Chorus Aviation Inc

Chorus Aviation Inc (TSX: CHR) is a travel & leisure group based out of Canada. It offers variety of regional aviation solutions and support services. The Group has divided its business into two reportable segments being Regional Aircraft Leasing and Regional Aviation Services.

Financial Highlights – Declined Financial Performance in Q1 FY2020 (31^st March 2020)

 (Source: Quarterly Report, Company Website)

On 14^th May 2020, Chorus Aviation Inc released an update on the trading performance for the Q1 FY2020. The group’s operating reported revenue surged by CAD 6,174 thousand to CAD 350,041 thousand in Q1 FY2020 from CAD 343,867 thousand in Q1 FY2019. The group reported an operating income of CAD 46,692 thousand in the first quarter of the FY2020 versus an operating income of CAD 40,119 thousand in Q1 FY2019. Driven by an increase in the interest expenses and foreign exchange losses, the group reported LBT (loss before tax) of CAD 12,931 thousand in the first quarter of the financial year 2020 versus PBT (profit before tax) of CAD 38,664 thousand in Q1 FY2019. The Group reported a net loss of CAD 17,294 thousand in Q1 FY2020 versus net income of CAD 33,447 thousand in Q1 FY2019. The basic and diluted loss per share stood at 0.11 cents in Q1 FY2020 versus a basic and diluted earnings per share of 0.22 cents in Q1 FY2019. The cash balance stood at CAD 90,648 thousand as on 31^st March 2020 versus CAD 87,167 thousand as on 31^st December 2019. The Total Assets stood at CAD 3,096,498 thousand as on 31^st March 2020 versus CAD 2,945,694 thousand as on 31^st December 2019.

Share Price Performance

 Daily Chart as of 15^th May 2020, after the market closed (Source: Refinitiv, Thomson Reuters)

Chorus Aviation Inc shares closed at CAD 2.39 at the time of writing after the market close on 15^th May 2020. Stock's 52 weeks High is CAD 8.45 and Low is CAD 1.80.

Conclusion

The Company has shown a decline in financial performance in the first quarter of the financial year 2020. Although the Top-line performance has slightly improved, while the bottom-line performance has declined, and profitability remained in the negative zone for the period. The group needs to manage its operating and non-operating expenses unless it results in further deterioration in financial performance in the coming years. The market conditions in which the company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the company. The Group expect delay in its new leasing revenue due to a delay in completion of order Bombardier. The net debt for Q1 FY2020 increased, while the Covid-19 caused challenges with liquidity position to be managed properly. Due to the travel restrictions imposed by the government, the capacity has declined in the first quarter versus Q1 FY2019 and is expected to decline in the second and third quarter for FY2020 as against Q2 and Q3 of FY2019. The group has taken actions to increase liquidity, reduce costs and is confident towards its innovative and disciplined business model to tackle the crisis.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of CAD 2.39 (as on 15^th May 2020), with support from few catalysts needs to be evaluated at a later stage.

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