Chorus Aviation announces revisions to the capacity purchase agreement with Air Canada

Chorus Aviation Inc., parent company of Jazz Aviation LP (Jazz), today announced an agreement to revise the capacity purchase agreement (CPA) between Jazz and Air Canada. The agreement addresses the dramatic and sustained reduction in air travel demand caused by the COVID-19 pandemic by optimising the Jazz fleet. The revisions to the CPA are conditional on Jazz reaching an agreement with the Air Line Pilots Association, International which represents Jazz pilots. If this condition is satisfied, the CPA will be amended on a retroactive basis to 1 January 2021.

Chorus and Air Canada have a successful history of working together to adjust the terms of the CPA for mutual benefit. These proposed changes relate primarily to the Covered Aircraft, enhancing Jazz’s position in Air Canada’s network as the sole regional partner for 70+ seat regional aircraft until 2025 while providing Air Canada with greater cost efficiency and flexibility.

“The COVID-19 pandemic continues to challenge the aviation industry. With the Jazz fleet operating at a fraction of the capacity it flew a year ago, now is the time to update the CPA to help preserve regional flying and Jazz’s place within it,” commented Joe Randell, President and Chief Executive Officer, Chorus.

“The Jazz fleet is up-gauging to larger regional jet aircraft and replacing smaller turboprop fleet sooner than contemplated in the previous fleet plan. Bringing the Embraer 175 aircraft into the Jazz Covered Aircraft fleet makes Jazz the exclusive Air Canada Express operator of 70+ seat aircraft until 2025 and is a demonstration of our cost competitiveness and strong relationship with Air Canada. Further, quarterly reconciliation of the controllable cost guardrail receivable provides greater certainty in the timing of cash flows and improves our liquidity by eliminating potentially significant draws on working capital,” concluded Mr Randell.

The revisions to the CPA optimises the Jazz fleet for Air Canada and makes it the exclusive provider 70+ seat regional capacity in the Air Canada Express network until 2025, while providing significant cost savings and network planning flexibility for Air Canada.