Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to be Corp [noise].
Inc. third quarter 2019 earnings analyst call.
At this time all participants are in they listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During recession, you want me to press Star one on your telephone if you require any further assistance. Please press star zero I would now like to hand to the conference over to your speaker today not only.
Mcgann, Vice President of Investor Relations and corporate Affairs. Please go ahead.
Thank you can see.
Hello, and thank you for joining us today for third quarter 2019 conference call and audio webcast with me today from course, or Joe Randall President and Chief Executive Officer, Imperialists, born Chief Financial Officer.
But given a brief overview of the results and then going to questions from the analyst community because it's got to name. It's called maybe forward looking I direct your attention to the caution regarding forward looking statements information, which are subject to various risks uncertainties and assumption.
That are included or referenced on page 44 ever management's discussion and analysis of the results in operations of course aviation Inc. for the period ended September Thirtyth 2019 see outlook section other sections of our M.D. neighbor such statements appear.
In addition, some of the following discussions and involve certain non-GAAP financial measures, including references to EBITDA adjusted EBITDA.
He be cheat and adjusted net income please refer to section 17 ever Mdna for a discussion related to the use of such non-GAAP measures I'll now turn the call over to Joe Randall.
Thank you Natalie and good morning, everyone.
Since becoming publicly traded in 2006, we've reported 54 consecutive profitable quarters.
And today I'm pleased to share with you yet another.
With over 90% of our revenues secured through long term contracts.
Our business is predictable and transparent.
We currently have a minimum of approximately 2.5 billion U.S. and future contracted revenue.
Inclusive of the point 6 billion U.S.C.P.A. fixed merger.
As such our business delivered results once again met our expectations.
And we made advancements in growing or leasing business.
We've been extremely busy since your last quarter report out having acquired were delivered 17 aircraft in our regional aircraft leasing segment.
This was a tremendous accomplishment by our team and a clear demonstration of our technical and transactional bench strength.
I commend our employees for their professionalism. These recent deliveries account for approximately 22% of or non CP a committed fleet today.
Our revenues are starting to reflect the new leases, we've added to our portfolio.
This trend is expected to continue yours or leasing business grows and aircraft are delivered.
Our diversification strategy is taking hold as evidenced by the 76% increase in adjusted earnings before tax where E. B T generated by this segment over the same period and 2018.
Accounting now for approximately 22% of overall adjusted EBITA <unk>.
I'm very encouraged by this growth and the strength of her team.
We further demonstrated the capabilities of our maturing aircraft leasing business.
When we completed our for sale at least assets with the divestiture of Threed dashi four hundreds that had been normally since July 27 team.
We're very pleased with this transaction has it not only provided a positive return and our investment generated capital to reinvest in future aircraft acquisitions and indication of our disciplined approach to maximize returns.
Finally, the growth momentum in or leasing the busiest continued as we welcomed a new customer the window here a member of the Lion Air group for the lease up to 80 or 72, six hundreds and the acquisition of two existing HCR 70, Twosix hundred already Oh at least.
From another less or.
These aircraft further extend our reach into the rapidly growing southeast Asian markets.
We have a healthy pipeline and expect to have news of additional lease transactions sorry.
As it relate them to last quarter. We also have the capacity to grow our leasing portfolio by up to 20 aircraft per year through a combination of new debt and internally generated cash flows the funding equity portion of future aircraft acquisition.
Very well have more to say about this in his comments.
We take a process driven conservative approach to building or leasing business. Our objective is to maintain a diversified customer base with good prospects seek geographic diversification and limit aircraft type concentration.
As has been proven in the past regional aviation is a resilient sector of the aviation industry.
As a CPT operator, we do not beer, the commercial risks or exposure to fluctuations in fuel price is these are managed by air Canada.
Further our TPS provisions for minimum guarantees related to fleet size can fix piece.
Due to the predictable nature of our contracted revenues the quality of our customers and our resilient market sector, we are well positioned to seize new opportunities to profitably grow and diversify.
