Good morning. My name is Mariama, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chorus Aviation Inc. first quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, please press star and then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. I would now like to turn the call over to Nathalie Megann, Vice President, Investor Relations and Corporate Affairs. You may begin your conference.
Thank you, operator. Hello, and thank you for joining us today for our first quarter 2018 conference call and audio webcast. With me today from Chorus are Joe Randell, President and Chief Executive Officer, and Jolene Mahody, Executive Vice President and Chief Financial Officer. Excuse me. 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 statements and information which are subject to various risks, uncertainties, and assumptions that are included or referenced on page 32 of our Management's Discussion and Analysis of the results and operations of Chorus Aviation Inc. for the period ended March 31, 2018, 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 measures, including references to EBITDA, Adjusted EBITDA, adjusted Net Income. please refer to Section 16 of 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 day, everyone. Thank you for joining us. This morning, we held our annual meeting of shareholders, and I'm pleased to report that all orders of business were approved. I thank our investors and our Board for their support. It is also my pleasure to welcome Ms. Margaret Clandillon to our Board of Directors. Margaret is a highly experienced corporate director with over 30 years of legal and business experience in aircraft leasing and capital markets. Her counsel will be valuable as we continue to execute on our growth strategy. Now, turning to the first quarter. I'm pleased with our overall performance and believe we are off to a positive start. Our efforts in this period were concentrated, excuse me, on maintaining the momentum achieved in 2017 towards our vision of delivering regional aviation to the world.
We were very pleased to welcome Dublin-based CityJet to our growing portfolio of regional lessees. This transaction was a sale and leaseback of two CRJ-900s, bringing our fleet of leased aircraft to 67, with an average age of 6 years. In the quarter, we successfully completed an equity raise that yielded approximately CAD 107 million in net proceeds, bringing the total amount of capital raised for our leasing business to just over CAD 300 million since the start of last year. When combined with the anticipated debt financing at typical ratios of up to 3 times equity, this capital affords us the ability to invest up to CAD 1.2 billion in aircraft for third-party leasing. Based on our deployment rate over the last year, we expect to fully deploy this capital by mid-2019.
We have ongoing active negotiations and continue to have many good opportunities to assess. Our intention is to deploy this capital prudently, as we've done to date, methodically and deliberately, with a good mix of aircraft types, clients, and geographic locations. Jazz and Voyageur continue to operate within our expectations and are maintaining a solid course of delivering positive customer satisfaction. Jazz Technical Services completed the fifth Extended Service Program on a Dash 8-300 that is now contributing to our leasing revenue stream under the CPA with Air Canada. We were pleased that Jazz's Airport Services Group ratified a new collective agreement that extends to January of 2022. I thank the Chorus team for their continued efforts toward our shared vision. Before closing, I'd like to take this opportunity to congratulate Air Canada on its results, especially given the difficult weather this past winter.
There is, however, one point I'd like to clarify relating to the deployment of Rouge. From our perspective, we view Rouge positively, as it not only makes Air Canada stronger, which is good for us, it also provides additional destinations which we feed. Rouge broadens the Air Canada network, and all other services benefit. This broadening of the network helps Air Canada launch new regional feed routes, such as the two that were just announced, Montreal to Windsor and Montreal to London. Recently, Air Canada also announced seven new routes in Western Canada, which will be flown by Jazz. We work very closely with Air Canada to help maximize its network, and the deployment of Rouge services on routes which have traditionally operated, we have traditionally operated, is, in fact, a good sign. It shows that demand has grown enough to support the larger aircraft.
This has always been the case where mainline services move on routes where demand is sufficient, and this is often done seasonally. It's all about putting the right aircraft on the right routes at the right time.... Air Canada has a lot of flexibility to match capacity to demand using our services, and also we enable Air Canada to explore and to test new markets. Our fixed fee compensation under the CPA isn't affected by where we fly or how much we fly. This ensures a strong alignment of interests with our customer, Air Canada. We deploy our aircraft on routes they deem best, and our fees for operating the flights don't change as a result. These fees and the minimum number of aircraft in the CPA fleet are set out in our agreement until 2025, and any changes to our contract require mutual consent.
