Chorus Aviation settles arbitration case with Air Canada
Nov. 26, 2013, Halifax - Chorus Aviation Inc.received confirmation today that the decision in the arbitration relating to the benchmarking provisions in the Capacity Purchase Agreement (CPA) with Air Canada will not result in changes to the controllable cost mark-up that Jazz Aviation LP receives from Air Canada.
November 26, 2013 By Carey Fredericks
A majority of the arbitration panel agreed with Jazz that there is no justification to change the current 12.5% mark-up, and therefore, Jazz has no obligation to pay retroactive amounts to Air Canada. All other contractual provisions of the CPA are unchanged and will continue to provide clarity on Jazz's revenues going forward.
"We are pleased that the arbitration panel has ruled in favour of Jazz and that we can now move forward with certainty," said Joseph Randell, president and chief executive officer, Chorus and Jazz. "Our long-term partnership with Air Canada continues to be a core component of our business, and we believe this ruling provides us with additional flexibility to continue to operate as an industry leader and deliver value for all our stakeholders. Given Chorus' strong cash flow profile and liquidity position resulting from this arbitration decision, the Board is committed to maintaining the current annual dividend of $0.30 per share as it reviews all alternatives to further enhance shareholder value."
"We've heard and understand Air Canada's desire to reduce the cost of its regional services," continued Randell. "Over the past several months we have developed a framework of strategic options that seeks to address Jazz's cost structure while maintaining our industry-leading operations, and foster a more effective partnership. This framework is based on a series of win-win propositions that could strengthen Jazz and Air Canada in the North American market, create additional value for all our respective stakeholders, and solidify our future in Air Canada's network. We look forward to engaging with Air Canada on these meaningful and achievable initiatives."
Chorus remains focused on prudently managing its financial resources with the goal of enhancing value for all stakeholders, including Air Canada and its passengers, as well as our employees. As such, the Chorus Board of Directors and management team continuously review their capital allocation strategy, seeking to maintain an appropriate balance between reducing debt, investing in the business and returning capital to shareholders.