Chorus Aviation's (CHRVF) CEO Joseph Randell on Q1 2018 Results - Earnings Call Transcript

Chorus Aviation, Inc. (OTC:CHRVF) Q1 2018 Earnings Conference Call May 4, 2018 11:00 AM ET

Executives

Nathalie Megann - Vice President, Investor Relation and Corporate Affairs

Joseph Randell - President and Chief Executive Officer

Jolene Mahody - Executive Vice President and Chief Financial Officer

Analysts

Walter Spracklen - RBC

Cameron Doerksen - National Bank

Kevin Chiang - CIBC

Turan Quettawala - Scotiabank

David Tyerman - Cormark Securities

Tim James - TD Securities

Operator

Good morning. My name is Marianna, 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. [Operator Instructions] 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.

Nathalie Megann

Thank you, operator. Hello and thank you for joining us today for our first quarter 2018 conference call 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. 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 Pages 6 and 7 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 discussions involve certain non-GAAP measures, including references to EBITDA, adjusted EBITDA and adjusted net income. Please refer to Section 16 of our MD&A for a discussion relating to the use of such non-GAAP measures.

I'll now turn the call over to Joe Randell.

Joseph Randell

Thank you, Natalie, 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 the 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 market. 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're off to a positive start. Our efforts in this period were concentrated 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 less seats. This transaction was the sale and leaseback of two CRJ900's bringing our fleet of leased aircraft to 67 with an average age of six years.

In the quarter we successfully completed an equity raise that yielded approximately 107 million in net in that proceed, bringing the total amount of capital raised for our leasing business to just over 300 million since the start of last year. When combined with the anticipated debt financing at typical ratios of up to three times equity, this capital affords us the ability to invest up to 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 asset 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 continued 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. And we were pleased that if Jazz's airport services group gratified a new collective agreement that extends to January of 2022.

I thank the Chorus team through their continued efforts toward our shared vision. Before closing, I would like to take this opportunity to congratulate Air Canada and its results especially given the difficult weather this past winter. There is however one point I would 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 mastermind its network and the deployment of Rouge services on routes which had traditionally operated - we have traditionally operated is in fact a good sign. It shows that demand is growing enough to support the larger aircraft.

This has always been the case where mainline services move on routes where demand is efficient and this is done often seasonally, its' all about putting the right aircraft on the right routes at the right time. Air Canada has a lot of flexibility and mass capacity to demand using air 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 us strong alignment of interest with our customer Air Canada. We deploy our aircraft on route saving 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 their agreement until 2025. And any changes to our contracts would require mutual consent.

I felt it's 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 growth competencies in regional aircraft leasing, contract line operations and MRO.

I'll now turn the call over to Jolene, and she will take you through the financial results.

Jolene Mahody

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 347.6 million versus 319.8 million in the same period of 2017, an increase of 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 freight 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 control of the revenue, which are intended to reimburse Chorus the 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 compared to the same period in 2017.

We reported adjusted EBITDA of 78 million versus 54.4 million in 2017, an increase of 23.6 million or 43.4%.

The 23.6 million increase in adjusted EBITDA was primarily driven by 13.8 million increase mainly due to the growth of third party regional aircraft leasing, increased aircraft leasing revenue under the CPA of 2.3 million.

Decreased stock based compensation of 2.2 million, decreased operating costs related to 1.3 million increase in capitalized labor and maintenance cost on owned aircraft for major maintenance overhaul and a decrease the 4.9 million in other expenses. This was offset by a decline of 0.9 million in CPA performance in terms of revenue.

Adjusted net income came in at 26.5 million for the period, an increase from 2017 of 10.4 million or 64.5%. Adjusted earnings per share grew 61.5% to $0.21 per basic share.

The change with the result of the 23.6 million increase in adjusted EBITDA previously described and the 0.2 million decrease in income taxes, which are partially offset by 5.8 million of interest cost related to increased aircraft debts and convertible units and 7.6 million of additional depreciation primarily related to new aircraft.

