Q3 2021 Chorus Aviation Inc Earnings Call
Yeah.
Good morning, ladies and gentlemen, and welcome to the Chorus Aviation, Inc. Third quarter 2021 financial results Analyst Conference call.
At this time all participant lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
If at any time during this call you require immediate assistance. Please press star zero for the operator.
As a reminder, this call is being recorded today November the 11th 2021, and I would now like to turn the conference over to Natalie Mccann Vice President of Investor Relations. Please go ahead.
Thank you Michelle.
Hello, and thank you everyone for joining us today for our third quarter 2021 conference call and audio webcast with me.
Today from courts are Joe Randell, President and Chief Executive Officer, and Gary Osborne, Chief Financial Officer.
We'll start the call by giving a brief overview of the results and then go on to questions from the analyst community.
Because some of the discussion in this call may be forward looking I direct your attention to the caution regarding forward looking information and statements, which are subject to various risks uncertainties and assumptions that are included or referenced in our management discussion and analysis of the results and operations of chorus Aviation Inc. For the period ended September <unk>.
<unk> 2021, the outlook section.
Section and other sections of our MD&A, where such statements appear.
In addition, some of the following discussion involves certain non-GAAP financial measures, including references to EBITDA adjusted EBITDA adjusted EBT and adjusted net income please refer to our MD&A for a discussion related to the use of such non-GAAP measures I'll now turn the call over to Jeff.
Thank you Natalie and good morning, everyone.
Many airlines, including Air Canada are reporting their strongest results since the onset of the pandemic.
We are optimistic these positive trends will continue our experience is no different changes in the air and our industry has arrived at an important inflection point.
Throughout this crisis, we've made significant strides to secure liquidity strengthened our balance sheet and our customer relationships and to prepare as best we can to seize opportunities.
The regional aviation sector is leading to a recovery of domestic air transportation in many parts of the world improve.
Improving market conditions are evidenced this quarter by the significant increases in fleet utilization by both our Air Canada Express operation.
Our portfolio of leased aircraft.
Starting with the CPA operations, all aircrafts have been removed from storage and returned to service in.
In the third quarter, we carried more than double the number of passengers. We carried in the first half of this year for.
For the balance of this year, we're projected to operate approximately 75% 80% of our fourth quarter 2019 flying activity.
As such we're very pleased to have welcomed back substantially all our frontline and administrative staff and are recruiting additional team members.
Jazz is compliant with federal COVID-19, vaccination regulations, approximately 98% of our employees are fully vaccinated.
Employees, who are not vaccinated or do not have a medical or permitted exemption her on unpaid leave.
Additional indicators that regional and domestic air travel is recovering are found in our leasing business, where leasing revenue collections increased to 77%.
10 percentage points over the previous quarter.
Our portfolio of leased aircraft, excluding those off lease.
Operator at approximately 75% of their pre pandemic average flying hours in the third quarter of this year compared to 2019.
Remarkable improvement given the industry has was essentially grounded at the height of the pandemic.
Since our last report out we successfully executed agreements to lease eight off lease aircraft with two new customers.
We're pleased to welcome Emerald Airlines of Dublin, Ireland, and connect the airlines of Boston, Massachusetts to our portfolio.
We now have only two remaining aircraft to be remarketed and we're in discussions with potential operators.
Going forward, we believe airlines will increasingly look to operate operating leases to finance their fleets, whether to conserve capital or to support their efficiency and sustainability initiatives.
Growth in the Middle class markets was driving rapid pre pandemic growth in emerging markets and we expect this growth trajectory to resume.
Demand for regional aircraft in the 100 to 150 seat range, primarily the new generation Airbus <unk> hundred 20, and the Embraer E. Twos now commonly referred to as crossover aircraft.
Exciting opportunities.
Turboprops, continuing to be an integral part of regional networks worldwide, given their ability to properly match market demand and unique markets.
