(Montreal) The boss of Chorus Aviation expects flight activity to approach pre-pandemic levels in the second quarter, even if it has been hijacked by the Omicron variant for the past two months.
Updated yesterday at 3:37 p.m.
Utilization of Chorus aircraft on Air Canada regional flights could reach 87% between April and June, as demand is expected to increase as travel restrictions ease, CEO Joe Randell says and fears related to COVID-19.
Chorus, which provides regional service to the country’s largest carrier and leases aircraft around the world, said its aircraft utilization at Air Canada was on track to reach 60% of 2019 levels for the quarter in Classes. This utilization rate ended the year at 76%, which was at the low end of the forecast range put forward by the company in the fall.
“The fourth quarter was going well, etc. And then Omicron hit,” Randell told analysts.
“Even though there will be a drop in the first quarter because of Omicron, I think there is reason to believe that things will now pick up and we will get to where we were before Omicron, and further. Mr. Randell continued.
The expectations mark a slight step back from the enthusiastic forecast three months ago, when Mr Randell said a return to full operations by the end of the second quarter “could be very achievable”.
Some of Chorus’ 17 aircraft leasing customers remain in a financial hole, resulting in an 83% rental revenue recovery last quarter – an improvement from 77% in the third quarter – while more carriers are finding some balance.
Philippine Airlines emerged from bankruptcy last month and Aeromexico, which filed for Chapter 11 protection in the United States in June 2020 with $2 billion in debt, is on the verge of successfully doing so.
“After the onset of the COVID-19 pandemic, Chorus Aviation Capital received requests from nearly all of its customers for some form of temporary rental fee relief as they faced an unprecedented reduction demand for passenger air travel,” the company said in a statement.
Lease relief agreements often include lease term extensions, allowing deferred amounts to be repaid at the end of the extended term.
The relaunch will “first and foremost” affect short-haul domestic flights for passengers wishing to visit friends and family — a boon for Chorus, whose Jazz Aviation subsidiary serves regional Air Canada, which reach international business clients less directly — noted analyst Walter Spracklin of RBC Dominion Securities.
Profits and revenues on the rise
Chorus Aviation posted a profit for its most recent quarter, posting results that beat expectations despite the havoc wrought by the Omicron variant in December.
Chorus’ net income climbed to 10.2 million, or 6 cents per share, for the fourth quarter. By comparison, the company had earned 9.2 million, or 6 cents per share, in the same period a year earlier.
The Halifax-based company’s operating revenue jumped to $346.5 million in the quarter ended Dec. 31, up from $218.2 million in the last three months of 2020.
On an adjusted basis, earnings were 12 cents per share, compared to 5 cents per share in the same quarter a year earlier. Analysts on average had expected a profit of 9 cents a share for the quarter, according to forecasts compiled by financial data firm Refinitiv.