The Chronicle Herald (Provincial)
Chorus Aviation lays off staff
Chorus Aviation Inc. is taking several measures to manoeuvre through the coronavirus pandemic, including temporarily laying off staff, trimming executive salaries and suspending its dividend.
"Our industry is facing its worst crisis in history,” said president and CEO Joe Randell in a news release Monday.
“The world situation is unstable and there are no signs of a near-term recovery. We entered this predicament from our strongest position ever, and it's devastating to be sending approximately 3,000 employees home, given the successes we've achieved together.”
Chorus bills itself as a global provider of integrated regional aviation services. Headquartered in Halifax, the company comprises Chorus Aviation Capital, a global lessor of regional aircraft, as well as Jazz Aviation and Voyageur Aviation. Chorus provides regional aviation support services that include aircraft acquisitions and leasing, aircraft refurbishment, engineering, modification, repurposing and preparation, contract flying, and aircraft and component maintenance, disassembly and parts provisioning.
“Our employees are amongst the most talented in the industry, and I'm deeply troubled by the uncertainty and anxiety this is causing our employees and their families,” said Randell.
“The rapid and dramatic impact of this pandemic is astounding, and we're taking all measures to ensure the safety of our employees, mitigate costs, bolster our liquidity and strengthen our relationships with customers. We're prudently and responsibly managing our financial resources to secure our future and eliminating all discretionary cash outflows, thus requiring a suspension of our dividend.”
He said the decisions were necessary to ensure Chorus emerges from the COVID-19 crisis as resiliently and quickly as possible.
The company release said the aviation industry has been hit hard, with strict travel restrictions and global cancellations affecting all airlines. The International Air Transport Association is estimating a $356-billion year-on-year loss in passenger revenue worldwide.
“Even if the company's business model does not directly expose it to the market risks ordinarily faced by airlines, substantially all its source revenue is derived from airline customers, through its capacity purchase agreement with Air Canada and its leasing of aircraft to airline customers globally,” the statement said.
“The full extent of the duration and therefore impact of this pandemic are unknown.”
Chorus said it is working with its main customer and partner, Air Canada, which has implemented a secondquarter network-wide capacity reduction of 85 to 90 per cent. Chorus's Air Canada Express flying has been reduced by about 90 per cent for April and May, resulting in what the company termed significant temporary employee reductions.
“Chorus is reviewing the
Canada Emergency Wage Subsidy program and is awaiting further details to assess any impact to these planned reductions,” according to the release.
The company said its Voyageur subsidiary, which represents less than 10 per cent of Chorus's consolidated revenue and net income, is engaged in specialty contract flying, primarily for international organizations engaged in humanitarian missions, as well as specialty maintenance, repair, overhaul and parts sales.
“Voyageur is experiencing continued demand overseas to support humanitarian efforts, contracted flying for cargo services, and there has been no interruption to the air ambulance operation in New Brunswick,” the statement said.
Among other measures, Chorus announced that after payment of the March 2020 dividend, no further dividends will be paid until further notice, and the dividend reinvestment program will also be suspended.
“The suspension of the dividend will preserve significant cash to strengthen the company's balance sheet through this crisis,” it said.
Randell is to forgo 70 per cent of his salary, and members of the executive team will forgo up to 50 per cent of their salaries.
The board of directors has taken a 25 per cent reduction in fees.
Chorus shares were trading Monday afternoon on the Toronto Stock Exchange for $2.22, down 33 cents.