Chorus Aviation Inc. announces solid third quarter 2011 financial results

Chorus Aviation Inc. (“Chorus”) (TSX: CHR.B CHR.A CHR.DB) today announced its third quarter 2011 earnings with a net income of $13.9 million or $0.11 per share, and on an adjusted basis of $21.5 million or $0.17 per share.

Q3 2011 HIGHLIGHTS

— Operating revenue of $411.7 million. — Free Cash Flow(1) of $29.1 million. — Operating income of $31.1 million. — Net income of $13.9 million, or $0.11 per share. — Adjusted Net income(1) of $21.5 million, or $0.17 per share.

“I’m pleased with our operations and financial performance in the third quarter,” said Joseph Randell, President and Chief Executive Officer, Chorus.“We continued to generate positive operating income and cash flows from operations in the third quarter. Our fleet renewal program is progressing on schedule and we now have seven Q400s in the fleet.”

Mr. Randell went on to say, “We were honoured to receive two prestigious awards in October, true testaments to our employees commitment to excellence. The Canadian Council for Aviation and Aerospace’s Outstanding Corporate Member award recognized the avid support and leadership of our Maintenance and Engineering division. Not only has our participation in this organization benefited our operating arm, Jazz, by improving our internal quality process, but our contribution extends to other members as well.”

“We were also the recipient of the regional award of the Canada’s 10 Most Admired Corporate Cultures of 2011 program, as presented by Waterstone Human Capital. It is truly gratifying to be recognized amongst Canada’s leading organizations. Our culture is one that delivers – and our employees take tremendous pride in the product and service they deliver. I’m immensely proud of their accomplishments,” Mr. Randell continued.

Financial Performance – Third Quarter 2011 Compared to Third Quarter 2010

Operating revenue increased from $379.1 million to $411.7 million, representing an increase of $32.6 million or 8.6%. The increase in operating revenue was primarily due to a $26.6 million or 19.8% increase in pass-through costs from $134.2 million to $160.8 million, which included $24.9 million related to fuel. Passenger revenue, excluding pass-through costs, increased by $5.5 million or 2.3% primarily due to a 3.1% increase in Billable Block Hours; offset by a lower US dollar exchange rate, which had the translation effect of decreasing mark-up revenue by $0.5 million. Other revenue increased by $0.5 million.

Total operating expenses increased from $352.1 million to $380.6 million, an increase of $28.5 million or 8.1%. Controllable costs increased by $1.9 million, or 0.9%, primarily as a result of costs associated with capacity growth, including $0.4 million associated with the Q400 aircraft introduction consisting of crew salaries and benefits, and training costs.

Salaries, wages and benefits increased by $7.1 million, due to the increased number of full time equivalent employees required to facilitate capacity growth, wage and scale increases under new collective agreements, increased pension expense resulting from a revised actuarial valuation, and increased compensation expense related to Chorus’ employee share ownership purchase plan.

Non-operating expenses amounted to $12.6 million, representing an increase of $15.8 million. This change was mainly attributable to a foreign exchange loss of $10.1 million (of which $7.6 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, the absence in this quarter of any gain on derivative liabilities and increased interest expense.

EBITDA was $43.0 million compared to $37.4 million in 2010, an increase of $5.6 million or 15.0%. Free Cash Flow was $29.1 million, down $0.7 million or 2.3% from $29.8 million.

Operating income of $31.1 million for the three months ended September 30, 2011, was up $4.1 million or 15% over third quarter 2010, while net income of $13.9 million was down by $16.3 million due to the previously described changes in non-operating expenses and a deferred income tax expense of $4.6 million.