Chorus Aviation Overview
March 25, 2019
Delivering regional aviation to the world TSX: CHR Caution regarding forward-looking information
This presentation contains “forward-looking information” as defined under applicable Canadian securities laws. Forward-looking information is identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such information may involve but is not limited to comments with respect to strategies, expectations, planned operations or future actions.
Forward-looking information relates to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and other uncertain events. Forward-looking information, by its nature, is based on assumptions and is subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, among other things, external events, changing market conditions and general uncertainties of the business. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed in forward-looking information. Factors that could cause results to differ materially from those expressed in this presentation include those identified in Chorus’ public disclosure record available at www.sedar.com and the risk factors identified in Chorus’ Annual Information Form dated February 21, 2019. Statements containing forward-looking information in this presentation represent Chorus' expectations as of the date of this presentation (or as of the date they are otherwise stated to be made) and are subject to change after such date. Chorus disclaims any intention or obligation to update or revise such statements to reflect new information, subsequent events or otherwise, unless required by applicable securities laws.
Chorus Aviation Overview 2 Chorus is a fast-growing global provider of integrated regional aviation solutions
Chorus Aviation Overview 3 Regional aviation is based on aircraft carrying Up to 130 passengers
2 main types of Flying shorter distances than Accounting for ~22% of regional aircraft Narrow Body jets the world’s commercial fleet
1 2 Regional Up to 130 % of all flights below 500 miles Worldwide aircraft fleet Jets passengers 83% 15,800 50% of world Bombardier CRJ-200 to CRJ-1000 passengers fly <500 miles Embraer E135 to E190
Airbus A220
37% Turbo Up to 90 5,900 props passengers 4,500 17% TP 2,300 Bombardier Dash 8 – 100 to 400 Jets 3,600 ATR ATR 42 to ATR 72
Turbo Regional Narrow Regional Narrow Wide props Jets Body Jets Aircraft Body Body
1 OAG (2012). 2 FlightGlobal (2019), includes in-service aircraft with more than 20 seats Regional aircraft are fundamental to efficient air transport networks and link 60% of the world’s communities 1
Chorus Aviation Overview 4 Regional aviation shows strong stability through economic cycles
Indexed aircraft value volatility for narrow-body, turboprop and regional jet aircraft 120 Turboprop 115 aircraft
110
105
100
95
90 Narrow-body Regional jet 85 aircraft aircraft
80 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
● Mainline operators look to contract out more flying to regional partners ● Smaller aircraft are best suited to serve reduced market demand
Source: AVITAS
Regional aviation is a defensive sector in economic downturn
Chorus Aviation Overview 5 Investment Highlights
Chorus has a unique strategy to provide a full suite of regional aviation services to customers 1 worldwide
Chorus is well-positioned for significant growth opportunities, as an international 2 aircraft lessor and leasing opportunities within its CPA with Air Canada
Chorus has a predictable revenue stream, with 90%+ of annual 3 revenues secured through long-term contracts and strong relationships
Chorus Aviation Overview 6 Contents
1 Chorus Overview 2 Regional Aviation Services
3 Regional Aircraft 4 Conclusion Leasing
5 Appendix 1 6 Appendix 2 Financial Statements Supplemental information
Chorus Aviation Overview 7 Chorus Overview - Highlights
● Chorus has become a significant player in global regional aviation ● $1.45B revenues in 2018 ● $343M adjusted EBITDA 1 in 2018 ● 5,200 employees worldwide ● $1.1B market capitalization as of March 15
● Led by a very experienced and stable management team
● 3 complementary lines of business generate value at every stage of an aircraft’s lifecycle
● 12%+ ROIC in the last 2 fiscal years, including fast-growing aircraft leasing division
1 Adjusted EBITDA is a non-GAAP financial measure
Chorus Aviation Overview 8 Chorus has become a significant player in global regional aviation
$1.45B 2018 Revenues Consistently profitable since 2006 IPO
135 Aircraft owned $343M 2018 Adjusted EBITDA
5,200 Employees TSX:CHR Trading symbol
Aircraft Leased: Monthly 87 40 outside N-A $0.04 dividend per 47 inside CPA share (DRIP)
Note: Market capitalization value based on 156,147,655 shares outstanding and TSX closing stock price of $7.30 as of March 15, 2019.