Where there was flying at the height of the pandemic. It was whips turboprops. These aircraft offer greener credentials and jet aircraft in major airlines are considering how they replaced 50 seat jets and this could be with dash eight four hundreds in <unk>.
Electric and hydrogen propelled engines are being explored and we're watching developments closely.
Given the changes to our industry and the emerging opportunities. We continue to believe that we're in the right sector of the business.
Our ability to manage the entire lifecycle of a regional aircraft is a major strength that differentiates us from the competition.
New contracts recently awarded to <unk> demonstrate the ingenuity and expertise of our team.
By the end of this month will be fully operational under the Purolator agreement and we're hopeful to grow this book of business.
Our facility in North Bay is extremely busy and we're very pleased with the exciting work happening there.
So I'm optimistic the worst is behind us and I couldnt be more grateful to our employees for their steadfast commitment to safety.
Well being of our customers the company.
And one another.
The good work we've done together throughout this crisis provides a solid foundation that will deliver value to our stakeholders.
Thank you for listening and I'll now turn the call over to Gary.
Thank you Joe and good morning.
Here's how the third quarter of this year compares to the third quarter of 2020.
We generated adjusted EBITDA of $78 1 million, which decreased by $7 8 million related to the 2021, CPA amendments and the reduction in foreign exchange rate from the prior year.
Adjusted net income was $15 3 million in the quarter, an increase of $4 4 million, which resulted in adjusted EPS of <unk> versus <unk> in the third quarter of 2020.
The increase was primarily due to a reduction in interest expense, resulting from the repayment of a more ties in term loans and lower depreciation expense.
<unk> segment adjusted EBITDA was essentially unchanged from the prior quarter due to additional aircraft, earning lease revenue offset by lower lease revenue attributable to restructured leases and lower earnings due to lower U S dollar exchange rate.
<unk> segment adjusted EBITDA decreased by $7 7 million to third quarter results were impacted by a decrease in fixed margin of $2 4 million in accordance with the CPA.
An increase in stock based compensation of $1 5 million.
An increase in general administrative expenses attributable to increased operations.
And a decrease in incentive revenue.
0.6 million offset by an increase in capitalization of major maintenance overhauls on owned aircraft of $2 1 million.
An increase in other revenue due to an increase in third party MRO activity and part sales.
And an increase in aircraft leasing revenue under the CPA and <unk> 3 million, primarily due to six incremental <unk> nine hundreds.
Offset by the removal of the Dash eight 300 fleet and lower earnings of $1 8 billion due to lower U S dollar exchange rate.
Adjusted net income was $15 3 million for the quarter, an increase of $4 4 million due to a decrease of $5 7 million due to changes in foreign exchange a reduction in net interest costs of $2 8 million a decrease.
Depreciation expense of $2 1 million.
The $1 3 million dollar decrease in adjusted income tax expense.
Offset by the aforementioned one or $7 $8 million decrease in adjusted EBITDA.
Net income decreased $34 $5 billion over the prior period.
Due to an increase in net unrealized foreign exchange losses, primarily on long term debt of $40 8 billion.
An increase in lease repossession costs of $2 8 million primarily related to aircraft Refurbishments.
Outset by a decrease in impairment provisions of $4 8 million in the rail segment.
And the previously noted increase in adjusted net income of $4 4 million.
Now turning to liquidity.
We ended the quarter with $258 1 million in liquidity, which was an increase of $82 million over the second quarter of 2021, primarily due to the issuance of the unsecured series C. Debentures for net proceeds of $80 9 million.
Of these net proceeds of $29 8 million $29 8 million is currently held in a restricted cash account in exchange for a conditional waiver of the 35% repayment obligation under the unsecured revolving credit facility.
The net proceeds from the issuance, including the related restricted cash will be used to perm, primarily where <unk>, sorry, partially redeem or repay existing indebtedness, including the 6% debentures, which may be redeemed on or after December 31 2021.
Liquidity, excluding the net proceeds from our series C debentures, and the relief and related restricted cash increased by $29 1 million over the second quarter of 2021 due to positive operating cash flows of $82 8 million offset by scheduled debt repayments of $45.
