Chorus profits fall 152% as COVID-19 hits industry, prompting cost cuts

HALIFAX — Chorus Aviation Inc. saw profits drop by more than 150 per cent year over year last quarter as the COVID-19 outbreak wreaks havoc on the airline industry.

The regional aviation company reported a net loss of $17.3 million for the quarter ended March 31, compared with earnings of $33.45 million last year, as net income decreased by $50.7 million due in part to a change in net unrealized foreign exchange losses.

Chorus has placed more than 3,000 workers on temporary layoff or off-duty status, on top of slashing capital expenditures and cutting compensation for management and staff to trim costs.

The reductions come as its contract work for Air Canada Express has been chopped by 90 per cent for April and May. Delayed delivery of planes from Bombardier will further hit revenue in the partnership, Chorus said.

The company has also had to delay the planned expansion of its leasing division because of market uncertainty, saying “substantially all” of its current leasing customers have asked for some form of temporary rent relief.

Chorus said it received only one quarter of its contractual lease payments for April.

Clients CityJet and Virgin Australia are undergoing “bankruptcy-like procedures and it is not clear whether either airline will need these planes,” wrote Financial Bank analyst Cameron Doerksen.

As the federal government gears up to deliver relief measures for hard-hit industries, smaller airlines worry they’ll be left out.

Prime Minister Justin Trudeau announced Monday that federal financing will be available to the country’s largest employers to help weather the COVID-19 economic crisis. Loans will start at $60 million for companies with at least $300 million in annual revenues.

Chorus and other regional carriers, most of which fall far short of that threshold, fear they might go under without a tailor-made support program from Ottawa as border shutdowns and the collapse of global travel continue to choke off demand.

For the first quarter, Chorus reported revenue rose less than two per cent year over year to $350 million.

Adjusted net income reached $25 million, up from $19 million last year, as it started off the year in a good financial shape before the pandemic hit. Adjusted earnings per share hit 16 cents, up from 13 cents a year earlier and beating analyst expectations of 17 cents, according to financial markets data firm Refinitiv.

The airline’s total liquidity now stands at $265 million, including a recent US$100 million unsecured loan.

The company’s share price fell seven per cent or 18 cents Friday to close at $2.39 on the Toronto Stock Exchange.

This report by The Canadian Press was first published May 15, 2020.

Companies in this story: (TSX:CHR)

The Canadian Press