Chorus Aviation Overview
November 19, 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 Investment Highlights
Regional aviation is a resilient sector of the aviation industry showing strong stability during economic 1 downturn
Chorus has a predictable revenue stream, with 90%+ of annual revenues secured 2 through long-term contracts and strong relationships
Chorus has strong growth prospects in aircraft leasing and is differentiated from pure play 3 competitors with an integrated model
Chorus Aviation Overview 4 Regional aviation is based on aircraft carrying Up to 130 passengers
2 main types of Fly shorter distances than Account for ~22% of the regional aircraft Narrow Body jets 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 Mitsubishi <500 miles Embraer E135 to E190
Airbus A220 37% Turbo Up to 90 5,900 props passengers 4,500 17% TP 2,300 De Havilland Dash 8 – 100 to 400 Jets 3,600 ATR ATR 42 to ATR 72
Turbo Regional Narrow Regional Narrow Wide props Jets Body Body Body
1 Official Aviation Guide (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 5 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 resilient sector in an economic downturn
Chorus Aviation Overview 6 The Chorus Story: An Integrated Model
Leasing Opportunities
Maintenance Data Technical Support
Core MRO Opportunities Segments Wet Leasing Dry Leasing
Older Assets Customer Leads - Wet for Part Out Leasing & Part Sales
Wet to Dry Lease End of Life Aircraft Inspections Opportunities Assets
Part Sales & Aircraft Transitions Component Repair Strategic Technical Aircraft Repossessions Enabler Expertise
Common Customers, Relationships Suppliers and OEMS
Chorus Aviation is a global provider of integrated regional aircraft solutions
Chorus Aviation Overview 7 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 8 Chorus has become a significant global player in regional aviation $1.35B 2018 Revenues1 Consistently profitable since 2006 IPO
171 Aircraft owned2 $341M 2018 Adjusted1 EBITDA
5,200 Employees TSX:CHR Trading symbol
Aircraft Leased: Monthly 126 55 third-party $0.04 dividend per 71 inside CPA share (DRIP)
1 On January 1, 2019, Chorus adopted IFRS 16 using the retrospective transition approach with restatement to comparative periods. 2 Includes 1 future committed leased transactions outside North America, 9 future CRJ900 and 5 future aircraft (type TBD) acquisitions/leased transactions inside the CPA.
~$1.3B market capitalization as of November 13, 2019
Note: Market capitalization value based on 159,928,315 shares outstanding and TSX closing stock price of $8.15 as of November 13, 2019. 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 Strategy Officer
40 years 30 years 26 years
Dennis Lopes Steve Ridolfi Gary Osborne Senior VP, Chief Legal President, Chief Financial Officer Officer and Corp. Secretary Chorus Aviation Capital
5 years 37 years 27 years
Chorus Aviation Overview 10 Delivering revenue and net earnings growth
$M Operating CAGR Revenues 1,666 2016 to 2018 1,545 1,277 1,352 1,353 ▲6.6% 2014* 2015 2016 2017 2018
$M Adjusted CAGR 340.6 2014 to 2018 EBITDA 286.9 215.9 228.3 248.1 ▲13.8% 2014 2015 2016 2017 2018
$M Adjusted Net CAGR 122.3 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 $75.3 for 2019 and 2020. See slide 22. Significant growth potential remains, both inside and outside the CPA
Chorus Aviation Overview 11 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 12 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 (wet leasing and leasing under the CPA)
Leverage the synergies and technical expertise across our lines of business to further drive diversification and profit
Chorus Aviation Overview 13 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 14 Contracted flying/wet leasing generates largest 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 15 Chorus is Air Canada’s primary regional partner
Aircraft currently ~650 ~78% 116 operated by Jazz daily flights Largest of Air Canada’s Chorus regional seat 49 Currently 84 customer capacity leased under N.A. destinations the CPA
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 16 Amended/extended CPA with Air Canada to 2035
● Guarantees ~$2.5B in contracted revenue over 17 years1 ● $1.6B from aircraft leasing ● $858M from fixed fees ● $97.26M equity investment by Air Canada in Chorus ● 60% of investment proceeds to purchase larger aircraft for CPA fleet ● 40% of investment proceeds to acquire aircraft for the leasing business ● Modernization of Air Canada Express fleet ● Acquisition of 9 new CRJ-900s will generate lease revenue under CPA ● Margin risk on controllable costs reduced to a maximum of $2M/year
Provides long-term certainty and stability
