Chorus Aviation Inc
TSX:CHR
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Chorus Aviation Inc
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Ladies and gentlemen, thank you for standing by, and welcome to the Chorus Aviation Fourth Quarter and Year-end Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the call over to Nathalie Megann, Vice President, Investor Relations. Please go ahead.
Thank you, Denise. Hello, and thank you for joining us today for our fourth quarter and year-end 2020 conference call and audio webcast. With me today from Chorus are Joe Randell, President and Chief Executive Officer; and Gary Osborne, Chief Financial Officer. We'll start by giving a brief overview of the results and then go on to questions from the analyst community. Because some of the discussion in this call may be forward-looking, I direct your attention to the caution regarding forward-looking information and statements, which are subject to various risks and uncertainties and assumptions that are included or referenced in our management's discussion and analysis of the results and operations of Chorus Aviation Inc. for the year ended December 31, 2020, the outlook section and other sections of our MD&A where such statements appear. In addition, some of the following discussion involves certain non-GAAP financial measures, including references to EBITDA, adjusted EBITDA, adjusted EBT and adjusted net income. Please refer to our MD&A for a discussion related to the use of such non-GAAP measures. I'll now turn the call over to Joe Randell.
Thank you, Nathalie, and good morning, everyone. It's remarkable the difference a year can make. One can't help but to reflect and compare how dramatically our business has changed in the last 12 months. 2019 was an outstanding year, and we were poised for significant growth and diversification in 2020, having started the year from our strongest position in our history. However, the COVID-19 crisis forced us to quickly pivot our strategy from offense to defense, from organic growth to one of building liquidity and protecting the balance sheet. The crisis brought a deep global reduction in passenger demand and onerous travel restrictions, imposing significant financial hardship on our customers and dramatically reducing our CPA operations. Nevertheless, the resiliency of our business model and the dedication of our team delivered respectful -- respective [ level ] financial performance despite these unprecedented challenges. Year-over-year, adjusted EBITDA of $347 million was relatively consistent due primarily to the fixed fee nature of our contract with Air Canada and modest growth in regional aircraft leasing revenue. We are one of the few operators reporting positive returns, having concluded the 2020 fiscal year with $0.26 in net earnings per basic share or $0.40 on an adjusted basis. We closed 2020 with approximately $200 million in liquidity, and we anticipate this to be relatively stable for the balance of this year. Preserving liquidity remains a priority given the duration. And ultimate impact of the pandemic on our industry are unknown. We understand that the financial losses airlines are incurring are not sustainable in the long term. We continue to work with Air Canada and our leasing customers to help them manage the economic pressures they are facing as a consequence of the sustained reduction in demand for passenger air travel. We are confident that air travel will return. But given the uncertainty of when, we continue to take the steps necessary to protect the company. But there have been some bright spots. We are encouraged by the incremental increases in aircraft utilization and leasing revenue collected in the leasing segment. In the fourth quarter, we collected approximately 60% of the revenue build in that period, a 10 percentage point increase over the third quarter. We continue to monitor our portfolio of lessees and are in active discussions to remarket the 13 aircraft that have been returned. This has been challenging in this environment. We were very pleased to have delivered the final 2 of 5 new Airbus A220 aircraft to airBaltic of Latvia in the fourth quarter. Voyageur was successful in securing contract extensions with the United Nations for 4 CRJ200 aircraft and won the competitive bid for a new 5-year contract with Ambulance New Brunswick. This milestone extends our 25-year relationship with the province, a wonderful testament to the expertise of our team. In the latter part of December, we took delivery of 5 new CRJ900s, bringing the total to 8 new aircraft earning leasing revenue under the CPA in 2020, and we received the ninth aircraft last week. While we only operated approximately 35% of the capacity we flew in the same period last year, our fixed fee compensation under the CPA was unaffected by the significant reduction in flying activity. As a result of service cancellations across Air Canada's network, many of our smaller and regional communities are without air service, and over half of our employees remain on inactive status. We've been advocating for our industry with key government stakeholders so as to ensure the sustainability of regional aviation services is top of mind when making policy decisions. Aviation in Canada needs sector support and urgently needs attention from government. Our stakeholders are being challenged by the uncertainty surrounding future services. We look forward to resuming service and providing critical links to the rest of Canada and the world through the Air Canada network, and we are eager to do so. I'm hopeful our government will soon introduce its plan to assist our vital industry given its importance to the transportation infrastructure, social fabric and economic recovery of Canada. I continue to be amazed by the resolve of our team, and I sincerely thank our employees for doing all possible to maintain the safety and integrity of our operations. For the near term, we'll continue to focus on this while preserving liquidity and supporting our customers. Before I turn the call over to Gary, I wanted to touch on the preliminary acquisition proposal we received last October. While that proposal is no longer being considered, we are having discussions with the same party regarding a potential investment. While I understand many of you may have questions regarding this, due to the contractual and confidential considerations, I can't provide more color on this dialogue at this time. And naturally, we will update the market should a material transaction be realized. Thank you very much for your time, and I'll now pass the line over to Gary.