I felt it important to remind our shareholders of this, given the market's reaction to this news earlier this week, especially when you consider how robust the fundamentals of our business continue to be. Looking ahead, we remain focused on creating additional long-term shareholder value by capitalizing on our industry relationships as we build our core competencies in regional aircraft leasing, contract flying operations, and MRO. I'll now turn the call over to Jolene, and she will take you through the financial results.
Thank you, Joe, and good afternoon, everyone. We continue to transition our business, and I'm very pleased with our progress. In the quarter, we generated total revenue of CAD 347.6 million, versus CAD 319.8 million in the same period of 2017, an increase of CAD 27.8 million or just under 9%. The primary driver of this increase was our non-CPA aircraft leasing, which together with maintenance, repair, and overhaul, increased by 123% quarter-over-quarter. The objective of our growth plan is to build non-CPA revenues by leveraging the expertise within our organization to deliver a full suite of regional airline services to customers worldwide.
Approximately 88% of our revenue was generated under the CPA in the first quarter, as compared to 94% in the same period of 2017. Bear in mind, however, that approximately 71% of our consolidated revenue in the quarter was attributable to pass-through and controllable revenues, which are intended to reimburse Chorus for services provided under the CPA. With our recent capital raise, our intention is to continue building our regional aircraft leasing revenue. Now I'll turn to the first quarter of this year, and here's how the results compare to the same period in 2017. We reported Adjusted EBITDA of CAD 78 million versus CAD 54.4 million in 2017, an increase of CAD 23.6 million or 43.4%.
The CAD 23.6 million increase in Adjusted EBITDA was primarily driven by a CAD 13.8 million increase due to the growth- mainly due to the growth of third-party regional aircraft leasing, increased aircraft leasing revenue under the CPA of CAD 2.3 million, decreased stock-based compensation of CAD 2.2 million, decreased operating costs related to a CAD 1.3 million increase in capitalized labor and maintenance costs on owned aircraft for major maintenance overhauls, and a decrease of CAD 4.9 million in other expenses. This was offset by a decline of CAD 0.9 million in CPA performance incentive adjusted Net Income came in at CAD 26.5 million for the period, an increase from 2017 of CAD 10.4 million or 64.5%. Adjusted Earnings per Share rose 61.5% to CAD 0.21 per basic share.
The change was a result of the CAD 23.6 million increase in Adjusted EBITDA previously described, and the CAD 0.2 million decrease in income taxes, which was partially offset by CAD 5.8 million of interest costs related to increased aircraft debt and convertible units, and CAD 7.6 million of additional depreciation, primarily related to new aircraft. Net Income was CAD 5.1 million for the period, a decrease of CAD 29.9 million or 81.3% from the same period of 2017. This decrease was due primarily to changes in unrealized foreign exchange losses of CAD 32.2 million, which was offset by the previously noted CAD 10.4 million increase adjusted Net Income. in February, we implemented a dividend reinvestment plan to help support our growth, our growth in our aircraft leasing business.
The plan currently offers a discount of 4% from the average market price per share purchased under the plan, and I'm very pleased with the current approximately 20% uptake so far. Looking ahead to the balance of this year, capital expenditures for 2018, excluding those for the acquisition of aircraft and the ESP, but including capitalized major maintenance overhauls, are expected to be between CAD 44 million and CAD 50 million. Capital expenditures for ESP and aircraft acquisitions, as announced as of March 31st, 2018, are expected to be between CAD 81 million and CAD 84 million. However, this excludes future capital for aircraft acquisitions.
Based on scheduling information from Air Canada, billable block hours for 2018 are expected to be between 360,000 and 375,000 hours, and this is based on 116 covered aircraft as at December 31, 2018. The actual number of billable block hours for 2018 may vary from this anticipated range due to many factors, which are outlined in Section Nine of the Risk Factors. For additional information supporting our projected guidance for the balance of this year, I'll refer you to Section Four, the 2018 Outlook section of our MD&A for the period end of March 31, 2018. And, that concludes my commentary. Thank you for listening. And operator, we can now open the call to questions from the analyst community.