1The revenue estimates are based on agreed aircraft lease rates in the CPA and certain assumptions and estimates for future market lease rates related to new and extended leases under the CPA (January 2019 to December 2035). A foreign exchange rate of 1.2600 (based on the long-term historical average rate) was used in the calculation of the estimates. 17 See cautionary statement regarding forward-looking information on slide 2 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 18 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
De Havilland 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
De Havilland 50 26 ● 18 aircraft will undergo an Extended 19 Dash 8-300 Service Program and generate leasing revenue under the CPA ● 8 of the 18 completed to date
De Havilland 37 15 ● Removed from the fleet and replaced 0 Dash 8-100 with larger aircraft
Chorus Aviation Overview 19 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 De Havilland, Bombardier and Embraer 135/145 regional aircraft
North Bay, ON ● 200 000 sq. ft. facility ● Performs heavy maintenance, repair and overhaul activities, customized designs and engineering and aircraft modifications ● Transport Canada, U.S. Federal Aviation Administration 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 ● Parts provisioning, sales and service for regional aircraft - complements MRO activities
Chorus Aviation Overview 20 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 21 Regional aircraft leasing/dry leasing is an attractive business with strong growth potential
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 22 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
Efficient ● Maintain adequate liquidity and flexibility while obtaining the lowest cost Capital of capital available ● Seek debt financing from a variety of markets, channels and sources ● Reserve capital for select deals to allow for opportunistic purchasing
Chorus Aviation Overview 23 Committed fleet of 55 aircraft worth US$ 1.1 billion
● Approximately ~US$ 740M in future contracted lease revenue 1 ● Weighted average fleet age of 3.4 years2 ● Weighted average remaining lease term of 6.5 years 2 ● ~92.6% debt is fixed rate3 ● Weighted average cost of borrowing of 4.36%4
1 Includes all aircraft which have been delivered as well as pending acquisitions and future deliveries for which CAC has received lease Europe Asia commitments. Assumes N. America 15 Aircraft 20 Aircraft lessees fulfill payment and 3 Aircraft other lease obligations for the entire lease term.
2 Fleet age and remaining lease term are calculated Africa based on the weighted- 9 Aircraft average of aircraft net book value as of September 30, 2019.
3 Debt and contract terms of 92.6% fixed rate debt S. America (inclusive of floating rate 5 Aircraft debt that is fixed through the use of swaps) and 7.4% Australia floating rate debt (with 3 Aircraft leases that float on the same basis as the debt).
4 Reflects actual borrowings as at September 30, 2019 only.
See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 24 Chorus has become the world’s 2nd largest regional aircraft lessor (portfolio value)
Portfolio value (US$ M)
NAC 5,970
Chorus1 Including commitments 2,000 Chorus2 Current 1,634 Chorus is the only large regional GECAS 1,565 aircraft lessor which Falko3 1,235 is also an operator
DAE 735
Elix 515
TrueNoord 500
Avation 485
Avmax 360
HEH 340
See cautionary statement regarding forward-looking information on slide 2 Source: FlightGlobal (June 2019); portfolio values based on half-life CMVs 1Chorus’ value, including commitments, consists of 71 aircraft leased under the capacity purchase agreement, including 9 future CRJ900 acquisitions, 8 future ESPs and 5 aircraft (type TBD). Non-CPA aircraft leasing includes all aircraft which have been delivered as well as 6 pending acquisitions and future deliveries for which CAC has lease commitments. 2Chorus’ current value includes 49 aircraft leased under the capacity purchase agreement and 52 non-CPA aircraft leased to customers outside of North America. 3Falko includes Avolon Chorus Aviation Overview 25 Diversification across airlines, geography and aircraft types Turboprops Regional Jets
Customer Aircraft Dash 8 ATR CRJ Embraer TBD committed1
Malindo Air2 2 IndiGo 6 Ethiopian 5 Azul 5 SpiceJet 5 Air Nostrum 4 Wings Air2 4 Jambojet 4 Philippine 3 Airlines Aeromexico 3
Flybe 8 1Chorus value includes 71 aircraft leased under the capacity purchase agreement Virgin Australia 3 which include 9 future CRJ900 acquisitions, 8 future ESPs on Dash 8-300 aircraft and 5 Cityjet 2 future aircraft (type TBD) that will generate revenue under the CPA. Non-CPA aircraft KLM 1 leasing includes all aircraft which have been delivered as well as pending acquisitions 55 and future deliveries for which CAC has Total third-party 22 21 6 6 received lease commitments. Air Canada 71 52 14 5 2A member of the Lion Air Group.
