What Chorus Aviation (CHR) Said on Its Q3 Earnings Call

Key Points

• Chorus raised its 2026 outlook to adjusted EBITDA of CAD 185–195 million and free cash flow of CAD 110–120 million, citing SkyCare, KADEX and stronger year-to-date results.
• Q3 adjusted EBITDA declined to CAD 47.7 million from CAD 51.6 million as lower Air Canada CPA earnings outweighed growth in Voyageur and KADEX; adjusted net income was flat at CAD 15.1 million.
• Chorus is expanding beyond its CPA business: it expects non-CPA revenue to grow to CAD 265–300 million in 2027, while SkyCare and KADEX add to its operations. The company also returned CAD 19.2 million to shareholders in Q3 through buybacks and dividends.

Chorus Aviation TSE: CHR reported lower third-quarter adjusted earnings before interest, taxes, depreciation and amortization, but raised its 2026 outlook as acquisitions and aircraft parts sales helped diversify its business beyond its Air Canada capacity purchase agreement.

Adjusted EBITDA fell to CAD 47.7 million from CAD 51.6 million a year earlier, as previously communicated reductions under the capacity purchase agreement, or CPA, more than offset growth at Voyageur and newly acquired KADEX. Adjusted net income was flat at CAD 15.1 million, while adjusted earnings per common share rose to CAD 0.68 from CAD 0.60, helped by share repurchases.

Chief Financial Officer Gary Osborne said Voyageur and KADEX generated CAD 3.6 million more in the quarter on higher parts sales. Free cash flow declined to CAD 26.9 million, or CAD 1.21 per share, from CAD 33.2 million, or CAD 1.29 per share, a year earlier. After CAD 16.1 million in scheduled term loan repayments, free cash flow was CAD 10.8 million.

Outlook Raised as Non-CPA Revenue Grows

Chorus now expects 2026 adjusted EBITDA of CAD 185 million to CAD 195 million and free cash flow of CAD 110 million to CAD 120 million. After CAD 65 million of scheduled term loan repayments, it expects free cash flow of CAD 45 million to CAD 55 million.

Osborne said the updated outlook reflects the addition of SkyCare Air Ambulance, stronger earnings and a higher U.S. dollar exchange rate in year-to-date results. He also cited KADEX’s performance, a good year at Voyageur and steady CPA operations.

The company expects revenue from parts sales, contract flying, maintenance, repair and overhaul, and other non-CPA activities to rise from CAD 200 million to CAD 220 million in 2026 to CAD 265 million to CAD 300 million in 2027. It expects a combined EBITDA margin of approximately 20% for those businesses.

Osborne told analysts that the implied increase in non-CPA EBITDA should essentially offset an expected reduction in CPA earnings next year. He said the 2027 revenue outlook is based on current operations and reasonable growth, rather than major new contract wins. He added that the company generally sees annual non-CPA growth of 5% to 10%.

President and Chief Executive Officer Colin Copp said Voyageur’s Flexrotor uncrewed aircraft system and aerial firefighting activities are priorities for next year. He said other defense and agency contracts could provide opportunities, but cautioned that contract wins can be unpredictable.

SkyCare and KADEX Expand the Business

Chorus closed its acquisition of SkyCare on November 1 for approximately CAD 40 million, equivalent to 4.5 times SkyCare’s unaudited 2025 EBITDA, Osborne said. At closing, Chorus funded CAD 36.1 million, including a CAD 4.1 million working capital adjustment, using its operating credit facility and cash on hand.

Copp said the acquisition expands Chorus’s presence in Northern Ontario and Manitoba. He told analysts that a contract with Ornge accounts for the majority of SkyCare’s business and that the company also has a growing charter operation. SkyCare has 22 aircraft, he said.

Chorus sees potential opportunities across its businesses, including engineering, aircraft parts and pilot training, Copp said. He added that SkyCare has no anticipated major fleet expenditure beyond ordinary maintenance capital spending and that Chorus is primarily focused on organic growth at the business.

KADEX, acquired April 1, contributed CAD 17.7 million in revenue and CAD 0.8 million in net income during the quarter. Since acquisition, it contributed CAD 34.1 million in revenue and CAD 2 million in net income, Osborne said.

Aircraft Sales and Shareholder Returns

Chorus sold one Dash 8-400 aircraft in the quarter for CAD 10 million, producing a CAD 2.2 million gain. Eight of nine aircraft under a previously announced sales agreement have been sold. The final sale is expected by year-end, subject to closing conditions and maintenance, bringing cumulative net proceeds slightly above the previously communicated US$62 million, Osborne said.

The company repurchased and canceled about 615,000 shares for CAD 16.8 million in the quarter and paid a CAD 0.11-per-share dividend. Together, buybacks and dividends returned CAD 19.2 million to shareholders in the quarter and CAD 44.3 million year to date.

Chorus’s leverage ratio improved to 1.4 times from 1.5 times in the prior quarter and 1.7 times at year-end, remaining within its target range of one to two times. Osborne said the company plans to examine options to refinance its Series C debentures toward the end of the year.

About Chorus Aviation (TSE:CHR)

Chorus is a holding company which owns the following principal operating subsidiaries: Jazz Aviation, the largest regional operator in Canada and provider of regional air services under the Air Canada Express brand; Voyageur Aviation, a leading provider of specialty charter, aircraft modifications, parts provisioning and in-service support services; Cygnet Aviation Academy, an industry leading accredited training academy preparing pilots for direct entry into airlines; and Elisen & Associates, a leading provider of aerospace engineering and certification services.

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