~$1.13B market capitalization as of March 15, 2019 1
Chorus Aviation Overview 9 A highly experienced and stable management team with significant aviation experience
Joseph Randell Colin Copp Jolene Mahody President and COO and President, Executive VP and Chief Executive Officer Chorus Aviation Services Chief Financial Officer
40 years 30 years 26 years
Dennis Lopes Steve Ridolfi Gary Osborne Senior VP, Chief Legal President, Incoming Officer and Corp. Secretary Chorus Aviation Capital Chief Financial Officer
5 years 37 years 27 years
Chorus Aviation Overview 10 Delivering revenue and net earnings growth
12%+ ROIC $M Operating CAGR Revenues 1,666 2016 to 2018 1,545 1,277 1,352 1,451 ▲6.6% 2014* 2015 2016 2017 2018
$M Adjusted CAGR 342.7 2014 to 2018 EBITDA 286.9 215.9 228.3 248.1 ▲13.8% 2014 2015 2016 2017 2018
$M Adjusted Net CAGR 121.8 Income 115.4 115.4 2014 to 2018 107.2 102.0 ▲6.4% 2014 2015 2016 2017 2018
Effective 2019, the CPA fixed fee compensation reduces from $111.3M (2018) to $75.5 for 2019 and 2020. See slide 22. Significant growth potential remains, both inside and outside the CPA
Chorus Aviation Overview 11 Chorus activities are carried out through 2 business segments: Regional Aviation Services and Regional Aircraft Leasing
Lines of business
Contracted Flying Maintenance Aircraft Legal Aircraft Division Fleet Specialized Heavy mods Scheduled Spare parts Entity Leasing Charter contract MRO and owned Flights provisioning flying part-out
~ 20% Regional Aircraft Chorus Aviation Capital Corp. 40 40 FY 2018 Leasing Adjusted EBITDA ~ 34% Regional Aviation Jazz Aviation Aircraft leasing 75 47 FY 2018 Services LP under CPA Adjusted EBITDA
Jazz
Jazz Technical Services ~ 46% Voyageur Voyageur 20 FY 2018 Aviation Corp. Airways Adjusted EBITDA
Voyageur Aerotech
Voyageur Avparts
Total 135 87
Regional Aircraft Leasing and CPA leasing account for 54% of Adjusted EBITDA and hold strong growth potential
Chorus Aviation Overview 12 Chorus operates 13 facilities across Canada plus 3 international offices for its leasing business
Headquarters (2) ● Admin offices / crew bases (8) ▲ Line maintenance facilities (4) Heavy maintenance facilities (2)
Chorus ●▲Calgary Aviation Capital Ireland International ●▲Vancouver offices North Bay● Montreal●▲ ● Toronto●▲ Halifax ● ● England Singapore
Note: Chorus’ presence in Singapore and England consists of business development representatives
Chorus Aviation Overview 13 Our strategic agenda
Grow our regional aircraft leasing business through aircraft acquisitions, portfolio acquisitions and potential skyline transactions
Grow our regional aviation services of contracted flying, MRO and technical services
Leverage the synergies and expertise across our lines of business to further drive diversification and profit
Chorus Aviation Overview 14 Profit growth synergies across our 3 lines of business
Contracted Flying
Aircraft MRO Services Maintenance, Leasing & Repair & Trading New Customers Overhaul
Chorus generates value at every stage of an aircraft’s lifecycle
Chorus Aviation Overview 15 Contents
1 Chorus Overview 2 Regional Aviation Services
3 Regional Aircraft 4 Conclusion Leasing
5 Appendix 1 6 Appendix 2 Financial Statements Supplemental information
Chorus Aviation Overview 16 Regional Aviation Services - Highlights
● Largest historical business segment currently generating ~80% of company adjusted EBITDA
● Includes aircraft leasing under the CPA, contract flying operations and range of MRO, engineering and technical services.