Thank you. At this time, I would like to remind everyone, in order to ask a question, please press Star and then the number 1 on your telephone keypad. We'll pause for a brief moment to compile the Q&A roster. Your first question comes from Walter Spracklin with RBC. Your line is open.
Thanks very much. Good morning, everyone.
Good morning.
So, Joe, you addressed the Rouge issue because at first when Calin kind of highlighted it, he actually used the example of Halifax to St. John's as being instead of a few flights on a regional aircraft, we could condense it into less flights, moving same or more people on a narrow body, which kind of led to that view that maybe there would be less use of regional players. But to your point, you're seeing that as either offset or not only offsetting, but adding by the new connectivity that the additional Rouge routes provide. Is that right?
Yeah, I think, you know, the whole idea of Air Canada's route network is really to put the right-sized airplane and the right, you know, to compete against whoever's on the route in the right manner, and nobody owns routes. You know, there's not a. You can say that a particular route is operated by us, but nobody actually owns the routes. They're left to Air Canada's revenue management and scheduling people to decide what the best combination is. And, you know, in the past, we've had, you know, many examples of routes that we have operated, that Air Canada put larger equipment on, and vice versa, a number of routes that have been down gauged over the years as well. And it's a function of the connectivity, it's a function of the local market, et cetera.
You know, I think what people fail to see is that, you know, since Air Canada has been expanding, we've gone on a lot of new flying, especially in Western Canada, you know, routes like Denver, Vancouver, San Jose, Vancouver, Dallas, Vancouver, Chicago, Vancouver, as an example, all feeding Air Canada. Aside from those routes, now that we've been operating for a period of time, there were seven routes that were just announced in Western Canada not long ago, including Edmonton, San Francisco, Edmonton, Kelowna. I won't go through the list, but, you know, so, so we're not seeing a decrease in the demand for hours on our services. We're seeing a redeployment, which is really what it's all about. The network is not static. It's going to keep changing all the time.
And, you know, when you look at the additional feed that we provide, we feed Rouge just like we do mainline. So if Air Canada puts on a new Rouge flight from Montreal to Budapest, as an example, that's a great opportunity. Air Canada has launched some new services from Montreal to Philadelphia, to Baltimore, et cetera. And a lot of these services connect to Rouge services out of Montreal, as an example. So you know, the whole system is rather dynamic, and, you know, it sounds as if we're being replaced in some of these, but overall, it's really a, you know, it's really a redeployment, realignment, and that's more of what it's all about, and that's what we see.
So if there is a redeployment, I mean, the risk, I guess, is that you might lose a route due to densification, but you don't get the redeployment because it goes to another regional player. Are you? Well, are you winning most of the new routes? You know, can you give us some comfort that of the regional routes that have been redeployed, you've won, you know, the majority of them, or is that fair to say?
No, no, I think, I think I've gone through the list of the routes that have been announced that we will operate. I don't have it top of mind in terms of the other regionals, but, you know, we have not seen a shift in the share of the flying that we have as a result of this at all.
Okay.
You know, so I'm really a little bit... We were a little bit baffled in terms of how the market interpreted this and how it responded, because the fundamentals of our business and our relationship with Air Canada, the amount of flying that we do and the flexibility we give Air Canada, is exactly the same as it's always been.
That's good to hear. And I guess when the C Series comes out, I get the same thing. Do you see that as opening up routes, or is that a threat to the C Series now encroaching in on some of what the regional flying you would have been doing? 'Cause as I understand it, the C Series will continue to be operated by mainline. Is that right?
Yeah, you know, I, again, I think we'll see some new routes, we'll see some changes. Of course, what you have to recall, what you have to remember is that Air Canada is taking out its fleet of 190s, and, you know, the C Series is more equivalent to that size of aircraft. And, you know, as Air, Air Canada succeeds and grows, we're seeing new routes, new opportunities, and in the event of a downturn, frankly, you know, the converse is generally true, where there are a lot of routes then that all of a sudden can't support their larger, larger equipment, and that's where we are, where we are deployed. I think quite often it's the larger equipment on the larger end of the scale that, where there are fewer options that suffer the most in a, in the event of a downturn.
So, you know, we're a bit of a hedge. We're hedged in terms of the downturn because we've got the right size airplanes with the right economics to offer and still maintain good frequency.
