Chorus Aviation Capital Presentation October 26, 2017 Caution Regarding Forward-Looking Information
Certain information in this presentation may contain ‘forward-looking information’ as defined under applicable Canadian securities legislation. Forward-looking information typically contains words such as “anticipate”, “believe”, “could”, “should”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar words 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, including those described in this presentation, and is subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst 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 the actual results, performance or achievements to differ materially from those expressed in forward-looking statements. Factors that may cause results to differ materially from expectations in this presentation include, without limitation: risks relating to Chorus’ economic dependence on and relationship with Air Canada; risks relating to the airline industry (including the international operation of aircraft in developing countries and areas of unrest); aircraft leasing (including the financial condition of lessees, availability of aircraft, access to capital, fluctuations in aircraft market values, competition and political risks); energy prices, general industry, market, credit, and economic conditions (including a severe and prolonged economic downturn which could result in reduced payments under the Capacity Purchase Agreement (‘CPA’) with Air Canada); competition affecting Chorus and/or Air Canada; insurance issues and costs; supply issues and costs; the risk of war, terrorist attacks, aircraft incidents and accidents; epidemic diseases, environmental factors or acts of God; changes in demand due to the seasonal nature of Chorus’ business or general economic conditions; the ability of Chorus to reduce operating costs and employee counts; the ability of Chorus to secure financing; the ability of Chorus to attract and retain the talent required for its existing operations and future growth; the ability of Chorus to remain in good standing under and to renew and/or replace the CPA and other important contracts; employee relations, labour negotiations or disputes; pension issues, currency exchange and interest rates; leverage and restrictive covenants contained in debt facilities; uncertainty of dividend payments; managing growth; changes in laws, adverse regulatory developments or proceedings in countries in which Chorus and its subsidiaries operate or will operate; pending and future litigation and actions by third parties. For a further discussion of risks, please refer to Chorus’ most recent MD&A and to the Annual Information Form dated February 15, 2017. The statements containing forward-looking information in this presentation represent Chorus’ expectations as of October 12, 2017, and are subject to change after such date. However, Chorus disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
Page 2 Chorus at a Glance
TSX: CHR Consistently profitable Ticker symbol since becoming ~ $1.3 billion publicly traded in 2006 Operating revenue - 2016
~ $1.1 billion Focused on building (1) Market capitalization additional shareholder value ~ $248 million +104% Adjusted EBITDA, excluding other items - Three year share price Monthly dividend of (2) 2016 performance $0.04 per share
(1) Calculated using closing price of Chorus shares of $8.59 on the TSX on October 4, 2017. (2) Between October 4, 2014 and October 4, 2017.
Page 3 Chorus Lines of Business
• Focused on providing a full suite of regional airline services
1 2 3 Contracted flying Maintenance, repair Regional operations and overhaul (MRO) aircraft leasing
Operated by
Focus area of growth and revenue diversification
Page 4 1 Overview of Contracted Flying Operations
Air Canada Express – Operated by Jazz Voyageur
• Jazz is responsible for providing crews, airframe . Voyageur provides specialized contracted flying maintenance, flight operations, some airport and aviation services operations, and general administration • Contract flying services • Missions • Scope operation • Flight operations • ~700 daily flights • 73 destinations in North America . Fleet of 18 owned aircraft (16 Bombardier • Fleet of 117 aircraft manufactured)
• Three types of missions . Flying ACMI missions around the world for over 12 years • Smaller markets with less demand • High density markets at off-peak times . Blue-chip customers such as the United Nations • Point-to-point services on lower density routes
. Contracted services done with Canadian licenses, • Jazz is Air Canada’s primary regional supplier, certifications, and designations providing ~70% of their regional capacity
World-renowned reputation for superior safety standards and operational integrity.
Page 5 2 Overview of MRO Operations
. Separate division under Jazz . Stand alone profit centre . Focused on traditional heavy maintenance on Bombardier aircraft
. Operating in North Bay, ON . 200,000 square foot facility . Highly specialized and custom MRO and engineering, design for domestic & international clients
. Established in 2016 . Regional aircraft part sales and service
Page 6 3 Overview of Chorus Aviation Capital
• Established in January 2017.
• Fairfax Financial invested $200 million in Chorus through a private placement of convertible debt.
• New subsidiary Chorus Aviation Capital (“CAC”) setup to build a global, regional aircraft leasing platform - further advancing Chorus’ growth and diversification strategy.
• Delivers a full suite of support services to customers worldwide by leveraging the expertise within Chorus’ group of companies.
