Q2 2021 Mesa Air Group Inc Earnings Call
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Thank you for standing by and welcome to the Mesa Airlines quarter, two Investor Conference call. All participants are in a listen only mode until the question and answer session at that time. Please press star one on mute your phone and record your name at the prompt. This call is being recorded if you have any objections. Please disconnect.
At this time I would now like to turn the call over to CEO and chairman Jonathan Ornstein. Thank you Sir you may begin.
And thank you operator, good afternoon, and thank you for standing by everyone on the call like day.
Welcome to the second quarter fiscal year 2021 earnings call.
It is now my pleasure to turn the conference over to me Oh, There you got so low.
Okay.
This is Jonathan Ornstein, I'm, the chairman and Chief Executive Officer Mesa Airlines on the call today are Mike Lotz, our President and Chief Financial Officer, Brian Gillman, Our executive VP, and General Counsel and Brad Rich, our Chief operating officer and talking to you back argues senior VP of finance.
<unk> seen the announcement, but to reiterate Clark brings 20 years of industry experience from Alaska Airlines and will be a terrific asset on both the operational and financial sides of our business I'd like to open up with our forward looking statement before the presentation and the comments begin Mesa would like to remind you that our press release comments made on the average ball and respond.
So to your questions. During this call may include forward looking statements as defined under the private Securities Litigation Reform Act of 1995.
As such they are subject to future events and uncertainties that could also affect our results to differ materially from those statements. Also please note. The company undertakes no obligation and makes no commitment commitment to update or revise these forward looking statements any forward looking comments should be considered in conjunction with the cautionary statements in our press release and the <unk>.
Factors included in our filings with the SEC, which Mesa encourage you to read.
In addition, please refer to our press release from the investors section of basis website to find additional disclosures and reconciliations of non-GAAP financial measures that will be used on today's call.
Okay I'd like to begin with my usual way by thanking all of our people in the field for their dedication and hard work.
What is clearly one of the most if not the most challenging period car industry. Thank you everybody.
In spite of this tough environment I'd like to cover a number of highlights from the COVID-19.
On the financial side, we reported a pretax profit of $7 6 million.
<unk> included a $4 5 million non cash adjustments.
Purchase other previously leased <unk> hundred resulting in an adjusted pre tax profit of $12 1 million or 23 cents per share.
At American after reaching an agreement to extend our capacity purchase agreement in November 'twenty, 'twenty, four or five years before the aircrafts.
Can increase that number about five additional air that started in January and extending through the summer months.
At United We added two more of the 20, new Embraer 175 L. L aircraft to our fleet with the last two deliveries expected next month, bringing the total Embraer 175 fleet to 80.
And our cargo operations, we are adding a third 737 400, which we expect to be in service in July to support existing operations.
As a reminder, we had the first and only regional airlines to operate narrow body cargo aircrafts.
And we'll continue to pursue additional cargo opportunities.
We announced our LOI with Gramercy associates to begin regional jet operations in Europe with some of our surplus C. R. J nine hundreds.
Gramercy is a private.
Company founded by Tony Davis, Tony is the former CEO of Tiger Airlines, Singapore, and Australia, and Beanie babies. He is also the former D O O.
Orlando Aviation.
Importantly, we are making significant strides in our adoption of new technology and decarbonization of air travel.
This quarter, we announced our investment in Archer Aviation's E VTOL aircrafts, alongside United Airlines and.
In the transaction Mesa, and United received equity larger aviation in the form of awards or purchase up to 200, it's 160 from United and 44 Mesa subject to certain conditions.
During the quarter Mesa reported initial 40 per cent best thing.
Awards at $16.3 million. So it may seem cutting edge, we are essentially going back to our roots operating smaller efficient aircraft we.
We are excited to be at the forefront of this elite toll technology continue to pursue other opportunities in the area of sustainability and eco friendly flawed.
We are also proud to be named to the Forbes list of America's Best midsize employers by 2021.
