Chorus Aviation has announced that it will trade eight aircraft for $45 million. The announcement came on August 29th. The company’s subsidiary, Falko Regional Aircraft Limited (Falko), will sell the aircraft. The regional airliners in question are wholly owned by the company, meaning they are entirely paid off. All of which were previously leased and used by regional airlines. It did not state the specific makes and models of the aircraft. Chorus’s business model revolves around owning and leasing aircraft to airlines around the globe.
A trade for capital
The $45 million Falko will receive from this deal will be the company’s net revenue after all taxes and fees have been withdrawn. The company has not stated who the recipient of the aircraft will be. However, it has been noted that the transaction will be finalized by the end of the third quarter in 2022. It has ensured that this exchange will not significantly alter its financial forecast released in early August.
The trade will increase Chorus’s cash flow by $45 million. Photo: Getty Images
This will be the first transaction Falko has made since being acquired by Chorus. It believes that the increase in cash flow will be more beneficial than the equity value of the eight aircraft. The company intends to use these funds for future trades. The President and Chief Executive Officer of Chorus, Joe Randell, stated,
“I’m pleased to report that the first trading transaction of the Chorus/Falko era is taking place. This deal is transacting at one time book value and will generate net free cash flow of approximately USD $45 million,”The sale of these Chorus owned aircraft decreases debt and leverage while generating cash flows from trading. We will continue to look for opportunistic asset sale transactions to increase shareholder value,”
An opportunistic partnership
Chorus recently acquired Falko on behalf of its profitable reputation. The team at Falko specializes in trading aircraft for increased profits on top of leasing and managing aircraft. Before joining Chorus, it sold over 160 aircraft. It has made Chorus one of the world’s largest aircraft management companies. Randell stated,
“The recent Falko acquisition has made Chorus a market leading regional aircraft asset manager and the world’s largest aircraft lessor focused solely on the regional aircraft leasing space, significantly advancing our growth and diversification strategy.”
Regional empire
The Canadian aviation company has built a small empire around regional aviation. It controls a share in every aspect of the regional airline industry. It does this through its subsidiary companies. Falko is the world’s largest asset manager and regional aircraft lessor. It also owns Jazz Aviation, Air Canada’s regional provider. Additionally, it owns Voyager Aviation, which specializes in aircraft charters, parts provision, and aircraft modifications of regional airplanes around the globe.
Jazz Air is one of Chorus’s largest assets. Photo: Getty Images
The company shared its subsidiaries’ services within the regional aviation industry. It stated,
“Chorus’ subsidiaries provide support services that encompass every stage of a regional aircraft’s lifecycle, including: aircraft acquisition and leasing; aircraft refurbishment, engineering, modification, repurposing and transition; contract flying; aircraft and component maintenance, disassembly, and parts provisioning.”
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