Mr. Colin Copp reports

CHORUS AVIATION INC. ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

Chorus Aviation Inc. has released its second quarter 2023 financial results.

"I am pleased to report Chorus' solid financial performance for the quarter, delivering improvements in Leverage Ratio and Free Cash Flow. Free Cash Flow has more than doubled year-over-year to $70.3 million, and our Leverage Ratio has improved to 3.8 at June 30, 2023, from 4.4 at December 31, 2022. As a result of our contractual earnings, we are on track to meet our guidance for 2023," said Colin Copp, President and Chief Executive Officer, Chorus.

"We continue to have productive and advancing discussions on Fund III with our existing lead investors in Fund II and others. Due to market conditions over the past year, several of the larger, existing U.S.-based investors in Fund II have been limited from making certain investments due to regulatory limits on the composition of their portfolios. We have recently been informed that certain states have amended their regulatory limits, facilitating our discussions with potential investors," stated Mr. Copp.

"The market for regional aviation remains strong. In the second quarter, Falko had 20 aircraft transactions with nine distinct airline customers across six continents. In addition, as of June 2023, regional current market values and lease rates have shown signs of recovery from pandemic lows, reflecting a positive forward outlook," noted Mr. Copp. "We continue to see many opportunities to deploy funds in regional aircraft leasing to earn strong mid-teen returns and look forward to providing an update upon concluding discussions with our investors."

"Capacity in our Jazz operation is currently constrained as the strong industry wide demand for pilots continues. Over the past year, more than 300 pilots have transferred to Air Canada through our pilot flow agreement in addition to attrition to other airlines," Mr. Copp continued. "In the same period, we have successfully recruited and trained over 300 pilots and are collaborating with Air Canada to explore ways to increase flying capacity under the CPA. We continue to see a good supply of new hire pilots and are growing our pipeline of future pilots through our Jazz Pathways Program and our new flight training academy Cygnet Aviation."

Second Quarter Summary

In the second quarter of 2023, Chorus reported Adjusted EBITDA of $110.7 million, an increase of $5.9 million over the second quarter of 2022.

The RAL segment's Adjusted EBITDA was $57.3 million, an increase of $6.8 million primarily due to three months of Falko's earnings in the second quarter of 2023 versus two months in the second quarter of 2022 partially offset by decreased revenue related to the sale of wholly-owned aircraft in the second half of 2022.

The RAS segment's Adjusted EBITDA was $61.8 million and was in-line with the second quarter of 2022. Second quarter results were impacted by:

• an increase in aircraft leasing revenue under the CPA of $1.5 million primarily due to a higher US dollar exchange rate; and
• an increase in other revenue of $1.3 million due to an increase in parts sales, MRO activity and contract flying; offset by
• a contracted decrease in Fixed Margin of $0.8 million;
• a decrease in capitalization of major maintenance overhauls on owned aircraft of $0.8 million; and
• an increase in general administrative expenses attributable to increased operations.

Corporate Adjusted EBITDA of $(8.4) million was higher than the second quarter of 2022 by $0.9 million due to:

• an increase in general administrative expenses related to higher professional fees, salaries, wages and benefits and travel expenses; partially offset by
• a decrease in stock-based compensation of $1.1 million due to a decrease in the Common Share price, offset by the change in fair value of the Total Return Swap.

Adjusted net income was $25.6 million for the quarter, a decrease of $2.0 million over the second quarter of 2022 due to:

• an increase in depreciation expense of $4.4 million primarily attributable to Falko and capital expenditures in 2022;
• an increase of $2.9 million in income tax expense; and
• a change in net foreign exchange of $2.7 million; partially offset by
• a $5.9 million increase in Adjusted EBITDA as previously described;
• a decrease in net interest costs of $1.5 million primarily related to the redemption of the 6.00% Debentures in December 2022 and the recognition of income related to the discontinuance of hedge accounting on an interest rate swap; partially offset by interest on long-term debt assumed as part of the Falko Acquisition and the draw on the Operating Credit Facility; and
• a change on fair value of investments of $0.8 million.

Net income increased $60.7 million over the second quarter of 2022 primarily due to:

• a change in net unrealized foreign exchange of $27.9 million;
• a decrease in impairment provisions of $20.5 million;
• a decrease in lease repossession costs of $10.7 million;
• a decrease in restructuring expected credit loss provision of $10.4 million; and
• a decrease in strategic advisory fees of $5.7 million; partially offset by
• the previously noted decrease in Adjusted net income of $2.0 million; and
• an increase in income tax expense on adjusted items of $12.8 million.