Our relationship with our employees is of critical importance to us and we were pleased to see our average recognized.
Once again I'd like to thank all of our people for making this possible.
With that I'd like to turn the.
The call over to Brad Rich, our Chief operating officer to.
To give you an update on our level of operations as well as our American United and D. H L operational performance Brad. Thank you.
Alright, Thank you Jonathan and good afternoon to everyone. Thank you for joining us today.
I'd like to begin with highlighting some of our main priorities.
First the health and safety of our employees and passengers remain at the top of our priority list.
As you would expect we're in constant contact with our partners and the CDC on the latest guidance and protocols.
We're also committed to improving our operational performance as a high priority.
Our collective work with our partners continues to strengthen these relationships and we're committed to continuous improvement of our performance.
And while all of the new things going on in the New ventures at the company are exciting I would like to reemphasize that the key to maintaining these long term relationships is delivering consistently strong operational performance and producing industry leading economics.
By way of review of the March quarter, we generated 73942 block hours, which was down 32% from last year, but up six 8% from the December quarter, and that's despite flying fewer aircraft and the American operation.
Based on current guidance from our partners, we expect the June quarter utilization in United Operation to be at about 75% to 80% of pre COVID-19 levels and then the American operation at approximately a 100% pre COVID-19.
The September quarter is projected to be.
85% to 90% at United and a little over a 100% in our American operation.
If recent demand trends continue we anticipate a steady increase in block hours as we progress towards a strong recovery in capacity.
As far as operational performance, we continue to see improvements in our key operational performance metrics.
The March quarter, our controllable completion factor was 99, 9%, which is consistent with 99, 9% a year ago, but we've seen very good improvement in our controllable on time departures, which was 91, 1% versus 81, 3% a year ago.
As I said.
Focus on continual improvement in operational performance will remain one of our highest priorities.
I would now like to provide an update on our American operation.
As Jonathan stated, we previously announced both a five year extension that was finalized in the December quarter as well as an agreement with American to add five additional C. R. J aircraft above those CPA levels.
Subsequent to quarter end, we formalized the agreement to operate those five additional aircrafts through mid August of 2021.
We believe there may be additional future opportunities.
As a reminder, our current fleet consists of 64 C. R J nine hundreds.
Of these 64 aircraft, we own 49, and 41 of those or finance.
Under our previously announced U S Treasury loans.
And seven are financed with EDC export development Bank of Canada.
We also have 15 aircrafts leased through 2024.
We will be using the majority of these aircraft to support the American operation.
However, we are still reviewing several new opportunities that would productively utilize some of these aircraft.
Given the attractive financing and low debt balance on a majority of the fleet. We believe these aircrafts are valuable assets and will remain productive.
We are making a number of investments in our C. R. J sleep designed to improve the overall fleet help enhance long term value and strengthen operational reliability.
These investments include cabin interior refurbishment and a significant increase in the volume of aircraft heavy checks.
We have a historically high level of heavy check lines due to bringing aircrafts online as demand continues to strengthen.
And to create additional operational spare support to enhance performance.
Access to and productivity of the heavy chat providers has been challenging, but we're working very aggressively to add additional providers to bring aircraft back into operation as quickly as possible.
Due to all of the investments in the fleet and our focus on performance. We do remain confident in our ability to meet the operational requirements of the new agreement with American.
Now moving to an update of our United Operation.
Relationship with United remains strong and productive we continue to work collectively.
Many strategic and operational initiatives that we feel will create additional value in our relationship.
We are proud to be one of SKU airlines, taking delivery of new aircraft in today's difficult environment.
And by way of update.
We currently have 18, new E 175, L. L. L. L. L. L L aircrafts.
They've been placed into service between November of 2020 and May of 2021 day.
Last two will be delivered by the end of June 'twenty one.
