Is Chorus about to be broken up in two different entities?
Chorus is now the second largest regional aircraft lessor in the world. This segment is also, in the long run, the most promising and profitable. Even more so post-Covid, when airlines will be too indebted to buy as many of their own aircrafts as before.
The leasing segment is born from Chorus' desire to diversify from the CPA with Air Canada, following the tense negotiations of recent history. Though still proportionally modest, it does bring some comforting balance compared to the heavy CPA segment.
This cautionary balance is however only required in the current situation where Chorus is a small autonomous entity with minimal financial backing. Indeed, Chorus can only count on itself, including in the coming months when it will be looking for a large capital inflow to take advantage of the huge opportunities opening up in the international leasing business. Hence the idea that the ideal buyer of Chorus would be a large deep-pocket financial institution.
Such an institution is certainly willing to takeover Chorus as is. But in no need for the balance the two segments bring, it could easily be tempted to resale one of the two as a way to make the takeover immediarely profitable. Would the purchasing pension fund prefer to milk the CPA cash cow for the years to come, or the active financial institution be more comfortable with the dealings of the international lessor?
Seen from this angle, I am not so sure Chorus is strongly determined to fend off a takeover. The "conditions" the press release is alluding to might indeed be crucial. Could the current management team only sell the CPA segment to focus on internationnal leasing with a real war chest? Will it succeed in leveraging the full potential of both segments to obtain the highest possible price, knowling one of the two segments might be quickly liquidated in the aftermath?
In a way or another, realizing full value might lead to the breaking up of Chorus in two different entities.