● Capacity Purchase Agreement (CPA) between Jazz and Air Canada extended to 2035 ● Minimum $2.5B in revenues over 17 years ● Provides opportunities to lease new larger aircraft and modernize older ones
● Growth opportunities for MRO activities
See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 17 Contracted flying generates greatest revenue stream
Air Canada Operates scheduled service through a CPA with Express flying Air Canada under the Air Canada Express brand
Specialized Provides medical, logistical and contracted humanitarian flight operations to blue chip flying customers globally
Charter flights Offers charters throughout North America for corporate clients, governments, special interest groups and individuals
Chorus Aviation Overview 18 Chorus is Air Canada’s primary regional partner
Aircraft operated ~700 ~74% 116 by Jazz daily flights Largest of Air Canada’s Chorus regional seat 47 Leased under 79 customer capacity the CPA N.A. destinations
Responsibilities Air Canada Jazz under the Capacity ● Purchases capacity ● Conducts marketing ● Supply of flying crews Purchase ● Manages routes ● Assumes ● Airframe maintenance commercial risk Agreement ● Sets flight ● Flight operations schedules Retains revenues for ● ● Some airport operations passenger & cargo ● Sets ticket prices transport ● General administration
● Flexibility to respond quickly and efficiently to market changes Benefits for and opportunities Air Canada ● Jazz manages Air Canada Express operations at 36 airports across Canada ● Source of qualified pilots through Pilot Mobility Program
Chorus Aviation Overview 19 Chorus and Air Canada are true allies
● $97.26M equity investment by Air Canada in Chorus ● 9.99% initial ownership ● 60-month investment hold ● DRIP enrollment and standstill ● One seat on Chorus Board
● 60% of investment proceeds to purchase nine new CRJ900s for Air Canada Express fleet will increase leasing revenue under the CPA
● 40% of investment proceeds to acquire aircraft for the leasing business
Chorus Aviation Overview 20 Amended/extended CPA with Air Canada to 2035
● Guarantees ~$2.5B in contracted revenue over 17 years ● $1.6B from aircraft leasing ● $858M from fixed fees
● Plan to modernize Air Canada Express fleet with increased leasing of larger aircraft
● Margin risk on controllable costs reduced to a maximum of $2M per year
Secures highly predictable revenues and earnings for the next 17 years See cautionary statement regarding forward-looking information on slide 2 Chorus Aviation Overview 21 CPA extension increases total minimum contracted revenue by ~$940M
Minimum contracted revenue in CPA ($M)
● Near-term fixed fee 2019-2020 2021-2025 2026-2035 reductions more than offset Significant Min. 105 aircraft Min. 80 aircraft TOTAL fleet transition by term extension and aircraft leasing Change vs ($59M) +$138M +$842M +$940M Original CPA ● Aircraft leasing driving ~65% of the contracted revenue for 2,468 the term of the amended agreement
● Potential for additional lease 858 extensions/renewals beyond 2025
1,528 ● Maximum available performance incentives will 1,056 548 average ~$3.4M annually over 918 976 the term These are variable in nature 308 2 ● 399 1,610 and are not included in the Fixed fee 325 476 contracted revenue figures 417 980 223 748 Aircraft 151 593 1341 577 leasing 266 253 134 Original Amended Original Amended Original Amended Original Amended CPA CPA CPA CPA CPA CPA CPA CPA
1 Certain current aircraft leases under the current CPA extend past December 31, 2025 2 ‘Total Amended CPA’ column includes contracted aircraft leasing for 2036 and beyond estimated at $19 million See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 22 The amended CPA brings significant modernization to the Air Canada Express fleet ● Fleet known by aircraft type until 2025 ● Post-2025: Commitment to operate a minimum of 80 aircraft in the 75 to 78 seat range ● Current lease commitments beyond 2025 leave substantial room for additional lease extensions / renewal on current aircraft and possibility of new aircraft
Seat Existing Aircraft type Comment Amended Cap. Fleet CPA
