Chorus Aviation

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At the beginning of the pandemic I considered selling Chorus Aviation this but I thought maybe the wait won’t be too long. I am still sitting at a 50% loss. How much longer should I wait for this to bounce back? Do you see it bouncing back anytime soon.
FYI I do not expect to recoup the whole share price.
Thanks

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Asked on April 22, 2021 6:59 am
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Thanks

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Posted by Dan Kent
Answered on April 22, 2021 10:55 am
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First off, apologies for answering the other one with the wrong ticker! I thought I saw CRH not CHR!

Chorus is pretty beat up, and rightfully so. Revenue dipped from $1.3 billion to $948 million in 2020. However, this was a company that was not hit as hard as someone like Air Canada because it mostly deals with regional flights, which were still mostly in operation.

This is a company I wasn't much of a fan of even pre pandemic. Revenue growth is relatively flat, and net income has been slowing shrinking over the last decade. The company also has a ton of debt. Over $2.2 billion. This is impacting their balance sheet in a negative way. Looks like the company has over $220 million in debt due this year, which pretty much eats away all its available cash. That $2.2 billion in debt is also 3.3 times the company's total market capitalization.

So, long term I'm not much of a fan of this company at all. However, I could definitely see some short term upside if we get back to reopening quickly. Will it return to it's mid $8 range pre pandemic? I don't think so. In fact, I'd be really surprised if we see this stock trading above $6, unless it is because of a buyout from another airline.

But when Canada does start getting back to normal and people start flying again, that news alone may spark some interest in Chorus which could result in a bump in price. It's trading about 4% below its historical valuations, so it's not dirt cheap, but it's cheaper than usual.

I see short term upside based on reopening news, which is essentially pure speculation. As a long term investor, not a fan.

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Posted by Dan Kent
Answered on April 22, 2021 7:48 am