Chorus Aviation recorded operating income of Canadian dollar (C$) 20.8 million ($20.7 million) in the first quarter, down 29.7% from the same three months of 2012.
The decrease was primarily related to the termination of an agreement with Thomas Cook, which generated $4 million in operating income in the first quarter of 2012, and voluntary severance costs of C$5.7 million for employees.
The Halifax-based parent of Jazz Aviation recorded C$416 million in operating revenues for the first quarter of 2013, down from $437.1 million in the same period in 2012. Operating expenses fell 2.9% to C$395 million in the first quarter of 2013.
Net income in the quarter dropped $17 million year-over-year to C$9.2 million, or C$14.7 million on an adjusted basis before interest, taxes, depreciation, amortisation and obsolescence.
In light of a challenging environment and C$80.2 million in debt that is due at the end of 2014, Chorus reduced its quarterly dividend to investors.
"We have, and continue to prudently manage our financial resources," says Joseph Randell, president and chief executive of Chorus in a release. "The regional airline industry is changing dramatically both here and south of the border. Competition is increasing significantly. We must continue in our efforts to reduce costs, strengthen the fundamentals of our business, and improve our financial position to ensure we have the flexibility required to effectively respond and compete in our ever-changing markets."
The voluntary separation programme for 33 senior pilots and 51 maintenance employees is expected to provide a return within the next two years as Chorus decreases its operating costs, says Randell.
Chorus Aviation's cost per available seat mile excluding fuel was 21.47 Canadian cents, up from 16.55 Canadian cents a year earlier. When excluding the Thomas Cook flying from the first quarter of 2012, that number is up 4.8% from 20.48 Canadian cents.
Chorus Aviation flew 97,202 billable block hours in the quarter, down 6.6% from 2012 when the Thomas Cook agreement was in place. Without that flying, block hours were up 0.8% year-over-year.
The vast majority of Jazz Aviation's flying is done on behalf of Air Canada.