I'll conclude my remarks by expanding congratulations to the team adores your for winning business of the year Award from the North Bay Chamber of Commerce and to the jazz team for being named amongst Canada safest employers 29 team taking go in the transportation category.
As are wonderful acknowledgment of our professional.
And many thanks to of course team for delivering another safe and solid quarter. Thank you and I'll now pass the line over to Gary to take you through the third from partners third quarter financial results. Thank you, Joe and good morning or group of companies. Its strong performance in the third quarter period over period adjusted EBITDA grew by 5.8 million emerged.
Perfect due to a 78% increase as adjusted EBITDA in the regional aircraft leasing segment with 12 leasing transactions closing in the quarter.
Adjusted earnings per share grew by 12.5% from the second quarter. This year in large part due to a 76% increase in an earnings before tax in the regional aircraft leasing segment.
We continue to hits all operating results athleisure in jazz, which includes the completion of the two years piece on the dashi three hundreds, but now generate revenue under the SCPA.
Here's how the third quarter compared to the same theory as last year.
We reported adjusted EBITDA of 92.6 million, an increase of 5.8 billion were 6.7% relative to the third quarter of 2018.
The regional aircraft leasing segment adjusted EBITDA increased by 13.2 million related to the growth in the number of aircraft on lease in addition to the aircraft deliveries in the quarter. We also completed our first sale lease assets on October Twentyth is being three dashi four hundreds that run at least since 2017 for net cruise.
Fees of approximately $25 million U.S. after debt repayment.
The regional aircraft services segment, adjusted EBITDA decreased 7.4 million, partially offsetting the previously described to increase.
The regional Aviation services segment results were inline with expectations and reflect the 2019, CK amendments, which reduced the fixed margin performance incentive revenue when course moved to market based compensation rates.
These reductions were partially offset by the implementation of the controllable cost curve real that mitigated the expected third quarter SCPA merchant short for all related related to reduce fees.
Beyond that should changes related to the amended SCPA. The third quarter results were impacted by a decreased stock based compensation of 2.1 million due to the change in share price and increased aircraft leasing under the see good.
Adjusted net income for the quarter was 29.2 million were 18 cents per basic share a decrease of from 2018 at 1.6 billion or 5.2%.
And that was due to an increase in depreciation of 4.6 billion primarily related to the additional aircraft in the regional aircraft leasing segment, an increase in net interest costs of 3.8 billion primarily related to two aircraft assets in the regional aircraft leasing segment and an increase in non operating costs and 0.2 million related to a.
Loss on disposal of property equipment offset by foreign exchange losses on working capital offset by the 5.8 billion increase in adjusted EBITDA I previously described.
1.2 billion decrease in income tax expense related to lower adjusted EBITA.
Net income was 24.2 million or 15 cents per basic share a decrease of 0.6 million over the 2018 period, excluding the quarter over quarter change in net unrealized foreign exchange losses on long term debt of 18.9 million. The decrease was due to the previously noted 1.6 million decrease.
The adjusted net income offset by decreased employee separation costs of 1 billion.
We ended the third quarter with a solid cash position of 82 million.
As mentioned last quarter, we have the capacity to grow or regional aircraft leasing segment by up to 20 aircraft per year through accommodation of new debt and internally generated cash flows.
We will use these resources to fund the equity portion of future aircraft acquisitions. In addition to the delivery of nine Crj nine hundreds in 2020 and deep remaining east piece to be completed but to your 2022.
We will bolster our cash position through new new debt reasons as required to fund this group.
As dinner practice, we managed costs against the objectives are remaining within market, except oranges of leverage and maintaining adequate financial flexibility.
With the addition of the aircraft under both the regional aircraft leasing segment in the aircraft leasing revenue under this EPA courses estimated future contracted lease revenue is approximately 1.9 billion U.S.
On the SCPA merge and revenue of 0.6 million U.S. is included with the total future contract revenue courses future.
Revenue of approximately 2.5 billion U.S.
Capital expenditures for 2019, including capitalized major maintenance overhaul and excluding expenditures for the acquisition of aircraft in the east Pete are expected to be between 41 and 47 billion.