We have removed all of the C. R. J seven hundreds from our fleet and we continue to transition the transition process of leasing. These 20 C. R. J 700 aircraft to go jet Airlines as part of the previously announced agreement which ends in 2030.
We are in the final months of retraining. The current C. R. J 700 pilots in Washington, Dulles on the Embraer 170 fives.
And most of that training expense will be covered by the training credits that are part of the Embraer 175 purchase agreement.
Now that we are operating a single fleet of Embraer.
<unk> hundred 70 fives for United.
We are seeing not only an improvement in cost reductions, but anticipate consistent strong performance and enhanced network efficiencies through aircrafts flow.
And increased utilization.
In regards to our DHL operation, we have $2 737, 400 cargo aircraft in service with DHL.
We have secured a third 737 that we anticipate to be available in July of 'twenty one.
That will provide.
Additional support for this operation.
So far we've been pleased with the operation and believe we are well positioned to grow this line of business.
I'd now like to make some comments on a topic that is getting a lot of attention recently, which is the anticipated hiring requirements for airline industry labor.
First of all I too would like to express my appreciation to all of the aviation professionals that Mesa that have demonstrated their commitment and dedication through this difficult time and.
And we do greatly appreciate appreciate each one of them.
We remain focused on hiring and training to meet increasing staffing requirements and nearly all of our operational divisions.
Our applicant pools are strong and in the case of pilots stronger than we've seen in recent history and we believe in our ability to hire across the airline.
We remain active in the hiring of mechanics flight attendants and other operational support positions and we are bringing back the pilots that were in training at the beginning of the pandemic.
Furthermore, we feel like we're very well positioned to be an industry, leading option for regional airline pilots.
Through opportunities such as.
The United 88 program.
We are one of few airlines able to offer a direct pathway for our pilots to become a career pilot for United Airlines.
We also have the seven 737 aircraft on certificate or the only regional airline offering the ability to fly larger aircraft and earned the highest pay in the regional industry.
We're also well positioned with crude almost sales across the country that allow our pilots the opportunity to live where they desire and commute easily to work.
We are also currently offering upgrade opportunities.
And we are actively recruiting from hundreds of aviation schools across the country.
With that I'd now like to turn the time over to torque to walk through our financial performance.
Great. Thanks, Brad I appreciate that.
Let me do a quick recap on the earnings for the second quarter of fiscal year 2021, we reported net income of $5 $7 million or <unk> 14 per share. This.
This compares favorably to net income of $1 9 million from the same quarter last year or <unk> <unk> per diluted share.
As noted in our press release the primary reason for the increase in earnings from Q2 2020 to Q2 2021 is due to the combination of about $56 million pre tax benefit from.
See through PSB to under the cares act largely offset by temporarily reduced rates offered to our partners related to the PSP program and the deferral of $4 9 million of revenue all of which was billed and paid by American and United during the quarter and will be recognized over the remaining terms of the contracts.
We reported $1 $9 million of income tax expense for the quarter. However, we do not pay any cash taxes as we have over $500 million of valuable NOL carryforward.
So let me review, where we are in cash and liquidity. We ended Q2 at $148 million compared to 181 million in Q1.
Pointed out last quarter, the 181 million for Q1 included $48 million of United CPA prepayments for future months, which was reduced to zero in Q2.
During the quarter. We also made 21 million in scheduled principal payments and from.
The PSP program through we received $48 7 million for PSP too and a $7 3 million of our top offer PSB too in Q3 for.
PSP three we've been allocated $52 2 million half of which was received in April with the balance expected in Q3.
So there was no capex from the quarter, although we did make a $7 million deposit T. G E on five engines to be delivered in calendar year 2021.
Capex for the remainder of fiscal year 2021 is when GE engine with the remaining nine in fiscal year 2022, and 'twenty three.
Going forward on cash, although we booked reduce rates to our partners for PSP to in Q2, the actual cash credits of roughly 30 million will be given in Q3.
And as we look to the end of fiscal year 2021, we expect cash to be in the hundreds of $110 million range.
