Q4 2019 Earnings Call
Thank you for saying boy and welcome to the fourth quarter 2019 earnings call for Atlas Air worldwide. At this time all participants are in a listen only mode. After the speakers presentation there'll be a question and answer session to ask a question. During the session you need to press star one of your telephone. Please be advised that todays conference is being recorded if your corner further systems.
Press Star Zero I'd now like to hit the converts over to your speaker today. Thank you I was there you may begin.
Thank you Jesse and good morning, everyone.
Ed Mcgarvey Treasurer for Atlas Air worldwide.
And to our fourth quarter 2019 results conference call.
Today's call will be hosted by John Dietrich, Our Chief Executive Officer, and Spencer Schwartz, our Chief Financial Officer.
Today's call is complemented by slide presentation that can be viewed at Atlas air worldwide Dotcom under presentations in the Investor information section.
As indicated on slide two we'd like to remind you that our discussion about the company's performance. Today include some forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These statements relate to future events and expectations and they involve risks and uncertainties.
Our actual results or actions may differ materially from those projected in any forward looking statements.
For information about risks factors related to our business. Please refer to our 2018 form 10-K as amended or supplemented by our subsequently filed FCC reports.
Any references to non-GAAP measures are meant to provide meaningful insights and are reconciled with GAAP in today's press release and in the appendix that is attached to today's slides.
During our question and answer period today, we'd like to ask participants to limit themselves to one principal question and one follow up question. So that we can accommodate as many participants is possible.
After we've gone through the Q, we'll be happy to answer any additional questions as time permits.
At this point I'd like to draw your attention to slide three and turn the call over to John Dietrich.
Thank you Ed and good morning, everyone.
Thank you for joining.
As many of you know today's my first time speaking to you as CEO of Atlas Air worldwide.
Do so with great pride and with a strong sense of responsibility to our company our customers our employees and of course our shareholders.
I'd first like to take this opportunity to thank Bill Flynn, who retired at year end for his many contributions to Atlas during his time as CEO.
Let's now chairman of the board and I look forward to continuing to work closely with him and our other board members going forward.
As this is my first call with you there are several themes that I want to emphasize.
Air freight is and will continue to be a long term growth industry that is a critical part of the global supply chain.
Atlas is well positioned with a formidable fleet of aircraft in its diversified portfolio and a long list of marquee customers.
In light of recent market challenges and as we move the business forward, we're adjusting our business to manage our costs and best align our resources with our strategic priorities with a focus on growth customers and those opportunities that generate the best returns.
And subject to some of the uncertainties and potential opportunities associated with the unfortunate outbreak of the Corona virus, we anticipate that our financial performance in 2020 will be an improvement over 2019.
Let's please move to slide four.
As I mentioned airfreight is vital in meeting the demands of growing global economy, and the increasing demand for time definite networks by domestic and international supply chains.
Atlas will continue playing a key role in meeting the rising needs of businesses and consumers.
Our fourth quarter and full year 2019, adjusted results reflected a peak season that included a pick up in customer demand and improved yields compared with the middle of the year.
It also reflected our team coming together to deliver the high quality services that our customers appreciate.
As expected our fourth quarter results also benefited from the peak season flying we do for express customers.
An increase in military passenger and cargo flying.
Lower heavy maintenance expense.
Lower aircraft rent and depreciation.
And a refund of excess aircraft rent paid in previous years.
Our results. However, we're also affected by the global air freight environment, and macroeconomic conditions, which reflected the effects of terrorists global trade tensions and geopolitical unrest in certain countries in South America as well as certain labor related service disruptions.
These factors resulted in lower commercial cargo yields and utilization of our 747 408, CMI and charter aircraft.
As a result any in accordance with U.S. accounting standards, we recorded a noncash special charge for the write down of our 747 400 freighter fleet.
As well as the disposition of certain non essential dry leased aircraft engines.
This resulted in lower aircraft rent and depreciation during the quarter and higher than anticipated adjusted EBITDA and adjusted net income during the period.
We also expect lower rent and depreciation to positively affect earnings in 2020 and beyond.
Turning to slide five I had a few thoughts about the strength of our business and the future.
They begin with the company strategic principles first and always safety security and compliance is our top corporate priority.
We will continue to promote assays and compliant operation in everything we do.
In addition, and as I mentioned earlier, we had a strong core of long term marquee customers and we play a key role in their operating networks.
These are customers that we value, including DHL, Amazon Asiana out of South Korea, Boeing DSV panel peanut based in Denmark.