... Okay. And just to be clear, I mean, since they operate the 190s, is there no chance you'll be able to operate the C Series for Air Canada? Has that already been signed, sealed, and delivered, kind of thing?
Yeah, that's not in our portfolio at this time, so.
Okay. Moving over to the leasing business, I noted there was a little bit of a language change on your leverage from, I think it was 3 to 4 to 1, to now up to 3 to 1. And I'm just wondering if, are you seeing any obstacles that weren't there before? Is higher interest rates a consideration here? Is there anything that would lead you to adjust your leverage? And maybe just give an update on exactly the environment for the leasing of new and deployment of new aircraft as well, that'd be helpful.
Yeah. Well, Jolene may have a comment on the, you know, on the leverage, I guess, and that, but in fact, you know, we're not really seeing anything much different than what we did before. As a matter of fact, we're finding now, as we get more leverage and volume and a track record here, that that is actually going to help us in terms of the financing of the fleet.
Right.
You know, because the cost of capital is critical, you know, the more you leverage it up, frankly, the better you do. We're seeing some positive trends on that.
Yeah, I think, Walter, if there was any language change, it was certainly unintentional. I don't take any meaning into it. You know, we continue to see and achieve kind of leverage rates that we had in the past. And as Joe said, in fact, you know, under some of the arrangements that can be put in place with EDC, we, with you know, the track record, I think that we're creating and stuff, we expect lowering costs of capital and ability to leverage, you know, to a greater degree if we chose to do that. But the numbers of 3:1 to 4:1 are still fully intact.
Interest rate, rising interest rates?
Yeah, no, we're not seeing any fallout of rising interest rates. I mean, as you know, our approach certainly from the deals that we have to date, we lock in our interest rates in one form or another, and we match it up with the lease term. You know, as time moves on, I think, you know, you'll probably see inflection points with OEMs increasing pricing based on increases in interest rates, which we'll continue to bake into our investment decision and into the leasing rates themselves. But we're not seeing any fallout from that at this stage.
I think, rising interest rates will cause, you know, all boats to rise with the tide, because I think you'll see that reflected in, in lease rates. And, and, you know, and in terms of carriers themselves, the cost of financing the aircraft, if they were to do their own acquisition, is going to increase as well. So, you know, other than the ultimate impact that it may have on the economic, you know, on the world economy, which still seems to be, you know, going very well, it's not something that we lose any sleep over.
Got it. Okay, that's all my questions. Thanks very much.
Thank you.
Your next question comes from Cameron Doerksen with National Bank. Your line is open.
Yeah, thanks. Good morning. I guess, just a couple of questions on the Chorus Aviation Capital business. I mean, just, firstly, on the, I guess, the pace of capital deployment here, you know, has slowed a little bit in the last couple of quarters. I know there's, there's some lumpiness to getting these transactions done, but, you know, how comfortable are you in kind of deploying or, or deploying capital to bring in another 20-25 or so aircraft by mid-2019? That's only sort of, you know, 12 or 14 months of just wondering if-
Yeah.
If you still feel pretty confident about being able to do that.
Yeah, we're very confident about that, Cameron. You know, we have a number of transactions at various stages in the development cycle. As you said, it's going to be a little lumpy. If you look back over last year, you know, I think we did what we said we were going to do, and it was, though, a little lumpy. You know, it's more about getting the transactions, the right transactions before us, and, you know, we see a good pipeline, a continued good pipeline of opportunities. So, there's no change in that regard. You know, the first quarter, certainly the last little while, has been a little slower, but, you know, we see the pace picking up.
Okay. And I think maybe one of the limiting factors, if we go back six months or so, was just the size of the team at Chorus Aviation Capital. Have you basically filled out all the necessary team there to get the transactions over the line?
Yeah, we're-- we've grown the team, and, you know, we have our Chorus Aviation Capital, Ireland, and we're in the process of even adding more resources there. So we've brought a lot of people in with various backgrounds, you know, with leasing companies, et cetera. So, you know, we're building a stronger team as it goes forward. We're being careful about not overbuilding as well because, you know, it's, it's a matter of building the team at the right pace. But, you know, we're getting traction, and, and as time goes on, it will increase the number of professionals that we're going to have. But we have all the primary functions certainly well covered.
