This Canadian regional aviation business has a 6% dividend yield. It trades at ~9x earnings per share (EPS), and recently signed an extension of its commercial agreement with Air Canada through 2035. Currently, Chorus Aviation has high customer concentration, with Air Canada representing 90% of 2018 revenues. With the extension of the commercial agreement now complete, Chorus is looking to grow its business (specifically a regional aircraft leasing division) and diversify its revenue sources over time.
To add some intrigue to the story, Air Canada does not exactly have the best track record of dealing with business partners. Specifically, Aeroplan is an example of a business that was tied at the hip with Air Canada and the story did not end well for investors.
This video reviews the Chorus Aviation business model, key terms of their commercial agreement, a case study of Aeroplan and concludes with key considerations for investors.
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