Thank you, Joe, and good morning. In line with Joe's commentary, there's been -- there has been an incredibly challenging year in which we saw the industry reduce to a fraction of its 2019 operating levels. Even with this, Chorus was able to achieve positive cash from operations, net income and EBITDA, ending the year with over $200 million in liquidity. The results are a testament to our business model, strong partnerships with customers, including Air Canada, and the dedication of all our employees including those on inactive status awaiting their return. Our fourth quarter adjusted EBITDA was $82 million, a $6.7 million decrease over fourth quarter 2019. Adjusted net income was $7.7 million, a $15.6 million decrease over last year, which led to a decrease in adjusted EPS at $0.05 versus $0.15 last year. Here's how the fourth quarter of this year compares to 2019. The Regional Aircraft Leasing segment's adjusted EBITDA decreased by $7.8 million, primarily due to a $3.6 million expected credit loss provision and lower lease margins attributable to 13 off-lease aircraft. Due to the impact of COVID-19, the noncash general aircraft impairment provision of $41.6 million and $0.5 million for lease repossession costs were added back to adjusted EBITDA. The general aircraft impairment provision was a result of the combination of a drop in current market values, a general assessment of our leases and carrying values of the related assets. Adjusted EBITDA for the Regional Aviation Services segment increased by $1.1 million. The results were impacted by a decrease in stock-based compensation, an increase in aircraft leasing under the CPA, a decrease in general and administrative expenses offset by a decrease in capitalization of major maintenance overhauls on owned aircraft operated under the CPA, a reduction in other revenue and an expected credit loss provision. Adjusted net income was $7.7 million for the quarter, a decrease of $15.6 million due to the previously mentioned $6.7 million decrease in adjusted EBITDA, an increase in depreciation of $3 million primarily related to additional aircraft, an increase in net interest cost of $3.8 million primarily related to the new credit facilities for general operating purposes and additional aircraft debt and an increase of $6 million in realized and unrealized foreign exchange offset by a $3.5 million decrease in adjusted income tax expense. Net income decreased $27.4 million, primarily due to the previously noted decrease in adjusted net income of $15.6 million, a general aircraft provision of $41.6 million offset by the change in net unrealized foreign exchange on long-term debt of $25.3 million and tax recovery on adjusted items of $5.8 million. For the year 2020, Chorus reported adjusted EBITDA of $347.5 million, an increase of $5.7 million over 2019. Adjusted EBITDA for the Regional Aircraft Leasing segment increased by $12.9 million primarily due to the additional aircraft earning leasing revenue, partially offset by the allowance for adjusted -- or sorry, for expected credit loss provision of $8.8 million and lower lease margins attributable to off-lease aircraft. The Regional Aviation Services segment adjusted EBITDA decreased by $7.2 million and was impacted by a reduction in other revenue due to a decrease in third-party MRO activity, reduced part sales and reduced contract volume; a decrease in capitalization of major maintenance overhauls on owned aircraft operated under the CPA of $5.9 million; an expected credit loss provision of $1.5 million partially offset by a decrease in stock-based compensation of $9.3 million due to the change in share price, inclusive of the change in fair value of the total return swap; an increase in aircraft leasing under the CPA primarily related to additional revenue of $9.9 million earned from 2 incremental Dash-8-300s and 8 incremental CRJ900s in 2020 versus 2019; and a decrease in general administrative expenses. Adjusted net income was $64 million, a decrease over 2019 of $30.9 million primarily due to an increase in depreciation of $19.2 million related to additional aircraft; an increase in net interest cost of $19 million related to additional aircraft debt; the 5.75% unsecured debentures added in December 2019 and new credit facilities; an increase of $6.9 million