Aircraft related acquisitions in the ERP capital expenditures in 2019 are expected to be between 660 million and 670 million related to the previously announced transactions.
For additional information supporting our outlook for the balance of this year.
I'll refer you to section for the 2019 looks section of our Mdna for the period ended September Thirtyth 2019.
That concludes my commentary. Thank you for listening operator, we can open the call to questions from analysts community when rating.
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad again that is star then the number one on your telephone keypad.
Our first question comes from the line of contracts, but that's with Scotiabank. Your line is open.
Thanks, and good morning, everyone.
Just wanted to start a with the sale of three Q4 hundred aircraft.
That I think took place in October .
So you mentioned the there is a U.S. a 25 million net proceeds after debt repayment, but would there be any EBITDA impact in Q4, and a what do you plan to do with the proceeds is it going to be deployed into new aircraft purchase.
Hi, Kerry I was born here as far as the the transaction it will have a minor impact to our overall EBITDA and results in Q4, we're still working through those numbers due to the structure of that transaction as far as the funds go to be redeployed back into the future leasing transactions. So we're going to tell that right back into the business.
Yeah, I know I could just had a little color to that as well the business is really a trading business. It's an integral part of the business and our customer was interested in acquiring the aircraft.
And at the end we achieved [noise].
Gives me a better return with the combination of the sale in the opportunity to reinvest the proceeds in the business.
You know in terms of future aircraft acquisitions. So overall, we were very pleased with the transaction.
Okay. Thanks, Thanks for that and then following up but just on the leasing side. Obviously, you mentioned a there six aircraft transactions since the end of third quarter of such a five have been received a prior to November 13, I just wanted to clarify the people that do you have in the M. DNA It has no.
Yes, that's true I think do transactions in Q4 and one in Q1. So how do you reconcile all this I'm like do we see more leasing transactions happening beyond what do you have suggested in Indiana.
Yes, So I guess, if you look at the table. It includes the a reduction due to Falcon three so and then.
So essentially if you take that into accounts or would have been five in.
In Q4 that are listed there and then as first the future transactions go in a one wings. There. That's what we have announced to date and then I think we're certainly continuing to work through the pipeline and we expect that we'll have future announcements in the near future. Yes. So so essentially the 500 or pending that are shown in.
Q4 for those five now what's been delivered yeah.
Good Thanks, and lost before me on on customer side of things I'm. So have you seen any any deterioration or do you do a either economic conditions on some of the issues any any changes in customers credit quality or reading, so beautifully Europe or elsewhere.
No we've not seen any significant changes we're still very much the same as when we entered into these transactions with these various operators demands continues to be robust and our and our pipeline of future.
Possible transactions look good and we hope to be in a position soon to make more announcements in that regard. So we've not really seen any changes in the market and in the regional aviation segment.
And just sort of theory here again, just to reiterate we do monitor or lessees actively so we keep a good oil and all their credit portfolios and we're quite pleased with where they're at right now.
Okay. Thanks, a lot for that that's it for me.
Okay.
Your next question comes from the line of Doug Taylor with Canaccord Genuity. Your line is open.
Yes. Thank you good morning, and now I'll start by adding my congratulations to you Joe on your pending Hall of Fame induction.
Okay.
Let me drill down a little bit more on the ER the decision to exit the leases. These aircrafts. So based on what you. Just said can you just confirm you were approached about.
These particular aircraft.
Are you actively looking at making any other changes or augmentations your portfolio that might involve you exiting aircraft or rebalancing the portfolio in some way regionally or by air frame.
Yeah in this case, a customer the ultimate customer approached us and we were pleased to old wise and I think it worked out very well we've talked through the transaction very quickly to generate a good cash and we felt overall that the redeployment in fact cash and other opportunities where it provides us with a better reach.
Sure. So that was really the motivating factor on our side. So it was really a win win.
You know I will continue to look at opportunities to trade, we have nothing pending a in that regard et cetera, but it is very much a trading business. As you know we've purchased aircraft from other less stores because they want it to rebalance or felt that it could better deployed or the cash that they would.