Bombardier 74 44 ● 3 will be removed in 2023 36 Q400 ● 12 currently leased under the CPA will NextGen extend lease to 2030 ● 19 leases expiring between the end of 2025 and 2028
Bombardier 75 21 ● 9 CRJ900s will be purchased and leased 35 CRJ-900 under the CPA ● 5 CRJ900s will be sourced by Air Canada and leased to Jazz in the first half of 2019
Bombardier 50 10 ● Transferred to Jazz from Air Georgian 15 CRJ-200 ● 15 to operate until 2025
Bombardier 50 26 ● 19 aircraft will undergo an Extended 19 Dash 8-300 Service Program and generate leasing revenue under the CPA ● 8 of the 19 completed to date
Bombardier 37 15 ● Removed from the fleet and replaced 0 Dash 8-100 with larger aircraft
Chorus Aviation Overview 23 Maintenance Repair & Overhaul (MRO) and Parts
Halifax, NS ● 6-bay, 80 000 sq. ft. facility ● 24/7 operations provide flexibility to serve carriers exactly when needed
● Certified to perform traditional heavy maintenance activities on Bombardier and Embraer 135/145 regional aircraft
North Bay, ON ● 200 000 sq. ft. facility ● Performs heavy MRO activities, customized designs and engineering and aircraft modifications ● Transport Canada, FAA and European Aviation Safety Agency approved ● Transport Canada certified Canadian Design Approval Organization ● Supplemental Type Certificates for Dash 8 100/200/300/ Q400s and Dash 7s ● Provides parts provisioning, sales and service for regional aircraft - great complement to MRO activities
Chorus Aviation Overview 24 Contents
1 Chorus Overview 2 Regional Aviation Services
3 Regional Aircraft 4 Conclusion Leasing
5 Appendix 1 6 Appendix 2 Financial Statements Supplemental information
Chorus Aviation Overview 25 Regional Aircraft Leasing - Highlights
● Rapidly growing business launched in 2017
● Attractive business with many synergies with Contracted Flying and MRO
● Led by industry veterans with strong relationships throughout the industry, including over 100 airlines
● Key achievements in 2 years: ● C$401M1 capital raised to date ● Committed fleet of 40 aircraft worth US$ 860M ● US$300M warehouse facility ● Already the world’s 4th largest regional aircraft lessor based on portfolio value
1 $97.26M of the $401M relates to Air Canada’s equity investment; 40% will be used to acquire third-party leases and 60% to acquire aircraft to operate under the CPA
See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 26 W worldwide aviationholds Regional W 20 1 25 10 15 Airbus Global Market Forecast (2018 Forecast Market Global Airbus 0 5 o 9718 9719 1997 1992 1987 1982 1977 o Airlines increasingly dependent on operating leases Air Travel expected to double from 2015 to 2025 rl r f O m O l leet d d p p a Oil crisis
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SARS e R rat 4,7 P 32 K) 022017 2012 2 Financial Crisis FlightGlobal 0 i % n 0 g l 6 e 36 0021 2019 2015 2010 ,1 as 0 % 022027 2022 0 e (2019), includes in includes (2019), 2x 7 40 ,3 0 % 0 Chorus Aviation Overview Chorus Aviation 022037 2032 9 43 ,40 s % tr 0 - service TPs, RJs, and NBs with more than 20 seats 20 than with more NBs and RJs, TPs, service 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% o n ● ● ● ● g gr byfactors: 2 Growthleased aircraft in fleet driven over years 10 past the growthoutperformed GDP ~2.0x by has Resilient passenger air traffic growth requirements, residual no and value risk operational flexibility, lowerfinancing provideOperating leases more 20 forecast4.4% of ● ● Increasing use of leased aircraft (vs owned) leased of use Increasing fleet global in Increase - year world trafficannual growth o 1 w 2 th po 1 t e 1 n ti a l
27 Regional aircraft leasing is an attractive business
1 Essential ● 50% of global passengers fly on trips shorter than 500 miles component of ● Regional aircraft allow airlines to optimize aircraft size commercial and reduce per-seat-cost aviation
2 Very resilient ● 70-130 seat fleet expected to grow at ~3.7% per year over demand from a the next 20 years1 broad user base ● Penetration rate of operating leases is still relatively low for regional aircraft (~25%) compared to narrow-body jets (~49%)
3 Geographically ● Economic growth in emerging markets is expected to significantly diverse demand outpace growth in advanced economies ● Fast growth of the urban middle class in emerging markets will create opportunities for regional air travel