You know, and of course, we do get some technical support from Voyageur, et cetera, so it's, we're able to draw on some of that.
Okay. And the, I guess, the SG&A costs related to Chorus Aviation Capital, where do they show up on the income statement?
...So they run throughout the income statement, Cameron. So, you know, the majority obviously would be in the form of salaries, which would be in the salary line, combined with all the rest of the employee labor costs, and then anything else, if it's not capitalizable and transaction costs, they would flow through the other expense section of the P&L.
Okay. No, that, that's good. All right, that, that's actually all I had. Thanks very much.
Thank you.
Your next question comes from Kevin Chiang with CIBC. Your line is open.
Hey, yeah, thanks for taking my question here, and good morning, everybody. Maybe just a follow-up question on the impact of rising rates. I'm wondering, you know, as rates rise, are you able to increase the lease terms to reflect the spread? Are you, do you see any pushback or maybe rates haven't risen enough for you to have those conversations? But just wondering, are you able to match that spread even as rates rise here?
Yeah. So just, you know, the, I think, I guess you're talking about, prospective deals.
Right.
Certainly, on the deals that we've done to date, they're, you know, 95% of the interest rates are fixed, so we're not, you know, we're not exposed there. And yeah, you know, we've not seen any, I guess, margin compression to this point on rising interest rates at all. We've been able to kind of maintain kind of that targeted range that we had anticipated and wanted. So, you know, we'll kind of see what happens as time goes forward, but we've not seen any follow-on implications.
We continue to, you know, to look to match the term of the debt to the terms of the lease and, you know, at fixed rates, so.
Okay. That's helpful. And then when you think of the size of the pie and, you know, you've highlighted by mid-2019, you'll basically be double your current levels now, so maybe close to 50 aircraft, give or take. You know, how big does this fleet get, the non-Air Canada component of the lease portfolio? How big can this get? It seems like this pipeline is very deep. It, you know, is it 70 planes, 80 planes, is... Or is 50 kind of a good level you'd like to stay at?
Well, we see, you know, as we get traction and, you know, we're maintaining the right balance in terms of the financial leverage that we have and, you know, the equity that we have to invest, et cetera, maintaining and looking to capitalize on the opportunities that are there. You know, we, we presently haven't said anything really beyond 2019, but, you know, we see it as a, as a growing enterprise. And, you know, you have some very, like, the largest regional lessor in the world, who's got about $6 billion in assets, and, which is, which is Nordic. And, you know, we continue to see good opportunities in becoming a strong world number two in the, in the, regional aircraft leasing business.
You know, we're certainly quite a bit smaller than Nordic is, but it's all about doing it prudently, about, you know, taking on the appropriate risk reward levels. And, you know, I think we're getting good tractions. We're seeing a lot of traction. We're seeing a lot of opportunities out there that, in fact, we're not interested in. So we're being cautious, but you know, it clearly is the growth end of our business.
That's helpful. And the last one for me, maybe a follow-on on, you spoke of the growth opportunities with Air Canada, given their expanding network and the ability for you to help connect the dots. When I look at... I know billable hours might not be the perfect proxy, but if I look at, you know, the high water marks for your billable hours, looking back the last, you know, 10+ years, call it about 400,000 hours in a very different environment, and today, you're kind of north of 90% of that level. It, are you – I wonder what the utilization rate of your covered fleet is.
Like, if Air Canada continues to grow, do you need to start adding to the covered fleet, or is there a significant amount of additional flying you can still do with the planes you have currently under the CPA-covered fleet?
No, well, I think the underlying issue under the hours, and, you know, you're right about the hours, is that you have to really look at what the fleet is composed of, and we have really shifted further and further away from 37 and 50-seat airplanes to 75-seaters. And that's just a matter as to, a fact as to what's happening in the regional business, especially as the markets grow, et cetera. And, you know, we see, and the opportunities on the 75-seat aircraft side, side. You know, the smaller aircraft, the, the, ASM costs are higher because of the smaller aircraft, so there's a natural movement. Now, if you look at our ASM production, despite the lesser hours, our ASM production was up 3% over last year, in 2017 over 2016.
