Chorus Aviation Inc. announces fourth quarter and year end 2012 results and intention to make a Normal Course Issuer Bid

Chorus Aviation Inc. announces fourth quarter and year end 2012 results and 
intention to make a Normal Course Issuer Bid 
Annual adjusted net earnings per share increases to $0.77 
Consistent quarterly profitability since 2006 
HALIFAX, Feb. 20, 2013 /CNW/ - Chorus Aviation Inc. ("Chorus") (TSX: CHR.B 
CHR.A CHR.DB) today announced of its fourth quarter and year end 2012 
earnings. The highlights are provided below. 
Q4 2012 HIGHLIGHTS 


    --  Operating revenue of $411.7 million.
    --  Free Cash Flow(1) of $30.3 million, or $0.24 per basic share.
    --  Operating income of $25.4 million.
    --  Net income of $14.7 million, or $0.12 per basic share.
    --  Adjusted net income(1) of $17.9 million, or $0.14 per basic
        share.
    --  Billable Block Hours of 97,249.

Year end 2012 HIGHLIGHTS
    --  Operating revenue of $1,710.7 million.
    --  Free Cash Flow(1) of $139.8 million, or $1.13 per basic share.
    --  Operating income of $128.6 million.
    --  Net income of $101.1 million, or $0.81 per basic share.
    --  Adjusted net income(1) of $95.5 million, or $0.77 per basic
        share.
    --  Billable Block Hours of 404,101.

"I am pleased with our annual and fourth quarter financial and operational 
performance," said Joseph Randell, President and Chief Executive Officer, 
Chorus."Our operating income improvement of $26.6 million was driven by the 
operating margin from our Q400 leasing operations, the one-time termination 
fee from Thomas Cook and incentive revenue earned under the CPA. Our 
continuous focus on safety and operational excellence resulted in a $4.4 
million increase in performance incentives earned in 2012 over 2011 as we 
consistently maintained the highest standing in on-time performance amongst 
Canada's major operators. This is a great accomplishment when you consider 
we fly more daily flights within Canada and fly to more Canadian destinations 
than any other carrier - I commend our employees for their exceptional hard 
work and dedication."

"The resolution to the benchmarking arbitration with Air Canada has 
unfortunately been further delayed," continued Randell. "Although there can be 
no assurances as to the outcome, we remain confident in our position and 
continue to work to reach a successful conclusion on the remaining issues in 
dispute. In the meantime, we prepare for the future by focusing on the 
imperative of cost competitiveness while strengthening our foundation. This 
will allow us to sustain a strong organization."

Financial Performance - Fourth Quarter 2012 Compared to Fourth Quarter 2011

Operating revenue increased from $407.7 million to $411.7 million, 
representing an increase of $4.0 million or 1.0%. Passenger revenue, 
excluding pass-through costs, increased by $4.9 million or 2.0% primarily as a 
result of an increase in Billable Block Hours, rate increases made pursuant to 
the Capacity Purchase Agreement ('CPA') with Air Canada, increased revenue 
related to a new engine maintenance contract for the Q400 aircraft of $5.5 
million, and a $0.1 million increase in incentives earned under the CPA; 
offset by a lower US dollar exchange rate and no activity in the quarter for 
Thomas Cook. Pass-through costs decreased from $158.4 million to $157.4 
million; a decrease of $1.0 million or 0.7% which included an increase of $1.8 
million related to fuel costs. Other revenue increased by $0.1 million.

Operating expenses increased from $382.4 million to $386.3 million, an 
increase of $3.8 million or 1.0%. Controllable Costs increased by $4.9 
million, or 2.2%; offset by a decrease in pass-through costs of $1.0 million.

Depreciation and amortization expense increased by $2.1 million, primarily 
related to the purchase of Q400 aircraft, with the balance due to increased 
capital expenditures on aircraft rotable parts and other equipment; offset by 
decreased major maintenance overhauls and certain assets having reached full 
amortization.