You know they would.
Develop as a result of that so we'll continue to do the same so.
Isn't all about just acquisition, it's about trading and that's about maximizing returns on your investment.
So you mentioned that EBITDA will obviously be impacted as those aircraft actually the fleet in Q4 or do you expect them to recognize a gain of some sort on the on the accept versus your book value of those aircraft.
We are still working through the details in a transaction transaction, but we don't expect anything to be material.
Just first gain or loss so.
So obviously in a quarter or like the one that you've you've just exited with the volume of aircraft coming and timing of when those aircraft comes and.
Has a pretty big impact I think on that the profitability within that quarter I could you comment a little bit on on that you know how the.
The deliveries were spread over the course of the quarter I'm just looking for a little help in terms of the the linearity or the the sequential impact of the existing portfolio Q3 to Q4.
[noise] Yeah, we're just looking at off right now.
I believe.
In August was very very busy month in terms of the post the completion of.
Some of the.
The leases so Gary Yeah, I think just on page 20, the Indian aid is listed the deep, thereby merger when everything came injuring the.
At least post the quarter and its first the other the other deliveries during the quarter.
It was almost midpoint of wasn't quite skewed the midpoint I think it was a little bit on the back into the quarter. If you divide it Q3 and half.
So fairly well balanced okay, yeah, I'm fairly well I mean once you worked at all of its pretty balanced.
Okay last question for me, obviously, you've got a lot more scale now with your leasing business and you know the interest rate environment would appear to be favorable I mean can you comment on your ability to lower the debt cost side of the equation.
At least at the margins over you know in the near term with either the existing or or aircraft related debt or some of the other facilities that you've now put in place.
Well its first the aircraft build that we had in the regional segment regional leasing segment.
Those those aircraft are generally backed by asset backed debt. So there their fixed term debt. So one and they're set so those interest rates are essentially baked in and if you remember the lease rates associated with those that.
Lessees it did move with that debt. So it preserves the merchant so at this stage, we don't actively look at trying to reset that debt because it is nicely matched with.
Let's see contracts and as we move ahead with the interest rate environment, where it's been it's been on the lower side have you know as we know.
That will certainly help the lease rates.
Come down for lessees, the margins will remain similar because there that's the way the industry works you thinking emerge in there. So we see it is good for the lessees good for us in that sense, but we don't have an active program, where we're going to look at we are looking at the debt that we design per lessee.
Going forward, we will be actively looking at how we reduce our costs absolutely, yes, because that's a key that's a key factor in this business.
It was that there will be more options. We believe in terms of how we finance business.
Yeah, that's that's encouraging immunology last one more question there I mean, the last time, we had the debt.
Our interest rate environment that we are starting to see again, there seem to be increased competition, particularly on the.
Narrow body side in terms of chasing down the lease rates and the returns have yet observed any change in the return moved the ROI profile I'll say.
Given where the interest rates are in them and are moving in the new deals that you've signed.
Oh, we're generally still targeting what we had originally planned on.
It's a competitive environment, we chase a lot of potential opportunities to come up with what we've put together in our portfolio here, but we've not seen a huge influx of new capital into the regional aircraft leasing business I think it it remains a very stable sake.
And you know, we do realize that there's more pressure, especially on the wide body side and some on the narrow body, but again you know this.
Currently we're not seeing that same sort of.
Uh huh tumor abundance of capital really flowing into this business.
Thank you very much.
Okay.
Your next question comes from the line of Walter Spracklin with RBC. Your line is open.
That's very much good morning, everyone.
Good morning, Welders, so so I want to start with no. You mentioned 20 per year that you indicated before of self funded growth.
In new leases when you look at your pipeline right now certainly in the near term would you say that that is pretty much lined up with what you would expect to do in the next 12 months or or would you expected to be higher or lower compared to that self funded target.
The pipeline that we see right now we anticipate no issue and.
Growing by 20 airplanes as we've said perfect okay.
