Chorus Aviation Overview September 17, 2020 Chorus is a global - - PowerPoint PPT Presentation

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Chorus is a global provider of integrated regional aviation solutions

September 17, 2020

Chorus Aviation Overview

This presentation contains “forward-looking information” as defined under applicable Canadian securities

• laws. Forward-looking information is identified by the use of terms and phrases such as “anticipate”,

“believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such information may involve but is not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking information relates to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and other uncertain events. Forward-looking information, by its nature, is based on assumptions and is subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, among other things, external events, changing market conditions and general uncertainties of the business. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed in forward-looking information. Actual results may differ materially from those expressed in this presentation for a number of reasons, including a prolonged duration of the COVID-19 outbreak and/or further restrictive measures to contain its spread, the evolving impact of COVID-19 on Chorus’ contractual counterparties, changes in aviation industry and general economic conditions, the continued payment (in whole or in part) of amounts due under the Capacity Purchase Agreement (CPA), Chorus’ ability to pay its indebtedness and otherwise remain in compliance with its debt covenants, the risk of cross defaults under debt agreements and other significant contracts, the risk

• f asset impairments and provisions for expected credit losses, the delay or non-delivery of the remaining six

new CRJ900 aircraft to Chorus for operation and lease under the CPA, as well as the risk factors identified in Chorus’ most recent Management’s Discussion & Analysis, Annual Information Form and public disclosure record available at www.sedar.com.

Forward-looking information disclaimer

2

3

Ch Chorus i s is s a a gl globa

• bal provid

ider r

• f in

integrated r regio ional avia iatio ion s solu lutio ions

1 2 3

Regio iona nal a l avia iatio ion n is is a resilie ilient nt s sector r of t the he avia iatio ion n ind indus ustry ry sho howing ing firs irst s sig igns ns of r recovery ry during uring econo nomic ic d downt nturn urn Ch Chorus has a pr predi edicta ctabl ble r e reven enue e str trea eam, wit ith h 90%+ o

• f annua

nnual r l revenue nues s secur ured thr hroug ugh lo h long ng-ter erm c contr tract cts and s d str trong g rela latio ions nship hips Cho horus rus is is dif ifferent ntia iated fro rom p pure re pl play aircr craft l t lea easing c g competi petitors du due e to to i its abilit ility t to provid ide a a full s ull suit uite of regio iona nal a l avia iatio ion n serv rvic ices an and ext xtens nsiv ive operatio iona nal e l exp xperie rienc nce

4

Highlights

Regional aviation is based on aircraft carrying Up t p to 150 50 pa passenge gers

Regional Jets Up to 150 passengers

Bombar bardi dier/ Mitsubi ubishi hi

CRJ-200 to CRJ-1000

Embr brae aer

E135 to E190

Airbus bus

A220-300

83 83% 37% 7% 17% 7% Turbo props Regional Jets Narrow Body

2 main types of regional aircraft Fly shorter distances than Narrow Body jets

5 3,60 ,600 2,300 00 5,90 ,900 15 15,80 800 4,500 00 Regional Narrow Body Wide Body

Account for ~22% of the world’s commercial fleet

Regional aircraft are fundamental to efficient air transport networks and link 60% of the world’s communities 1

Jet ets TP TP

1 Officia

ial l Aviatio ion Guid ide ( (2012). 2 FlightGlobal (2019), includes in-service aircraft with more than 20 seats

50% 50% of

• f wor
• rld

passe ssengers s fly <500 m 500 miles

Turbo props Up to 90 passengers

De Hav Havilland and

Dash 8 – 100 to 400

ATR TR

ATR 42 to ATR 72

% of all flights below 500 miles 1 Worldwide aircraft fleet 2

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

6

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

Grow our regional aircraft leasing business through aircraft acquisitions, portfolio acquisitions and potential skyline transactions Grow our regional aviation services of contracted flying (wet leasing and leasing under the CPA) Leverage the synergies and technical expertise across our lines of business to further drive diversification and profit

7

Our long-term strategy unchanged by near-term challenges

Chorus’ business

Regional Aviation Services Regional Aircraft Leasing

8

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

9

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

Contracted flying/wet leasing generates largest revenue stream

Operates scheduled service through a CPA with Air Canada under the Air Canada Express brand Offers charters throughout North America for corporate clients, governments, special interest groups and individuals