4 Stable ● Stable technology of regional aircraft reduces volatility in residual technology value compared to narrow-body aircraft and supply ● Steady historical deliveries
1 Bombardier Market Forecast 2017-2036
Chorus Aviation Overview 28 5 pillars of our aircraft leasing growth strategy
Highly ● Industry veterans based on 3 continents Experienced ● Strong relationships with over 100 airlines Team
Customers ● Seek airline customers with good credit quality and/or strong prospects ● Employ collaborative approach to working with airlines ● Build a diversified customer base
New to Mid-Life ● Acquire modern technology, high demand, marketable aircraft Aircraft ● Use sale leasebacks to build airline relationships ● Use skyline purchases to reduce aircraft acquisition costs
Long-Term ● Target 5 to 10 years to provide significant visibility into future Leases ● Aim to recover cost of the aircraft over first lease
Low Cost of ● Seek debt financing from a variety of sources Capital ● Reserve capital for select deals to allow for opportunistic purchasing
Chorus Aviation Overview 29 Launched third-party leasing in January 2017 to seize opportunities in regional aircraft leasing
C$ 401 M raised since 2017 Net proceeds
● Provides ~$1.6B of C$ M investment capital when levered at 3:1 2017 2018 2019 ● ~75% of capital committed as of March 26, 2019
● Remaining capital expected to be committed by early 2020
● 60% of Air Canada’s investment allocated Investment Public share Air Canada to leasing under the from Fairfax offering Investment CPA Financial
Note: Amounts shown above are expressed in terms of gross proceeds, except for the $401 M, which is net proceeds See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 30 Committed fleet of 40 aircraft worth US$ 860M
● Approximately ~US$ 645M in future contracted lease revenue 1 ● Weighted average fleet age of ~3 years 2 ● Weighted average remaining lease term of ~6.5 years 2 ● ~87% debt is fixed rate ● Weighted average cost of borrowing of 4.52% 3
Europe 10 Aircraft N. America 3 Aircraft
Asia 10 Aircraft Africa 9 Aircraft
1 Includes all 40 aircraft incl. 2019 deliveries. S. America 2 Fleet age and remaining lease term is 5 Aircraft calculated based on the weighted-average of Australia aircraft net book values as at 31/12/2018. 3 Aircraft 2019 deliveries not included. 3 Reflects actual borrowings as at 31/12/2018. 2019 deliveries not included. Chorus has the ability to adjust lease rate as a result of changes in variable interest rates on certain of its leases.
See cautionary statement regarding forward-looking information on slide 2 Chorus Aviation Overview 31 Chorus has rapidly become the world’s 4th largest regional aircraft lessor (in portfolio value)
Portfolio value (US$ B)
NAC 6,025
GECAS 1,750
Falko 1,325
Chorus 1,200
DAE 850 Chorus is the only large regional Elix 575 aircraft lessor which is also an operator TrueNoord 500
Avmax 350
CDB 325
Avation 300
Source: FlightGlobal (2019); portfolio values based on half-life CMVs Chorus value includes 47 aircraft leased under the capacity purchase agreement
Chorus Aviation Overview 32 Diversification across airlines, geography and aircraft types
Turboprops Regional Jets
Customer Aircraft Dash 8 ATR CRJ Embraer committed Ethiopian 5 Azul 5 Air Nostrum 4 Lion Air 4 Jambojet 4 Philippine Airlines 3 Falcon 3 AeroMexico 3 Flybe 3 Virgin Australia 3 Cityjet 2 KLM 1 Total third-party 40 15 13 6 6 Air Canada 47 Grand total 87 57 13 11 6
Chorus Aviation Overview 33 Three ways to acquire leasing assets
Description Sample Chorus Transaction
1 From lessors Purchase of assets with Purchase of 2 E190s with attached leases from Aeromexico leases attached from lessor’s non-core portfolio Investec
2 From airlines Sale and leaseback of Purchase of 3 new Bombardier existing or future aircraft Q400s from Philippine Airlines deliveries with concurrent long-term leaseback agreement
3 From aircraft Direct purchase from Purchase of 2 Q400 turboprops manufacturers manufacturers for directly from Bombardier with subsequent lease to airlines subsequent lease agreement to JamboJet Airlines