in realized foreign exchange and unrealized foreign exchange losses, partially offset by a $5.7 million increase in adjusted EBITDA, as previously described; and a decrease in the adjusted income tax expense of $9.3 million. Net income decreased $91.7 million over 2019 primarily due to the general aircraft impairment of $68.2 million; a decrease of $30.9 million in adjusted net income; $3.2 million on lease repossession costs and increased employee separation program costs of $2.5 million, offset by tax recovery on adjusted items of $10.3 million. Now turning to liquidity. We ended 2020 with approximately $200 million in liquidity, a decrease from the third quarter of approximately $17 million, primarily due to the equity funding of 2 previously committed A220-300s acquired in the fourth quarter as well as working capital requirements. We generated strong cash from operations of $56.8 million. Key items that impacted our overall liquidity in the quarter included an increased receivable from Air Canada of $28.4 million primarily related to increased flying and other activity, increased CAC receivables of $8.4 million, decreased cash of $34.4 million due to repayment of long-term borrowings and decreased cash of $33.1 million primarily due to the acquisition of 2 A220-300 aircraft net of financing. In the fourth quarter, Chorus also successfully negotiated the terms of certain of its debt facilities by extending existing repayment terms, all of which is further described in our MD&A. In summary, we amended the following: increased the term [ out ] period of the USD 100 million unsecured revolving credit facility to replace a bullet payment due in April 2022, with repayment over 8 equal installments of principal interest starting in July 2022 and increased the term of the loan deferral program repayment by lengthening the repayment period from 12 to 18 months beginning in January '21. The balance deferred as of December 2020 was USD 28.9 million. Amended the terms of certain of its aircraft loans to remove the remarketing period deadline for aircraft repossessed up to April 24, 2021. This eliminates the requirement to repay the principal amount of the loans prior to maturity if the aircraft are not released by the end of the remarketing period. And Chorus remains in compliance with the relevant loan conditions. We currently expect liquidity to be relatively stable to the end of this year as we continue with measures to manage it, including the continuation of the reduction of nonessential capital expenditures and overhead costs. As Joe mentioned, we collected approximately 60% of lease revenue billed in the fourth quarter from our lessees, excluding repossessed aircraft, a 10 percentage point improvement over the third quarter of 2020. Planned capital expenditures in 2021, including capital -- capitalized major maintenance overhauls are estimated to be between $32 million and $38 million. This estimate includes $18.4 million that will be included in controllable costs. Planned aircraft-related acquisitions are expected to be between $100 million and $110 million in 2021. These deliveries are subject to securing financing and certain closing terms. That concludes my commentary. Thank you for listening. Operator, we can open the call to questions from the analyst community when you are ready.
[Operator Instructions] Your first question comes from David Ocampo with Cormark Securities.
So it's pretty good to see the remarketing period get eliminated, but the commentary is that it's for all planes up to April 24, 2021. Do you expect to see or do you see any major concerns with your customers right now where you may have to repossess other aircraft? I was just trying to get a sense on why that data is 2 months out.
So just on the remark, that April 24 date, that relates to our largest lender, EDC. So the remarketing period has been eliminated for up to that date for anything repossessed. So you can see that in the [ bottom ] section of the MD&A. And then as far as the lessees, we actively monitor all our lessees. And we have Aeromexico that's continuing to go through its bankruptcy process, and we're optimistic throughout that piece. And then we continue to monitor others across the globe. And as far as the lessees go, it's ongoing and it's a very fluid situation.