Aircraft maintenance expense increased by $7.9 million as a result of 
increased Block Hours of $0.6 million, increased maintenance cost for a new 
maintenance contract for the Q400 aircraft of $5.5 million, increased engine 
overhaul on charter aircraft of $1.2 million, an inventory adjustment of $1.6 
million and increased other maintenance costs of $1.9 million; offset by a 
decrease in engine maintenance activity due to engine charges for the CRJ 
aircraft of $1.8 million and a decrease in the US-dollar exchange rate on 
certain material purchases of $1.1 million.

Aircraft rent decreased by $4.4 million primarily as a result of no expense in 
the fourth quarter for Thomas Cook aircraft, the return of CRJ aircraft of 
$2.1 million and a lower US dollar exchange rate of $0.9 million.

Salaries, wages and benefits decreased by $2.1 million primarily as a result 
of a reduction in the number of full time equivalent employees; offset by wage 
and scale increases under new collective agreements, increased incentive 
compensation expense, increased pension expense resulting from a revised 
actuarial valuation and lower capitalized salaries and wages related to major 
maintenance overhauls.

Other expenses decreased by $0.7 million primarily due to decreased 
professional fees and general overhead expenses.

Non-operating expenses increased $10.2 million. This change was mainly 
attributable to a foreign exchange loss of $3.8 million (of which $3.3 million 
was related to an unrealized foreign exchange loss on long-term debt and 
finance leases) arising as a result of the change in value of the Canadian 
dollar relative to the US dollar and increased interest expense related to the 
Q400 aircraft financing of $1.0 million.

EBITDA(1) was $40.2 million compared to $38.0 million in 2011, an increase of 
$2.2 million or 5.9%, producing an EBITDA margin of 9.8%. Free Cash Flow was 
$30.3 million, an increase of $1.0 million or 3.3% from $29.4 million.

Operating income of $25.4 million for the three months ended December 31, 
2012, was up $0.1 million or 0.4% over fourth quarter 2011 from $25.3 million.

Net income for the fourth quarter of 2012 was $14.7 million or $0.12 per basic 
share, a decrease of $8.0 million or 35.3% from $22.7 million or $0.18 per 
basic share. On an adjusted basis, net income was $17.9 million or $0.14 per 
basic share, a decrease of 8.3% or $0.02 per basic share from $19.6 million or 
$0.16 per basic share.

Financial Performance - Year End 2012 Compared to Year End 2011

Operating revenue increased from $1,664.5 million to $1,710.7 million, 
representing an increase of $46.2 million or 2.8%. Passenger revenue, 
excluding pass-through costs, increased by $56.8 million or 5.8% primarily as 
a result of a $9.0 million settlement fee related to the early termination of 
the Thomas Cook Flight Services Agreement, a 0.7% increase in Billable Block 
Hours, rate increases made pursuant to the CPA with Air Canada, a higher US 
dollar exchange rate, and a $4.4 million increase in incentives earned under 
the CPA. Pass-through costs decreased from $670.6 million to $659.3 million, 
or $11.3 million or 1.7%, which included $14.6 million related to fuel cost. 
Other revenue increased by $0.7 million.

Operating expenses increased from $1,562.5 million to $1,582.1 million, an 
increase of $19.6 million or 1.3%. Controllable Costs increased by $30.9 
million or 3.5%; offset by a decrease in pass-through costs of $11.3 million.

Non-operating expenses decreased by $4.1 million. This change was mainly 
attributable to a foreign exchange gain of $5.9 million (of which $5.6 million 
was related to an unrealized foreign exchange gain on long-term debt and 
finance leases) arising as a result of the change in value of the Canadian 
dollar relative to the US dollar; offset by increased interest expense related 
to the Q400 aircraft financing of $6.6 million.

EBITDA(1) was $185.3 million compared to $146.1 million in 2011, an increase 
of $39.3 million or 26.9%, producing an EBITDA margin of 10.8%. Free Cash Flow 
was $139.8 million, an increase of $33.0 million or 30.9% from $106.8 million.

Operating income was $128.6 million for the year ended December 31, 2012, was 
up $26.6 million or 26.1% over the year 2011 from $101.9 million.