10

Provides medical, logistical and humanitarian flight operations to blue chip customers globally

Air Canada Express flying Charter flights Specialized contracted flying

Chorus is Air Canada’s pri rimary ry r reg egiona nal part rtner ner

(pre C e COVI VID-19) 9)

Responsibilities under the Capacity Purchase Agreement Air Canada Jazz

• Purchases capacity
• Manages routes
• Sets flight

schedules

• Sets ticket prices
• Conducts marketing
• Assumes

commercial risk

• Retains revenues for

passenger & cargo transport

• Supply of flying crews
• Airframe maintenance
• Flight operations
• Some airport operations
• General administration

11

• Fl

Flexibility to r

• respond
• nd qui

uickly and nd e efficient ntly t to m

• market cha

hang nges and nd op

• ppor
• rtuni

unities

• Jaz

azz man anag ages Air C Can anad ada a Express operat ations at at 3 38 ai airports ac across Can anad ada

• Sour
• urce of
• f qua

ualified p pilot

• ts t

thr hroug

• ugh

h Pilot

• t M

Mob

• bility P

Prog

• gram

Benefits for Air Canada

~80%

• f Air Canada’s

regional seat capacity

116 Aircraft currently

• perated by Jazz

52 Currently

leased under the CPA

~690

daily flights

90

N.A. destinations

Largest Chorus customer

Str trategi gic B Benefits ts

• 6-bay, 80,000 sq. ft. facility, 360 employees
• Performs heavy MRO activities, interior refurbs and LOPA changes, IFE/WIFI

installs

• 24/7/365 operation provides flexibility to carriers with industry leading

turnaround time

• De Havilland Dash-8 100/200/300/400, Bombardier CRJ

100/200/700/900/1000, Embraer 135/145 Rated

• Transport Canada, FAA and EASA approved
• De Havilland Authorized Service Facility, Bombardier Authorized Service

Facility

• Bombardier/De Haviland and Embraer 135/145 regional aircraft
• 200 000 sq. ft. facility, ~155 employees
• Performs heavy MRO activities, customized designs and engineering and

aircraft modifications

• Transport Canada, FAA and European Aviation Safety Agency approved
• Transport Canada certified Canadian Design Approval Organization
• Supplemental Type Certificates for Dash 8 100/200/300/400s and Dash 7s
• Provides parts provisioning, sales and service for regional aircraft - great

complement to MRO activities

Halifax, NS North Bay, ON

• “Strategic Enabler”
• Provides part sales and component

repair for leased aircraft

• Conducts aircraft repossessions,

transitions and inspections

• Facilitates part-out of EOL assets
• Provides strategic insight into residual

value of potential acquisition

• pportunities
• Facilitates relationships with airlines

that drive other revenue opportunities

Facilit ilitie ies

Maintenance Repair & Overhaul (MRO) and Parts

MRO and Parts

12

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

13

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

Regional aircraft leasing/dry leasing is an attr ttracti tive bus usines ness with th solid d gr growth th po potenti tial

• 50% of global passengers fly on trips shorter than 500 miles
• Regional aircraft allow airlines to optimize aircraft size

and reduce per-seat cost

• 70-150 seat fleet expected to grow at ~3.7% per year over

the next 20 years1*

• *Penetration rate of operating leases is still relatively low

for regional aircraft (~29%) compared to narrow-body jets (~50%)

14

• Economic growth in emerging markets is expected to significantly
• utpace growth in advanced economies
• Fast growth of the urban middle class in emerging markets

will create opportunities for regional air travel

• Stable technology of regional aircraft reduces volatility in residual

value compared to narrow-body aircraft

• Steady historical deliveries

Es Esse sentia ial l com

• mpon
• nent of
• f

comme mmercia ial l avi viation

• n

Very r resilie silient deman and f from

• m a

a broad

• ad u

user bas ase Ge Geog

• grap

aphical ally y div iverse se d dema mand St Stable technol

• log
• gy

and s d suppl pply

1 Bombardier Market Forecast 2017-2036

*denotes projections prior to COVID-19 pandemic

1 2 3 4

15

Diversification across airlines, geography and aircraft types

Turbo bopr props ps Region

• nal

al J Jets

Customer Aircraft committed1 Dash 8 ATR CRJ Embraer A220 TBD Aeromexico 3  airBaltic 5  Air Nostrum 4  Azul Airlines 5   Croatia Airlines 2  Ethiopian Airlines 5  IndiGo 8  Jambojet 3  KLM Cityhopper 1  Malindo Air2 4  Philippine Airlines 3  SpiceJet 5  Wings Air2 1  Undisclosed customer 2  To Total t al thir ird-pa party 51 19 17 4 6 5 Air Canada 71 52 14 5 Gr Grand to tota tal 12 122 71 17 17 18 18 6 5 5

