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Exchange Income Corp. continues to flourish

Exchange Income Corp. (EIC) is already responsible for about 1,000 jobs in Winnipeg through its ownership of Calm Air, Perimeter Aviation, Bearskin Airlines and Keewatin Air and a small, efficient head office for its corporate operations that last year generated revenues of just shy of $900 million.

Late last year, EIC’s Newfoundland subsidiary, Provincial Aerospace Ltd. (PAL), was part of the winning bid for the country’s new fleet of 16 Airbus C295 fixed wing search and rescue planes, built in Spain. PAL will be responsible for 26 years worth of maintenance on the planes.

At EIC’s annual meeting in Winnipeg last week, EIC’s chief executive officer Michael Pyle confirmed – as had previously been hinted – that the heavy maintenance work on those search-and-rescue planes will be done in Winnipeg.

Construction on a new hangar to do that work will likely begin in about 18 months and it will need up to 40 staff from the outset, with expansion out to about 100 employees in the long term.

“Those are not entry-level positions, but high-skilled, well-paid positions,” Pyle said.

He said the hangar, expected to cost about $10 million, will also eventually be responsible for the heavy maintenance work on the company airlines’ fleet of Dash 8, ATR42 and ATR72 planes – currently being handled in PAL’s hangar in Newfoundland.

“There’s only 16 search-and-rescue planes, so there is not always going to be one here, so to take advantage of the infrastructure — and not have to fly them all to Newfoundland – we’ll use the expertise and bring it to Winnipeg,” he said.

The first of the Airbus C295s is not scheduled to be delivered until the end of 2019 and Brian Chafe, CEO of St. John’s-based PAL, said the heavy maintenance work will not be needed until after about five years of service, but the facility will have to be up and running long before that.

Pyle said the hangar will be built on the current site of the Royal Aviation Museum of Western Canada, which is in the final stages of a capital campaign to finance its move to another location on the airport campus.

That new infrastructure piece for the Winnipeg market is just one of a number of moving parts for the diversified company that includes a Florida-based airplane parts and leasing company called Regional One.

After EIC’s modest initial public offering in 2004, when it raised $8 million, the company now has a market capitalization of a little more than $1 billion and was added to the TSX Composite Index last year. It has a history of dividend growth — it was $1.08 per share in 2004 and is $2.10 today – that is unmatched on the TSX.

While results for the first quarter of 2017 – released on Wednesday – were modest, with revenue up only two per cent over the same period last year to $222.5 million and operating profit down two per cent to $43.3 million, Pyle said the company is doing what it needs to do to continue to grow.

“I am more confident than I have ever been about the future of the company,” Pyle told shareholders at the annual meeting.

The first-quarter results included a hefty increase in spending as a result of new plane purchases as well as unusually high expenditures on plane maintenance that will not continue to be a factor for rest of the year.