Page 7 Strategic Vision
Opportunity Execution
Chorus believes there is a significant Chorus established, Chorus Aviation Capital opportunity to develop a large and profitable (CAC) for the purpose of acquiring, financing, leasing platform. leasing and trading regional aircraft.
. Global passenger growth continues to . Focused exclusively on the 70 to 135 seat accelerate. commercial market segment.
. Regional aircraft leasing segment is stable . Objective is to become a leading global and currently underserved with limited regional aircraft lessor. competition
. Create significant synergies with Chorus' . Segment enjoys premium yields and sector other businesses. margins with favorable access to capital.
Page 8 Accelerating Global Passenger Growth
Air Travel Expected to Double in the Next 15 Years Airlines are More Dependent on Operating Leases
World annual RPK (trillions)
16.0 ICAO Airbus 14,000 45% 40% total traffic GMF 2015 40% 14.0 12,000 34% 35% 12.0 10,000 30% 9,600+ Operatingon% Lease 30% 10.0 8,000 ...and will 22% 6,800+ 25% double again 8.0 in the next 6,000 17% 5,200+ 20% 2x 15 years 6.0 15% 4,000 3,300+ 10% 4.0 2,200+ 2,000 5% 2.0 No. Aircraft of Commercial 0 0% 0.0 1995 2000 2005 2010 Mar-16 1975 1985 1995 2005 2015 2025 2035 Operating Lease Operating Lease Market Share (%)
. Over the last 20 years, passenger demand has . Increasing size of the global fleet increased at an average of 5% per annum . Growing market share of aircraft on operating lease . Outpacing GDP growth by 2.7x . Significant increase in aggregate number of aircraft on lease
Airline passenger growth will remain robust.
Sources: Airbus Global Market Forecast (2016), Boeing Current Market Outlook (2016), ICAO Historical Traffic Figures, Ascend, Page 9 ICAO (1983 – 2013) and IATA December 2015 (2014-15) Aircraft Leasing Continues To Build Momentum
1970 1980 1990 2000 2011 2020 3,772 a/c 6,037 a/c 9,160 a/c 15,032 a/c 21,741 a/c Forecast 17 leased 100 leased 1,343 leased 3,713 leased 7,943 leased Over 50% 0.4% 1.7% 24.7% 24.7% 36.5% leased
Over half of the world’s fleet expected to be leased by 2020.
Sources: Boeing Current Aircraft Market Outlook 2016 Page 10 Aircraft Leasing is a Financially Attractive Segment
Profit Before Tax Margins Return on Average Equity1
AviaAM 41.8% SinoAero 33.9%
CALC 38.4% NAC 21.0%
BOC Aviation 36.8% AerCap 14.0%
Air Lease Corp 32.1% CALC 12.7%
NAC 29.7% BOC Aviation 11.9%
Alafco 26.2% AviaAM 11.1%
AerCap 25.8% Avation 10.5%
Air Lease SinoAero 24.8% 8.4% Corp
Avation 22.8% Alafco 7.3%
ACG 16.7% Aircastle 6.8%
Aircastle 15.2% ACG 6.1%
Source: Air Finance Journal Leasing Top 50, company reports, The Airline Analyst Page 11 Notes: 1 Shareholder loans as equity Five Verticals of Aviation Leasing
Commercial Corporate Regional Helicopters Engines
Transactions / Year: Transactions / Year: Transactions / Year: Transactions / Year: Transactions / Year:
1,500 aircraft 650 aircraft 300 aircraft 500 aircraft 200 engines US $100bn US $18bn US $10bn US $6bn US $2bn
Percent Leases: Percent Leases: Percent Leases: Percent Leases: Percent Leases:
40% 15% 20% 15% 30%
Large Lessors: Large Lessors: Large Lessors: Large Lessors: Large Lessors:
35+ 1 4 6 10+
Comments: Comments: Comments: Comments: Comments:
NB – Narrow body General Aviation TP – Turboprops Industrial Turbine Engines WB – Wide body Civil Air Transportation RJ – Regional Jets Air Transport Spares and Passenger Cargo 100 seats or less Emergency maintenance rotation Response
*Large Lessors defined as corporations with assets greater than US $1bn Page 12 Uncrowded Regional Aircraft Leasing Market
Large Competitors Commercial Corporate Regional Helicopters Engines
/
Page 13 Chorus Has Already Become a Significant Leader in Regional Aircraft Leasing
Portfolio Value (Estimated) Source: Chorus Estimates
(US$m)
6,000 5,400
5,000
4,000
3,000 2,700
2,000
1,100 1,050 1,000 800 700 700 500 400 400
0 NAC GECAS Chorus Avolon DAE ELIX FALKO CDB Leasing Avation GOAL
Page 14 Regional Aircraft are Fundamental to Efficient Air Transport