Grand total 126 74 21 20 6 5 Chorus Aviation Overview 26 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 another lessor
2 From airlines Sale and leaseback of Purchase of 6 new ATR72-600s existing or future aircraft under IndiGo’s purchase deliveries agreement with concurrent long- term leaseback agreement
3 From aircraft Direct purchase from Purchase of 2 Dash 8-400 manufacturers manufacturers for turboprops directly from subsequent lease to airlines De Havilland with subsequent lease agreement to JamboJet
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 27 30+ Years Experience in Lease Management
Lease Extension . Although our leasing New entity is recently Natural Customer formed, our team has Expiry Marketing significant lease management experience with Sale or Part- strong competencies Out of Asset in all aspects of the Lease aircraft leasing cycle; Event the core based in Lease Ireland. Restructure
. Strong leasing Workout Consensual experience at the Required Return Irish board and Chorus public board Non- levels. Consensual Return
Our team has experience with all aspects of lease event management
Chorus Aviation Overview 28 Chorus’ leasing business is fully built-out and highly scalable
Legal Services Technical Expertise End-of-Lease Support • Aircraft Acquisitions/Sales • Engine & Component • Reconfiguration & • Lease Negotiations Costs Redelivery • Aircraft Financings • Technical Advisory • Ferry & Positioning Flights • Records Reviews • Re-Possession Capabilities
Financial Services Lease Term Support End- of- Life Services • Treasury Support • Pre-Purchase Inspections • Aircraft Conversions • Tax Management • Aircraft and Records • Aircraft Storage • Insurance Audits • Aircraft Part-out • Reserve Projections
Our leasing business is strongly supported by the entire Chorus Aviation organization
Chorus Aviation Overview 29 Aircraft Lease Transition Technical Expertise
Chorus Aviation subsidiaries have 40+ years of experience with aircraft acquisitions and lease transactions with over 300 aircraft since 2000. Our technical expertise is a competitive advantage.
Technical Aircraft Leasing Services 1. Pre-purchase and Re-delivery Since 2000, Jazz has completed Inspection aircraft lease returns/inductions and recently completed lease 2. Custody and Control return work for other airlines, 3. Technical Support Services and managed aircraft transitions 4. Heavy Maintenance Service & for other leasing companies. Checks Additionally, Jazz has extensive technical knowledge and 5. Engine Services & Changes capability with regards to 6. Interior Configuration Changes aircraft acceptance from the and Refurbishing OEM. 7. Aircraft RecordsAudits 8. Aircraft Storage 9. Airworthiness Management Voyageur provides a full suite of 10. Ferry Flights & Aircraft aircraft leasing support services Positioning and has completed multiple lease returns for aircraft leasing 11. Aircraft re-possession companies.
Chorus Aviation Overview 30 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 ● C$3.4B in future contracted revenues1
Protected profit ● Air Canada assumes risks related to commercial aspects margin under ● +/- C$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 ● Diversification of aircraft type and geography leasing business ● Diversification of customer base with good prospects
Valuable aircraft ● Mature and efficient regional aircraft lifecycle ● Ability to fly, lease, sell, modify, disassemble and part-out aircraft
1 This estimate is based on agreed lease rates in the CPA and certain assumptions and estimates for future market lease rates related to new and extended leases under the CPA as at January 1, 2019. This estimate also assumes that satisfactory performance of obligations by our counterparties. A foreign exchange rate of $1.26 (based on the long-term average historical rate) was used in the calculation of this estimate. See cautionary statement regarding forward-looking information on slide 2 Chorus Aviation Overview 31 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 32 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 33 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 34 Consolidated Income Statement For the three and nine-month periods ended September 30, 2019 and 2018
Three months ended September 30, Nine months ended September 30, Expressed in thousands of Canadian dollars, 20192018 2019 2018 except earnings per share (Restated) (Restated) Operating revenue 351,454 341,993 1,027,841 1,019,563 Operating expenses Salaries, wages and benefits 115,414 113,080 358,114 339,866 Depreciation and amortization 34,004 29,401 99,806 87,909 Aircraft maintenance materials, supplies and services 54,068 56,421 160,837 184,808 Airport and navigation fees 45,016 44,991 127,695 127,307 Terminal handling services 4,754 4,924 15,597 16,386 Other 39,648 36,824 116,762 107,839 292,904 285,641 878,811 864,115
