February 18, 2022 By Christopher Reynolds, The Canadian Press
The head of Chorus Aviation Inc. says he expects flying activity will move closer to pre-pandemic levels in the second quarter, despite being thrown off course by the Omicron variant over the past two months.
CEO Joe Randell said Thursday that use of aircraft on Air Canada regional routes could reach 87 per cent between April and June as demand rises in step with easing travel restrictions and COVID-19 anxieties.
Chorus, which provides regional service for the country’s largest carrier and and leases planes across the globe, said Air Canada plane use is on track to reach 60 per cent of the 2019 level in the current quarter. That’s after ending the year at 76 per cent, which sat at the bottom end of the company’s guidance in the fall.
“The fourth quarter was going well, etc. And then Omicron struck,” Randell told analysts.
“While there is a drop in the first quarter as a result of Omicron, I think there’s reason to believe that now things are going to pick back up and we’re going to get to where we were pre-Omicron and plus,” Randell said.
The expectations mark a slight scale-down from enthusiastic predictions three months ago, when Randell said a return to full operations by late in the second quarter “could be very achievable.”
Some of Chorus’s 17 plane-leasing clients remain in a financial hole, resulting in cash collection of 83 per cent last quarter — an improvement from 77 per cent in the third quarter, as more carriers find their footing.
Philippine Airlines emerged from bankruptcy last month and Aeromexico, which filed for Chapter 11 protection in the United States in June 2020 amid US$2 billion in debt, is poised to exit bankruptcy.
“Following the onset of the COVID-19 pandemic, Chorus Aviation Capital received requests from substantially all of its customers for some form of temporary rent relief, as they coped with an unprecedented reduction in demand for passenger air travel,” the company said in its release.
The rent relief arrangements often include lease term extensions, allowing for repayment of deferred amounts at the end of the prolonged period.
A return to the skies will be “first and foremost” among short-haul domestic passengers looking to visit friends and family — a boon for Chorus, whose Jazz Aviation subsidiary provides service to Air Canada regional flights that cater less directly to international business customers — said analyst Walter Spracklin of RBC Dominion Securities.
Chorus eked out a profit in its latest quarter, reporting results that beat expectations despite the Omicron gut punch in December.
Net income rose to $10.2 million or six cents per diluted share in the fourth quarter, compared with $9.2 million or six cents per diluted share a year earlier.
Operating revenue at the Halifax-based company jumped to $346.5 million in the quarter ended Dec. 31, up from $218.2 million in the last three months of 2020.
On an adjusted basis, it earned 12 cents per share, up from five cents a year earlier. The average analyst estimate was for a profit of nine cents per share for the quarter, according to financial markets firm Refinitiv.