Yes. We're monitoring everybody very closely. And I'd say we certainly don't see anything near term. But again, we're in a difficult environment. I would add, though, that we have 13 airplanes off lease. And we are in active discussions presently with a number of parties with respect to those airplanes and certainly feel more optimistic this quarter than we did at the end of the last about being able to position those aircraft with other operators. But again, nothing firm at this point. But we're seeing some positive signs.
And Joe, you just took my next question, but maybe to build on that, like how are the discussions with customers? Are lease rates coming down quite dramatically from what you're seeing? And are there a lot of other regional aircraft that are hitting the market that you have to compete against?
We're -- there are quite a number of airplanes available in every -- of every type out there. If you look at the values today on used airplanes, both their current market values and the lease costs and that sort of thing, they're down quite substantially year-over-year. Depending on which publication you look at, you can see indications of 30%. It's not unusual, et cetera. So these are the things we're dealing with in the near term. I think we're optimistic we're going to see that start to come around as COVID starts to -- the effect of COVID starts to decline. And the other good thing we're seeing is increased utilization of our fleet that we have out there. And this is consistent with what we've said before, that the domestic and short-haul markets will be the first to come back. And I think that's generally accepted in the industry. So we are seeing that. And we're seeing good utilization rates in other parts of the world on the fleet, including in Asia and Africa and also in South America. So sort of steady as it goes, but certainly feeling that the flying is up. We're collecting more of our receivables, et cetera. We're heading in the right direction. But how long, and as I've said in my commentary, how deep, is yet to be determined.
So Joe, on that, have you noticed an uptick from the 60% of lease revenue that you guys have collected? Or is that -- can we assume that that's going to remain flat for the Q1?
Yes. We're not seeing a significant change from that at this point, but we'll continue to monitor it. Again, we're working with several customers. And as they come back and the flying increases, we hope and expect to see some increase in that regard. There is sometimes a little bit of a lag as people come back because, obviously, in some cases, fares are lower, et cetera. So -- and operators are digging themselves out of a rut that was created over 2020.
Your next question comes from Tim James of TD Securities.
Concerning your expectations for the controllable cost guardrail receivable at the end of the first quarter. It's a fairly wide range relative to what you provided in your Q3 report for the end of the year. Is there any particular reason why there is a fairly wide range on that expectation for the end of the first quarter?
So that is actually -- as it pertains for the end of 2021. So that's why you see that wide range. And Tim, it's really going to depend on how things work out in the operation. We also have to sit down with our customer at Air Canada and try to set some rates here coming up. So that is difficult in this environment, but that's giving you a range for the entire year. So in the first part of the year, we'd expect to be in the lower part of that range. And then as the year progresses, towards the higher end of that range.
Okay. Okay. That's helpful. That makes sense. Then your CapEx plans for 2021 of $100 million to $110 million, this is obviously nonmaintenance CapEx. It just -- it seems a little high to me when I think about sort of the aircraft that are being acquired and taking into account, there's a little bit in there for the ESP. I'm just wondering, am I underestimating the cost of those [ air ] assets likely? Or is there something else included in there that isn't sort of specifically called out.
Yes. We have probably somewhere between $10 million and $20 million as a general provision in case we need to do any aircraft improvements. So it's just a -- it's a [ outlook ] at this stage.
Okay. Okay. Then I'm just wondering, and I'm not sure if you can provide any color on that, but the report cites just that prior to the pandemic, Chorus was providing Air Canada or providing about 80% of the Air Canada Express capacity. What would that value have been? Can you give us a sense in 2020, what that percentage of capacity would have changed to, if at all?
I think it's probably fair to say it wouldn't have changed, that it would have remained proportionate through that period of time. The 2 carriers providing the capacity would be ourselves and Sky Regional. And both of us -- and both ourselves and Sky are flying these days. So I don't think there's much of a material difference there.
Your next question comes from Konark Gupta with Scotia Capital.
Just wanted to first start off on the liquidity argument. So you guys are expecting liquidity to be more or less kind of stable throughout the year. I'm just curious if you can provide any cadence for that. Do you expect some initial liquidity decline in the first half and then it rebounds? Or it's the other way? And then does it reflect -- does your assumption reflect any external financing or the sectoral support from the government?