Operating income 58,550 56,352 149,030 155,448 Non-operating (expenses) income Interest revenue 718 876 2,205 1,925 Interest expense (18,816) (15,179) (54,243) (43,763) Gain on disposal of property and equipment (849) (194) 617 (186) Foreign exchange (loss) gain (7,114) 11,274 18,712 (22,482) Other — — — 500 (26,061) (3,223) (32,709) (64,006)
Income before income taxes 32,489 53,129 116,321 91,442 Income tax expense Current income tax (4,287) (1,475) (8,727) (1,658) Deferred income tax (4,007) (8,005) (11,011) (24,591) (8,294) (9,480) (19,738) (26,249)
Net income 24,195 43,649 96,583 65,193 Earnings per share, basic 0.15 0.31 0.62 0.48 Earnings per share, diluted 0.15 0.31 0.61 0.47
Chorus Aviation Overview 35 Consolidated Statements of Financial Position
As at September 30, December 31, January 1, 2019 2018 2018 Expressed in thousands of Canadian dollars (Restated) (Restated)
Assets Current assets Cash 81,840 92,592 78,007 Accounts receivable – trade and other 99,607 77,097 77,397 Inventories 58,606 55,691 51,543 Prepaid expenses and deposits 13,909 11,486 11,334 Current portion of lease receivables 5,134 5,190 4,511 Income tax receivable 998 704 2,268 Total current assets 260,094 242,760 225,060 Restricted cash 33,139 20,081 13,625 Lease receivables 9,612 13,865 17,522 Property and equipment 2,415,485 1,997,552 1,736,927 Intangibles 1,868 2,088 2,392 Goodwill 7,150 7,150 7,150 Deferred income tax asset 4,257 4,295 3,022 Other long-term assets 55,786 37,490 28,362 2,787,391 2,325,281 2,034,060 Liabilities Current liabilities Accounts payable and accrued liabilities 188,592 189,048 213,910 Current portion of lease liabilities 6,408 6,720 6,179 Current portion of long-term incentive plan 5,173 4,087 5,844 Current portion of long-term debt 184,035 142,652 118,567 Dividends payable 6,458 5,657 5,014 Income tax payable 8650 930 — Total current liabilities 399,316 349,094 349,514 Lease liabilities 11,835 15,910 20,932 Long-term debt 1,310,445 1,102,783 995,062 Convertible units 194,891 194,294 193,540 Deferred income tax liability 184,659 172,262 135,577 Other long-term liabilities 105,806 61,131 57,835 2,206,952 1,895,474 1,752,460 Equity 580,439 429,807 281,600 2,787,391 2,325,281 2,034,060 Chorus Aviation Overview 36 Segmented Financial Statement Three Months Ended September 30, 2019
For the three months ended September 30, 2018 For the three months ended September 30, 2019 (Restated)
Regional Regional Regional Regional Aviation Aircraft Aviation Aircraft (in thousands of Canadian dollars) Services Leasing Total Services Leasing Total $ $ $ $ $ $
Operating revenue 317,078 34,376 351,454 322,156 19,837 341,993 Operating expenses 276,259 16,645 292,904 275,603 10,038 285,641
Operating income 40,819 17,731 58,550 46,553 9,799 56,352 Net interest expense (8,533) (9,565) (18,098) (9,252) (5,051) (14,303) Foreign exchange gain (loss) (7,061) (53) (7,114) 11,418 (144) 11,274 Loss on disposal of property and equipment (849) — (849) (194) — (194)
Earnings before income tax 24,376 8,113 32,489 48,525 4,604 53,129 Income tax expense (7,499) (795) (8,294) (8,708) (772) (9,480)
Net income 16,877 7,318 24,195 39,817 3,832 43,649
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 Chorus Aviation - The Leasing Platform Business Cycle Acquire Manage Transition Dispose
• Strategy and • Lease • Lease • Asset Trading Planning Management Contracting Management
• Worldwide • Compliance • Worldwide • Contracting for Market Market Sale Coverage • Maintenance Coverage Monitoring • Worldwide • Purchase/Lease • Aircraft Market Contracting • Continuous Delivery and Coverage Risk Acceptance • Aircraft Assessment • MRO Services Delivery and • Repossession and Part-out Acceptance • MRO Services • OEM/Fleet Relationship Management
. Within our leasing entity, Chorus Aviation Capital, a team of 20 professionals with strong competencies in all aspects of the aircraft leasing cycle; the core based in Ireland. . Legal, financial and administration support provided from parent, Chorus. . Technical operations supported by Jazz and Voyageur (technical advisory and support services). . Ability to leverage the synergistic capabilities of Jazz and Voyageur (e.g. repossessions, transitions, part-outs, etc.). . Strong leasing experience at the Irish board level and Chorus public board level.