As for our debt total debt of $725 million down from $746 million at the end of Q1 2021, we.
We have debt payments of $14 million in Q3, and $45 million in Q4 of which $18 million was previously deferred.
Assuming no new debt at fiscal year end debt will be $656 million down from almost $900 million just two years ago.
Now, let me turn to guidance, we are still operating in an uncertain environment, but we are getting better visibility as we hopefully move past the worst of the pandemic.
We are expecting a gradual improvement in block hours throughout the remainder of the fiscal year for fiscal year 2021, We expect 85000 block hours in Q3 and 89000 in Q4.
We are approaching pre COVID-19 levels and expect further progress as the vaccine rollout continues on heavy maintenance, which is engine and C. Checks. We have provided our estimates. These amounts are higher than we would consider normal run rates. Most of this work as Brad pointed out is related to C checks, which were previously deferred and we're catching up on them through the end of the calendar year as.
Well as enhancing our aircraft interiors and now I'd like to turn it back over to Jonathan for closing remarks.
Thank you very much towards.
The last year has obviously been a very difficult for the entire industry.
From the entire country's entire world. However.
However, we are pleased that Mesa has enabled to remain profitable.
Well for our partners and importantly kept our people are fully employed.
This is due to our operational performance our industry, leading economics and the tremendous support we received from our people in the field and here in the office lease.
These factors position us well for growth and.
And we will continue to look at new opportunities as the industry evolves.
I'd like to now open this up for other questions that we might be able to help you with.
Yes, Sir it is now time for the question and answer session of today's call. If you would like to ask a question. Please press star followed by one please make sure that your phone is on mute it and record your name clearly when prompted.
The first question comes from Savi <unk> from Raymond James. Thank you. Your line is open.
Alright, Thank you and good afternoon, everyone.
I'm just.
Just a quick question on air.
The block hours it looks like maybe block hours down slightly versus the guidance provided last quarter.
Even though you're kind of extending the aircraft with American just curious if you can provide any color around that.
Brad or Mike.
Oh this is Mike yeah, So I think savi, they're fairly close to where we were I think.
Are we just being a little bit more conservative as you know these schedules you know they're changing week to week. So I think we're just being a little bit more conservative with our estimate.
Yeah, Hey, Mike right.
That completely it's just we're just trying to be a little.
Cautious and the projections.
And just around the the C. Arcane purchase are off lease and just kind of curious the thinking around that if you can provide any color on you know how attractive that deal was and any update on that the European JV S. T can ask the conversations you're having there and the timing of when we might hear more.
On that front.
Yes.
I'll say I'll take this one John so on the.
If you look on the on the on the leash purchase.
Look we have made it clear we are trying to buy out all of all of our leases end and.
Take them on as owned aircraft. We have 18, we had 18 leases we're down now to 2017. This particular accurate was just one of the one of the unusual ones and our fleet because it's the only aircraft we will plant paying like supplemental maintenance.
Rent for.
Net net we ended up having to return forego getting the maintenance reserves on it.
So we picked we picked up from a cash standpoint, we picked up the aircraft for very little.
Very little cash and avoided return conditions, but the way the accounting works based on fair market value ended up being a noncash write off.
As far as the European JV, we're still moving along with it we had the LOI we intent in intend to probably give a better update next quarter I don't know Jonathan if you want to add anything to that.
Well, yeah, I mean, I think that you know.
Some of you know, Mike and I have some experience over in Europe.
We had known Tony for a while.
You'd actually advise us on a couple of other deals that we've looked at.
I think that's probably the most knowledgeable guy in Europe.
When it comes to regional operations.
He has had tremendous experience.
In Europe, and with real serious players in the industry, who we respect them and so the fact that they were willing to invest alongside of US was very attractive and I think this could be a good opportunity per mesa.