Net income for the year 2012 was $101.1 million or $0.81 per basic share, an 
increase of $33.0 million or 48.4% from $68.1 million or $0.55 per basic 
share. On an adjusted basis, net income was $95.5 million or $0.77 per basic 
share, an increase of $23.8 million or 33.3% from $71.7 million or $0.58 per 
share.

Benchmarking Arbitration (Refer to Section 14 -Economic Dependence and Section 
19 - Risks Relating to Current Legal Proceedings of Chorus' 2012 MD&A for 
additional information)

As communicated on October 2 and 3, 2012, the arbitration panel (the 'Panel') 
released its award (the 'Award') on the 2009 benchmark exercise between Jazz 
Aviation LP ('Jazz') (a wholly owned subsidiary of Chorus) and Air Canada.

In the Award, two of the three member Panel concluded that the component unit 
cost driver methodology ('CUCD') put forward by Air Canada was the appropriate 
methodology to use in the 2009 Benchmark to compare Chorus' Unit Costs to the 
stage length adjusted median controllable unit costs of the Comparable 
Operators. However, the Panel also agreed with Chorus that a number of the 
additional adjustments proposed by Chorus were also required to be made (the 
"Adjustments") but did not provide guidance on the calculation of such 
Adjustments. The Panel also agreed with Chorus that fleet age impacts the rate 
at which maintenance costs increase. However, the Panel did not specify a 
methodology for the Fleet Age Adjustment and directed Air Canada and Chorus to 
negotiate a further adjustment that would account for the impact of fleet age 
on the rate at which maintenance costs increase (the "Fleet Age Adjustment") 
failing which the parties will submit new proposals and analysis to the Panel 
on that issue.

There remain substantive disputes between the parties with respect to the 
interpretation and application of the Award and its impacton the 
Controllable Mark-Up. The parties have been unable to reach agreement on 
either the calculation of certain of the Adjustments or the Fleet Age 
Adjustment.

Air Canada took theposition at the hearing that there should be no such 
Fleet Age Adjustment but now is taking the position that a Fleet Age 
Adjustment ought to be made and that such adjustment should be in its favour. 
The effect of making the Fleet Age Adjustment, in the manner asserted by Air 
Canada, would be to materially reduce theControllable Mark-Up below the 
11.41% rate that Air Canada asserts should otherwise result from the 
application of the other Adjustments.

Chorus remains of the view that, given its older fleet relative to those of 
the relevant comparable operators, and consistent with the position it took at 
the initial hearing, any Fleet Age Adjustment would only be to the benefit of 
Chorus and therefore regardless of the decision on the other Adjustment, the 
Fleet Age Adjustment should result in the Controllable Mark-Up remaining at 
12.50% going forward until at least the 2015 Benchmark andthat it should not 
be required to repay Air Canada any amounts in respect of payments made since 
January 1, 2010.

Following the release of the Award, the parties had scheduled a further 
hearing with the Panel to occur in the last week of November 2012 to resolve 
the outstanding issues in dispute, including the impact of the Fleet Age 
Adjustment. That hearing was subsequently adjourned to the last week of 
January 2013 and then to the first week of April 2013 in order to provide the 
parties with additional time to put forward evidence on the issues which 
remain in dispute.

Normal Course Issuer Bid

Chorus also announced today that it intends to make a normal course issuer 
bid. Under the bid, which is subject to acceptance by the Toronto Stock 
Exchange (the "TSX"), Chorus will have the right to purchase for cancellation 
up to a maximum of 11,087,520 of its Class A Variable Voting shares and/or 
Class B Voting shares (collectively, the "Shares"), representing 10% of the 
public float of the Shares. As of February 19, 2013, Chorus had 124,015,471 
Shares issued and outstanding, of which 110,875,196 Shares constitute the 
total public float of the Shares. Purchases made pursuant to the bid will be 
made in the open market through the facilities of the TSX in accordance with 
the rules and policies of the TSX. Chorus is proposing to commence the bid on 
or about February 28, 2013 and have it remain in effect until one year from 
the date on which purchases commence. Shares purchased by Chorus pursuant to 
the bid will be cancelled. Chorus has not purchased any common shares during 
the previous year pursuant to any issuer bid.