Year-to-Date Summary

Chorus reported Adjusted EBITDA of $228.8 million for 2023, an increase of $40.7 million over the same prior year period.

The RAL segment's Adjusted EBITDA was $118.9 million, an increase of $36.7 million primarily due to six months of Falko's earnings versus two months in the first half of 2022; partially offset by decreased revenue related to the sale of aircraft in the second half of 2022.

The RAS segment's Adjusted EBITDA was $125.7 million, an increase of $6.4 million due to:

• an increase in other revenue of $8.0 million due to an increase in parts sales, MRO activity and contract flying; and
• an increase in aircraft leasing revenue under the CPA of $3.9 million primarily due to a higher US dollar exchange rate; partially offset by
• a decrease in capitalization of major maintenance overhauls on owned aircraft of $1.8 million;
• a contracted decrease in Fixed Margin of $1.5 million; and
• an increase in general administrative expenses attributable to increased operations.

Corporate Adjusted EBITDA of $(15.8) million was higher than the same period 2022 by $2.4 million due to:

• an increase in general administrative expenses related to higher professional fees, salaries, wages and benefits and travel expenses; partially offset by
• a decrease in stock-based compensation of $0.9 million due to a decrease in the Common Share price, offset by the change in fair value of the Total Return Swap.

Adjusted net income of $56.4 million, an increase of $11.1 million over the same prior year period primarily due to:

• a $40.7 million increase in Adjusted EBITDA as previously described; partially offset by
• an increase in depreciation expense of $17.4 million primarily attributable to Falko and capital expenditures in 2022;
• an increase of $8.2 million in income tax expense; and
• an increase in net interest costs of $4.0 million primarily related to interest on long-term debt assumed as part of the Falko Acquisition and the draw on the Operating Credit Facility partially offset by the redemption of the 6.00% Debentures in December 2022 and the recognition of income related to the discontinuance of hedge accounting on an interest rate swap.

Net income of $52.3 million, an increase of $69.8 million over the same prior year period primarily due to:

• the previously noted increase in Adjusted net income of $11.1 million;
• a change in net foreign exchange of $25.4 million;
• a decrease in impairment provisions of $20.5 million;
• a decrease in restructuring credit loss provision of $10.4 million;
• a decrease in strategic advisory fees of $8.4 million;
• a decrease in lease repossession costs of $7.1 million; partially offset by
• an increase in income tax expenses on adjusted items of $13.0 million.

Consolidated Financial Analysis

This section provides detailed information and analysis about Chorus' performance for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. It focuses on Chorus' consolidated operating results and provides financial information for Chorus' operating segments.

Outlook

Jazz's capacity is currently constrained as the industry-wide demand for pilots intensifies. In the past 12-months, Jazz has seen over 300 captain or captain-eligible pilots flow to Air Canada under the existing pilot flow agreement, along with attrition to other mainline airlines. In that same time period, Jazz has successfully hired and trained over 300 first officers and continues to see a good supply of new hire pilots.

Jazz expects this trend on flow of pilots to Air Canada and attrition to other airlines to continue in the near term.

The CPA provides a Fixed Fee to Jazz regardless of flying levels; therefore, the reduction in flying is not expected to have any impact on Jazz's earnings.

Falko continues to have positive and advancing discussions on its new fund (Fund III) with its existing lead investors in Fund II and others. Chorus is also routinely exploring opportunities to sell Falko's wholly-owned or majority-owned aircraft in order to advance the implementation of its asset light leasing strategy.

Chorus has the key elements to successfully execute on its strategy to transition to an asset light leasing model while growing its contractual fund management business and its RAS segment. The key elements include:

• Strong and predictable core earnings from the RAS segment, with the potential to expand into adjacent and complementary business lines;
• Significant wholly-owned or majority-owned aviation assets that can be monetized to reduce debt and return capital to Common Shareholders while also providing funding to improve the growth and return profile of the business over time through accretive investments; and
• Growth potential in the Falko series of funds from which Chorus can generate attractive returns via asset management fees, co-investment returns and incentive payments.