Fedex and see a out of Japan, Quantus in Australia, you P.S.U.S. military and the NFL.
As well as many other airlines freight forwarders charter brokers sports teams and direct shippers.
We have a modern and diversified fleet, providing customers the biggest and broadest array of aircraft for domestic regional and international cargo and passenger operations.
We are a major player in express E commerce, the U.S. military in fast growing markets. We're also a major player in the transpacific as well as the growing market between South America and the rest of the World. In addition to our presence in the U.S.
We're constantly focused on operating efficiencies cost management and the on time performance at our customers expect.
And as we've shown we have a disciplined capital allocation strategy with a focus on balance sheet meant maintenance.
And we do all that with a tremendous team of dedicated customer focused highly experienced employees, who bring diverse skill sets to help us move our business forward.
So that that is what is shaped where we are today and we'll continue to shape our future.
Atlas is well positioned for continued success going forward.
We are no doubt in volatile times with the ongoing trade wars geopolitical unrest.
And the Corona virus.
But we will continue to manage through these challenges and they will pass.
And as history has taught us through other crises airfreight will play a key role as the global supply chain Rebalances.
One of our top priorities is also to complete a new joint collective bargaining agreement for our pilots.
Our negotiating teams are meeting regularly.
In some significant progress has already been made.
We have a defined path forward under the merger provisions of the two collective bargaining agreements.
And we have reached what are called tentative agreements for more than half of this sections in the new JCB.
We still need to receive a comprehensive economic proposal as well as an integrated seniority list from the union both of which are required to complete and implement a new JCB.
But we are doing all we can to move the negotiations forward.
We cannot say with certainty when this new agreement will be ultimately reached.
But we remain committed to continuing to work together with union leaders to negotiate and complete the contract as soon as possible to provide our pilots with the contract they deserve.
As I said earlier, we are taking steps to adjust our business and elevate Atlas as I've reviewed the range of our business activities.
Identified certain operations that are not generating acceptable levels of return.
I will be focused on addressing those areas to ensure that our resources are put to the most profitable use.
Slide six highlights our framework for 2020.
Just about every industry is experiencing the impacts of the unfortunate Corona virus outbreak air freight is no different.
The full effects are yet to be determined and therefore, our visibility into the year ahead is evolving.
In these unprecedented circumstances, we are playing a key role in our customers operating networks as they navigate through this challenging time.
We are also currently accommodating special charter demand and are well prepared for the anticipated surge of volumes once manufacturing resumes in full force.
Based on global economic conditions in our current expectations and subject to the risks and potential opportunities associated with the Corona virus, we expect to a fly approximately 325000 block hours. This year with revenue of about 2.8 billion.
Including the impact in 2019, and the expected impact in 2020 from lower aircraft rent and depreciation.
We anticipate that our adjusted EBITDA will grow by a mid teens percentage in 2020 and that our adjusted net income will increase by a high thirtys to low fortys percentage.
Excluding the impact of lower aircraft rent and depreciation in both years, we anticipate that our adjusted EBITDA and adjusted net income in 2020 will be comparable to or slightly higher than 2019 levels.
Our outlook reflects an expected refund in 2020 of excess aircraft rent paid in previous years.
The impact in 2020 of an increase in amortization of deferred maintenance compared with 2019.
The absence of return conditions income that we realized in the first quarter of 2019.
Improved operating efficiencies and cost savings and a full year adjusted effective income tax rate of approximately 21%.
Our outlook also reflects that we have part for less efficient 747, 400 converted freighters since the beginning of 2020.
We also plan to return 1747 freighter to its less or in the first half of this year.
And we have sold or expect to sell three non essential aircraft in our dry lease portfolio.
Similar to historical patterns, we anticipate that well over three quarters of our adjusted net income in 2020 will occur in the second half the year.
In addition, our core capital expenditures, which exclude aircraft in engine purchases in which are mainly for parts and components for our fleet are projected to total approximately 90 to 100 million in 2020.
Significantly lower than core Capex of about 134 million in 2019.
Looking to the first quarter, which is also subject to the developments related to the Corona virus.
We expect approximately 75000 block hours.
640 million in revenue.
90 million of adjusted EBITDA, and adjusted net income ranging from approximately breakeven to a modest profit.
This is a good time to as Spencer to provide an overview of our fourth quarter 2019 results and after Spencer's remarks, I'll provide a few additional comments and then we'll be happy to answer your questions Spencer.
Thank you John and Hello, everyone.
Our fourth quarter results are highlighted on slide seven.