Okay. So as far as the liquidity goes, we would expect in the first part of the year to have a little bit of pressure traditionally. If you look back, it's one of our worst quarters, Q1, on working capital, but we still don't see a meaningful reduction from that level. And then as you go through Q2 and Q3, it improves. And in Q4, you kind of slide back a bit. So it will be plus or minus a little bit from that projection throughout the course of the year. And sorry, there was another part of you question.
So I think it related to assumptions, perhaps on government or sectorial support.
Yes. Sectoral support and any external financing you plan to raise in that liquidity assumption.
So we do assume that we would raise around 70% on those aircraft financing from that. That's a very typical assumption we have, but we do not assume any level of government assistance in that.
Just a reminder, anything that we get under the CEWS program flows back to Air Canada. So it doesn't directly flow to us. We feel that the sectorial support is very important. But of course, given the fact that we're a contract flyer for Air Canada, we're certainly hopeful that Air Canada will be assisted in looking to reinstate and provide services as the market comes back up. And so that discussion is very important to us.
Absolutely. So maybe just a clarification on the cost guardrail. Is it -- if the government sectoral support comes in, will it impact the cost guardrail receivable by any magnitude?
It will depend. It's kind of hard to speculate. But the way it works under the CPA is if we get a reduction in cost net through the government programs, it flows back as part of that guardrail process. So you can expect that it would make its way back to Air Canada. It could reduce our guardrail or could increase it depending on if it was overly negative, but it would generally be positive.
Makes sense. Perfect.
Yes. Via the CEWS program.
Okay. And then on the gross lease receivable at CAC, if I'm understanding correctly, just making sure, you have been collecting less than 100% of your leases, obviously. So as you collect less than 100%, you bill your receivable and then you start collecting some of the previous receivables, I guess, right, as those payments come due? How should we think about this liability item or this asset item, gross lease receivables? Should it increase as you go throughout the year, as you obviously collect less than 100% minus the payments you receive? Or how should we think about it?
No. If you go to our disclosure, we expect it to remain fairly constant to the end of the year without seeing a major change. And it's really, as you alluded to, we are going to receive some of the deferral payments back from the customers. So what they've -- we put in new receivable, and then there could be some amounts that interchange there. So we see it as being pretty flat to the end of the year.
And for CapEx, is there any timing for CapEx where -- in any particular quarter, which is heavy on CapEx?
I think you could say Q1 will probably be lighter than most coming through here. The 2 aircraft that we're -- with the undisclosed customer is still under negotiation in that. So that's not something that's imminent right now, but that could change. And as far as the maintenance CapEx, I think you would see that start to spool up as the operation starts to spool up. So...
Okay. And with respect to remarketing discussion, Joe, curious if you can help us here. Like you have been sitting with these 13 aircraft for some time, obviously now, and then hopefully, the vaccine kind of brings in some recovery for the industry here. What are the early discussions like with your customers? Are they interested in these 13 or some of these 13 aircraft you have? Or they are looking for some other kind of aircraft type? And what is sort of the timing discussion that's happening at this point? Is it like late '21 or early 2022 at this point?
No. We're -- these customers are actively considering the aircraft that we have off lease. And we have not been out actively marketing an increase in our business due to our focus on liquidity over the year. So we've been focused on remarketing those airplanes aside. I think there are a couple of aircraft there that we may potentially do. And so there are operators that are looking at getting back up here, and so the timing is to be determined. But certainly, we're hopeful that throughout this year, you'll see quite a number of those 13 airplanes start to be re-leased and put back in operation with customers.
That's great. And then last one for me before I turn it over. The stock-based comp in Q1 last year, I think it dropped because the stock price dropped. I was just curious, like given where you are right now on the share price and the total return swap you have, would you expect the second -- the Q1 of this year, the stock-based comp, be flat or down from last year?
Well, it should be flat. We put the -- as far as the total expense year-over-year, I'd have to look at that. But with the total return swap, essentially, when we put it in place, it locks in a very flat number, so it's constant. And throughout 2020, it was a relatively constant number. So you shouldn't see a lot of fluctuation in '21 year-over-year.