1 Bombardier Market Forecast 2017-2036 Source: FlightGlobal (2019), Chorus Aviation estimates Global regional aircraft leasing market estimated at ~275 new aircraft deliveries per year1
Chorus Aviation Overview 34 Chorus holds defensive position in economic downturn
Visibility on ● Over 90% of revenues embedded in flight operations and future revenues aircraft leasing long-term contracts and costs
Protected profit ● Air Canada assumes risks related to commercial aspects margin under ● +/- $2M guardrail on controllable costs CPA ● Minimum fleet and aircraft leasing commitments
Better suited to ● Lower costs and smaller aircraft than mainline carriers serve reduced ● Aircraft leasing provides operational flexibility, reduces market demand financing requirements and eliminates risk on aircraft residual value
Conservative ● Rigorous evaluation process approach to ● Strong diversification of aircraft type and geography leasing business ● Diversified customer base with good credit rating
Valuable aircraft ● Mature and efficient regional aircraft lifecycle ● Ability to fly, lease, sell, modify, disassembly and part-out aircraft
See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 35 Contents
1 Chorus Overview 2 Regional Aviation Services
3 Regional Aircraft 4 Conclusion Leasing
5 Appendix 1 6 Appendix 2 Financial Statements Supplemental information
Chorus Aviation Overview 36 Conclusion
Chorus is very well positioned to grow significantly in the regional aircraft leasing business, led by a very strong team of industry 1 veterans and supported by internal expertise and capabilities in regional aviation services
Chorus is committed to grow its regional aviation services, both inside and outside 2 the CPA
Chorus has a predictable revenue stream, with a business model based on long-term contracts, less exposed 3 to downturns than main line carriers and lessors
Chorus Aviation Overview 37 Contents
1 Chorus Overview 2 Regional Aviation Services
3 Regional Aircraft 4 Conclusion Leasing
5 Appendix 1 6 Appendix 2 Financial Statements Supplemental information
Chorus Aviation Overview 38 Consolidated Income Statement For the years ended December 31, 2018 and 2017
Expressed in thousands of Canadian dollars, 2018 2017 except earnings per share Operating revenue 1,451,194 1,352,200 Operating expenses Salaries, wages and benefits 443,332 444,993 Depreciation and amortization 120,687 103,244 Aircraft maintenance materials, supplies and services 240,744 192,639 Airport and navigation fees 170,180 167,147 Aircraft rent 98,023 99,390 Terminal handling services 21,720 27,907 Other 139,867 143,834 1,234,553 1,179,154
Operating income 216,641 173,046 Non-operating (expenses) income Interest revenue 2,924 2,246 Interest expense (59,209) (45,757) Loss on disposal of property and equipment (164) (125) Foreign exchange (loss) gain (56,530) 53,886 Other 500 687 (112,479) 10,937
Income before income taxes 104,162 183,983 Income tax expense Current income tax (2,133) (1,589) Deferred income tax (35,041) (15,071) (37,174) (16,660)
Net income 66,988 167,323 Earnings per share, basic 0.49 1.36
Earnings per share, diluted 0.48 1.33
Chorus Aviation Overview 39 Consolidated Income Statement Fourth quarter 2018 and 2017
Three months ended December 31, Year ended December 31,
Expressed in thousands 2018 2017 Change Change 2018 2017 Change Change of Canadian dollars $ $ $ % $ $ $ %
Operating Revenue 358,663 356,033 2,630 0.7 1,451,194 1,352,200 98,994 7.3 Operating Expenses 297,402 305,872 (8,470) (2.8) 1,234,553 1,179,154 55,399 4.7
Operating income 61,261 50,161 11,100 22.1 216,641 173,046 43,595 25.2 Net interest expense (14,447) (13,341) (1,106) (8.3) (56,285) (43,511) (12,774) (29.4) Foreign exchange (loss) gain (33,806) (7,958) (25,848) (324.8) (56,530) 53,886 (110,416) 204.9 Other 22 59 (37) 62.7 336 562 (226) (40.2)
Earnings before Income tax 13,030 28,921 (15,891) (54.9) 104,162 183,983 (79,821) (43.4) Income tax expense (11,011) (8,918) (2,093) (23.5) (37,174) (16,660) (20,514) (123.1)
Net income 2,019 20,003 (17,984) (89.9) 66,988 167,323 (100,335) (60.0)