On an adjusted basis, EBITDA totaled $204.7 million and income from continuing operations net of taxes totaled $98.2 million.
This included after tax benefits of $10.5 million $7.6 million due to lower aircraft rent and $2.9 million due to lower depreciation.
On a reported basis, we had a net loss of $410.2 million, which was primarily driven by a noncash special charge of $485.2 million after tax.
Our adjusted earnings in the fourth quarter included an effective income tax rate of 17.7%.
For the full year, we had an.
And adjusted tax rate of 12.5%.
In 2020, we expect our full year adjusted income tax rate to be approximately 21%.
Looking at slide eight.
Operating revenue totaled $747 million in the fourth quarter.
AC my revenue reflected a decline in 747 400 AC my flying related to the global air freight environment and macroeconomic conditions, partially offset by growth in 747, 400, Triple seven and 737 CMO and cargo fine.
In charter revenue is relatively in line with a fourth quarter of 2018, driven by increases in cargo and passenger flying that were mainly offset by a decline in commercial cargo yields excluding fuel.
In dry leasing revenue during the quarter, primarily reflected the schedule return of a triple seven freighter in 2019.
Moving to slide nine <unk> segments.
Contribution totaled $186 million in the fourth quarter.
AC My earnings primarily reflected a reduction in heavy maintenance expense.
The decrease in aircraft rent and depreciation and growth in semi cargo flying.
Charter contribution during the period was primarily driven by a decrease in commercial cargo yields and lower 747 freighter utilization.
This was partially offset by increased passenger and cargo flying for the military.
A reduction in heavy maintenance expense.
Lower aircraft rent and depreciation.
In dry leasing the change in contribution was similar to the change in revenue primarily driven by the schedule return of the Triple seven freighter, partially offset by lower interest expense and lower depreciation.
Turning to slide 10.
Our net leverage ratio moved a bit lower in the fourth quarter as we continue to make debt payments.
We ended the year at 4.4 times.
We look for an improvement by the end of 2020, as we increase our cash balance and continue to make debt payments of approximately $70 million per quarter.
We don't have any from aircraft purchase commitments and we remain committed to a strong balance sheet.
Earlier this month, we extended dry leases with a key customer for to triple seven freighters each for a period of 10 years from the end of the existing leases.
In connection with the lease extensions, we refinanced two secured loans totaling $126 million on the aircraft at balloon payments of 112 million due later in 2020.
With two new 10 year term loans with fixed coupon rates, averaging less than 3.3%.
Now I'd like to turn it back to John.
Thank you Spencer.
Moving to slide 11, I would like to revisit the themes that I started with today.
Air freight is and will continue to be a long term growth industry that is a critical part of the global supply chain.
Atlas is well positioned with a great fleet of aircraft.
And long list of marquee customers.
As we move the business forward, we're adjusting our business to manage our costs and best align our resources with our strategic priorities.
Again, with a focus on growth customers and those opportunities that generate the best returns.
And subject to some of the uncertainties and potential opportunities. We've talked about we anticipate that our financial performance in 2020 will be an improvement over 2019.
With that operator may we have our first question.
Certainly at this time I would like to remind everyone in order to ask the question. Please press star and the number one way or telephone keypad, we'll pause for just a moment a couple of acuity roster.
Your first question comes from Bob Labick CJS Securities. Your line is open.
All right. It's actually we should go down for Bob This morning, good morning.
Highly.
So just starting with the fleet changes can you give us some more color around.
Yes that.
You're right.
Retiring or parking and then.
These selling of the three non essential aircraft off from a standpoint of expected proceeds.
Potential uses of proceeds and things like that.
Sure ill start with the with the some four seven.
Parking or the converted freighters as we talked about throughout the latter part of last year.
Demand has been soft softer and win in that environment, It's usually the least efficient aircraft.
Logically that get parked onest and frankly.
On the demand.
Has not been there for those aircraft. So we elected for the 747 converted freighter.
To to be temporarily part.
As we manage through the current period.
They are available to us with appropriate lead times to return back to service.
But they are generally because they are converted freighters other generally heavier less efficient more fuel burn.
No one knows load capability than some 474, hundreds so thats kind of the reason behind.
The parking of those aircraft.
With regard to the other what we describe as non essential aircraft. We believe the market was right to to monetize some of those aircraft and and collect the cash we got fair returns. We're pleased with the results of those disposition of assets.
And we look forward to some of our future investing activities Spencer and Lee dispenser, I'll, just add that as far as use of proceeds.
