Chorus Aviation finds Aircraft Leasing becoming more Profitable
Chorus Aviation released it's third quarter results on November 14.And it was another successful quarter.Adjusted EBITDA was $87 million--a 4% increase over 2017.But it is the aircraft leasing to third parties that has drawn the attention of investors.Aircraft leasing to third parties added 3 new customers for a total of 33 aircraft leased.Chorus also executed leasing,maintenance,repair and overhaul contracts with international customers.Since 2015 Chorus has beefed up their maintenance operation.So this blog feels that the success of this program has given Chorus a reputation that has made aircraft leasing to largely emerging economies more well known and more successful.
Third Quarter Results
Above is a CRJ-1000 aircraft;it is one of the new regional jets built by Bombardier.It is a very fuel- efficient and effective aircraft and Chorus is very familiar with it as well as all of the CRJ series.They operate them and lease some of these to industrial economies.But surprisingly the pick-up in their aircraft leasing business has come from turboprop aircraft leased to emerging economies.Chorus is leasing more Q-400s and Embraer 190s.This blog feels that the strong connection CHR has with Bombardier and their turboprop aircraft has definitely helped their aircraft leasing business.
Results for 2018
When Chorus started it's aircraft leasing business in late 2017 it borrowed $200 million from Fairfax Financial for working capital.Some investors thought they might not be able to pay it back.Recently Chorus issued some convertible debentures and used the funds to pay it all back to Fairfax.At first Chorus was almost completely leasing regional jets (CRJ 700,900and 1000) to airlines in more industrialized countries but of the 33 leased now about half are turboprops leased to airlines in emerging countries such as Ethiopia,Phillipines and Malaysia.There is no doubt that Chorus' reputation for service and maintenance has fueled growth in both turboprops and regional jets. There is little doubt that Chorus will have leased 36 to 38 aircraft by yearend.Maybe 1 more regional jet and 2 to 3 turboprops with new customers.My blog on Workathon blog(see Workathon 31/07/2017) calculated that 2017 adjusted EBITDA would be about $250 million and would be higher for 2018.In fact, 2017 adjusted EBITDA was $275 million and with 38 aircraft leased 2018 should be $290 to $300 million. This blog has called for a greater use of a maintenance operation for turboprops at it's North Bay operation and their Voyageur Airway's charter business.This will not effect 2018 but may add perhaps $10 to $20 million to adjusted EBITDA in 2019.However this is unlikely to pull e.p.s to $1.00 for 2018 but it will still earn a respectable P/E ratio of 6 to 7 and a stock price of $6.25 to $7.00. https://www.ethiopianairlines.com/AA/EN ; http://ww17.lionairlines.com/
Third Quarter Results
Above is a CRJ-1000 aircraft;it is one of the new regional jets built by Bombardier.It is a very fuel- efficient and effective aircraft and Chorus is very familiar with it as well as all of the CRJ series.They operate them and lease some of these to industrial economies.But surprisingly the pick-up in their aircraft leasing business has come from turboprop aircraft leased to emerging economies.Chorus is leasing more Q-400s and Embraer 190s.This blog feels that the strong connection CHR has with Bombardier and their turboprop aircraft has definitely helped their aircraft leasing business.
Results for 2018
When Chorus started it's aircraft leasing business in late 2017 it borrowed $200 million from Fairfax Financial for working capital.Some investors thought they might not be able to pay it back.Recently Chorus issued some convertible debentures and used the funds to pay it all back to Fairfax.At first Chorus was almost completely leasing regional jets (CRJ 700,900and 1000) to airlines in more industrialized countries but of the 33 leased now about half are turboprops leased to airlines in emerging countries such as Ethiopia,Phillipines and Malaysia.There is no doubt that Chorus' reputation for service and maintenance has fueled growth in both turboprops and regional jets. There is little doubt that Chorus will have leased 36 to 38 aircraft by yearend.Maybe 1 more regional jet and 2 to 3 turboprops with new customers.My blog on Workathon blog(see Workathon 31/07/2017) calculated that 2017 adjusted EBITDA would be about $250 million and would be higher for 2018.In fact, 2017 adjusted EBITDA was $275 million and with 38 aircraft leased 2018 should be $290 to $300 million. This blog has called for a greater use of a maintenance operation for turboprops at it's North Bay operation and their Voyageur Airway's charter business.This will not effect 2018 but may add perhaps $10 to $20 million to adjusted EBITDA in 2019.However this is unlikely to pull e.p.s to $1.00 for 2018 but it will still earn a respectable P/E ratio of 6 to 7 and a stock price of $6.25 to $7.00. https://www.ethiopianairlines.com/AA/EN ; http://ww17.lionairlines.com/
Comments
Post a Comment