Net income was 5.1 million for the period, a decrease of 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 32.2 million, which was offset by the previously noted 10.4 million increase in 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 for shares purchased under the plan and I'm very pleased with the current approximately 20% uptick so far.

Looking ahead to the balance of this year, capital expenditures for 2018 excluding those for the acquisition of aircrafts and the ESPs, but including capitalized major maintenance overhaul are expected to be between 44 million and 50 million.

Capital expenditures for ESP and aircraft acquisition as announced as of March 31, 2018, are expected to be between 81 million and 84 million. However, this excludes future capital for aircraft acquisition. Based on schedule information from Air Canada, billable block hours for 2018 are expected to be between 350,000 and 375,000 hours and this is based on 116 covered aircraft as of 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 9 of the risk factors. For additional information supporting our projected guidance for the balance of this year are referred in Section for the 2018 outlook section of our MD&A for the period ended March 31, 2018.

And that includes my commentary. Thank you for listening and operator we can now open the call to questions from the analyst community.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Your first question comes from Walter Spracklen with RBC. Your line is open.

Walter Spracklen

Thanks very much, good morning everyone.

Joseph Randell

Good morning.

Walter Spracklen

So George, you addressed the Rouge because at first when Killen kind of highlighted it he actually used the example of Halifax to St John's [ph] as being instead of a few flights on a regional aircraft we could connect to the in the last 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 Rouge routes provide, is that right?

Joseph Randell

Yeah, I think the whole idea of Air Canada is really to put the right sized airplane in the right - to compete against whoever's on the route in the right manner and nobody owns routes. There's not a - you can say that a particular route is operated by us, but nobody actually owns that route, so it's left Air Canada's revenue management and scheduling people to decide what the best combination is. And in the past we've had examples of rules that we have operated but Air Canada put larger equipment up and vice versa. A number of routes that have been down gauged over the years as well and it is a function of connectivity, it's a function of the local market et cetera. And I think what people fail to see is that since Air Canada's been expanding, we've got on a lot of new flying especially in Western Canada routes like Denver-Vancouver, San Jose-Vancouver, Dallas-Vancouver, Chicago-Vancouver as an example all feeding via Canada. And aside from those routes, now that we've been operating for a period of time, there are seven routes that were just announced in Western Canada not long ago including Edmonton-San Francesco, Edmonton-Kelowna, I won't go through the list. 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, that work is not static, it's going to keep changing all the time. When you look at the additional fee that we put by re feed routes just like we do mainline, so if Air Canada puts on a new routes 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 connects to rural services, Montreal as an example. So the whole system is rather dynamic and it sounds as if we're being replaced in some of these, but overall it's really redeployment, realignment and that's more of what it's all about and that's going to be.

Walter Spracklen

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 winning most of the new routes - can you give us some comfort that of the regional routes had been redeployed, you have won the majority of them, is that fair to say?

Joseph Randell

No, I think I've gone through the list, the routes that have been announced that we will operate, I don't have at the top mind in terms of the other regional's, but we have not seen a shift in the share of the flying that we have as a result of this at all. So I'm really a little bit - we're 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.

Walter Spracklen

That's good to hear and I guess when the C series comes out the same thing do you see that is 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 because as I understand it -

Joseph Randell

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's is taking all 190s and C series is more equivalent to that size of aircraft. Air Canada succeeds and grows, we're seeing new routes, new opportunities and any event of the downturn frankly, the Congress is generally true where there are a lot routes, but all of a sudden can't support their larger equipment and that's where we are deployed. I think quite often it's the larger equipment on the larger end of the scale that were the fewer options that suffered the most in the event of a downturn. So you we're a bit of a hedge - we're hedged in terms of a downturn because we've got the right size airplanes with the right economics to offer and still maintain good frequency.

Walter Spracklen

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, is that already been signed, sealed and delivered kind of thing.

Joseph Randell

Yeah, that's not in our portfolio at this time, so yeah.

Walter Spracklen

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 three to four to one to now, up to three to one 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 might be helpful?

Joseph Randell

Jolene may have a comment on the leverage I guess and impact, 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 track record here that that is actually going to help us in terms of the financing of the fleet. And because the cost of capital is critical, the more you leverage it up frankly the better to do and we're receiving some positive trends on that.

