Chorus Aviation develops a new set of Wings

     In July Chorus Aviation announced two new leases for newly acquired aircraft.The first for 2 Embraer 190 aircraft and the second for 3 Q-400 aircraft.The terms of the lease are not known at this time.But this blog believes this is what is called a long term full-maintenance lease.The new subsidiary called Chorus Aviation Capital has now acquired 11 fully leased aircraft this summer.6 aircraft were leased in June.The operating margin on these leases is not yet known.Revenues for the first 6 ( but not the last 5 aircraft) will be included in second quarter results.       

                   A good Second Quarter
           This blog is expecting a good second quarter for Chorus Aviation.For example, above is a new CRJ-1000 produced by Bombardier and leased by Chorus Aviation Capital.And revenues on the Amended C.P.A. with Air Canada should have levelled off. Also we expect revenues from the planes leased to Air Canada Express will be as high as in Q1.The new investments in Voyageur Airways,their charter operation, will be slightly higher.But the second quarter will be the first quarter to show earnings from their new subsidiary Chorus Aviation Capital.This is the subsidiary that has long term full maintenance leases.
                By the numbers
    There is some controversy over Chorus' earnings.Several financial websites show earnings for 2016 at $.60 to $.90.This includes Scotiatrade and Qtrade.This raises the price/earnings ratio and makes the stock look more expensive.This blog believes that these are cash flow figures, not earnings.The best estimate of earnings comes from  using Adjusted EBITDA.Last year earnings (adjusted EBITDA) were around $230 million and so e.p.s were about $1.80 per share.This means that the price/earnings ratio is about 3.75 times.That makes Chorus a cheap stock relative to stocks on the TSX index.
     A Workathon post of January23,2017 see this blog for prediction of earnings predicted 2017 earnings of $235 to $250 million for 2017.The wild card here will be the new revenues from Chorus Aviation Capital coming; so this figure might be a little low.The most likely figure would be $250 million and this makes e.p.s at $1.95 to $2.05 per share.With a price/earnings ratio of 3.75 to 4 this should drive the stock price up to the $7.50 to $8.00 area by yearend.This blog picks this stock as one to watch in the second half of 2017.                 

use Workathon to pick 2017 winners ; use workathon for financial analysis