2.3 million;
• the Defined Benefit Pension Revenue recognized in 2023 of $29.9 million (Air Canada agreed to compensate Jazz for the one-time impact of the wage increase on the Jazz defined benefit pension plan); and
• an increase in employee separation program costs of $1.1 million; partially offset by
• a positive change in net unrealized foreign exchange of $5.9 million; and
• a decrease in income tax expense on adjusted items of $8.4 million.

Year-to-Date Summary

Chorus reported Adjusted EBITDA from continuing operations of $158.9 million for the nine months ended September 30, 2024, a decrease of $8.0 million compared to the same prior year period primarily due to:

• a decrease in aircraft leasing revenue under the CPA of $13.3 million primarily due to a change in lease rates on certain aircraft;
• an increase in stock-based compensation of $2.2 million due to an increase in the Common Share price offset by the change in fair value of the Total Return Swap; and
• an increase in general administrative expenses attributable to increased operations; partially offset by
• an increase in other revenue of $13.6 million primarily due to Voyageur’s increased revenue in parts sales, contract flying and MRO activity;
• an increase in capitalization of major maintenance overhauls on owned aircraft of $4.1 million; and
• an improvement in the Controllable Cost Guardrail of $2.0 million.
• Adjusted Net Income from continuing operations of $35.7 million, a decrease of $5.6 million compared to the same prior year period primarily due to:
• a $8.0 million decrease in Adjusted EBITDA as previously described;
• an increase in depreciation expense of $10.4 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; and
• a negative change in net foreign exchange of $0.3 million; partially offset by
• a decrease of $10.2 million in income tax expense; and
• a decrease in net interest costs of $2.9 million.
• Net income from continuing operations of $33.7 million, a decrease of $39.7 million compared to the same prior year period primarily due to:
• the previously noted decrease in Adjusted Net Income of $5.6 million;
• the Defined Benefit Pension Revenue recognized in 2023 of $29.9 million (Air Canada agreed to compensate Jazz for the one-time impact of the wage increase on the Jazz defined benefit pension plan); and
• a negative change in net foreign exchange of $12.2 million; partially offset by
• a decrease in income tax expense on adjusted items of $8.1 million.

Outlook

The discussion that follows includes forward-looking information. This outlook is provided for the purpose of providing information about current expectations for 2024. Forecast information has also been provided for 2025 and 2026 for Jazz Aviation LP (‘Jazz’). This information may not be appropriate for other purposes. Due to the planned sale of its RAL segment, Chorus has removed consolidated guidance for 2024. Refer to Section 4 of the MD&A for Post Sale Pro forma non-GAAP Financial Measures September 30, 2024). The forecast has changed as a result of updated foreign exchange rates. The forecast has changed as a result of updated foreign exchange rates, changes in assumptions on certain lease rates and lease extensions.

The CPA provides a Fixed Margin to Jazz regardless of flying levels; therefore, any variations in flying are not expected to have any impact on Jazz’s earnings. In addition, Jazz receives compensation for aircraft leased under the CPA that generates predictable Free Cash Flows. Jazz aircraft have amortizing debt that will be fully paid-off at the end of the original lease term under the CPA. At the end of each lease, Jazz will either extend the lease, sell or part-out each aircraft. Subsequent aircraft leases will continue to produce predictable Free Cash Flow at lower rates as the aircraft will be unencumbered.

	Annual Forecast(1)
(unaudited)(in thousands of Canadian dollars)	2024$	2025$	2026(2)$
Fixed Margin(3)	60,900	59,600	43,900
Aircraft leasing under the CPA
Revenue(4)	132,000	116,000	100,000
Payment on long-term debt and interest	96,000	77,000	67,000
Total Fixed Margin and Aircraft leasing under the CPA less payment on long-term debt and interest	96,900	98,600	76,900
Wholly-owned aircraft leased under the CPA (end of period)(4)	48	45	39
Wholly-owned aircraft leased under the CPA available for re-lease (end of period)(4)	nil	3	9

Covered Aircraft

The forecasted Covered Aircraft under the CPA for the years 2024 to 2026 is as follows:

			Change		Change
		Forecast 2024	2025	Forecast 2025	2026	Forecast 2026
Dash 8-400	Aircraft Leased under the CPA	34	(3)	31	(6)	25
	Other Covered Aircraft	5	(5)	—	—	—
		39	(8)	31	(6)	25
CRJ900	Aircraft Leased under the CPA	14	—	14	—	14
	Other Covered Aircraft	21	—	21	(5)	16
		35	—	35	(5)	30
CRJ200	Aircraft Leased under the CPA	—	—	—	—	—
	Other Covered Aircraft	15	—	15	(15)	—
		15	—	15	(15)	—
E175	Aircraft Leased under the CPA	—	—	—	—	—
	Other Covered Aircraft	25	—	25	—	25
		25	—	25	—	25
Total	Aircraft Leased under the CPA	48	(3)	45	(6)	39
	Other Covered Aircraft	66	(5)	61	(20)	41
		114	(8)	106	(26)	80

About Chorus Aviation Inc.

Chorus is a global aviation solutions provider and asset manager, focused on regional aviation. Our principal subsidiaries are: Falko Regional Aircraft, the leading pure play regional aircraft asset manager and lessor, managing investments on behalf of third-party fund investors; Jazz Aviation, the largest regional operator in Canada and provider of regional air services under the Air Canada Express brand; Voyageur Aviation, a leading provider of specialty charter, aircraft modifications, parts provisioning and in-service support services; and Cygnet Aviation Academy, an industry leading accredited training academy preparing pilots for direct entry into airlines. Together, Chorus’ subsidiaries provide services that encompass every stage of a regional aircraft’s lifecycle, including: aircraft acquisition and leasing; aircraft refurbishment, engineering, modification, repurposing and transition; contract flying; aircraft and component maintenance, disassembly, and parts provisioning; and pilot training.