"The directors and management of Chorus believe that the market price of the 
Shares during the period of the bid may be such that the purchase of Shares by 
Chorus for cancellation would be in the best interests of Chorus and an 
appropriate use of corporate funds in light of potential benefits to remaining 
shareholders," said Mr. Randell.

Chorus Aviation Inc.'s audited consolidated financial statements for the years 
ended December 31, 2012 and December 31, 2011, and accompanying Management's 
Discussion and Analysis (MD&A) are available at www.chorusaviation.ca and at 
www.sedar.com. A copy may also be obtained on request by contacting Investor 
Relations at: investorsinfo@chorusaviation.ca or (902) 873-5094.

Investor Conference Call / Audio Webcast

Chorus will hold an analyst call at 9:00 a.m. ET on Thursday, February 21, 
2013 to discuss the fourth quarter and year end 2012 results. The call may 
be accessed by dialing 1-888-231-8191. The call will be simultaneously audio 
webcast via: www.newswire.ca/en/webcast/detail/1097399/1195627or in the 
Investor Relations section at www.chorusaviation.ca. This is a listen-in only 
audio webcast. Media Player or Real Player is required to listen to the 
broadcast; please download well in advance of the call.

The conference call webcast will be archived on Chorus' Investor Relations 
website at www.chorusaviation.ca. A playback of the call can also be 
accessed until midnight ET, February 28, 2013, by dialing (416) 849-0833 or 
toll-free 1- 855-859-2056, and passcode 88335638# (pound key).

(1) Non-GAAP Financial Measures

EBITDA
EBITDA (earnings before interest, taxes, depreciation, amortization and 
obsolescence) is a non-GAAP financial measure commonly used throughout all 
industries to view operating results before interest expense, interest income, 
depreciation and amortization, gains and losses on property and equipment and 
other non-operating income and expenses. Management believes EBITDA assists 
investors in comparing Chorus' performance on a consistent basis without 
regard to depreciation and amortization, which are non-cash in nature and can 
vary significantly depending on accounting methods and non-operating factors 
such as historical cost. EBITDA should not be used as an exclusive measure 
of cash flow because it does not account for the impact on working capital 
growth, capital expenditures, debt repayments and other sources and uses of 
cash, which are disclosed in the statement of cash flows which form part of 
the financial statements.

FREE CASH FLOW
Pre-conversion distributable cash was a key performance indicator used by 
management to evaluate the ongoing performance of Jazz Air Income Fund. 
Distributable cash is not a measure which is commonly utilized in respect of a 
public corporation. Management believes, however, that it is a term with which 
its shareholders are familiar and has provided Free Cash Flow as a proxy for 
previously reported distributable income. Free Cash Flow is calculated in 
the same manner as distributable cash. Free Cash Flow is defined as EBITDA 
less non-operating expenses, Maintenance Capital Expenditures to sustain the 
operation, and adjusted for any unrealized foreign exchange gain or loss on 
long-term debt and finance leases and any unusual non-operating one-time 
items. Other capital expenditures incurred to facilitate growth of the 
business are excluded from this calculation.

ADJUSTED NET INCOME
Adjusted net income and adjusted earnings per share are calculated by 
adjusting net income by the amount of any unrealized foreign exchange gains 
and losses on long-term debt and finance leases. During the fourth quarter 
of 2012, Chorus recorded a $3.3 million loss in unrealized foreign exchange on 
long-term debt and finance leases. On an annual basis, Chorus recorded a 
$5.6 million gain in unrealized foreign exchange on long-term debt and finance 
leases. These adjustments more clearly reflect earnings from an operating 
perspective.

Caution regarding forward-looking information

This news release should be read in conjunction with Chorus' audited 
consolidated financial statements for the years ended December 31, 2012 and 
December 31, 2011, and MD&A dated February 20, 2013 filed with Canadian 
Securities regulatory authorities (available at www.sedar.com).