Jolene Mahody

Yeah, I think Walter, if there was any language change it was certainly unintentional, I don't think any meaning into it. We continue to see and achieve high leverage rates that we had in the past and as Joe said, in fact under some of the arrangements that can be put in place with the EDT, with the track record I think that we're creating and stuff makes that lowering cost of capital and ability to leverage to a greater degree if we tell them to do that, but the numbers of three to four to one are still fully impact.

Walter Spracklen

And interest rate, rising interest rate?

Jolene Mahody

Yeah, no, we're not seeing any callout 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 a lease term. When it's time gone, I think you'll probably see an inflection point with OEMs, increasing pricing based on increases in interest rates and what will need to bake in for investment decision and into the leasing rates themselves, but we're not seeing any callout at this stage.

Joseph Randell

I think rising interest rates will cause all boats to ride with the tide because I think you'll see that reflected in these rates and in terms of carriers themselves, the cost of financing the aircraft if they were to do their own accusation is going to increase as well, so other than the ultimate impact that it may have on the economics on the world economy, which still seems to be going very well, but it's not something that we lose any sleep over.

Walter Spracklen

Got it, okay. That's all my questions Thanks very much.

Joseph Randell

Thank you.

Operator

Your next question comes from Cameron Doerksen with National Bank. Your line is open.

Cameron Doerksen

Yeah, thanks. Good morning. I guess just a couple questions on the Chorus aviation capital business and just firstly on the - because of the pace of capital deployment here has slowed a little bit in the last couple of quarters. I know there's some lumpiness to getting these transactions done, but how comfortable are you in kind of deploying or - deploying capital to bring in another 20 to 25 or so aircraft by mid-2019, it's only sort of 12 or 14 months. I'm just wondering if you still feel pretty confident about being able to do that?

Joseph Randell

Yeah, we're very confident about that Cameron. 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 I think we did when we said we were going to do. It was though a little lumpy. It's more about getting the transactions, the right transactions before us and where we see a good pipeline to continue good pipeline of opportunities, so there's no change in that regard. The first quarter certainly the last little while has been a little slower, but you know we see the pace picking up.

Cameron Doerksen

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 of course Aviation Capital, have you basically filled out all the necessary team there to get the transactions over the line?

Joseph Randell

Yeah, we've grown the team and we have our Chorus Aviation Capital all alone and we're in the process of even adding more resources there, so we brought a lot of people in the various backgrounds, leasing companies et cetera. So we're building a stronger team as it goes forward, we're being careful about not over building as well because it's a matter of building the team and provide pace, but we're getting traction and as time goes on it will increase the number of professionals that we're going to add, but we have all the primary functions certainly well covered and of course we do get some technical support from there et cetera, so we are able to drive some of that.

Cameron Doerksen

Okay and the SG&A costs related to Chorus Aviation Capital, where do they show up on the income statement?

Jolene Mahody

So they run throughout the income statement Cameron, so 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 cost and then anything else that's not capitalizable and transaction cost is able to flow through the other expense section of the P&L.

Cameron Doerksen

Okay, that's good. Alright, that's actually all I had. Thanks very much.

Operator

Your next question comes from Kevin Chiang with CIBC. Your line is open.

Kevin Chiang

Thanks for taking my questions here. Good morning everybody. Maybe just a follow up question on the impact of rising rates, I'm wondering as rates rise, are you able to increase the lease terms to reflect the spread or are you seeing any pushback or maybe rates haven't risen enough to for you to have those conversations, but just wondering are you are you able to match that spread even as rates rise here?

Jolene Mahody

Yeah, so just the - I guess you're talking about perspective deals, certainly on deals that we've done today 95% of the interest rates are fixed, so we're not - we're not at force there [ph]. Yeah, we've not seen any I guess margin compression to the point on driving interest rate at all. We've been able to kind of maintain kind of that targeted range that we had anticipated and won it, so we will kind see what happens as time goes forward, but we've not seen forward implication.

Joseph Randell

And we continue to look to match the term the debt through the terms of the lease and at fixed rates.