Adjusted EBITDA 92,608 82,915 9,693 11.7 342,692 286,912 55,780 19.4 Adjusted EBT 46,116 32,536 13,580 41.7 159,008 132,091 26,917 20.4 Adjusted Net Income 35,105 23,618 11,487 48.6 121,834 115,431 6,403 5.5
Chorus Aviation Overview 40 Consolidated Statements of Financial Position As at December 31 Expressed in thousands of Canadian dollars 2018 2017
Assets Current assets Cash 92,592 78,007 Accounts receivable – trade and other 77,097 77,397 Inventories 55,691 51,543 Prepaid expenses and deposits 13,535 12,920 Income tax receivable 704 2,268 Total current assets 239,619 222,135 Restricted cash 20,081 13,625 Property and equipment 2,001,099 1,742,674 Intangibles 2,088 2,392 Goodwill 7,150 7,150 Deferred income tax asset 4,295 3,022 Other long-term assets 41,693 33,647 2,316,025 2,024,645 Liabilities Current liabilities Accounts payable and accrued liabilities 190,311 210,809 Current portion of obligations under finance leases 3,117 2,762 Current portion of long-term incentive plan 4,087 5,844 Current portion of long-term debt 142,652 118,567 Current portion of consideration payable — 4,387 Dividends payable 5,657 5,014 Income tax payable 930 — Total current liabilities 346,754 347,383 Obligations under finance leases 2,558 5,219 Long-term debt 1,102,783 995,062 Convertible units 194,294 193,540 Deferred income tax liability 172,254 135,740 Other long-term liabilities 67,595 65,679 1,886,238 1,742,623 Equity 429,787 282,022 2,316,025 2,024,645
Chorus Aviation Overview 41 Segmented Financial Statement Year Ended December 31, 2018
For the year ended December 31, 2018 For the year ended December 31, 2017 Regional Regional Regional Regional Aviation Aircraft Aviation Aircraft (in thousands of Canadian dollars) Services Leasing Total Services Leasing Total $ $ $ $ $ $
Operating revenue 1,371,354 79,840 1,451,194 1,322,816 29,384 1,352,200 Operating expenses 1,194,799 39,754 1,234,553 1,160,216 18,938 1,179,154
Operating income 176,555 40,086 216,641 162,600 10,446 173,046 Net interest expense (36,569) (19,716) (56,285) (36,838) (6,673) (43,511) Foreign exchange (loss) gain (57,123) 593 (56,530) 57,892 (4,006) 53,886 Other(1) 336 — 336 562 — 562
Earnings (loss) before income tax 83,199 20,963 104,162 184,216 (233) 183,983 Income tax expense (34,311) (2,863) (37,174) (16,584) (76) (16,660)
Net income (loss) 48,888 18,100 66,988 167,632 (309) 167,323
Operating income 176,555 40,086 216,641 162,600 10,446 173,046 Depreciation and amortization(2) 91,827 28,860 120,687 92,011 11,233 103,244 Employee separation(2) 5,364 — 5,364 10,622 — 10,622
Adjusted EBITDA(3) 273,746 68,946 342,692 265,233 21,679 286,912
Earnings (loss) before income tax 83,199 20,963 104,162 184,216 (233) 183,983
Unrealized foreign exchange loss (gain) 49,482 — 49,482 (60,868) — (60,868) Employee separation program 5,364 — 5,364 10,622 — 10,622 Foreign exchange gain on cash held for — — — (1,646) — (1,646) deposit Adjusted EBT(3) 138,045 20,963 159,008 132,324 (233) 132,091
Chorus Aviation Overview 42 Segmented Financial Statement Three Months Ended December 31, 2018
For the three months ended Dec. 31, 2018 For the three months ended Dec. 31, 2017
Regional Regional Regional Regional Aviation Aircraft Aviation Aircraft (in thousands of Canadian dollars) Services Leasing Total Services Leasing Total $ $ $ $ $ $
Operating revenue 335,640 23,023 358,663 340,918 15,115 356,033 Operating expenses 287,024 10,378 297,402 295,502 10,370 305,872
Operating income 48,616 12,645 61,261 45,416 4,745 50,161 Net interest expense (8,710) (5,737) (14,447) (9,604) (3,737) (13,341) Foreign exchange (loss) gain (34,257) 451 (33,806) (7,132) (826) (7,958) Other(1) 22 — 22 59 — 59
Earnings before income tax 5,671 7,359 13,030 28,739 182 28,921 Income tax expense (10,506) (505) (11,011) (8,159) (759) (8,918)
Net (loss) income (4,835) 6,854 2,019 20,580 (577) 20,003
Operating income 48,616 12,645 61,261 45,416 4,745 50,161 Depreciation and amortization(2) 23,048 8,082 31,130 25,874 5,623 31,497 Employee separation(2) 217 — 217 1,257 — 1,257
Adjusted EBITDA(3) 71,881 20,727 92,608 72,547 10,368 82,915
Earnings before income tax 5,671 7,359 13,030 28,739 182 28,921
Unrealized foreign exchange loss 32,869 — 32,869 2,358 — 2,358
