Chorus Aviation's Q1 2025 Results: A Strong Foundation Amid Strategic Shifts

Chorus Aviation Inc. (CHRRF) delivered a robust Q1 2025 earnings report, showcasing improved financial metrics, strategic cost discipline, and shareholder-friendly initiatives. However, the company’s path forward hinges on navigating risks tied to aircraft sales, part sales volatility, and macroeconomic headwinds. Let’s dissect the key takeaways and assess the investment case for CHRRF.

Financial Highlights: A Resilient Start

Chorus reported adjusted EBITDA of $56.9 million, up $2.8 million year-over-year, driven by cost reductions and strong performance in its Voyageur segment. This segment saw a 39% revenue surge to $37.7 million, fueled by parts sales and contract flying services. Meanwhile, free cash flow hit $40.6 million, a $9.9 million increase from Q1 2024, reflecting lower debt servicing costs and operational efficiency.

The company’s balance sheet remains a bright spot:
- Liquidity stands at $265 million, bolstered by a $59 million prepayment from Air Canada.
- Leverage ratio rose slightly to 1.6x, still historically low, with no major debt maturities until 2027.

Strategic Priorities: Growth and Shareholder Returns

1. Voyageur’s Expansion: Management emphasized the segment’s potential, with plans to leverage parts sales and specialty aviation services for long-term growth. CFO Gary Osborne noted that while part sales are “lumpy,” they remain a core focus.
2. Share Repurchases: The $25 million Substantial Issuer Bid (SIB) launched in April 2025 adds to $53 million repurchased since 2022, underscoring a commitment to capital discipline.
3. Fleet Rationalization: Chorus aims to sell 9 owned Dash 8-400 aircraft by year-end 2025, expecting proceeds of $5–7 million each. These sales will free up capital while reducing lease obligations.

Risks and Challenges

• Aircraft Sales Execution: While bids for Dash 8-400s are “satisfactory,” delays or lower-than-expected prices could impact liquidity. Over $362 million in future lease revenue is tied to Air Canada’s fleet requirements, highlighting reliance on this key partner.
• Part Sales Volatility: Voyageur’s growth depends on inconsistent part sales, which management acknowledged could cause quarterly swings.
• Working Capital Pressures: The $70 million working capital drawdown in Q1—driven by Air Canada’s prepayment—was a one-time event, but it underscores reliance on large clients.

Market Context and Valuation

Chorus’ stock has risen 15% year-to-date as investors bet on its balance sheet strength and Voyageur’s growth. However, the company’s valuation remains reasonable, with a trailing P/E of 14.5x, below peers like AMR Corp (AMR) at 17.2x.

Conclusion: A Hold with Upside Potential

Chorus Aviation’s Q1 results affirm its financial resilience and strategic focus. The Voyageur segment’s growth, combined with a fortress balance sheet and shareholder-friendly policies, positions CHRRF to weather macroeconomic turbulence. However, risks—including aircraft sales execution and part sales volatility—demand cautious optimism.

Investors should monitor:
- Progress on Dash 8-400 sales (anticipated by year-end).
- Quarterly part sales trends relative to prior-year comparisons.
- Air Canada’s fleet plans, as over 90% of CPA lease revenue is tied to this partnership.

For now, CHRRF appears well-positioned to capitalize on its niche in specialty aviation, making it a compelling holding for investors seeking stable cash flows and growth in a fragmented sector. The path to higher returns hinges on executing its strategic initiatives without major hiccups—a challenge, but one Chorus seems prepared to meet.

Final Take: Hold with a positive bias, given its strong liquidity, Voyageur’s growth tailwinds, and management’s disciplined capital allocation. Risks are manageable but require close monitoring.