$5 million in additions to property and equipment of $9 million.
Sure.
Tober 2021 of course repaid $30 million under its operating credit facility and subsequently entered into a new three year committed operating credit facility on October 14th 2021.
This new facility provides of course with a committed limit of $75 million plus a $25 million uncommitted accordion.
Other key liquidity movements during the quarter included increased cash of $46 9 million due to higher accounts payable, resulting from operations and commodity taxes relating to the timing of cash payments.
Increased cash of $11 5 million due to the increase in security deposits and maintenance reserves decreased cash of $45 5 million to the scheduled debt repayment.
Decreased cash of $42 7 million due to an increase in restricted cash, including the aforementioned $29 8 million held for the conditional EDC waiver.
Decreased cash of $13 8 billion due to an increase in accounts receivable from air Canada, a $4 7 million and an increase in <unk> gross lease receivables of $9 1 million.
Decreased cash of $9 million due to investments in property plant and equipment.
Hence the September 32021, the controllable cost guardrail receivable was $12 7 million or recap of $20 million and subsequently paid in accordance with the 2021 CPA.
As COVID-19 impact varies by region, and our CPE CIC portfolio is global in nature.
We anticipate that CACI gross lease receivable at $62 3 million at the end of the third quarter could increase up to $65 million U S. By the end of the fourth quarter 2021, which is up from our outlook shared last quarter due to potential delays in payments.
Planned capital expenditures in 2021, including capitalized major maintenance overhauls are estimated to be between 19 million and $29 million.
This estimate includes between seven and $9 million that will be included in the in the controllable costs and paid by Air Canada.
Planned aircraft related acquisitions are expected to be.
To be between $40 million to $50 million in 2021.
Actual spend to September 32021 was $42 7 million.
While there are no further significant growth capital expenditures forecast for 2021 at this time, we continue to prudently evaluate new transactions, while also remarketing, our too awfully CRM <unk> 900, aircrafts and one dash eight 400, we expect to be returned at the end of January 2022.
With the current recovery in passenger demand for air travel and further improvement expected in 2022, <unk> plans to invest between 300 and $400 million in aircraft acquisitions in 2022 finance finance through existing cash resources capital raises in secured debt financing or a combination.
Thereof.
We have continued with our plan to create additional flexibility in our capital structure by paying down our secured.
And overall adjusted net debt by the end of the third quarter. We successfully completed another capital raise with gross proceeds of 85 billion and reduced our adjusted net debt since the beginning of the year by $194 8 million.
We also increased our percentage of unsecured debt to approximately 18% of total debt and brought our unencumbered asset pool to approximately $115 million U S.
We anticipate continuing with our debt reductions while evaluating growth opportunities over the course of this year.
Before opening the call to questions from the analyst community I would like to acknowledge the continued outstanding efforts of our team during 2021, and a challenging and evolving operating environment.
That concludes my commentary. Thank you for listening operator, we can open the call to questions.
Thank you Sir.
Ladies and gentlemen, we will now begin the question and answer session.
If you would like to ask a question. Please press the star followed by the one on your telephone keypad.
I would like to withdraw your question. Please press the star followed by the channel.
Please standby one moment for your first question.
Your first question comes from Kamran Derksen of National Bank Financial. Please go ahead.
Thanks, very much good morning.
Good morning, Kevin.
So.
On I guess see the growth plans for 2022 in the MD&A you've highlighted that I guess your current expectation is that you may be spending between $3 million to $400 million four additional aircraft acquisitions could you talk a little bit about what specific opportunities you're seeing there or the <unk>.
I guess buying out of leases or are there maybe new aircrafts. When you mentioned <unk> hundred 20, and he too has attractive assets. So maybe just little more detail around your expectations for next year on the on the <unk>.
Portfolio growth.
Sure.
Well, what we're seeing now is more activity in the market with respect to sale and leaseback opportunities specifically as carriers.
