Chorus Aviation Inc. confirms successful outcome of benchmarking arbitration with Air Canada
Nov 26, 2013
Ruling Upholds Current 12.5% Controllable Mark-Up
Board Continues to Review Opportunities to Further Enhance Shareholder Value
HALIFAX, Nov. 26, 2013 /CNW/ - Chorus Aviation Inc. ("Chorus") (TSX: CHR.B CHR.A CHR.DB) received confirmation today that the decision in the arbitration relating to the benchmarking provisions in the Capacity Purchase Agreement ("CPA") with Air Canada will not result in changes to the controllable cost mark-up (the "Controllable Mark-up") that Jazz Aviation LP ("Jazz") receives from Air Canada.
A majority of the arbitration panel agreed with Jazz that there is no justification to change the current 12.5% mark-up, and therefore, Jazz has no obligation to pay retroactive amounts to Air Canada. All other contractual provisions of the CPA are unchanged and will continue to provide clarity on Jazz's revenues going forward.
"We are pleased that the arbitration panel has ruled in favour of Jazz and that we can now move forward with certainty," said Joseph Randell, President and Chief Executive Officer, Chorus and Jazz. "Our long-term partnership with Air Canada continues to be a core component of our business, and we believe this ruling provides us with additional flexibility to continue to operate as an industry leader and deliver value for all our stakeholders. Given Chorus' strong cash flow profile and liquidity position resulting from this arbitration decision, the Board is committed to maintaining the current annual dividend of $0.30 per share as it reviews all alternatives to further enhance shareholder value."
"We've heard and understand Air Canada's desire to reduce the cost of its regional services," continued Mr. Randell. "Over the past several months we have developed a framework of strategic options that seeks to address Jazz's cost structure while maintaining our industry-leading operations, and foster a more effective partnership. This framework is based on a series of win-win propositions that could strengthen Jazz and Air Canada in the North American market, create additional value for all our respective stakeholders, and solidify our future in Air Canada's network. We look forward to engaging with Air Canada on these meaningful and achievable initiatives."
Chorus remains focused on prudently managing its financial resources with the goal of enhancing value for all stakeholders, including Air Canada and its passengers, as well as our employees. As such, the Chorus Board of Directors and management team continuously review their capital allocation strategy, seeking to maintain an appropriate balance between reducing debt, investing in the business and returning capital to shareholders.
Forward Looking Statements
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 Chorus' 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. There are no assurances that Chorus will enter into or implement new CPA amendments with Air Canada. The forward-looking statements contained in this discussion represent Chorus' expectations as of November 26, 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.
Chorus Aviation Inc. 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
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. As the largest regional carrier in Canada, Jazz has a proven track record of industry leadership and exceptional customer service, and has leveraged that strength to deliver value to all its stakeholders. The Company operates more flights and flies to more Canadian destinations than any other carrier and has a workforce of approximately 4,450 professionals highly experienced in the challenging and complex nature of regional operations.
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 November of 2013, Jazz is operating scheduled passenger service on behalf of Air Canada with approximately 739 departures per weekday to 54 destinations in Canada and to 25 destinations in the United States. With a fleet of 122 Canadian-made Bombardier aircraft, Jazz flies more daily flights to the most Canadian destinations than any other carrier
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.
SOURCE Chorus Aviation Inc.
For further information:
Halifax, Nova Scotia
Halifax, Nova Scotia