To put to use a few aircrafts, but our total in the water. There has been a significant restructuring in regional operations in Europe. As a result of COVID-19 and I think this could be a really good example of being in the right place at the lifetime.
I appreciate the comments thank you.
Thank you. Our next question comes from Helane Becker from Cowen Your line is open.
Thanks, very much operator, thanks for the time guys. So on Capex.
Capex I kind of missed that.
Thank you Sade torque one G engines, and then nine comp in fiscal 2022, and 2023 or do I think about it as calendar year. So do you have just a single point number two.
Or I guess fiscal 'twenty, one and fiscal 'twenty two.
Yeah. This is Mike I'll jump in for torque here.
But for fiscal 'twenty. One is just it's just one aircraft for physical guarantee region. Yeah. One engine had heard fiscal 'twenty, one and then it would be four in fiscal 'twenty two yes.
And 25 in 'twenty two 'twenty three.
Okay. That's perfect and then do you have and asked them at.
The storm and power outages in Texas, and how they impacted your operations.
Yeah Yeah.
Yeah Helane.
We estimated it was roughly an impact of about $3 million net net at the end of the day.
Okay do you have to cover that or do your partners.
Well, we this is Mike.
We cover the crew cost of that right now.
Our crews have a guarantee flying and the extent that that flying is cancel then then we still have to pay the crews.
The maintenance cost you know, we're not we're not burning engines were not burning bryan's expense. So it's kind of a mix, but we still absorb the crew cost.
Gotcha and then my final question.
Oh boy, what we're saying is that the net impact after what our partners pay us what we paid.
So about $3 million.
I'll tell you that I've met its net.
Other income net.
Okay. That's perfectly understandable thanks, Jonathan and then my last question.
How long will you give your partner slower contract rates is it just when youre receiving P. S. P or does that continue after P. S T.
Well I'll answer it and you know Mike do you want to give some more technical piece, but.
The lower contract rates.
Clearly were around what was going on with COVID-19 and P. S. P.
I don't think that anyone would expect us to continue to have lower rates.
In the absence of P. S P.
You want to add anything to that line.
No I think that's that's fairly accurate I mean, we are going to offer these rates through PSP, three which is through ship timber.
<unk> of this year and if theres a PHP four wheel.
We will address that.
Really do something along those as well, but right now it's just through September.
Gotcha, Okay. Thanks, everybody that's all very helpful.
Thank you again, if you would like to ask a question. Please press star followed by one please make sure that your phone is on mute it and record your name when prompted our next question comes from Michael Lindenberg from Deutsche Bank. Your line is open.
Hi, This is hilary on for Mike. Thanks for taking my question.
I guess it sounds like the JV opinion grammar school holidays.
Would that be recorded as earnings from and are scaling up given that you'll be illinois less sensitive to that and if that's the case I guess well, yeah, we probably won't global from coming out of the operating P&L line what will.
Yeah. This is Mike.
Depending upon the final structure, we're not sure what the accounting will look like but there's.
Not expect it to be anything in this fiscal year that would be significant.
Okay, My second floor and no debt.
Yeah, just I guess a longer term question you know you've been doing a great job of paying down debt and just wanted to get your thoughts on what your longer term capital structure will look like I guess over the day.
So you know will he be focused more on paying down debt or maintaining liquidity pools and I think we have a debt to cap number one pilot liquidity.
I guess on what day, you know yourself.
Yeah.
Well.
And then if anybody wants to add in I mean, you know the big.
Government loan has helped us significantly in terms of liquidity and you know.
While there is you know obviously, we repaid United.
Some of the money that they had given us in terms of in advance.
The benefit of that loan will become apparent as.
We continue to receive payments and we are not making principal payments. So it might be new that would that will more than suffice for the liquidity that we will require or at least the next few years.
I think that will continue to pay down all the other debt that we have.
And we will focus on continuing to purchase aircraft off of lease, which we find obviously you find attractive.