A manufacturers are starting to ramp back up.
Carriers are.
Really firming up their commitments in terms of these aircraft deliveries.
Most especially on the crossover aircrafts that I mentioned.
So obviously that scenario.
We've been active in previously and now look to.
Pick up on and during this period as well.
We've seen and we.
Expect we will continue to see.
Some portfolios that may become available as well.
So we're starting to see more activity more opportunities.
I think the last this last quarter is when we've really seen it sort of start to pick up and that's why we have this optimism.
And we're seeing the request for proposals out there now from from carriers.
Okay. That's helpful and I guess my second question is kind of related to the leasing business.
In Q3.
I guess before tax there was a loss in the business I mean, obviously you haven't got your full portfolio on lease so presumably that that will that will change, but can you talk about the profitability of that business as it kind of normalizes and given maybe what lease rates have done I mean can this business get back to the level of.
Profitability.
That's certainly meet your return objectives, but also is consistent with maybe what you saw pre pandemic.
Yes, so Gary.
Gary here.
When you look at the rail Division certainly we're going to have a lot of the aircrafts are currently off lease aircraft coming back to work. The other thing is.
To note is as aeromexico and others emerged from bankruptcy they'll get back on the positive side of the ledger as far as growth in revenue as they went through the <unk>.
Bankruptcy piece it was a little more challenging so we're going to see the pickup from the off lease aircraft some pluses.
Some of these leases get restructured a little bit of a pickup there. So we expect things to get a bit better on the revenue line that way. The other side is the interest has been coming down on that side as we've been paying down our debt so youll see that.
I think its way through and then the other the other thing is on the ECL. We booked just short of 1 million I think it was 900000 in the quarter and we continue to monitor that but as the health of the lessees has been turning around we are hoping that that ECL provision will turnaround also so from that perspective, I think the core fleet.
We will start to perform better than as we grow we will continue to add aircraft into that and certainly that will start to get the margins back to a much healthier level and the other side is SG&A is a bit high right now as a percentage of revenue and that's really because of the nature of what we just went through where we had off lease aircraft.
And what not and as we grow that'll come down so there'll be a few factors that will start to bring that back to a better version. So often so I would say Cameron in terms of the opportunities and getting back to normal.
It's sort of bifurcated between to two areas. One is there are still a number of airplanes that are off lease at a distress in terms of the older portfolios et cetera. The good thing is that we have essentially placed all of our grounded aircraft back on lease so.
It's something that we don't need to have and see these aircrafts coming back in the near term and be under a lot of downward pressure because the market will be absorbing some of this some of these excess assets that are there. So that's one part of it but the other side is the actual sale and leaseback side, which.
We see recovering.
Very well because these are new assets.
Not really competing against the assets that have been grounded there are new technologies or because of the green initiatives carriers re fleeting et cetera, so that end of the business.
We see.
Recovering in a very good way and as I mentioned in my comments with the balance sheets that are there we think that the penetration of operating leases within the business will actually increase as a percentage of the new production that's coming out. So that's why we're optimistic in terms of that part of the.
Business. It doesn't mean that there won't be competition out there et cetera, but we believe we can compete in that business and.
So that will be a focus and any other portfolios that are out there.
B price.
Priced according to the market conditions et cetera that exist for those for those aircrafts. So.
That's why we feel the worst is behind US. We just have these two airplanes left to release that we're optimistic we will have something very very soon and.
Then we will be focused on the two areas.
Just mentioned.
Okay, that's great I'll pass the line thanks very much.
Sure.
Your next question comes from Atlanta, Jan <unk> of BMO capital markets. Please go ahead.
Hi, Thanks for taking my question.
Just had a question about the leasing business.
Typically.
Just to build on Kevin's question as we think about the recovery moving forward.
I do think we've seen.
Worst of the downward revisions to these rates or are there still pockets.
Our ability and our leasing portfolio.
