Chorus Aviation Inc., parent company of Jazz Aviation LP, today confirmed the condition precedent to the revisions of the capacity purchase agreement (‘CPA’) between Jazz and Air Canada announced on March 1, 2021 has been met.
As a result, the amended CPA is effective on a retroactive basis to January 1, 2021. The newly ratified agreement with Jazz pilots, as represented by the Air line Pilots Association International, will run until December 31, 2035.
“I extend my gratitude to our Jazz pilots and the leadership team of the Air Line Pilots Association International for securing Jazz’s place within the Air Canada Express network. This is very good news for our employees and our stakeholders,” stated Joe Randell, president and chief executive officer, Chorus. “As the sole operator of Air Canada Express services, we look forward to integrating the Embraer 175s into our fleet and further expanding our wide portfolio of regional aviation capabilities and services.”
Revisions to the CPA include the following:
Consolidation of 25 Embraer 175s into Jazz’s Covered Aircraft fleet
- Jazz will operate the 25 E175s under the CPA.
- Jazz is the exclusive Air Canada Express operator of 70+ seat aircraft until the end of 2025.
- Fixed fees increase by $46.0 million over the term of the CPA with annual minimum fixed fees increasing by $1.2 million per year from 2021 to 2025, and by approximately $4.0 million per year from 2026 to 2035.
Removal of 19 Dash 8-300s from Jazz’s Covered Aircraft fleet
- 19 Dash 8-300s will be removed from the fleet in 2021. Removal of the Dash 8-300s will reduce future aircraft leasing revenue under the CPA by approximately $56.0 million over the remaining term of the contract.
- Chorus owns these Dash 8-300s, 15 of which have undergone the Extended Service Program (‘ESP’) which prolongs their useful life by approximately 15 years. Chorus estimates the carrying value of these aircraft to be approximately $65.0 million, and can sell, lease, or convert them for cargo operations.