Another strange quarterly report by Chorus Aviation

 On November13, 2015 Chorus Aviation released another unorganized report.The form of Chorus' reports is always different than other listed stock.It includes costs under the CPA agreement with regular costs and CPA agreement revenues with regular revenues.Now it mixes in revenues from it's newly acquired subsidiary as well as leasing revenues and charter revenues.On the positive side the restructuring at Chorus that was talked about in Workathon for  three blogs(see Nov.18,2014 and Oct.23,2013) is starting to take shape.
      Operational Statistics
   Chorus' regulated operating revenues decreased from $433 million in Q3 2014 to $412 million in 2015.Chorus suffered a $28 million loss from foreign currency this quarter compared to a $18 million loss in 2014.However they earned revenue from newly acquired Voyageur Airways,and from leasing operations and from maintenance operations.In total, adjusted EBITDA was $65 million up 16% from $56 million in 2014.Adjusted net income was $31 million or $.26 per share.
    New revenues,new Reports and new CPA agreement


       Past quarterly reports have talked about revenues coming in from the Chorus maintenance operation.It had a maintenance operation in London, Ontario and one in Halifax.It sold the London operation and moved everything to Halifax.Then it invested more into the operation to increase it's size and complexity.Next it bought a maintenance operation called Telesys that is a specialized maintenance company.By all accounts the maintenance revenues should have increased.This report shows that other(maintenance ) revenues increased by $6.5 million in the quarter.This blog calls for increased revenues from this category in 2016.Chorus got big increases in revenue from aircraft leasing and chartering.This category has to increase more before it stabilizes; at the present time this revenue is hard to predict, both have shown large increases in this quarter.The wildcard here is the newly acquired Voyageur Airways.It gets foreign charters and medical contracts and other specialized contracts.It is likely that more investment in new equipment must be carried out before this operation is producing a steady revenue source.
  The original CPA agreement was only put in place to give Chorus(then Jazz) to get started.It was not expected to provide a major competitor for Air Canada.Chorus has done well within the old existing agreement but it was time for an amended version.Air Canada gave them a new one last year and it gives Chorus much more scope.So that it leased 10 new aircraft in this quarter to enable them to be prepared for the new business in 2018.Strangely Chorus gives no guidance on the revenues expected  from the amended CPA in 2018.This blog feels that the impact of the new CPA agreement will be felt even as early as the next quarter.Assuming new revenues from Voyageur this blog expects that EBITDA may hit $70 to $75 million in Q4.
   The last expected change is for Chorus to break down it's non-regulated income even more in future quarterly reports.This has got to come!Another change that must come is more of an overview on revenues and costs.Regulated costs must be grouped together as well as regulated revenues.Non regulated costs and revenues will soon be given more space and a separate category.This will all aid the restructuring of Chorus Aviation;the increase in the price will follow.            use Workathon for advice on Cdn jun ior listed companies;use Workathon for research on Cdn. junior companies;use Workathon for research on Cdn. small caps