Estimated reading time 11 minutes, 33 seconds.
During the past 40 years, intrepid investors in the Canadian airline industry have often experienced severe turbulence. Canada 3000, Canadian Airlines International, Eastern Provincial Airways, Nordair, Pacific Western Airlines, Royal Airlines, Time Air, Transair and Wardair disappeared from both Canadian skies and stock exchanges. With the recent privatization of Helijet International, the acquisition of WestJet Airlines by Onex Corporation and the pending purchase of Air Transat by Air Canada, there are now only a few publicly-traded Canadian carriers. The three largest, based on market capitalization, are Air Canada, Cargojet Airways and Chorus Aviation — the parent of Jazz and Voyageur.
There is, however, another company that provides investors with an opportunity to participate in a diverse range of aviation activities across Canada.
Exchange Income Corporation (EIC) of Winnipeg, Man., has assembled a portfolio of companies that provide scheduled air services; medical evacuation charters; maritime surveillance sorties; aircraft maintenance, repair and overhaul; regional airliner leasing; and pilot training. While EIC is not a household name like Air Canada, it is an intriguing venture that deserves a closer look.
In September 2002, Duncan Jessiman and Michael Pyle created The Exchange Industrial Group Inc. in Winnipeg. It went public in May 2004 as the Exchange Industrial Income Fund and adopted its current name in July 2009. Since its inception, the company’s mission has been to acquire attractive businesses that can provide income-oriented investors with regular dividend payments. The company adheres to five main principles to identify suitable targets:
- Disciplined accretive acquisitions – each addition to the portfolio must be able to contribute to the corporation’s earnings, net of acquisition-related expenses, immediately;
- Experienced and proven management – ideally, the management team that has been responsible for the new addition’s success remains in place to provide continuity with customers and employees. Besides the company’s founder, there are other capable managers;
- Strong balance sheet – revenue growth and attractive operating margins are important, but retaining a prudently levered balance sheet is mandatory;
- Invest in organic growth opportunities – select companies that serve markets with growing demand; and
- Reward its stakeholders – pay a dividend to shareholders and provide attractive compensation to its employees.
In addition, EIC’s management team looks for companies that provide essential services or products, are leaders in markets that are…
Go to the news source: EIC: Canada’s prosperous aviation conglomerate