DISCOVERY AIR INC 8.375 PCT DEBS T.DA.DB.A

RE: CHL analysis

[Mongoose11]

15Stanmore, you may be correct about the Afghanistan contract being U.S. military rather than Canadian. I don't think it makes much difference either way however.

CHL is a more stable cash flow generator than DA. Their access to cheap financing and lower goodwill exposure makes them a great yield generator (the after tax yield on CHL is close to what I net on the DA debentures due to the dividend tax credit). I suspect that any downside/upside to CHL would be relatively gradual due to the fact that they aren't as exposed to expensive leverage.

On the other hand I think DA is more likely to appreciate faster as long as they continue to pay down their expensive debt. Without the debt DA is a literal goldmine.