I think as I mentioned in my comments I think we've seen now an inflection point.
I see as carriers get back up and as <unk>.
Passenger travel resumes and vaccination rates increase because the vaccination rates is really key here in terms of the recovery of the business.
I think as we see that continue to rise the business itself will rise accordingly in terms of the level of demand as people get back up in the air and I think thats evidenced by the increased utilization we're seeing in the fleet. Both once the aircraft we lease we monitor that closely and of course our.
Air Canada Express operation, which is has rebounded quite significantly.
Great and just one one quick question about the regional aviation services.
So I was just wondering what about the necessary resources that are being bought three being brought back to support the recovery and leasing any bottlenecks.
That youre seeing in that recovery there.
No we are very busy training.
People and we've gone through our list and in fact, we're hiring in flight attendants now et cetera.
But we don't see anything in the near term at all that.
Is going to create any pressure for us.
We look at the industry going forward and just like coming into the pandemic.
Everyone was looking at the.
Pipeline of staff et cetera, but rare.
Relative to others in the industry I think we're really in a good position. We have this flow through agreement with Air Canada Air Canada comes back.
They will be hiring a lot of our pilots, but that helps us hire pilots ourselves because they see a career path through jazz.
As being a long term career path in the industry and.
That's why we're such a I think a very good part of the supply chain very strong with the relationship with Air Canada, but.
Something that we have to keep our eye on going forward for sure is the availability of human resources.
Great. Thank you so much.
Okay.
Your next question comes from Kevin Chiang of CIBC. Please go ahead.
Hi, Thanks for taking my question I did get on the call a little bit late so maybe you did address this just.
Just wondering when you looked at.
The leasing business of course aviation capital specifically just wondering.
I guess the potential changes to the taxes in that jurisdiction given.
Given the broader global tax mandates being put out by major economies that does that.
Does that materially change the returns you would see within CACI or that or does it just ends up being a rounding error.
It's Gary here good morning, Kevin.
No we don't see that.
Changing the equation.
The minimum tax going from really 12 to happen Ireland 15.
It wouldn't have a material impact because theres a couple of things that play in Ireland. The way the tax regime works is really.
Your income is deferred really till the end and.
As a result as at the back end. So when you look at returns that will affect that and it's pretty nominal the differences firms that goes.
And so we don't see it as being material to the business and not changing the value equation.
Okay.
That's helpful.
And I guess, just just on I guess, the refocus on growth here within within leasing.
It sounds like you feel that you've turned the corner on lease rates, you're willing to put some capital to work here on the sales leaseback, but presumably these lease rates probably aren't where they were.
At least pre pandemic, even if they've inflected positively.
Get the returns.
Typically targeting does that suggest you are you able to get these assets.
At a lower price to kind of drive that mid teens Roe.
Or take at least.
Through your hurdle ROIC.
Percentage.
So.
Here again on the lease rate factors, obviously there'll be commensurate with the metal value and also the interest rates and whatnot, certainly they're a little bit lower I would say on some of the larger equipment, but the financing is much more competitive and much more.
Dynamic that way so from that perspective, the return should be.
In good stead for that metal.
So we're not really that concerned that we won't be able to at least be competitive in that space.
Okay, and maybe just last one for me.
75% of your leased aircraft R. R R.
Leased aircraft.
All running about 75% utilization from pre pandemic levels is there a way to think of how that's bifurcated.
Is it a pretty wide range like some people are at 150, and you kind of average out of 75 or is it.
Pretty tight around the 75% range.
There is some variation.
Alex the carriers and generally it's pretty much correlated to what's going on in the country with respect to Covid.
In that geography.
No.
So it's variable.
So.
We don't speak to the individual operators, but they are there is variation.
Ken.
Maybe if I can ask a last one I know this is probably.
Difficult to just answer on the fly but.
Okay.
Let's say 2019.
Cash flow from operations and I'll take our working capital because I know that could swing around for you guys.
If I look at 18, and 19, you'll kind of hovering around 270.