Worldwide Flight Distribution By Aircraft Type Worldwide Distribution of Aircraft by Type
3.0 Turboprop (TP) 14,800 2.5 Regional Jet (RJ) 61-120 Narrow Body (NB) 2.0
1.5 83% of NB flights are over 500 km 5,900 1.0 63% of J61-120 4,300 flights are over 500 RJ km 0.5 83% of TP flights are under 500 km TP Flights 2012(million) 0.0 Narrow Body Wide Body Regional Aircraft (NB) (WB) (RJ/TP)
Distance Category (km) . 30% of passenger fly less than 550 km (300 mi.) . Regional aircraft fleet is ~24% of total commercial fleet
. 60% of the world's communities linked with regional aircraft
. Regional aircraft have specific applications for short take-off and landing and extreme conditions
Source: OAG 2012, Boeing / Bombardier Page 15 Extensive Network of Regional Airlines Worldwide
A diverse set of potential customers on every continent
Continent CRJ Q400 ATR eJets
North America 33 6 6 12
South America 8 - 8 10
Europe 28 10 41 24
Africa 18 3 23 5 Asia 15 4 24 23 We continue to see significant demand for regional Australia - 1 5 3 aircraft leases Total Operators 102 24 107 77
Source: Company websites, Airfleets (July 2017) Page 16 Regional Transport Dominated by Three Manufacturers
Product Lines . Q400 . E170/E175/E190/E195 . ATR42/72 (in production) . CRJ 700/900/1000
Product Lines . Dash 8 - 100/200/300 . ERJ135/ERJ140/ERJ145 . Variants of 42/72 (classics) . CRJ - 100/200
Turboprop Market Share1 Regional Jet Market Share1
Bombardier Embraer ERJ / 44% / 56% / ATR Family Bombardier 42% / 58% / Dash 8 Family Ejets Family 1,200 1,500 CRJ Family 1,900 2,600 overall overall overall overall
2,700 Aircraft 4,500 Aircraft
Page 17 Deliveries Have Been Historically Stable
Regional Aircraft Historical and Projected Deliveries
400
350 322 2010–2015 Average 298 291 300 Deliveries: 257 285 286 288 256 95 249 250 234 99 232 99 95 108 101
200 107 99 100 103
150
227 100 199 192 193 177 185 149 150 132 131 50
0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Regional Jets Turboprops 1 2
Source: Airline Monitor, Wall Street Research Notes: 1 Includes CRJ700/705, CRJ900, CRJ1000, CS100, EMB135/140/145, EMB170/175, EMB190/195, SSJ100, MRJ, A318, 737-600, ARJ21 2 Includes ATR42, ATR72, Q400 Page 18 Regional Aircraft Future Values Similar to Narrow-Body
Projected half-life base values over time assuming 1.5% annual inflation
Aircraft % of Original Value Airbus A321 34.98% 100% Airbus A320 34.21% Boeing 737-800 33.67% 90% ATR 72-600 40.54% DHC 8-400 37.57% ERJ 175 38.78% 80% ERJ190 38.15% Canadaair RJ 900-900ER / 900LT 31.41% 70% Average Mainline 34.28% Average Turboprops 39.05% Average Regional Jets 36.11% 60%
50% DHC 8-400
40% ATR 72 600 Canadaair RJ 900-900ER/900LR 30% ERJ 175 ERJ 190 20% Boeing 737-800 Airbus A320 10% Airbus A321
0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Page 19 Regional Aircraft: An Ideal Leased Asset
1. Resilient Demand Expectations with a Broad User Base ― The 70-130+ seat fleet is expected to grow 4-5% per year over the next 20 years ― Operational efficiencies from regional aircraft play a key role in hub-and-spoke networks 2. Attractive Aircraft Type for Shorter Routes ― Regional aircraft allow airlines to optimize aircraft size and reduce per-seat cost ― ~50% of global passengers fly on trips below 500 miles and ~30% of global passengers fly on trips below 300 miles 3. Geographically Diverse Demand Dynamics ― Economic growth in emerging markets is expected to significantly outpace those in advanced economies ― The emergent urban middle classes in these areas present a real opportunity to expand air travel capabilities which will require the use of turboprop and regional jet aircraft 4. Stable Supply ― Historical deliveries of regional aircraft have been relatively consistent ― Regional aircraft projected deliveries are stable 5. Ability to Hold Values Over Time ― Values of regional jets and turboprops have proved less volatile relative to most narrow body aircraft
Page 20 Progress to Date
Scale . Announced transactions for 19 regional aircraft.