We intend to use those proceeds to shore up our balance sheet.
And to continue to focus on trying to lower net leverage ratio.
Okay, and then just a follow up in terms of.
Other opportunities you have to either reduce costs.
Gross margins.
Things of that nature without incremental aircraft additions.
Sure.
We're looking at every aspect of the business.
It includes optimizing things like our crew scheduling and bidding practices levering leveraging technology to make us more efficient.
Updating and streamlining our heavy maintenance tasks on these cast cards develop over time, and we review them from time to time, whether that work is required or not and there are ways to streamline.
Those maintenance events to make it more efficient and less expensive.
And some of the other things you'd expect in a softer market, reducing non essential travel canceling certain conferences or meetings that can otherwise be leveraged through webcast.
Appropriately managing our head count.
And the kind of other things you'd expect limiting outside services and contractors and really runs the whole gamut of the whole organization.
Contributing to keep our costs under control.
Great I will hop back in queue. Thanks.
Thanks Lee.
Your next question Kozar, Helane Becker with Cowen Your line is open.
Hi, Thank you very much operator.
John Welcome onboard itself.
Different for you now right instead of being just so listen or you get to participate more aggressively.
And indeed.
[laughter], so I'll try to not be so mean.
For your first conference call, but this is one of my questions would your pilots agree that you're doing everything possible to get that agreement negotiated and that Youre just waiting on them to provide you with stuff coming forward.
I think many would agree some may not.
I think really where where the the proof lies in the fact of what we're seeking to do.
We announced our merger with southern Air back in 2016, and since then we have taken all steps to move this process forward.
Fortunately for us the two CB A's have pretty explicit provisions as to what is called for in the event of a merger.
And that process. We've described in prior calls requires the union to do certain things, including giving us the integrated seniority list.
And that triggers a defined period of time of bargaining after which any unresolved issues should go <unk> arbitration, if there are any and resolve issues.
But to your question the Union leaders, particularly have steadfastly refused to honor those terms, which has forced us to seek legal intervention. So while that has taken time. It does in my opinion fit into the bucket of us doing everything possible, because we believe and the contracts provide an orderly time.
We process to get this resolved.
Nonetheless.
Notwithstanding some of the legal wrangling.
No. We continue to bargain we have brought in at the unions request a third party.
Professional negotiator that both parties no in respect to help us close the gap. So I think from that standpoint, they would also.
View us as working together to make progress together.
Because that's what it's going to require.
And so yes, I think it would be if you were asking individual crew member you'd get mixed results, but we truly believe we're pressing as quickly as we can notably the things identified.
Fit into the the category of things, we do required to make further progress we are waiting on a comprehensive proposal. We're at that point in the bargaining where every section does have economic consequences. So we need to know what the total ask is as we allocate where.
The funds or our best applied and we need to seniority list that even if we were to agree to CBVA. It really can't be implemented until we have the seniority list. So.
That's.
Why we identify that's the union has some responsibilities in this as well so hopefully that answered your question, yes, no. That's very good. Thank you very much I appreciate that.
My other question is with respect to what we're seeing in rates. So weve seen rates out of Asia double and I wish you over the past couple of weeks because there's no belly space, there's no container shipping and obviously if theres any manufacturing it has to go on air and Im just kind of wondering if there are.
On companies I guess shippers that are contacting you just start reserving space for March April and May.
Especially March and April.
As you know manufacturing starts to eventually.
Ramp backup in China.
Absolutely, we're getting a lot of calls.
With some very experienced.
Knowledgeable chippers freight forwarders brokers.
Who are anticipating while none of us knows for sure what's going to happen, there's a lot of uncertainty, but what we do know and with really the supportive.
All the senior officials in government, who are committed to keeping goods moving the supply chains moving.
It's going to return and and we've been through crisis, maybe not exactly like this before but the kind of activity you're talking about is absolutely happening.
Okay, and then just one really easy question.
The 123 aircraft in the chart.
Does that include the four parked aircraft.
It does.
Okay, great. Thanks, very much guys.
Thank you willing thank you Julie.
Your next question comes from Scott Group with Wolfe Research. Your line is open.
Hey, Thanks morning, guys. So I just.
One follow up on Helanes that Corona buyers question. So can you just to be clear like what have you assumed in the guidance.
Net positive or negative in the first quarter and the year.
Hi, Doug grates, doubling that back to what we're seeing and then.
Any are there any limits, we should be thinking about in terms of the number of charter flights you can actually flat.