Your next question comes from Walter Spracklin with RBC Capital Markets.
So there's a lot of, obviously, stranded capacity on the belly space of aircraft that were flying and now grounded internationally. And I noticed that you got a nice renewal with Voyageur. I'm just curious as to whether there's any potential to repurpose aircraft, either temporarily or longer term, if, as many expect, this stays constrained for some time. And can a Voyageur aircraft be repurposed? Or can you look to do a strategy pivot here to include a cargo element to Voyageur or to Chorus?
Yes. That's a very good question. We have repurposed a few Dash-8-100s into package freighters. And these aircraft, in some cases, we lease them as a dry lease, and in others, we operate on a contract with Voyageur. And we are actually using aircraft as well that are not entirely converted. So we've been growing. It's still relatively small, though, but it is an area of focus for Voyageur. And we do have quite a number of assets that we can repurpose here. And we have the expertise and the know-how and to do the change in the North Bay. So that's a very good interest to us. And I'm hoping that over the next couple of months, we'll have more to say with respect to cargo and how we're doing and what our plans are there.
Okay. That's great. You mentioned -- and you're absolutely right, I believe that certainly, shorter haul will come back quicker than longer haul. And you mentioned some indicators that you follow that suggests that, that is occurring. Can you give us some hard numbers on that, by any chance? Or perhaps off-line give us some indication of what you follow just so we can follow it along with you and kind of gauge that trend? Because I think it is a trend that a lot of your investors are very much focused on. It's part of their investment thesis. So any specific proof of that would be very helpful.
Yes. We have stats that we can provide you. There are a number of industry publications. And of course, we monitor the utilization on our own fleet by aircraft, by month. And so we're watching that very quick -- very closely with each of the operators. And we've seen, as I said, positive signs there and that sort of thing. But if we can just take that off-line. I don't have the specific publications with me right now, but we can certainly provide you with some indication as to where you can find some of this information.
Yes. And really, I was referring to what you were just referencing, Joe, that your own utilization and if you have the chance, again, off-line, just to give us when you said a positive indication, does that -- what would be the more quantitative of that. But certainly, we can take that off-line. Absolutely.
Yes. We could look at that for sure. But the other thing is that I think -- if you look at the percentage of our aircraft that are with operators that are active, it's a very, very high percentage, which is itself, I think, a good sign in that of the aircraft that are still with operators, very, very few are very low utilization. They're actually not too bad.
Great. In terms of the government talks, I know you're kind of probably taking the lead on this along with WestJet, but you're no doubt closer to it than certainly we are. The tone of Air Canada changed very dramatically in a matter of a couple of weeks from what I would say is fairly muted or even negative to very encouraged by the talks that they were having with government as of their last quarter call. Do you have any sense of how that -- that's progressing from your perspective? Are you in talks with government as well, officials on potential aid packages? And do you concur with that assessment that it is encouraging? And even since Air Canada's report, would you say that it continues to progress? How would you characterize it, Joe?
Well, I can't really speak on behalf of Air Canada in those talks. However, we have, ourselves, been talking to a number of government officials over the last number of months. And I think the -- it's fair to say that the level of engagement and discussion has improved from our point of view. And there are some very senior people in Ottawa now involved with this. So -- and we're encouraging them to support the sector for sure. There are a few things that we think are really important. And that's that we really need to get people back up in the air safely and people feeling safe about flying and I think rapid testing and adjusting quarantine periods, et cetera. But it's a very difficult environment right now that we face, to talk about some of those things. But our focus is on how you get back up here and what it looks like. So the focus is on that. The other thing is what we've been saying is that regional services have been under some financial stress for quite some time. And we've been in the regional business a long time. I've been in it for 40 years. And I could tell you that the download of government-imposed fees, charges from institutions is incredible in this country compared to the U.S. and others. We have all of these independent agencies now that have their own bottom lines to worry about. They're government institutions. It doesn't matter if it's Nav Canada, the airports, Capsa, et cetera. And these institutions are all putting up their charges. And we see in other parts of the world, when the market comes back, people want to be encouraged to fly and not have prohibitive fares facing them as they return to the air. So our focus has been on and saying to the government -- the government really needs to look at regional air transportation as an economic enabler and something that supports the transportation infrastructure within the country rather than being a cash cow. And these charges and these approaches have had, over the years, a very disproportionate effect on regional air transportation. And we've seen it happen. So we did an example the other day where a $250 airfare in the U.S. attracts fees, taxes, et cetera, about a 15% level. In Canada, the same fare tracks about 37%. And now we're seeing increases of AIFs and Nav Canada fees of 25%, 30%. And that's not helpful in terms of the return of air services. And we've been saying as well that these communities require access into a large network, into the world rather than being isolated and not part of a larger network. So that's been our message. And we have thousands of employees laid off here. And it's really important where we have the aircraft, we have the employees, we have -- and we have the position in the market. We have the safety record and the quality of service that is required in these markets. And I think these markets need assistance in terms of how to get back up and how we reestablish regional air service within Canada. And that's been our message. It's about how do we get back up as an industry and start linking the country again the way it needs to be linked from a social and an economic perspective.