The likelihood of us taking on any additional debt, which of course, you know we have a somewhat different view, sometimes from the street and that when we take on debt. It means we're getting new orders for aircraft.
You know that debt is effectively a pass through.
The partner that takes on that aircraft. So if we were to take on additional debt in all probability that would be associated with.
The addition of aircraft or potentially down the road somebody engines that we have to purchase.
My towards do you want to add anything to that.
No I think that's about right I mean, you know.
Like Jonathan said.
Taking on debt to buy aircraft to expand our operations with our partners is good debt for us there's no better debt for us and you know after that we're still on you know we're still like like torque alluded to I think we ended the year at.
$650 million and with any without any new debt I think we're scheduled next year to pay off the next fiscal year over $100 million and close to $100 million and 23. So.
We are starting to pay down the principal payments pretty significantly.
Okay, Great. That's very helpful. Thank you so much.
Okay.
Thank you. Our next question comes from Savi <unk> from Raymond James Your line is open.
Hey, thanks for the follow up.
Just a couple of questions from me one a bit of a longer term question.
What do you think Jonathan is is kind of a normalized margins of this business coming out of COVID-19 and when do you think you get there.
Well.
Normalized margins Oh, that's an interesting question for sure you know theres always been so much that's impacted.
Our our margins and earnings.
But it's just it's hard to say as we I think.
I mean.
You know.
Because for US obviously, the timing of maintenance events always plays a big big role in that as well is what are our partners.
I think as we get through this next period, but we do have is as we mentioned.
A fair amount of heavy check work that we have to do moving forward to that I mean, my third torque do you Wanna comment, where we think margins will be.
'twenty two 'twenty three 'twenty four seven the existing fleet.
I mean look we generally don't project our margins you know, but look they they should return to the levels. They were at pre COVID-19 by 'twenty fiscal 2022.
This year, it's still a transition year some of that some of our heavy maintenance will rollout maybe into the first quarter of 'twenty 'twenty two for US and then beyond that it should be back to traditional levels.
Okay. That's helpful and if I may just a clarification on the P. S. P. M is the is it kind of roughly half and half over the next couple of quarters or is it how should we think about how does that Ah P. S. P. Three shows up and from a timing perspective.
Since it goes out through September sorry.
So yeah. So it goes from April through September so six months.
For this last round. So if you think about we've got $52 million and change for this one that's going to be over spread over six months versus the PSP. Two was over four months. So we're gonna be getting net less every quarter compare to where we were in a in PSP.
PSP too if that makes sense and it'll be split about 50 50, yeah yeah.
Okay. That's helpful and actually if I might just from the commentary on the maintenance is that kind of tied to have you seen that build on that a E. R. J side and the C. RJ side or is that kind of tied to more on the bombardier side with that.
That not being an aircraft that's manufactured much in.
You know people's willingness to support that that aircraft debt.
You're talking about on the seat check issue.
It's definitely more so on the almost exclusively on the CR Jay So I remember the day eject you know United owns 42 of them. So that expense is really a passenger doesn't really impact our bottom line, we own 18 of them and then the new 'twenty, we got Orange Orange schedule for a few years before other than C. J, it's really see our day nine.
Hundred.
This cost item.
Yes.
Net to the Asian going forward, Mike Air is it's just more of a you know COVID-19 related recovery pains.
If I could just taking share I think that there's two issues. There. There is some amount of COVID-19 related but there was also the impact of Bombardier being acquired by NHI.
Obviously in any transition there, it's not always been smoothed as one would like.
I think having had.
Extensive conversations would see NHI Bombardier team, but they are working very hard to correct any deficiencies that we've had over the last few months in terms of parts availability or timing. So I I think debt that is probably paid as much as anything else.
Knowing Mitsubishi I think that there is a high probability that all of that group.
And us as we go out.
Six months, Mike do you want or torque or Brad want to add anything to that.
Yeah.
Hi, Jonathan This is Brad I think you've covered it pretty well I mean, you know the issue primarily nine hundreds the issues of Theres some co.
