Jazz chief believes investment return in Pluna lies in sale or IPO

Washington DC
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The head of Chorus Aviation, formally Jazz Air Income fund, believes to realize the full benefits of its investment in Uruguayan carrier Pluna the South American carrier needs to be sold or go public.

In April 2010 Chorus invested $15 million in Pluna, which resulted in a 33% non-voting stake in the airline.

Since that time Jazz has positioned senior manager Kirk Newhook at Pluna to help the Bombardier CRJ900 operator identify potential operational improvements and costs savings.

During a recent earnings call Chorus chief executive Joseph Randell explained the relationship with Pluna "has started to deliver benefits".

However, Randell states that recognizing a true return on investment of Pluna will either be sale or a public offering of the carrier.

As Randell examines ways to achieve a ROI on Pluna, Chorus for the fourth quarter of 2010 posted a C$27 million (C$27.1 million) pre-tax income compared with C$33 million the year prior. Revenues grew from C$351 million to C$392 million as operating income fell from C$17 million to C$12 million..

For the full year Chorus posted a drop in pre-tax income from C$159 million to C$121 million as revenues remained flat at roughly C$1.5 billion. The company's operating income also fell from C$88 million to C$59 million.