Kevin Chiang

Okay, that's helpful and then when you think the size of the pie and you highlighted by mid-2019, you'll basically be double your current levels now, so close to 50 aircraft give or take. 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. Is it 70 planes, 80 planes or is 50 kind of a good level you'd like to stay on?

Joseph Randell

We see, as we get traction and we're maintaining the right balance in terms of the financial leverage that we have and the equity that we have to invest et cetera, maintaining and looking to capitalize on the opportunities that are there. We presently haven't said anything really beyond 2019, but we see it as a growing enterprise and you have some very like the largest regional reservoir [ph] in the world. It's got a $6 million on assets and which is not and we continued to see good opportunities and becoming a strong world number two in the regional aircraft leasing business. We're certainly quite a bit smaller than Nordic is, but it's all about doing it prudently, about taking on the appropriate risk reward levels and 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 it clearly is the growth end of our business.

Kevin Chiang

That's helpful and last one for me, maybe a follow on - you spoke of the growth opportunities with Air Canada. Given their expanding network and ability for you to help connect the dots, when I look at I know billable hours may not be the perfect proxy, but if I look at the high watermarks for your billable hours looking back to last 10 plus year, call it about 400,000 hours in a very different environment and today you're kind of north of 90% of that level. I'm wondering what the utilization rate of your cover to 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 fly you can still do with the planes you have currently under the CPA covered fleet?

Joseph Randell

No, well, I think the underlying issue under the hours and you're right about the hours, is that you have to really look at what the fleet is composed of and we'd really shifted further and further away from 37 and 50 seat airplanes to 75 seaters and that's just a matter as to - fact as to what's happening in the regional business, especially user markets grow et cetera. And we see the opportunities on the 75 seat aircraft side. The smaller the aircraft the ASM costs are higher because of the smaller, 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 the last year in 2017 over 2016. So we have a covered fleet, we have an agreed upon fleet, but we're always opens to discussion with Air Canada Cheney about changing the mix while providing Air Canada with a better combination that will enable them to feed better et cetera. So 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 in fact even with changes in that regard.

Kevin Chiang

That's helpful and that's all for me. Thank you very much.

Operator

Your next question comes from Turan Quettawala with Scotiabank. Your line is open.

Turan Quettawala

Yeah, 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 115, 117 aircraft to at least to 2020 if not and how much of it out of 2025?

Jolene Mahody

So the minimum fleet is actually what we're operating and so it's 117 planes currently, it moves to 116 planes by the end of this year. And then Turan, as the - we have a number of Dash 8 to be rowed into the older years, that number drops down to currently a minimum 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 limit, they kind of the CPA.

Joseph Randell

There are five more of 75 seat aircraft in the plan as it exists today in 2020 I believe, so although there is a reduction in the number of wins, when you look ASM production going back to that then that remains very solid and of course the compensation that we receive is well defined as well to 2025.

Turan Quettawala

No, I understand that. Okay, perfect, thank you. And 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 what plans you might have for those, are they just sort of in the maintenance cycle or is there basically maybe an ability to either release those out or something?

Joseph Randell

Yeah, we've taken out quite a number of Dash 8-100s over the last few years. We converted compared 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 heard about these aircrafts. So we do have the number right now sitting and we are we are looking to remarket those airplanes. I think we're getting some interest in the freight side et cetera, so these are assets that we just have available that we're looking to repurpose and that's what Voyageur is all about.

Jolene Mahody

And Turan as you know though that they are fully owned, I mean there is no depreciation cost associated with them, there's no debt or anything against them.

Turan Quettawala

Yeah, thank you. And I guess maybe one last one for me here on the ESB cost, I guess those are generally related to the pilot flow through agreement, is that right?

Jolene Mahody

Sorry, what was the question?

Turan Quettawala

The ESP cost I think in the quarter, are those all - I think it's 4.2 million or something, is that all basically the pilot flow through agreement?

Jolene Mahody

The ESP cost?

Turan Quettawala

Did I misread that?

Jolene Mahody

So the - or the VSP cost, sorry, are you talking about Employee Separation Program cost?