COVID-19 related labor issues at the respective heavy check providers.
Their ability to support parts, it's becoming an issue, but look we're we've got them very high levels of leadership attention on this issue, we're bringing on new providers. We're opening new lines I mean, we've got a lot of of.
Attention and focus on this issue.
And we got a a kind of a bubble here to get through as we're bringing.
These additional aircraft back up that have been down during COVID-19 and once we get that behind us I expect us to be in.
Relatively good shape, so yeah, and if I could add something you know, which which I mean American has been very good in terms of understanding is.
There was a as you can tell by our numbers it embarked in a rapid spool up the American hours I mean, they are now at 100 per cent and going over 100 per cent.
They came to us.
No I'm asking for us to fly five additional aircraft that we had not planned on plant.
You know that's weird.
We have accommodated that requests obviously because a we.
We want to be good partners be we think we can make more money quite more aircraft.
But you know that certainly impacted some of these items because we have to keep five additional airplanes.
That's why and.
Again move around by our C check schedules.
There's a lot of good news to this is the fact that our partners want more flying and we've been able to provide it and you know as a result, we've had to make some accommodations in terms of C checks.
I don't want to give the impression that.
This was something that was unplanned is something that happened in large part a do it yourself from the fact that we took on additional funding.
Alright, I appreciate the answers.
Thank you I'm showing no further questions in queue at this time.
Okay.
I'd like to just make a couple of comments that I think I'm, a little bit surprised that the low in assets more about what we're doing in terms of decarbonization.
De carbonization and electric because I wanted to make sure that people. Appreciate that this is gonna be a very significant emphasis for the company going forward, we fully intend to be the leader in decarbonization and eco friendly fun.
We see how important it has become around the world.
Of course in Europe.
One of the reasons why we're beginning a European.
Perfect.
We are already now investing with United.
With Archer, which we think is the leading developer of urban mobility vehicles, which.
Technology change so rapidly.
You know I began in the industry, which.
It didn't seem like that long ago, but I'd tell the story of the first aircraft that I loaded back at Air L. A was it.
Chartered D C. Three built in the 19 forties.
Now we're flying regional Jets.
To Havana.
Idea that electric aircraft I'm not going to be a big deal I think is wrong I think there's a huge opportunity in front of us I am really delighted that United has chosen us to be their partner in <unk>.
We had worked very closely with them on this deal.
There are more deals down the road debt. We are working on today that we feel have a high probability of coming to fruition and that indeed golf is just the beginning.
We see this technology really emerge.
To what I think is gonna be the wave of the future.
And we are really dedicated to make that happen.
In addition.
You know one of the areas that we think provides us still to be a big opportunity as our cargo.
Taking on this 37 37.
The operations, we think that we will find a lot of business.
So that aircraft.
We are looking at putting on additional fleet types.
And I think we're in.
Discussions with.
With our partner that would provide some additional opportunity as we move going forward, but you know to do that the air.
Area that is our biggest focus has been.
And our operational performance, which to date given the fact that were operating only two aircrafts with no spares I think has been excellent and has been beyond our expectations.
When you think about the fact, we're operating a news flow type of monthly, but no spares.
It really does bode well for the future force.
So those are two big areas of opportunity, but I think the company is going to sell at and I think it's something that you know.
People will begin to focus on when they realize exactly how big the opportunities are which I think are extensive.
You know would that if there are no other questions.
I'm happy to conclude I want to thank everybody at the company again for a great job.
Spyros difficulties out there.
It's nice to see things beginning to look like they're getting better.
And I would like to thank everybody for their support out on the Street and then investing community.
Industry is a tough industry. We appreciate you hanging in with US and again, if you have any additional questions. Please feel free to call any of us privately and we'll be glad to answer them as best we can.
That does conclude today's conference you may disconnect at this time and thank you for joining have a great rest of your day.
Thank you.