Chorus’ leasing business is fully built-out and highly scalable
39 AppChorusendix Aviation Capital - Senior Management
Steven Ridolfi, President J. Bruce Peddle, Chief Operating Officer . SVP, Strategic Investments, Mergers & Acquisitions, Chorus . VP, Aircraft Leasing and Trading, Chorus Aviation Aviation . VP, Marketing and Sales, Bombardier Flexjet . SVP, Strategy, Mergers and Acquisitions, Bombardier . VP, Commercial, Embraer North America . President, Business Aircraft, Bombardier . Managing Director, Embraer Asia Pacific. . President, Regional Aircraft, Bombardier Rory McQueen, Vice President Finance & Cameron Mountenay, Chief Financial Officer Capital Markets . VP, Structured Finance, Bombardier . VP, Capital Markets, Lease Corporation International . VP, Finance and Contracts, Bombardier . Head of Treasury, Vistajet . VP, Asset Management & Business Development, Bombardier . Director, Structured Finance, Bombardier . Director, Aircraft Finance, Bank of Scotland
Fabio Ligi, Vice President, Lease Originations Prashant Mahajan, Vice President, Lease Originations . Director of New Aircraft Sales, Bombardier . Director of Sales, Bombardier . Director of Pre-owned Aircraft Sales, Bombardier . Airline Analyst, Saab Aircraft
Jim Murphy, V/P, Transactions and Control Una Slevin, Vice President, Head of Contracts . Director, Corporate Development/Aircraft Programs, . Director, Finance and Operations, CIT Aerospace International Chorus . European Treasury Manager, CIT Vendor Finance . Manager, Business Development, Jazz Aviation LP . Financial Controller, Commcorp International . Vice President, Commercial Operations, Provincial . Fixed Income Accountant, Credit Suisse First Boston, London, UK Airlines . Manager, Aircraft Programs, Jazz Aviation LP
Dave Corri, Vice President, Technical Ray Gorman, Vice President, Accounting . Director, Technical, Chorus Aviation Capital . Technical Services Engineer, Part M Aviation . Financial Controller, External Reporting & Control, DAE . Technical Services Engineer, Maintenance Planning, ASL Airlines . Financial Controller, External Reporting, AWAS Ireland . Manager, Statutory Reporting, AWAS . Aircraft Engineer, CityJet . Manager, PWC
CAC personnel have experience with all aspects of lease management.
Chorus Aviation Overview 40 How we mitigate risk
CPA/Wet ● Air Canada manages all commercial aspects and assumes all associated risks Leasing ● Air Canada pays for all fuel – CHR does not see a fuel bill ● Jazz operates ~78% of Air Canada’s regional capacity ● Jazz operates over 650 daily flights – complex and cost prohibitive to replace ● Minimum of $2.5B in contracted revenue until the end of 20351 ● Fix fee revenue tied to minimum aircraft fleet irrespective of hours flown ● Margin risk on controllable costs reduced to a maximum of $2M/year ● Cliff termination: operations cease at midnight December 31, 2035 ● Worldwide reputation for excellence in safety, operational integrity and customer service
Dry Leasing ● Robust, thorough transaction approval process to evaluate prospective customer ● Aircraft leasing expertise on the boards of CAC and CHR ● Diversity in customer, aircraft type and geographic location ● Target strongest airline in each jurisdiction – preferably in locations that honour Cape Town Convention ● Conduct regular on-site checks of aircraft condition and operations ● Collection of reserves, security deposits and maintaining high debt service cover ratio ● Target long-term leases, providing more return from the lease itself compared to aircraft residual value ● Maintain industry standards of leverage ● In-house ability to re-possess aircraft or to re-lease, operate, modify, refurbish, sell, disassemble/part out for parts provisioning when lease terms expire ● Regional aircraft values exhibit less volatility than narrow and wide body aircraft in market cycles
1 This estimate is based on agreed lease rates in the CPA and certain assumptions and estimates for future market lease rates related to new and extended leases under the CPA as at January 1, 2019. A foreign rate of $1.26 (based on the long-term average historical rate) was used in the calculation of this estimate. See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 41 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 12 16 17 18 18 18 18 ------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 51 64 65 66 66 66 66 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 10 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 42 Minimum CPA fleet commitment provides predictability
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 $75.3 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 43 Jazz is widely recognized for its excellence, both as an employer and operator
2019 2018
● Canada’s Safest Employers 2019 ● Canada’s Safest Employers 2018 Gold in Transportation cat. ● Silver in Transportation cat. ● Silver Psychological Safety cat. ● Canada’s Top Employers for Young People 2019 - 2014
● Canada’s Best Diversity ● Top Airline Reliability Employers 2019 - 2012 Performance Awards 2018-2015
● Mercer Award for Excellence in Diversity and Inclusion 2019 2017 ● Atlantic Canada’s Top 25 Employers 2019 - 2012 ● Canada’s Safest Employers 2017 Gold in Transportation cat.