Certain statements in this news release may contain statements which are 
forward-looking. These forward-looking statements are identified by the use of 
terms and phrases such as "anticipate", "believe", "could", "estimate", 
"expect", "intend", "may", "plan", "predict", "project", "will", "would", and 
similar terms and phrases, including references to assumptions. Such 
statements may involve but are not limited to comments with respect to 
strategies, expectations, planned operations or future actions.

Forward-looking statements relate to analyses and other information that are 
based on forecasts of future results, estimates of amounts not yet 
determinable and other uncertain events. Forward-looking statements, by their 
nature, are based on assumptions, including those described below, and are 
subject to important risks and uncertainties. Any forecasts or forward-looking 
predictions or statements cannot be relied upon due to, amongst other things, 
changing external events and general uncertainties of the business. Such 
statements involve known and unknown risks, uncertainties and other factors 
that may cause the actual results, performance or achievements to differ 
materially from those expressed in the forward-looking statements. Results 
indicated in forward-looking statements may differ materially from actual 
results for a number of reasons, including without limitation, risks relating 
to Jazz Aviation LP's relationship with Air Canada, risks relating to the 
airline industry, energy prices, general industry, market, credit, and 
economic conditions, competition, insurance issues and costs, supply issues, 
war, terrorist attacks, epidemic diseases, acts of God, changes in demand due 
to the seasonal nature of the business, the ability to reduce operating costs 
and employee counts, secure financing, employee relations, labour negotiations 
or disputes, restructuring, pension issues, currency exchange and interest 
rates, leverage and restructure covenants in future indebtedness, dilution of 
Chorus shareholders, uncertainty of dividend payments, managing growth, 
changes in laws, adverse regulatory developments or proceedings, pending and 
future litigation and actions by third parties. The forward-looking statements 
contained in this discussion represent Chorus' expectations as of February 20, 
2013, and are subject to change after such date. However, Chorus disclaims any 
intention or obligation to update or revise any forward-looking statements 
whether as a result of new information, future events or otherwise, except as 
required under applicable securities regulations.

About Chorus Aviation Inc.

Chorus Aviation Inc. ("Chorus") was incorporated on September 27, 2010 and is 
a dividend-paying holding company which owns Jazz Aviation LP, and Chorus 
Leasing III Inc.

Chorus is traded on the Toronto Stock Exchange under the trading symbols of 
CHR.A, CHR.B and CHR.DB.

For more information, visit www.chorusaviation.ca

About Jazz Aviation LP

Jazz Aviation LP has a strong history in Canadian aviation with its roots 
going back to the 1930s. Jazz is wholly owned by Chorus Aviation Inc. and 
continues to generate some of the strongest operational and financial results 
in the North American aviation industry.

There are two airline divisions operated by Jazz Aviation LP: Air Canada 
Express and Jazz.

Air Canada Express: Under a capacity purchase agreement with Air Canada, 
Jazz provides service to and from lower-density markets as well as 
higher-density markets at off-peak times throughout Canada and to and from 
certain destinations in the United States. In the fourth quarter of 2012, Jazz 
operated scheduled passenger service on behalf of Air Canada with 
approximately 779 departures per weekday to 82 destinations in Canada and in 
the United States with a fleet of Canadian-made Bombardier aircraft.

Jazz: Under the Jazz brand, the airline offers charters throughout North 
America with a dedicated fleet of five Bombardier aircraft for corporate 
clients, governments, special interest groups and individuals seeking more 
convenience. Jazz also has the ability to offer airline operators services 
such as ground handling, dispatching, flight load planning, training and 
consulting.

For more information, visit www.flyjazz.ca. 

Media Contacts:

Manon Stuart(902) 873-5054 Halifax, Nova Scotiamanon.stuart@flyjazz.ca

Analyst Contact:

Nathalie Megann(902) 873-5094 Halifax, Nova 
Scotianathalie.megann@flyjazz.ca

www.chorusaviation.ca

SOURCE: CHORUS AVIATION INC.

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CO: Jazz
ST: Nova Scotia
NI: AIR ERN CONF 

-0- Feb/20/2013 22:26 GMT


 
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