MONTREAL — Air Canada and Chorus Aviation have extended by 10 years a capacity purchase agreement, which will allow Jazz Aviation, a subsidiary of Chorus, to continue to serve the largest airline of Canada with regional routes until 2035.
Analysts believe that this agreement will dispel any concern about the future of the Chorus. Some doubts persisted since Air Canada announced in February that it would expand the fleet of its low-cost carrier in Red and it will fly its aircraft to the least expensive on the regional routes canada – what is traditionally the lot of Jazz.
Chorus has stated that the agreement announced Monday, would increase its revenues of 940 million, respectively, for a total contract of $ 2.5 billion in aircraft leasing and fixed royalties over the next 17 years. The agreement also modifies an agreement in 2015 by reducing the fixed costs and income incentives paid to Chorus of about $ 50 million per year.
Under the new agreement, Air Canada will invest $ 97.3 million in Chorus, which will give the carrier approximately 9,99 % of the shares entitled to class A variable voting shares and voting rights of the class B Chorus, over a base aggregate.
Chorus wishes to apply part of the proceeds of the investment to its leasing activity, making the purchase of new larger aircraft, including nine CRJ-900 with 76 seats in 2020.
The action of Chorus, a holding company based in Halifax, took up more than 15 percent Monday afternoon on the Toronto stock Exchange. It is trading at a 7,28 $, up 99 cents. The canadian Press