● Nova Scotia’s Top 15 Employers 2019 - 2012 ● APEX award for “Excellence in Publication” - Focus on Safety
● Employee Recommended Workplace – 2018 - 2019 The Globe and Mail & Morneau Shepell
Chorus Aviation Overview 44 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
er er rke ai a ( a a n rc es t t t i i s n n n t raf h u g g . ) a l l a re ea ea l t t
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r 022007 2002 an i 3 l 002005 2000 2 l ,1 i 4% 9/11 o 0 o - n 2037), 2037), 0 p
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
45 Hypothetical leased assets earnings example
Inputs Investment information Rentals Expenses Sale Aircraft cost $20. 0 Average LRF 0. 90% Interes t rate 4. 50% Holding period 10 Loan/value 0. 75 $1 5. 00 Monthy rental $0. 1 8 Depreciation rate 4. 00% Sales value 0. 00% E quity $5.0 Annual rental $2.2 P ayment at maturity 25. 00% (Gain over NBV) D /E R a ti o 3. 0x Income Statement Cas h Flows Metrics Net Interes t Deferred Net Debt Sales Cash NBV Aircraft Debt Year Revenue Depreciation E xpens e EBT taxes Income Investment Revenue Repayment proceeds Flow E quity Value Balance Debt/Equity
0 (5. 0) (5. 0) 5.0 20. 0 1 5.0 3.0 1 2.2 (0. 8) (0. 7) 0. 7 (0. 1 ) 0. 6 2.2 (1 .6) 0. 6 5.6 1 9.2 1 4. 1 2.5 2 2.2 (0. 8) (0. 6) 0. 7 (0. 1 ) 0. 6 2.2 (1 .6) 0. 6 6.2 1 8.4 1 3.1 2.1 3 2.2 (0. 8) (0. 6) 0. 8 (0. 1 ) 0. 7 2.2 (1 .6) 0. 6 6.9 1 7.6 1 2.1 1 .8 4 2.2 (0. 8) (0. 5) 0. 8 (0. 1 ) 0. 7 2.2 (1 .6) 0. 6 7.6 1 6.8 11.1 1 .5 5 2.2 (0. 8) (0. 5) 0. 9 (0. 1 ) 0. 8 2.2 (1 .6) 0. 6 8.4 1 6.0 1 0. 0 1 .2 6 2.2 (0. 8) (0. 5) 0. 9 (0. 1 ) 0. 8 2.2 (1 .6) 0. 6 9.2 1 5.2 8.9 1 .0 7 2.2 (0. 8) (0. 4) 1 .0 (0. 1 ) 0. 8 2.2 (1 .6) 0. 6 1 0. 0 1 4. 4 7.7 0. 8 8 2.2 (0. 8) (0. 3) 1 .0 (0. 1 ) 0. 9 2.2 (1 .6) 0. 6 1 0. 9 1 3.6 6.4 0. 6 9 2.2 (0. 8) (0. 3) 1 .1 (0. 1 ) 0. 9 2.2 (1 .6) 0. 6 11.8 1 2.8 5.1 0. 4 10 2.2 (0. 8) (0. 2) 1 .1 (0. 1 ) 1 .0 2.2 (5. 4) 1 2.0 8.8 1 2.8 1 2.0 0. 0 0. 0 Total 21 .6 (8. 0) (4. 7) 8.9 (1.1) 7.8 (5. 0) 21 .6 (1 9.7) 1 2.0 8.9 P roject IR R 1 5%
See cautionary statement regarding forward-looking information on slide 2
Chorus Aviation Overview 46