Employee separation program 217 — 217 1,257 — 1,257 Adjusted EBT(3) 38,757 7,359 46,116 32,354 182 32,536
Chorus Aviation Overview 43 Contents
1 Chorus Overview 2 Regional Aviation Services
3 Regional Aircraft 4 Conclusion Leasing
5 Appendix 1 6 Appendix 2 Financial Statements Supplemental information
Chorus Aviation Overview 44 Opportunities for incremental revenue at end of leases under the CPA
Significant ● Current lease commitments beyond 2025 leave substantial room for additional lease extensions/renewals on current and possibly new aircraft leasing to Air Canada in amended CPA opportunity as each aircraft ● Lease expiry of each aircraft is concurrent with full debt repayment; no exposure for Chorus on debt lease under the CPA ● 19 Q400 aircraft have lease terms expiring from end of 2025 to expires end of 2028 ● Put and call rights to Air Canada in 2025 no longer applicable due to CPA extension to 2035
Year end fleet counts 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Chorus-owned 75-78 seat aircraft earning 39 481 48 48 45 45 501 44 39 31 26 26 14 5 5 5 5 leasing revenue under CPA Average of 33 Average of 7 Chorus-owned Dash 8-300 aircraft2 (50-seat 16 17 18 19 19 19 19 ------aircraft) earning leasing revenue under CPA
Chorus-owned aircraft with expired leases 3, 4 - - - - 3 3 3 28 33 41 46 46 58 67 67 67 67
Average of 52 Total 55 65 66 67 67 67 72 72 72 72 72 72 72 72 72 72 72
1 Includes 9 CRJ900s acquired and leased in 2020 and 5 aircraft to be determined acquired and leased in 2025. 2 As of January 14, 2019, the Extended Service Program was completed on eight Dash 8-300s which are earning lease revenue under the CPA. The remaining 11 aircraft will gradually be completed by December 31, 2022 and will earn lease revenue under the amended CPA. 3 Owned Chorus aircraft that have their lease expire under the amended CPA. These aircraft have the potential for re-lease with Air Canada or other third parties, sale or part out. 4 Aircraft debt is fully paid off with each lease expiry, including the 3 Q400s removed in 2023.
Chorus Aviation Overview 45 Minimum CPA fleet commitment provides certainty
2026 Amended CPA 2019 2020 2021 2022 2023 2024 2025 Significant regional Onward network footprint DASH 8-100 ------under amended CPA DASH 8-300 19 19 19 19 19 19 19 - CRJ900 35 35 35 35 35 35 35 - ● Enhanced relevance to Air Canada Q400 36 36 36 36 36 36 36 - with CRJ200 regional AC Express capacity reallocated to Jazz CRJ200 15 15 15 15 15 15 15 - ● Further fleet modernization and Type TBD 80 transition to larger gauge TOTAL 105 105 105 105 105 105 105 80 equipment with the Dash 8-100s exiting the fleet earlier 2026 Previous CPA 2019 2020 2021 2022 2023 2024 2025 ● All owned Dash 8-300 aircraft Onward maintained as covered fleet until 2025 DASH 8-100 15 15 12 12 4 1 - - ● Minimum fleet of 105 determines DASH 8-300 26 26 26 26 26 26 26 - fixed fee revenue floor; set at $75.5 CRJ900 21 21 21 21 21 21 21 - million in each of 2019 and 2020, given substantial fleet transitions Q400 44 49 49 49 49 49 49 - and averages $61.6 million from 2021 CRJ200 10 ------2025 TOTAL 116 111 108 108 100 97 96 - ● Minimum covered fleet of 80 aircraft in the 75-78 seat range provides minimum revenue floor of $399 million over extended term from Operating aircraft in fleet may be higher than the minimum covered fleet 2026-35 commitment, particularly in the early years as fleet transition occurs
Chorus Aviation Overview 46 Jazz is widely recognized for its excellence, both as an employer and operator
2018 2017
● Canada’s Safest Employers 2018 ● Canada’s Safest Employers 2017 ● Silver in Transportation cat. Gold in Transportation cat. ● Silver Psychological Safety cat. ● APEX award for “Excellence in Publication” - Focus on Safety
● Canada’s Top Employers for Young People 2018 - 2014 2017 - 2015 ● Canada’s Best Diversity Employers 2018 - 2012 ● Top Airline Reliability Performance Awards ● Atlantic Canada’s Top 25 Employers 2018 - 2012
● Nova Scotia’s Top 15 Employers 2018 - 2012 2015
● 2018 Employee Recommended ● One of North America’s top five Workplace - The Globe and Mail on-time performing regional & Morneau Shepell airlines
Chorus Aviation Overview 47