. Five aircraft types from three manufacturers with average age of 2.7 years.
Diversity . Clients now include seven major regional airlines in seven countries on five continents.
. New clients include Azul, Aeromexico, Air Nostrum, Falcon Aviation, Flybe, KLM & Virgin Australia.
Visibility . Locked-in leasing stream with an average term of greater than 7 years.
. Lease revenue producing expected yield.
Liquidity . Committed financing for all 19 new regional aircraft.
. Average LTV of portfolio of 75% (Debt: Equity 3:1).
Experience . Expanded management team with five new appointments with 23 years average commercial aircraft experience.
. Opened and staffed our Irish office.
Returns . Acquisitions will nicely contribute to Chorus Aviation returns in subsequent quarters.
. Financial forecast metrics all meeting or exceeding our targets.
Page 21 Assembled a Highly Experienced Management Team
Steven Ridolfi . SVP, Strategic Investments, Mergers & Acquisitions, Chorus Aviation President . SVP, Strategy, Mergers and Acquisitions, Bombardier . President, Business Aircraft, Bombardier . President, Regional Aircraft Bombardier
James Bruce Peddle . VP, Aircraft Leasing and Trading, Chorus Aviation Chief Operating Officer . VP, Marketing & Sales, Bombardier Flexjet . VP, Commercial, Embraer North America . Managing Director, Embraer Asia Pacific
Cameron Mountenay . VP, Structured Finance, Bombardier Chief Financial Officer . VP, Finance and Contracts, Bombardier . VP, Asset Management & Business Development, Bombardier
Rory McQueen . VP, Capital Markets, Lease Corporation International (LCI) Vice President, Finance & Capital . Head of Treasury, Vistajet Markets . Director, Structured Finance, Bombardier . Director, Aircraft Finance, Bank of Scotland
Una Slevin . Head of Finance and Operations, CIT Aerospace Vice President, Contracts . Treasury Manager, CIT Group Finance . Financial Controller, CIT Group Finance
Jim Murphy . Director, Corporate Development & Aircraft Programs, Chorus Aviation Vice President, Transactions & Control . VP, Commercial Operations, Provincial Airlines . Director, Marketing & Fleet Planning, Canadian Airlines
Anil Mohan . Associate General Counsel, Chorus Aviation Vice President Legal . General Counsel, Halifax International Airport . Legal Counsel, IMP Group
Page 22 Progress to Date
Air Nostrum 4x CRJ1000s Flybe 3x ATR72-600s Virgin Australia 3x ATR72-600s Falcon 3x Q400s
Azul 2x E195s KLM 1x E190s Aeromexico 1x E190s Aeromexico 2x E190s
Contracted for 19 aircraft with an average age of 2.7 years.
Page 23 Progress to Date
Chorus Aviation Capital Aircraft Portfolio By Lessee Aircraft Country Geographic Aircraft Number Lessee Region Model Of Units Azul Brazil South America Embraer 195 2
Aeromexico Mexico North America Embraer 190 3
Air Nostrum Spain Europe CRJ1000 4
Falcon Aviation United Arab Emirates Middle East Q400 3
Flybe United Kingdom Europe ATR 72-600 3
KLM Cityhopper Netherlands Europe Embraer 190 1
Virgin Australia Australia Asia and Pacific ATR 72-600 3
7 Lessees 7 Countries 5 Continents 5 Models 19
Seven major regional airlines in seven countries on five continents.
Page 24 Regional Aircraft Sourcing Channels
Portfolio . Purchase of existing assets and leases from existing lessors. Acquisition
Airline Sale . Sale and leaseback of existing or future aircraft deliveries. Leaseback
Skyline Leases . Direct purchase from OEM for subsequent lease to airlines.
There are a significant number of profitable lease transactions available to CAC.
Page 25 Chorus Aviation Capital Growth Opportunity
. We believe there is a significant opportunity to develop a large and profitable leasing platform by exploiting this currently underserved segment and prevailing market dynamics.
. We have been able to consummate a significant number of successful profitable transactions over a short period of time. We have transitioned to a significant business with strong, attractive assets and contracted leases and margins, and we believe we can replicate and accelerate this growth.
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