I'll take the the first part of that Scott as Spencer. So I mean, thus far the current a virus impact has been a negative one.
As you would imagine with lunar new year extended factory workers, not being able to get into the factories and so forth. So we've had flight cancellations. We've also had.
Crew members, who we were not able to get into position.
Because the passenger airlines.
Weren't operating appropriately.
As Helane indicated that really is starting to change quite dramatically now and now we're starting to really see the tremendous demand and the increase in yields.
And the factories to get back to work this week.
Some of them not on full power and we expect that to continue to change and they will get on full power over.
Over the next.
We think about weaker weaken a half.
So there is really going to be this kind of anticipated surge.
So.
It's it's as John said earlier, our view is evolving right now we've had some some cancellations and negatives with regard to this.
We expect that we are then going to have quite some positives.
And both of those are kind of built into our outlook, but as again as John said, it really isn't evolving view given the uncertainties minimal at John.
Just the rest of it yeah.
And as I mentioned in my remarks, we are really well positioned to take advantage of that have that upside.
Significantly we worked together with the union to enter into in.
Memorandum of understanding.
We are taking volunteers for any flying in and out of China and working together with the Union, we have implemented some some programs, including premium pay for those segments into and out of China and been working very cooperatively with with the pilots in the entire team in the Union leadership, So my shout out to them.
And taking advantage as Spencer mentioned, there have been some cancellations in the interim period, but also those boys had been picked up by some of the charter activity, which we expect to continue if not accelerate when the surge happens.
Just sorry, I understand so.
Okay.
Our guidance that we have full year guidance do you said your second quarter second quarter reflects a meaningful benefit from that or not I guess thats just not clear to me.
It's.
It's still evolving Scott so it's hard to know.
Exactly what it's going to mean, so I think it's fair to say that there's potentially downside if things get worse or change and I think it's fair to say that theres potentially quite a bit of upside. If there is the surge that we anticipate.
And I would add to that weve been careful not to.
Take on.
Too much risk on the upside until we get more visibility and things materialize that we're anticipating.
Okay makes sense.
Just on the right down to the 400 fleet just so I understand it was this the entire fleet that you wrote down there or just the ones your parking and the four hundreds that are coming up where these any some meyer Carter.
Sure So Scott it was the.
The 747 400 freighter fleet so as the.
The entire fleet.
It's together as one sort of asset group, which includes owned and leased.
Airframes and engines Rotable parts leasehold improvements.
So is it was all of our 747 400 freighter fleet and.
Sorry did you have another part of the question that I missed.
The ones that are coming out that are getting parked here does in a few Meyer revision chart Oh right.
The two or in charter.
Okay.
Do you think Youre right, John but the whole 400 fleet, we should be talking about.
Parking more.
Yeah.
Factory freighters overtime.
Well, Scott, we're not anticipating that.
In fact as the some four seven as I mentioned still a great airplane.
With its nose loading capability more tonnage.
It's an aircraft the choice for the military as well and very attractive aircraft in our charter business.
It's again, it's parking the the least efficient aircraft during this period, which we expect to be temporary but.
On the some four seven freighters.
Four hundreds are here to stay than I would just add that we just this place to 744.
In an AC miringo with a new customer just a few weeks ago. So.
It's an aircraft it's still in in good demand.
Okay Thats, one just real quick the direct refund how much in 20 in the guidance versus 90.
And thanks for the time.
Thank you Scott So we haven't said exactly how much that's going to be in 20.
In 18, we had about 12.4 million in 19, we had 27.6 million and then.
In 2020, we Havent, yet said what that is.
But.
Something along those lines.
And we'll announce it us as the year progresses.
Thank you.
Your next in queue coast, Chris CFO Apollo with Susquehanna. Your line is open.
Good morning, Thanks for taking my question.
If so if saab belly capacity to mainland China, and Hong Kong comes back and say mid to Q.
How should we think about commercial charter or more specifically the overall supply demand balance for freighters.
A few months ago before the virus I got the sense that you know and I think you had suggested that some freighters might have to be part on I know that theres a need for capacity into China, but given how fluid. The situation is I'm curious so what you're seeing in the market.
Ex this region.
So my view on that Chris is that.
Even when the commercial belly capacity comes in to the marketplace. There is still going to be a tremendous amount of demand given the significant setback that manufacturing has experienced.
And it's not going to change overnight.
When some of the commercial carriers resume service and looking ahead I don't have all of the dates but some of the commercial carriers have pushed into April before they will resume service. So you're talking about that period of time before it even returns and that pent up demand to potentially building, which favors.
