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Chorus Aviation sells regional aircraft leasing arm in $1.9-billion deal

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Two years after betting big on plane leasing, Chorus Aviation Inc. has pulled a one-eighty and agreed to sell its regional aircraft leasing arm in a deal valued at $1.9 billion.

The sale to affiliates of New York City-based firm HPS Investment Partners will lighten Chorus’s hefty debt load, provide cash for new acquisitions and discard an underperforming segment, said CEO Colin Copp.

Chorus, which currently leases planes across the globe and provides regional service for Air Canada via Chorus subsidiary Jazz Aviation, bought London-based plane-leasing outfit Falko Regional Aircraft Ltd. in 2022. The deal boosted Chorus’s customer base to 32 airlines across 23 countries, up from 19 carriers in 16 countries.

“As we progressed through 2023, it became clear that the level of returns from the Falko acquisition were not materializing at the pace we had expected due to the challenging macroeconomic environment,” Copp told analysts on a conference call Tuesday to discuss the sale.

“It’s a milestone transaction for the company. It really enables us to significantly improve our balance sheet and accelerate shareholder value. It allows us to reposition for future growth,” he said, adding that the leasing segment’s value was not reflected in Chorus’s “discount” share price.

The company’s stock was up five cents or about two per cent to $2.86 on the Toronto Stock Exchange as of early afternoon.

The $1.9-billion offer from the HPS affiliates comprises $814 million in cash and $1.1 billion in aircraft debt to be assumed or prepaid by the buyers at closing.

Chorus said its largest shareholders, Brookfield Asset Management Ltd. and Air Canada — owning 13.2 per cent and 8.1 per cent of the company, respectively — have both signed agreements in favour of the transaction.

The deal still needs to get at least two-thirds of votes cast by Chorus’s common shareholders to be approved.

If it lands the approval, Chorus expects the transaction to close by the end of the year.

Several analysts on the call questioned the company’s prospects for earnings growth.

“A few years ago, you identified the leasing business as a growth vertical. And ultimately you’re recognizing today that the market didn’t recognize your strategy in that segment,” said Fadi Chamoun of the Bank of Montreal.

“How do you grow the business from here?”

Copp replied that he foresees organic growth as well as the potential for “some bolt-on, some smaller acquisitions.”

“We’re not chasing a big bang here. We’re focused on finding a nice, gradual, steady growth business that we can add to,” the CEO said.

The sale means the company will lean more heavily on Jazz, whose short-haul flights for the country’s largest airline fall under the Air Canada Express brand, as well as Voyageur Airways Ltd. Acquired by Chorus in 2015, Voyageur is a charter carrier based in North Bay, Ont., that also provides repair and air ambulance services.

“We have a good position from a balance sheet perspective,” said chief financial officer Gary Osborne. “We’re even in a better one when you look at the market, and what Voyageur and Jazz are in aviation, to grow the company.”

Chorus said the deal would drive down its debt ratio to 1.8 times from 3.6 times as of Dec. 31.

In February, the company reported that net income more than doubled to $106.1 million last year while revenue jumped five per cent to $1.68 billion. Its debt stood at $1.53 billion as of March 31.

This report by The Canadian Press was first published July 30, 2024.

Companies in this story: (TSX:CHR, TSX: AC, TSX:BAM)

The Canadian Press. All rights reserved.

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RCMP investigating after three found dead in Lloydminster, Sask.

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LLOYDMINSTER, SASK. – RCMP are investigating the deaths of three people in Lloydminster, Sask.

They said in a news release Thursday that there is no risk to the public.

On Wednesday evening, they said there was a heavy police presence around 50th Street and 47th Avenue as officers investigated an “unfolding incident.”

Mounties have not said how the people died, their ages or their genders.

Multiple media reports from the scene show yellow police tape blocking off a home, as well as an adjacent road and alleyway.

The city of Lloydminster straddles the Alberta-Saskatchewan border.

Mounties said the three people were found on the Saskatchewan side of the city, but that the Alberta RCMP are investigating.

This report by The Canadian Press was first published on Sept. 12, 2024.

Note to readers: This is a corrected story; An earlier version said the three deceased were found on the Alberta side of Lloydminster.

The Canadian Press. All rights reserved.



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Three injured in Kingston, Ont., assault, police negotiating suspect’s surrender

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KINGSTON, Ont. – Police in Kingston, Ont., say three people have been sent to hospital with life-threatening injuries after a violent daytime assault.

Kingston police say officers have surrounded a suspect and were trying to negotiate his surrender as of 1 p.m.

Spokesperson Const. Anthony Colangeli says police received reports that the suspect may have been wielding an edged or blunt weapon, possibly both.

Colangeli says officers were called to the Integrated Care Hub around 10:40 a.m. after a report of a serious assault.

He says the three victims were all assaulted “in the vicinity,” of the drop-in health centre, not inside.

Police have closed Montreal Street between Railway Street and Hickson Avenue.

This report by The Canadian Press was first published Sept. 12, 2024.

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Government intervention in Air Canada talks a threat to competition: Transat CEO

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Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.

“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.

“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.

Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.

Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.

Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.

The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.

As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”

“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.

The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.

Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.

The recall has so far grounded six aircraft, Guérard said on the call.

“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”

Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.

“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.

“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.

“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

The Canadian Press. All rights reserved.



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