So, you know, we have a covered fleet. We have an agreed-upon fleet, but we're always open to discussion with Air Canada about changing the mix, you know, providing Air Canada with a better combination that would enable them to compete better, et cetera. So, you know, I think you will see as time goes on, that the fleet will adjust, et cetera, but the undermining economics of the CPA for us are solidly intact, even with changes in that regard.
That's helpful, and that's all for me. Thank you very much.
Thanks, Kevin.
Your next question comes from Turan Quettawala from Scotiabank. Your line is open.
... Yes, thank you, and good morning. I guess, I wanted to just, ask one on the covered fleet as well here. I guess, Joe, in terms of the covered fleet, can you remind us again? I think the minimum is sort of very close to the 616, 617 aircraft, out to at least to 2020, is it not? And, and how much is it out to 2025?
So the minimum fleet is actually what we're operating. So it's 117 planes currently. It moves to 116 planes by the end of this year. And then, Turan, you know, we have a number of Dash 8s. If you go out into the older years, that number drops down to currently a minimum fleet commitment of 96 airplanes at the end of 2025. That's really predominantly driven by the 37-seat aircraft, the Dash 8-100. But as they meet their life limits, they kind of come out of the CPA.
There are 5 more 75-seat aircraft in the plan, as it exists today in 2020, I believe. So although there's a reduction in the number of fins, when you look at the ASM production, I keep going back to that, then, you know, that's, that's—that remains very solid. And, of course, the compensation that we receive is well-defined out to 2025.
No, no, I understand that. Okay, perfect. Thank you. Then I guess the other question I had was, I saw that there's about 10 planes, I guess, in your fleet that are sort of not operational right now. Just wondering, sort of what plans you might have for those. Are they just sort of in the maintenance cycle, or is there basically maybe an operability to either lease those out or something?
Yeah, you know, we've taken out quite a number of Dash 8-100s over the last few years. We converted some of them from passenger to freighter. They're under lease. We leased others to third parties. We actually redeployed some of those aircraft through Voyageur for contract flying, and we parted out quite a number. We've done quite well, actually, when we parted out these aircraft. So we do have a number right now sitting, and we are looking to remarket those airplanes. I think we're getting some interest, further interest in the freighter side, et cetera. So, you know, these are assets that, you know, that we just have available, that we're looking to repurpose, and that's what Voyageur is all about.
And Turan, as you know, those assets are fully owned. I mean, there's just some small depreciation costs associated with them. There's no debt or anything against them.
Yes, thank you. I guess maybe one last one from me here on the ESP costs. I guess those are generally related to the pilot flow-through agreement. Is that right?
Sorry, what was the question?
The ESP costs, I think, in the quarter, are those all, I think it's CAD 4.2 million or something. Is that all basically the pilot flow-through agreement?
The ESP cost?
Oh, did I, did I misread that?
So, the VSP cost, sorry, are you about Employee Separation Program costs?
That's right.
Yeah. So you're right. They were CAD 3.5 million, a combination of pilots and maintenance employees-
Got it.
-that we continue to invest in. Yes, you know, you know, our objective is to populate those new industry wage rate scales, and so we'll continue to invest to, change the, the demographic to populate those scales. You're exactly right.
Okay, are you having any difficulty in getting pilots right now on the other side? And maybe just talk a little bit about the average age of your pilots. I mean, are we getting to the right number now on that side?
So, you know, we continue to have a good pipeline of well-qualified pilots. We've been very proactive to ensure that that's the case. We've had a really good flow of pilots to Air Canada, over 500 that have gone over. And right now, if you look at our pilot roster, 54% of our pilots are under the new wage scales and the new agreement. So, you know, we've seen a major shift there. We actually hired 1,200 new employees last year, so we are repopulating all of Jazz, really, with a younger demographic under the new agreements, etc. I don't have an average age, but I will tell you that we sort of do have two bumps in the age.
We have a very young group of pilots that are the recent additions, primarily, and then we have, you know, a more mature number of pilots that have been with here, with us quite a long time. So, we've got a real good combination. So the age is in the middle. I'm sorry, I don't have the
I think the relevant metric for us is the percentage population on the new scale, which is about 54% versus age. Yeah.