1Chorus value includes 71 aircraft

leased under the capacity purchase agreement which include 9 future CRJ900 acquisitions, 5 future ESPs on Dash 8-300 aircraft and 5 future aircraft (type TBD) that will generate revenue under the CPA. Non-CPA aircraft leasing includes all aircraft which have been delivered as well as pending acquisitions and future deliveries for which CAC has received lease commitments.

2A member of the Lion Air Group.

Footnote: 13 aircraft being remarketed to third parties, not included above.

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

16

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

17

COVID-19 pandemic impact to the aviation industry worldwide

• Crisis created significant challenges for

aviation and global cancellations impacting all airlines worldwide

• Provincial and federal government-imposed

travel restrictions and border closures have unprecedented negative effect on passenger demand for Canadian air travel

• While Chorus is not directly exposed to

market risks, our revenue is derived from airline customers

• Full impact and duration of

pandemic still unknown

• Regional aircraft fundamentally important to most

countries’ domestic transportation networks

Regional aviation is holding up through pandemic

18

• Regional aviation generally resuming flying earlier

and at a quicker pace than long-haul travel

• With improving traffic trends, there is greater

increase in utilization of regional aircraft compared to narrow and widebody aircraft

Glo lobal fle al fleet capa pacity ty tr trends ds th through gh th the pa pande demi mic

19

Deeper cuts and slower recovery on 737s & A320s observed (more in line with ATR72-600s); A220s and E-Jets leading the recovery

Data from Cirium fleets Analyzer. Data valid as of August 20, 2020 and excludes China. Numbers reflect ‘Western” built commercial jets and turboprop aircraft, with primary usage as passenger aircraft and have over 30 seats onboard. 737 Family (all classic, NG & MAX variants), A320 Family(318/19/20/21 & neo), a220(-100/-300), E-Jets (175/190/195 & E2 variants).Widebody aircraft include all Boeing and Airbus types classified as Widebody aircraft using Cirium methodology.

% of

• f F

Fleet et In-Servi vice

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20

Widebody Aircraft 737 Family A320 Family A220 (CSeries) EJet Family ATR72-600 DHC8-400

20

Th The regi gional nal fl fleet c capa apacity y di did no d not reduc duce to t the he sam same de degr gree as nar as narrow a and w nd wide de bo body fl dy fleets

2000 4000 6000 8000 10000 12000 14000 16000 18000 Regional Aircraft Narrowbody Widebody Jan-20 Apr-20

Worldwide fleet capacity reductions due to COVID-19

55% 55% C Capacity Re Reduct ction 39% 9% C Capaci city Re Reduct ction

Num umber of

• f In-Service A

Airc rcra raft

67 67% C Capaci city Re Reduct ction

Source: Cirium, Fleets Analyzer Note: Regional aircraft does not include the a220 family of aircraft

Regional aviation shows less volatility through economic cycles

21

Regional aviation is a resilient sector in an economic downturn

Indexed aircraft value volatility for narrow-body, turboprop and regional jet aircraft

80 85 90 95 100 105 110 115 120 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

• Mainline operators look to contract out more flying to regional partners
• Smaller aircraft are best suited to serve reduced market demand

Turboprop aircraft Narrow-body aircraft Regional jet aircraft

Source: AVITAS

Growth opportunities in regional aircraft leasing

22

Sale-leasebacks have become the dominant channel for financing new acquisitions Airlines are monetizing their unencumbered aircraft assets through sale-leasebacks

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

23

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

1 2 3

Protecting the health and safety of our employees and passengers Preserving financial liquidity, ~$228 million* Maintaining strong relationships with Chorus’ customer base

24

Chorus responded to crisis by focusing on three key priorities

* Based on Q2 2020 report out on August 13, 2020

Chorus is managing the impact of COVID-19

• Updated health and safety

policies and procedures for travellers and employees in all workplaces, airports, and