No should you go by grow more than 20 than what's been your targeted.
Approach do you think you're you're most favorable approach for funding that excess.
Well, we're you know right now we're focused on the on the 20 and to deliver on the results I think next year, we will see a lot of these earnings of the leases kicking in with our earnings I think that will and should produce.
No swing in our share price et cetera, and we are going to monitor what happens as we build as these earnings into the company's results and look then at a how we grow the business further but for now we are saying study as it goes 20 aircraft.
Per year, we have the ability to fund that we're going to continue executing its very stable I think we've got a great portfolio of of customers a great equipment mix and for US. It's just about performing as we've said we will perform and then we will reoccur.
Valuate I think the opportunities are greater in the business, but we are using a very disciplined approach and the interest of our Shirley.
Well it makes a lot of sense so in terms of the.
Aircraft types that you're focused on right now and.
At any emerging opportunities in those we've talked a bit about the Airbus a 220 any update as to how you look at the type of aircraft that you will be.
What would be part of your portfolio and have you lean more toward expanding the number of types.
Well.
First of all we really like turboprops.
From a residual value perspective, and the stability of that's part of the business and that we think it's a great segment of the business. They are not replaceable by other types of equipment.
At all very easily in most markets et cetera. So we'll continue to focus.
On the turboprop size, but certainly on the regional jet side, you know, we're monitoring very carefully what happens with the Embraer product.
As it evolves from the one to the two product you know the temporary twos are definitely within our scope and and focus.
The two Twentys I've said previously are very much in our focus.
And you know when we like the 75 to 130 see regional jet market and especially some of the newer products.
We're not heavily exposed with respect to the older technology embraers or the CR Jays in our portfolio and for instance, the Crj is that we operate for Canada, which were the most of our bombard Jay product down the regional jet side is are are secured through long term.
Leases operated through the C.P.A.. So we're very comfortable with that but we see and we do see opportunities to grow most especially in the newer technology regional jet market.
If you were to go to the 220 is the air Canada option already kind of past of they they fully.
For fully.
Allocated how they're going to be financing that or could that be if you were to get into the eight to 20 could it be through the year relationship with their Canada.
Hi, I'm I'm I'm sure as to where Canada is in terms of funding these acquisitions et cetera, but you know we're interested in leasing the aircraft, but I can't really say anymore than that in terms of the air Canada is plans and how they would finance their fleet.
Fair enough, Okay, no I don't think that the Max.
Issues that were with the Max really impacted your business.
And correct me, if I'm wrong and now that there is at least discussion the possibly.
Coming back maybe in the near term any reason why that would have any impact at all on your business.
No.
First of all the impact that the Max has had on their business first of all hasn't had a financial impact on our business, but we were extremely busy and dresses.
Flying for Canada increased utilization, our block hours were up substantially.
In the quarter year over year, as we increase the utilization on the fleet and on our flight crews et cetera, but under the structure. This EPA of course, we are paid as fixed fee and we delivered that product to air Canada edits request to assist with that difficult situation and we continued to do so.
As the mass comes back I think there will be a lot of changes in the pilot World is air Canada introduces more aircraft and grows its operation and of course, we continued to provide your Canada with a whole lot of pilots and we work closely with air Canada and the transition of the pilots and 60 per.
A set of air Canada, as new hires as a pilot side will come from jazz. So we anticipate that to be very busy with pilot flow next year et cetera, but in terms of impact on our bottom line. The et cetera. You know, it's it's now been going to de risk very predictable as I said earlier.
So we're just there is a good partner to do whatever we can to assist or Canada.
Okay. That's all my questions. Thanks very much.
Thanks Walter.
Your next question comes from the line of Cameron Doerksen with National Bank. Your line is open.
Thanks, Good morning.
Just a question on the I guess, the cash debt repayments, if I look at the I used the current long term debt to your roughly 185 million or so which you'd have to.
Principally to repay over the next 12 months with that size of the end of Q3 I'm. Just wondering if you can give us some indication as to.