The asset light leasing model will enable Chorus to achieve greater scale in its leasing business by co-investing alongside third-party equity investors in Falko-managed funds, while decreasing risk to Chorus by reducing the use of recourse debt financing. As Chorus transitions to an asset light leasing model, asset sales will generate Free Cash Flow that can be deployed to pursue accretive investment opportunities and/or return capital to Common Shareholders. As part of this asset light transformation, Chorus is targeting:

• Aircraft asset sales: Chorus intends to opportunistically trade RAL's wholly-owned or majority-owned aircraft including in connection with the windup of its 67.45% ownership in Ravelin Holdings LP by its tenth anniversary in 2025. As of June 30, 2023, Ravelin Holdings LP held an interest in 39 aircraft with a net book value of US $397.9 million and secured debt of US $206.6 million. As asset sales occur, the related leasing revenues in RAL will decrease, which will be partially offset by lower depreciation and debt servicing costs and earnings from Falko managed funds.
• Reduced leverage: Chorus anticipates its Leverage Ratio will be between 2.5 to 3.5 by December 31, 2024, given the contractual nature of Chorus' earnings, amortizing debt repayments, and expected asset sales. Deleveraging amounts will vary from quarter-to-quarter depending on the timing and quantum of asset sales.
• Growth: Chorus intends to expand the number of Falko managed funds and the RAS business into adjacent and complementary specialty aviation business lines.

2023 Key Economic Assumptions:

The forecast now assumes Fund III will close outside of the 2023 year. Fund III is anticipated to have (i) a minimum of US $500.0 million in capital commitments and (ii) management fees and economic terms commensurate with those in Falko's prior funds.

The forecast revenue is based on current contracted lease revenue and forecasted revenues for leased aircraft and asset management fees. Aircraft leasing revenue under the CPA and Fixed Margin revenue is expected to be US $110.0 million and $63.0 million, respectively, in 2023 (2022: US $114.5 million and $66.3 million, respectively).

Asset sales of approximately US $50.0 million to $100.0 million in 2023 with a loan-to-value of between 50% and 60% generating net proceeds between US $25.0 million and US $50.0 million. If material asset sales are executed in 2023, this may reduce expected revenue in RAL, depending on the timing of such sales.

The forecast uses a foreign exchange rate of 1.30 for 2023 to translate USD to CAD revenue.

RAL's gross lease receivable may decrease from the June 30, 2023 balance of US $108.2 million to between US $95.0 million and US $100.0 million by the end of 2023 due to rent relief arrangements1 and repayment expectations.

RAL's lease deferral receivable exposure is partially mitigated by security packages held of approximately US $17.5 million (December 31, 2022 - US $17.1 million).

1 Following the onset of the COVID-19 pandemic, RAL received requests from many of its customers for some form of temporary rent relief, as they coped with an unprecedented reduction in demand for passenger air travel. Under rent relief arrangements, certain of which include lease term extensions, the repayment of the deferred amounts typically coincides with the lease term extensions.

Use of Defined Terms

Capitalized terms used but not defined in this news release have the meanings given to them in the MD&A which is available on Chorus' website and under Chorus' profile on SEDAR.

Investor Conference Call / Audio Webcast

Chorus will hold an analyst call at 9:00 AM ET on August 4, 2023 to discuss the second quarter 2023 financial results. The call may be accessed by dialing 1-888-664-6392. The call will be simultaneously audio webcast.

This is a listen-in only audio webcast.

The conference call webcast will be archived on Chorus' website under Investors > Reports. A playback of the call can also be accessed until midnight ET, August 11, 2023, by dialing toll-free1-888-390-0541 and using passcode 749492 # (pound key).

1 Non-GAAP financial measures

About Chorus Aviation Inc.

Chorus is a leading, global aviation solutions provider and asset manager, focused on regional aviation. Our principal subsidiaries are: Falko Regional Aircraft, the leading pure play regional aircraft asset manager and lessor, managing investments on behalf of third-party fund investors; Jazz Aviation, the largest regional operator in Canada and provider of regional air services under the Air Canada Express brand; Voyageur Aviation, a leading provider of specialty charter, aircraft modifications, parts provisioning and in-service support services; and Cygnet Aviation Academy, an industry leading accredited training academy preparing pilots for direct entry into airlines. Together, Chorus' subsidiaries provide services that encompass every stage of a regional aircraft's lifecycle, including: aircraft acquisition and leasing; aircraft refurbishment, engineering, modification, repurposing and transition; contract flying; aircraft and component maintenance, disassembly, and parts provisioning; and pilot training.

Chorus Class A Variable Voting Shares and Class B Voting Shares trade on the Toronto Stock Exchange under the trading symbol 'CHR'. Chorus 5.75% Senior Unsecured Debentures due December 31, 2024, 6.00% Convertible Senior Unsecured Debentures due June 30, 2026, and 5.75% Senior Unsecured Debentures due June 30, 2027 trade on the Toronto Stock Exchange under the trading symbols 'CHR.DB.A', 'CHR.DB.B', and 'CHR.DB.C' respectively.

We seek Safe Harbor.