• nboard aircraft (Air Canada’s

CleanCare+) to account for new information about COVID- 19

• Implemented COVID-19

business continuity plans to enable safe and continued

• perations, including support
• f employees working from

home where feasible

• Offered voluntary employee

separation packages and special leaves of absence to mitigate layoffs

• Discontinued 21 Jazz regional

routes and closed eight Jazz- managed stations due to reduced flying under the CPA

• Retired remaining Dash 8-100s

and looking to repurpose them

• Delayed delivery of six of nine

new CRJ900s until December 2020

• Took delivery and started

earning leasing revenue on three new CRJ900s in Q2 2020 Employees and customers Operations

25

Aggressive measures to reduce costs, preserve cash and strengthen liquidity position

• Initially reduced manpower by

approximately 65%

• Adopted the Canadian

Emergency Wage Subsidy (CEWS)

• Reduced salaries of Executives

Management and ATS, and Board of Directors’ fees

• Implemented freeze on all non-

essential expenses

• Curtailed capital investments
• Suspended dividend payments

and dividend reinvestment program (DRIP)

• As at August 13, 2020 available

liquidity of $228 million*

• Added and fully drew on a

US$100 million unsecured revolving credit facility

• Secured loan payment deferral

for up to US$30.4 million

• Secured financing of US$18.0

million on two previously unsecured aircraft

• Received US$3.7 million cash

from the sale of a Dash 8-300 Cost reductions/cash preservation Financing and liquidity

26

* Based on Q2 2020 report out on August 13, 2020

Chorus continues to focus on its customer base

• Working closely with Air Canada on cost reductions,

synergies and the efficient deployment of the schedule

• Executing on our fleet modernization strategy is key as

Air Canada endeavours to effectively match capacity and costs with travel demand

• Providing short-term rent reliefs to most of our lessees
• Deferrals are most commonly between three and 12

months, with repayment terms generally over a subsequent period of 12 to 24 months

• Leases are for a fixed term, contain absolute payment
• bligations on the part of the lessee, and cannot be

terminated for convenience

27

Air Canada Aircraft lessees

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

28

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

Chorus holds defensive position in economic downturn

• Over 90% of revenues embedded in flight operations and

aircraft leasing long-term contracts

• US ~$2.4B in future contracted revenues1*
• Air Canada assumes risks related to commercial aspects
• +/- C$2M guardrail on controllable costs
• Minimum fleet and aircraft leasing commitments

29

• Lower costs and smaller aircraft than mainline carriers
• Aircraft leasing provides operational flexibility, reduces

financing requirements and eliminates risk on aircraft residual value

• Rigorous evaluation process
• Diversification of aircraft type and geography
• Diversification of customer base
• Mature and efficient regional aircraft
• Ability to fly, lease, sell, modify, disassemble and part-out

aircraft

Visibility on future revenues and costs Protected profit margin under CPA Better suited to serve reduced market demand Conservative approach to leasing business Valuable aircraft lifecycle

1 The estimates are based on agreed lease rates in the CPA and certain assumptions and estimates for future market lease rates related to new and extended

leases under the CPA as at January 1, 2019. A foreign exchange rate of $1.30 (based on the long-term average historical rate) was used in the calculation of the

• estimates. The Regional Aircraft Leasing segment's estimates are based on agreed lease rates and assumes no default by lessees.

*As reported in Q2 2020 on August 13, 2020. See cautionary statement regarding forward-looking information on slide 2

1 2 3

Chorus is wel ell po positi tioned t ed to manage ge thr hroug ugh t h the he COVID-19 pa pandem demic due to

• ur current liquidity, make-up of our debt,

and the financial strength of Air Canada Chorus sees future opportunity to grow i w its s regio iona nal l avia iatio ion le n leasing ing b bus usine iness as airlines look to sale and leasebacks for future aircraft financings Chorus has a pr predi edicta ctabl ble r e reven enue e str trea eam, based on long-term contracts, that is less sensitive to passenger supply/demand dynamics; how