What the 2020 kind of principal repayment might be given some of the transactions you've you've kind of concluded. The you at the ended the quarter. It should we expect it to kind of creep I'm assuming.
The fleet plan stay as it is should we expect that to kind of creep towards the 200 million dollar Mark in 2020.
I guess it as far as you're modeling goes there if you look at the current debt and that through the third one balloon in there for a single 15 million to the next that next year that we expect to refinance so.
If you take that owed and then just model it with the aircraft acquisitions. It should move Directionally with that I don't have an exact number to give you for 2020, but if you did something like that it would give you a pretty good indication and as far as our free cash flow and how we generate if you look at the quarter can you start to assess that with the debt repayments in the cash flow from operations I think.
You can get a pretty good you can see that the stream of.
Inflows will certainly got more than match and be.
Greater than the oppose related to the debt.
Okay, Okay Thats helpful.
Maybe just a second question for me.
I.
Just wonder if you can give us an update on the voyageur business a near what.
How did business is performing in the last quarter and prospects for for additional contracts and things there.
Yes, Voyager performed well in the quarter.
The results of certainly improved Voyager and meeting our expectations there very busy.
In the you don't with aircraft modifications the MRO business, it's being fully utilized and we're growing some aspects of that business, it's not going to have a hugely material impact on results but.
It really is strategically important to us.
For a number of reasons in that it really supports.
Our third party leasing business, but also the jazz business et cetera, and the demand for contract flying has been good with contracts being removed or et cetera. So you know, it's very much steady as it goes and.
We're very optimistic about Voyager, though and and its impact going forward as really being a strategic enabler for us. So we're very pleased with the way the businesses are performing in North Bay.
Okay, No that's great. Thanks very much.
Your next question comes from the line of Tim James with TD Securities. Your line is open.
Thanks, Thank you very much good morning.
Good morning.
First question on the on the Cpms wondering how we should think about the use of the guard rails and the the CPGA in the quarter does that mean costs were were higher than expected and margin slightly lower and that's why those guard rails were triggered maybe you could just refresh us on how that works and and do you basically get a revenue booth.
To offset any any higher costs.
Yes, so the way it works is its $2 billion annually plus or minus that the guard rails kicks in so if you look at the way it worked in the quarter.
Any excess of the costs over the revenue would have been caught up with the guardrails.
Given that we're the first quarter and here, we were a bit behind and then likewise hit we over performed we would have reduced revenue by the same amount and if you look at what you're seeing is you know.
Certainly a good quarters first performs in the CPGA and then you you're measuring 2019, obviously against 2018, which was a different economic forum.
Yes. The of course costs were running very high in the third quarter because of all the increased flying we were doing for Canada et cetera, but.
All of that is basically covered and that's right and the way it works.
The way that works is that with the European extra flying and went up we would build air Canada. The rights under the CPGA and they would pay us as such in that Weve do the comparisons against the cost. So as we did extra flying if there's extra costs. It gets picked up and that girl.
So your reference earlier than two there being no financial impact from all the extra flying related to the Max issue is because of these guard rails, which kind of brought you back into that plus or minus 2 million dollar range.
Okay got it yes, yes, the impact is not significant on the bottom line at all but very much effects your revenues and expenses.
Okay. Okay. That's that's helpful.
Then just.
General sort of very long term question thinking about your cost structure here.
Joe could you give us kind of your updated thoughts on how we as kind of outsiders monitoring the long term cost structure of jobs and the provision of the CP services.
How we should think about the cost structure or monitor it to be comfortable with the competitiveness relative to peers and therefore, the relevance to air Canada is it best to look at it sort of trends in a in a cost per block hour or how would you recommend we watch that.
Well, you know I say it have to break the cost down into the various buckets.
The the leasing costs are market.
The third party maintenance cost the engine overhauls et cetera are all done at birth rates and really the controllable part of for costs from our point of view.
It would really be more into direct labor side, and then I'd point you to the collective agreements that we have in place with the pilots the agreement goes out to 2035.