Yes. Hopefully, the silver lining from all this is that we do get a revamp in many of these fees as we start to get the airline industry back on its feet. I appreciate the time as always, Joe.
Your next question comes from Cameron Doerksen with National Bank Financial.
So I just want to come back to the 2020 cost guardrail number, I guess it was the $44 million. I'm just wondering when that, I guess, that receivable is collected. I guess my understanding was that would be cash -- that would be collected in Q1, but I may be wrong on that. So maybe if you can just sort of clarify when that receivable comes in as cash for you.
That comes in, in Q1. And as of this moment, it's been collected. So...
Okay. And for the 2021 cost guardrail, it will be the same thing at the end of the year? You would actually receive the cash in Q1 of 2022.
It's always in Q1.
Okay. Okay. Perfect. Maybe a question on sort of the nature of your, I guess, discussions with Air Canada these days. I mean, obviously, I think they're probably as everybody in the industry is, has probably thinking that this crisis gone on longer than most people would have expected a year ago. And then, of course, Air Canada has continued to pay the leases under the CPA. Has there been any discussion about Air Canada deferring some lease payments or any other adjustments to the CPA at this point? I mean, maybe you can just sort of discuss the nature of the discussions that you've had with them?
Yes. We continue to discuss with Air Canada ways of improving efficiency, helping them through this pandemic, et cetera. And our partnership is very strong. And we've done a lot, and we will continue to do what we can and to help and to be a good partner going forward.So we're -- we discussed -- have deep discussions on every aspect of our business. And so -- and we will continue to do that. And that's -- I think that's the nature of our partnership.
Okay. Fair enough. And just maybe a final one for me, just with regards to the, I guess, remarketing of some of the aircraft in the third-party leasing business. Is the discussions that you're having with some of the potential airlines, are they more looking for short-term leases? Or maybe the better question is, which I assume you would probably prefer short-term leases given where lease rates are and then hope 3 years down the road to maybe re-lease those aircraft again that once the industry has recovered. Is that kind of the way you're looking at it?
Yes. Well, they're a little all over the place. I guess the benefit of the short term is the market may be better. But there's a benefit to a long-term lease as well, in that you have this certainty of payment and a longer-term customer, et cetera. So right now, we have, I think, a variety of potentials here that we're talking about. So there's a put and a take on whether it's short or long. So it's, in the end, something that works for us.
Your next question comes from Kevin Chiang with CIBC.
Maybe just back on the government assistance stuff. One of the things I think the government has said as part of the criteria would be like a public interest test or some sort of support for the broader aviation and airline industry -- aerospace industry in Canada, so those that receive any funding would have to provide additional support to the Canadian aerospace industry. Just when you look at Voyageur, your MRO business, just do you see an opportunity to potentially benefit from maybe more Canadian airlines using your services to the extent that they participate in a sectoral aid program? And what percentage of, let's say, that business or revenue today sits with Canadian airlines?