The main deck freighters.
So.
While eventually it will it will balance.
And you know goods that have moon.
By surface.
We'll move by air for.
Previously move by surface, just because the urgency to go to market.
So we think that.
Once the surge occurs.
It's going to be awhile and that the passenger belly capacity is not going to move the needle that much for a period of time.
Okay. So we shouldn't necessarily think that your current block hour and EBITDA guide is anchored to whenever American delta they kind of put.
You know capacity back online.
It sounds like you're.
Expecting sort of peak to fall whenever that happens.
Yeah that my view is that forecast is independent of of the commercial carriers in the belly capacity.
Okay.
Okay.
And then could you remind us where you are with respect to.
Amazon warrants the specifically the 2016 tranche the strike price and whether any have been exercise and one that traunch expires. Thanks.
Sure Chris.
None of those warrants have expired.
Sorry, yes, none of them expire another have exercised so we had a few different tranches warrant a and b.
Had a strike price of 30, 750, and warrants see has a strike price of 50 to 90.
And again, none of those have yet.
Been exercise.
Thank you.
Thank you.
Again, if you'd like to ask the question. Please press Star One. Your next question comes from David Ross with Stifel. Your line is open.
Yes, good morning, gentlemen.
Question on the labor side of things again, you mentioned in the fourth quarter. There was labor related service disruptions been highlighted a threat as year or so was it any less and for Q 19 than in prior quarters, and how do you see that trending into 2020.
Yes, it it was less in the fourth quarter for a combination of factors.
Including some of the steps that we took in management too.
Ensure we had enough crews out in the workplace. For example, we planned for peak season to have cruise available more crudes available the.
For the most part completed vacation and training. So we have more crews generally available by design.
As well as.
There's instances, where we'll close down the schoolhouse, where we have qualified pilots who serve as instructors.
Out on the line as additional coverage.
And frankly, the positive momentum with the labor discussions.
Our pilots stepped up and delivered the service our come to that our customers come to expect.
And the reference.
In my remarks about the service disruptions are related to.
Just generally in them in the labor environment, we're in.
We still see some.
Instances of what we believe our labor related service disruption, so that hasn't gone away entirely but the overwhelming majority of our pilots are are stepping up and serving our customers.
And that's why it's not as much of a focus in the fourth quarter as it was in previous quarters.
And going into 2020 do you expect this to be highlighted in the quarterly earnings again or is it close to minimal.
We're optimistic we're focused on getting to a deal with our pilots.
We want to get them the contract.
The Union has some responsibilities here as well as I've mentioned, Unfortunately, it's taken longer because of the litigations in the arbitrations.
That we've had to go through but my view is our pilots want to go to work they want to serve our customers.
And they want to do their jobs and they want their contract. So if we keep moving in that direction, which we have been I'm optimistic we're going to continue to see improvements and I'm certainly hopeful of that.
And I know you can't control with the Union does but do you have.
The goal for timing.
Of resolution to the labor contract.
As soon as possible and I think there are levers that both sides could pull to make that happen.
It's not going to happen overnight, because there's still a lot to discuss.
But.
Theres nothing that prevents us from continuing to kind of accelerate the time periods one of the things that I've shared publicly with the union.
On the current contract provisions call for.
The union to tender us the seniority list and after which there's a period of nine months of bargaining after which any unresolved issues go to binding arbitration.
As I mentioned, we also have a majority of these sections already agreed.
That nine months contemplates.
That you're starting from scratch from zero and we're not so there are opportunities to accelerate if we can but our view is that unless and until we get the seniority list in the.
Integrated excuse me the C artist Andy comprehensive economic proposal, it's difficult to make rapid progress. So both sides have responsibility to move this forward.
And then just one follow up you said earlier that there's a certain lead time to get the part 747 back into service what does that general lead time, if you see the demand out there.
It could range anywhere from a week to 245 days, depending on the status of the aircraft in the spending understands the engines when it's due for certain maintenance Theres no single answer to that but there are a couple of aircraft that we would.
Hold out that could move pretty quickly back online, if we need them and probably the other two little bit more lead time in that 30 to 45 day time period.
Thank you.
Thank you.
No no further questions at this time I turn the call back presenters for any closing remarks.
Great. Thank you operator.
Spencer and I would like to thank all of you for your interest in Atlas Air worldwide. We appreciate your sharing your time with US today and we look forward to speaking with you. All again soon thank you very much.
This concludes today's conference call you may now disconnect.
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Okay.
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