• wev

ever, count unterp rparty ris risk remains ins

Chorus is well positioned for recovery

30

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

31

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

32

Consolidated Statements of Income

For the three and six-month periods ended June 30, 2020 and 2019 (expressed in thousands of Canadian dollars, except earnings per share) Operating revenue 184,214 332,520 542,238 676,387 Operating expenses Salaries, wages and benefits 54,205 114,738 190,180 242,700 Depreciation, amortization and impairment 48,970 33,552 92,998 65,802 Aircraft maintenance materials, supplies and services 12,380 47,442 61,599 106,769 Airport and navigation fees 4,362 42,385 42,750 82,679 Terminal handling services 1,324 4,719 6,330 10,843 Other 29,290 39,323 68,006 77,114 150,531 282,159 461,863 585,907 Operating income 33,683 50,361 80,375 90,480 Non-operating (expenses) income Interest revenue 43 691 709 1,487 Interest expense (21,411) (18,890) (42,284) (35,427) (Loss) gain on disposal of property and equipment (390) 1,430 (374) 1,466 Foreign exchange gain (loss) 18,467 11,576 (20,965) 25,826 (3,291) (5,193) (62,914) (6,648) Income before income taxes 30,392 45,168 17,461 83,832 Income tax (expense) recovery (note 9) Current income tax 2,229 (2,220) (3,069) (4,440) Deferred income tax (3,456) (4,007) (2,521) (7,004) (1,227) (6,227) (5,590) (11,444) Net income 29,165 38,941 11,871 72,388 Earnings per share, basic 0.18 0.25 0.07 0.47 Earnings per share, diluted 0.18 0.24 0.07 0.46

Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 $ $ $ $

33 Unaudited Consolidated Statements of Financial Position

(expressed in thousands of Canadian dollars) Assets Current assets Cash 153,410 87,167 Accounts receivable – trade and other (note —) 111,393 68,666 Inventories 79,965 61,843 Prepaid expenses and deposits 7,837 11,150 Current portion of lease receivables 3,284 4,558 Income tax receivable 1,806 1,323 357,695 234,707 Restricted cash 40,126 26,690 Lease receivables 7,865 8,637 Property and equipment 2,676,339 2,592,327 Intangibles 1,660 1,799 Goodwill 7,150 7,150 Deferred income tax asset 542 2,784 Other long-term assets 80,585 71,600 3,171,962 2,945,694 Liabilities Current liabilities Accounts payable and accrued liabilities 142,800 177,575 Current portion of lease liabilities 4,128 5,785 Current portion of long-term incentive plan 1,956 6,549 Current portion of long-term debt 196,097 164,554 Dividends payable — 6,487 Income tax payable 1,458 10,114 346,439 371,064 Lease liabilities 9,384 10,531 Long-term debt 1,876,781 1,658,576 Deferred income tax liability 192,665 192,315 Other long-term liabilities 129,754 108,215 2,555,023 2,340,701 Equity 616,939 604,993 3,171,962 2,945,694

$ $ June 30, December 31, 2020 2019

34

Segmented information

Three months ended June 30, 2020

(expressed in thousands of Canadian dollars) Operating revenue 145,640 38,574 184,214 302,382 30,138 332,520 Operating expenses 111,497 39,034 150,531 267,306 14,853 282,159 Operating income (loss) 34,143 (460) 33,683 35,076 15,285 50,361 Net interest expense (9,544) (11,824) (21,368) (8,293) (9,906) (18,199) Foreign exchange gain (loss) 17,574 893 18,467 11,601 (25) 11,576 Other (loss) gain (390)

• (390)

1,430

• 1,430

Earnings (loss) before Income tax 41,783 (11,391) 30,392 39,814 5,354 45,168 Income tax (expense) recovery (3,514) 2,287 (1,227) (5,639) (588) (6,227) Net income 38,269 (9,104) 29,165 34,175 4,766 38,941

Total $ $ $ $ $ $ Regional Aircraft Leasing Regional Aviation Operations Regional Aircraft Leasing Total Regional Aviation Operations

For the three months ended June 30, 2020 For the three months ended June 30, 2019

35

Segmented information

Six months ended June 30, 2020

(expressed in thousands of Canadian dollars) Operating revenue 453,476 88,762 542,238 620,377 56,010 676,387 Operating expenses 394,331 67,532 461,863 557,942 27,965 585,907 Operating income 59,145 21,230 80,375 62,435 28,045 90,480 Net interest expense (18,316) (23,259) (41,575) (17,245) (16,695) (33,940) Foreign exchange (loss) gain (21,407) 442 (20,965) 26,006 (180) 25,826 Other (loss) gain (374)