That's great. That's perfect. Thank you very much.
Your next question comes from David Tyerman with Cormark Securities. Your line is open.
Yes, good morning.
Good morning.
My question is on the MRO, third-party flying, et cetera, everything but the CPA and the leasing business. I was just wondering if you could kind of scale it for us right now and give us an idea of how quickly it's growing and what the opportunities you see for it over the next couple of years are?
Yeah, I think on the MRO business, you know, we've done some third-party, through JTS here with Jazz. We're a Bombardier-approved maintenance organization now. So, you know, but essentially, if you go to this hangar today, we've got about six lines of business. Our six lines of MRO, two of them are outside the remainder of the Jazz fleet. You know, and it's the facility here is basically operating at capacity. We continue to do specialty work in North Bay, and we're actively working at growing that business. You know, the parts business, of course, has been going very well, but, you know, it's still not a particularly material part of our revenues. It really, our revenues are driven by contract flying and aircraft leasing.
So we don't have any specific numbers in that regard, but it really is supportive of the rest of our lines of business.
Yeah, and if I can just add to Joe's comments, David, so you know, the MRO flows through, I guess, that other revenue category on the P&L, along with third-party leasing. And you know, predominantly, if you kind of back into trying to figure out what portion is what, I'd say predominantly, majority of the increase year-over-year, quarter-over-quarter, is driven by the leasing side versus MRO. MRO for the quarter, fairly flat, up a little, but you know, we have a lot, as Joe said, of internal work going on at JTS, even with the Dash 8-300s. We're doing all that work in-house, and that's taking up a bit of capacity.
But then the other, non-CPA stuff I think you're referring to is, the contract flying related to Voyageur. And that's disclosed separately, charter and contract flying. That line, you'll see, it's fairly consistent with last year as well. But I'll just remind you that last year, you know, we saw a pretty significant uptake in that line, and we were over 16% in performance growth in that top line for the year. So we don't expect to repeat that growth level this year. It was a pretty, pretty big pickup with the same fleet, really, a couple of more Dash 8. But, so, you know, for this year, I think you'd, you'd model something a little bit more modest in, in that line as far as growth.
Should I basically conclude from all of this that the... Everything but the CPA and the leasing really is kind of a flat business, doesn't grow much, or is it still growing?
No, no, no. I, I wouldn't say that. I'm just trying to characterize the first quarter numbers, right? So that you can kind of figure out what's what on that other line, because I know it's a bit frustrating to try to figure out how much is driving from the, from the third-party leasing. I wouldn't say that at all. You know, relatively wise, it's obviously small because just of the nature of, of the pool of business that's there. But there is certainly, you know, some, some modest growth there, but it's not 43% growth that you're seeing in the aircraft leasing business.
Sure. Great. Okay. Okay, fair enough. That's all for me. Thanks.
Again, if you would like to ask a question, it is star one on your telephone keypad. Your next question comes from Tim James with TD Securities. Your line is open.
Thank you. I just have a question about the long term here, the very long term. What should investors think about as a possible trigger or an achieved financial metric that could be a catalyst for an increase in the dividend? And when I say long term, I mean, you know, five years or more in terms of what constitutes the long term.
Yeah, we've not really focused on any particular time frame. You know, our efforts right now are going into investing on, and growing, and diversifying the business, and we believe that is what will bring the greatest value to the shareholder in the longer term. You know, of course, you know, we watch the dividend, et cetera. The yield continues to be very high, and, you know, our efforts are really on building that share price and executing on our growth plan so that, you know, we don't see drop-offs in share price like we've just had this last little while. It's really about, you know, the fundamentals of the business are good.
It's about strengthening the foundation, gaining more momentum, and I think at the appropriate time, it would be looked at, but we don't have any time frames right now.
Okay. Thank you very much. That's the only question I had.
Okay. Thanks, Tim.
There are no further questions at this time. I will now turn the call back over to the presenters.
Thank you very much, Alfredo, and thank you everyone for being present on the call. Wish you a very pleasant weekend.
This concludes today's conference call. You may now disconnect.