And so very predictable you don't the costs are very predictable, which is of course I think one of the influencing factors, which air Canada in terms of entering into a long term agreement and one or other labor agreements have been brought in line with respect to it being industry compare.
It is and a number of those agreements still go for a number of years et cetera and.
Those costs, then as we renegotiate the agreements will be we'll be discussing goes with their Canada and I think we were provided to cover those costs. So we.
We will be in I think reasonably good shape with respect to to the market.
So and these are things that are addressed in the SCPA and make labor costs very predictable going forward. So.
I think that's really the check I think if you look at block hour costs than that.
Oh, you can compare those I guess reserve the other regional operators, it's a fair comparison, but we don't anticipate to be upside with respect to the competitiveness of our costs.
Back to kind of reiterate we worked very well with their Canada were.
On the cost side and the financing the operational groups are all linked let the hip.
And they understand the costs in the problem with block hour type cost and things like that deployment geographic appointed things like that affected so we work with their candidate understand or cost we understand them, obviously very well and there were quite comfortable with where we're out so as far as the benchmarking that sort of thing goes it's very difficult I think from.
You outside looking in but I can tell you that view, we worked very well with their Canada, and we're very cost focus and we are we actually provider, Canada with many more services and most CPGA partners do as well we do have any maintenance as an example, we do airport operations throughout Canada, whereas other CPR.
Operators are really purely flight crew and maintenance. So when you look at are caused our across really bring in all these other costs.
As well so when you do the comparisons it's always important but you do apples to apples.
Okay. That's very helpful. Thank you.
As a reminder, if he would like to ask your question. Please press Star then the number one on your telephone keypad. Our next question comes from the line of Kevin Chiang would see IVC. Your line is open.
Good morning, Thanks for taking my question and again, congrats Joe on on the induction there.
I think you might have mentioned the sort of their mother just missed it you're talking about the options around your your debt financing I think on the on the Q2 call. You mentioned you were looking are exploring.
Looking at the unsecured market.
You can provide enough duck update there and does that change.
How many.
20 aircraft number if you move to the unsecured market with a little more flexibility could you in theory.
Acquire more aircraft into your with a more favorable debt instrument in place.
We're still interested in the unsecured market the as you alluded to and to work we're looking at that market and we're certainly interested in it would continue to fund or 20 aircraft here I think you know back to the point I think it made on the call earlier, we continue to bond or debt levels to make sure that we stay within industry norms and whatnot so with that.
Bind.
Whatever instrument, we raised for the state within that within those metrics okay.
Give us sense, if that's something that could be completed in 2020 or was it still kind of the early early early innings of the evaluation.
So we're actively pursuing that so.
Part of our growth strategy and as.
As you see where we're really deploying our cash very well. So we want to continue to keep this pace. So we're looking to do it.
In such a way that we would allow us to do that so as I said that announcements and that sort of things stay tuned.
Okay.
We just last one from me.
In terms of your charter flying.
With some which are leasing business, having a having obviously exhibited strong growth here. It seems like people are pretty comfortable with the trajectory in the risk profile.
What do you still the charter flying side in terms of opportunities. It seems like it's also.
Something you think you baiting here is that something you think you can grow much more significantly maybe entering into markets on the contract flying side that you currently don't surface.
Yeah, Yeah, you know.
It's in our DNA basically contract flying.
And the type of contract flying we do is quite varied from everything from the SCPA operation with Air Canada to flying for the weren't World phone program in Africa.
And and this is where of course Voyager has an enormous amount of experience in terms of special mission flying et cetera, and have no. The whole concept of using a contract fly is really a focus of ours and you know in other segments of the business are of interest to us on the comp.
Track flying side as well, but again, we're going to take a pretty measured disciplined approach, but oh, we see opportunities in that regard and we certainly have the know how to deliver on those services.
Thank you very much.
Okay.
There are no further telephone questions at this time I now turn the call back to not only mcgann for closing remarks.
Thank you operator, we'll now conclude the call and we thank you all four I'd taken the time costs today have a great day.
[laughter]. This concludes today's conference call. Thank you for your participation you may now disconnect.