Yes. A lot of the Voyageur business is with customers outside of Canada. And the thing about it is that all segments, of course, as you know, are not created equal in this pandemic within aviation. The part that's been most severely hit has been passenger airlines and leases, et cetera. So I think I can't help but believe that the support will be more along that segment because the others, Voyageur itself, is doing not bad these days, frankly. And it is somewhat insulated from the passenger side of things. But of course, our CPA has very much influenced the lease, our third-party leasing at this point is all passenger aircraft. So I don't really know what the government's thinking here with respect to the sector. But I think the most immediate need is certainly more in the operating side of aviation within Canada. And I think that's where other governments have been putting support in terms of the sector, for instance, in the United States as an example.
Okay. That's helpful. And then just on Chorus Aviation Capital or your regional aircraft leasing operations. You basically have noted that most of your customers, if not all of your customers, have asked for some sort of relief. Can you -- are you able to share with us the breakdown of the type of relief being provided? Let's say, the percentage of customers or aircraft that are now under some sort of power by the hour versus just a straight delay in payment that gets recaptured in a future quarter? And I guess what I'm trying to get at is like -- do you need to see -- do these customers need to see traffic back at pre-pandemic levels before you get 100% rental recovery rate? Or... because I would think it could be lower. Like as long as they are on sound financial footing, it doesn't matter if they're running 80% of 2019. You should be seeing 100% of your lease payments. Is that the right way to think about it? Or do you need to see them back at 100% of pre-pandemic levels before that rental collection rate is at 100%?
I think the simple answer is with that is it depends on the customer. And we have customers that are in various states, and it depends what's going on within their individual geography and jurisdiction. And what works for one doesn't necessarily work for another. And one of the things that we do is we work closely with each of them to work to find the solution that works. So you're going to have a variety of things there. We have customers that have -- there's been no issue with throughout the pandemic and others that are struggling a lot. So -- and we don't break it down in that way, Kevin. a lot of it is competitively sensitive, I think, because I think one of the things that we believe is you can actually have a competitive advantage if you're more responsive with your customers and you work to find solutions. And it includes, in some cases, extending leases of a number of years. So it's a little all over the place, to tell you the truth.
Okay. That's helpful. And maybe just 2 housekeeping questions for me. I know, Joe, you -- I think in the previous answer, you talked about working with Air Canada and finding other ways to find cost savings that could help them as you're a key partner on the regional aircraft side. If I look at the CPA pass-through revenue, that was down 55% year-over-year, give or take. The controllable cost revenue was down less than that. If I use just a simple rule of thumb, is that kind of the opportunity that, that controllable cost revenue should be down maybe similar to what you saw in terms of the pass-through revenue, just given how -- given the lack of flying and if you're able to capture that saving and working with Air Canada, that's kind of a bigger bucket of flow-through into Air Canada?
The only thing I'd say about that is the pass-through flying is generally -- costs are generally very directly linked to the amount of flying you're doing. So -- whereas the other controllable costs, where you've got aircraft facilities, things of that nature are not directly impacted. And some of those costs continue to exist. So I don't think you can say that there should be or there can be a direct relationship or they are at the same level. I think we just work with Air Canada on all of the cost buckets and look at how we can improve the efficiency. We can help them. And it relates more to things other than costs in terms of what we do with them in streamlining procedures, processes, helping them work through things. And well, that's what we do.
Yes. I would concur with what Joe said. I mean there is a large fixed component in the controllable costs for facilities and for aircraft, and that's what would make the difference that you see there.
Okay. That helps. And I apologize, I was late on the call, but Gary, if -- you might have given this in your prepared remarks. Have you guided to what we should be thinking about in terms of the repayment of long-term debt in 2021 just given a number of the amendments to your debt facilities? Is kind of a low to mid-$30 million a quarter still the right run rate assuming current levels of flying?
Yes. I think if you just go to the current portion of the debt, that will give you a pretty good idea what's coming in the next 12 months. And you could kind of even that out for the most part.
[Operator Instructions] And we have no further questions queued up at this time. I'll turn the call back over to Nathalie Megann.
Thank you very much, operator, and thank you, everyone, for being present on this call. We look forward to speaking with you again soon. Have a great weekend.
This concludes today's conference call. You may now disconnect.