• (374)

1,466

• 1,466

Earnings (loss) before Income tax 19,048 (1,587) 17,461 72,662 11,170 83,832 Income tax (expense) recovery (6,366) 776 (5,590) (10,149) (1,295) (11,444) Net income (loss) 12,682 (811) 11,871 62,513 9,875 72,388

For the six months ended June 30, 2020 For the six months ended June 30, 2019

Total $ $ $ $ $ $ Regional Aviation Operations Regional Aircraft Leasing Total Regional Aviation Operations Regional Aircraft Leasing

Conclusion

6

Managing the impact of COVID-19

5

COVID-19 impact

• n industry

4

Regional Aircraft Leasing

3

Regional Aviation Services

2

Chorus’ Business

Contents

36

1

Appendices

Supplemental information

8

Appendices

Financial statements

7

The Chorus Story: An Integrated Model

Chorus Aviation is a global provider of integrated regional aircraft solutions

Dry ry L Leas easing Wet et L Leas easing

MRO O Oppo pportuni unities Leas asing O g Oppo pportuni unities Par art Sal Sales & Compo pone nent nt R Repai pair Olde der A Assets for

• r Part

rt Ou Out Wet t to Dry L y Leas ase Oppo pportun unities Mai aintenanc nance Dat ata Techni nical al Suppo Support Cus ustomer L Leads ads - Wet Leas asing & g & P Par art Sal Sales End nd of L Life Asse ssets Aircraf aft R Repo possessions ns Aircraf aft I Ins nspe pections Ai Airc rcra raft T Tra ransition

• ns

Co Core e Seg egmen ments ts Str trateg egic Enable abler

Rela latio ionship ips

Common Customers, Suppliers and OEMS

37

Technic hnical l Expe perti tise se

• Guarantees ~$2.5B in contracted

revenue over 17 years1

• $1.6B from aircraft leasing
• $0.86B from fixed fees
• $97.26M equity investment by Air

Canada in Chorus

• 60% of investment proceeds to purchase

larger aircraft for CPA fleet

• 40% of investment proceeds to acquire aircraft

for the leasing business

• Modernization of Air Canada Express

fleet

• Acquisition of 9 new CRJ-900s will generate

lease revenue under CPA

• Acquisition of 5 aircraft (type TBD) in 2025
• Margin risk on controllable costs

reduced to a maximum of $2M/year

Ame Amende ded/ d/extende ded C d CPA with Air Canada to 2035

38

Provides long-term certainty and stability

1 Over the 17-year term of the CPA (January 2019 to December 2035), the revenue estimates are based on agreed aircraft lease rates in the CPA

and certain assumptions and estimates for future market lease rates related to new and extended leases under the CPA. A foreign exchange rate

• f 1.30 (based on the long-term historical average rate which is reviewed and adjusted annually) was used in the calculation of the estimates.

See cautionary statement regarding forward-looking information on slide 2

• Committed ~C$2.5B in

contracted revenue (2019- 2035)

• Aircraft leasing
• C$1.6B in contracted revenue
• Average fleet age of 8.3 years

with average lease term of 8.4 years

• Potential for additional lease

extensions/renewals beyond 2025

• Opportunity to lease

additional aircraft in the future

• Fixed Fees
• C$858M in contracted revenue
• Controllable revenue based on

block hours, flight hours, cycles and passengers carried

• Pass-through costs, such as

airport, navigation, and terminal handling fees are fully reimbursed by Air Canada

• Maximum available

performance incentives will average ~C$3.4M annually

• ver the term 3
• +/- C$2M guardrail on

controllable costs 39

1 Revenue numbers and change numbers are for the term of the total time period indicated in each column 2 Includes contracted aircraft leasing for 2036 and beyond estimated at C$19M 3 These are variable in nature and are not included in the contracted revenue figures

See cautionary statement regarding forward-looking information on slide 2

Minimum Contracted Revenue in CPA1 (C$M) 2019-2020

Significant fleet transition

2021-2025

• Min. 105 aircraft

2026-2035

• Min. 80 aircraft

TOTAL

266 748 577 1,610 151 308 399 858

Fixed fee Aircraft leasing

$417 $1,056 $976 $2,468

2

Chorus and Air Canada are true allies with an amended/extended CPA to 2035