Turan Quettawala

That's right.

Jolene Mahody

Yeah, so you're right. There were 3.5 million, a combination of pilot and maintenance employees that we continue to invest in. Yeah, Turan our objective is populate those new industry wage rate scale and so we'll continue to invest to change the demographic to populate those scales. You're exactly right.

Turan Quettawala

Okay and then are you getting - 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.

Joseph Randell

So we continue to have a good pipeline of well qualified pilots. We've been very proactive to ensure the best case. We've had a really good flow of pilots through Air Canada over 500 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 we've seen a major shift there, we have actually hired 1.200 new employees last year. So we are repopulating all of Jazz really with a younger demographic under the new agreements et cetera. 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 recent additions primarily and then we have a more mature number of pilots that have been with us quite a long time. So we've got a really good combination, so the age is in the middle. I'm sorry. I don't have the -

Jolene Mahody

And I think the relevant metric for us would be percent of population on the new scale which is about 54% versus age.

Turan Quettawala

That's great, that's perfect. Thank you very much.

Operator

Your next question comes from David Tyerman with Cormark Securities. Your line is open.

David Tyerman

Yeah. Good morning. My question's 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 there?

Joseph Randell

Yeah I think on the MRO business we've done some third party through JTS here with Jazz we're a Bombardier approved maintenance organization now. So, but essentially if you go to this hangar today we've got about six lines of business or six lines of MRO, two of them are outside the remainder of the Jazz fleet. And 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. The parts business of course has been going very well, but it's still not particularly material part of our revenues. So 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.

Jolene Mahody

Yeah and if I can just add to Joe's comments, David, so the MRO flows through I guess that other revenue category on the P&L along with third party leasing. And predominantly if you kind of back into trying to figure out what portion is what? Let's say predominantly majority of the increase year-over-year - quarter-over-quarter is driven by the leasing size versus MRO. MRO for the quarter fair fairly flat, up a little, but we have a lot as Joe said, of internal work going on at JTS even with the Dash 8-300, so we're doing all that work and that's taking up a bit of capacity. But then the other non-CPAs, I think you're referring to is the contract flying related to Voyageur and that both separately chartered and start flying line, you'll see it fairly consistent with last year as well, but I'll just remind you that last year and we saw pretty significant uptick in that line and we're over 16% in performance growth in that top line for the year, so we don't expect to repeat that in growth level this year, with a pretty big pick up with the same fleet really with a couple of more Dash 8. So for this I think you'd model something a little bit more modest in that line as far as growth.

David Tyerman

So should I basically conclude from all of it that everything about the CPA and the leasing really is kind of a flat business, doesn't grow much or is it -

Jolene Mahody

No, I wouldn't say that. I'm just trying to characterize the first quarter numbers right, so that you can 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 third party leasing. I wouldn't say that at all. Relatively wide, but it's obviously small because just of the nature of the fuller business that's there, but there is certainly some modest growth there, but it's not 43% growth that you're seeing in the aircraft leasing business.

David Tyerman

Yeah, great, okay. Okay, fair enough. That's all for me, thanks.

Operator

[Operator Instructions] Your next question comes from Tim James with TD Securities. Your line is open.

Tim James

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 five years or more in terms of what constitutes the long term.

Joseph Randell

Yeah, we've not really focused on any particular timeframe. Our efforts right now are going into investing in growing and diversifying the business and we believe that is why we're bringing the greatest value to the shareholder in the longer term. Of course we watch the dividend et cetera. The yield continues to be very high and our efforts are really on building that share price and executing on our growth plan, so that we don't see drop offs in share price like we just had this last year in a while, it's really about - the fundamentals of the business is 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 timeframe straight of it.

Tim James

Okay, thank you very much. That's the only question I had.

Joseph Randell

Okay, thanks Tim.

Operator

There are no further questions at this time. I'll now turn the call back over to the presenters.

Nathalie Megann

Thank you very much, operator and thank you everyone for being present on the call. Wish you a very pleasant wee end.

Operator

This concludes today's conference call. You may now disconnect.