Outside of EIF, we aren't big fans of the industry. We are a long ways away from returning to pre-pandemic levels. In fact, Air Canada's CEO is on record saying that he does not expect to see pre-pandemic levels of revenue for at least three years. That is a long time to wait for those banking on pre-pandemic valuations.
On the bright side, CHR is likely to rebound sooner than a larger airline like AC as it is a regional carrier. It will however, won't be an overnight turnaround. Many organizations have put a moratorium on travel until 2021, and several major conferences have been cancelled or moved online. This has a significant impact on the industry.
Canada also has several travel bans in place, and Chorus Aviation's CEO recently said "Canada’s federal and interprovincial travel restrictions are now one of the most severe in the world." Given that the company is trading at 52-week lows, I would not be divesting my position here. Once Canada's strict regulations loosen, Chorus will certainly benefit - at least in the short term. Long-term however, the fact remains traffic is likely to take years to return to pre-pandemic level.
The company has enough liquidity to keep it going but it is unlikely the dividend will be reinstated anytime soon. On its latest call said that it expects flights to be about 20-30% of last year for the balance of 2020. It also said, just over half of its leased aircraft are back in the air. This is much better than this past quarter, but nothing to get overly excited about. This is also assuming there is no further economic setbacks.
Should you average down? I can't answer that for you, but I tend to ask myself these two simple questions:
1- Has the investment thesis changed? If no, then I'd consider adding. If yes, has it changed for the good or bad? If it's bad, i'd likely I would not add and may even look to exit my position at the next opportunity.
2- Is there a better investment? In other words, can i get a better return investing in another company. If yes, then I would invest elsewhere. If no, then i'd consider adding depending on the answer to question #1
Contrary to popular belief, research has shown that "averaging down" underperforms "averaging up". Investors need to take a cautious approach to averaging down so as to not get stuck with throwing good money after bad.
Hope this helps,
Mat