Dollars on an annualized basis, just wondering based on what youre seeing today in the recovery.
And the lease portfolio, where lease rates are where you renegotiate the air Canada contract.
I guess.
I guess.
How much can you get back to that 270 million dollar level or how much of that is just let's say just totally imperative because you'd have to renegotiate. Some of these agreements and then maybe you can kind of get to 90% of that thats kind of as good as you can get with the existing portfolio and then to grow above that you're.
Investing in Europe, and your asset base as a way to kind of frame that just based on all the all the stuff you've done over the past couple of years.
Yeah, sorry, it's Gary here, if you look at.
Prior to Covid or pre 2019 2020 levels. There are some changes obviously that have occurred on the rail side with leasing but also with the CPA.
Piece that.
We've had to.
A bit of a stepped out of the fixed fee and whatnot and remove the downstream. So certainly theres some changes there, but the one thing is the steadiness of the cash flow is still there and as you look forward it should grow a little bit hopefully as well and that starts to kick in in Voyager with the growth, we're seeing but the levels youre seeing.
At today's level.
Certainly good basis to move forward without giving a big predictions were moving.
But we will certainly is a great base to move ahead with and you'll probably see some growth from it as we get the aircraft released in Voyager does a bit form.
Okay. That's fair that's helpful.
Good progress in the third quarter on the recovery in there so I'll leave it there. Thank you for taking my questions.
Your next question comes from Walter <unk> of RBC capital markets. Please go ahead.
Hi, This is Ryan <unk> on for Walter Good morning, and thanks for taking my questions today.
Good morning, good morning.
I just wanted to start off and I was wondering if you could provide us with some more context on what you're seeing on the domestic recovery front is.
It's moving from 55% recovered in Q3 to 75% to 80% recovered in Q4 is a fairly significant jump.
And maybe looking ahead, how far away do you think you are from fully return to normal.
I'm a capacity perspective.
Well.
Considering in terms of our Air Canada Express flying and the level of flying that is actually determined by air Canada.
We do not determine that.
So.
In terms of predicting it.
The indication that we have now with respect to the fourth quarter is the plan that we have from air Canada.
But I think with this trend continuing you can certainly see with this type of trajectory that getting back close to full operations.
Probably latest second quarter could be a very achievable, but again it depends it.
It depends on the demand on the Air Canada front it depends on that.
The border.
Know that Theres a lot of pressure these days too.
Crossing the border easily more easy or easier and.
Our operation really benefits from players like that because we do a lot of trans border flying for Air Canada as well as they open.
Transporter markets and and travel increases and.
We are seeing on the flights that we operate very good demand in the domestic market. So.
Sure.
I think I think it's looking pretty good and of course, we're on the right side of the business because of the demand for the smaller aircraft really is the first to come back and that's why our 76 seat aircraft or jet aircraft are very busy these days flying throughout North America for Air Canada.
And that same sort of pattern as existing in other parts of the world.
We've seen Europe now there have been a few fits and starts there and that but.
Headed into the same direction.
Got it got it that makes sense and that's very helpful color and then just lastly here.
You mentioned that the Purolator agreement kicks in later this month I was wondering if you could provide us with any color on how material. This is expected to be to the top line and if theres any additional capex spend associated with this partnership.
Sorry, it's Gary here I can answer the Capex the capex is minimal.
Forecast and it's certainly not significant.
And then on the revenue line, it's not overly material to course at this point in time, but it continues to grow and as that relationship grows. It will continue to make its way through we've also had the purolator arrangement in place now for two or three quarters.
Because it started the trials so a lot of that revenue bump up you've seen at least off the existing fleet, but we are hoping to grow that relationship.
What I would say is that we've converted.
These dash eight one hundreds at.
Voyager into freighters.
And we had.
Temporarily aircraft operating in there for purolator that were not fully converted freighters that we now have in there.
Operating for Purolator.
But we do have a number of these airplanes available to convert.
The conversion cost is quite reasonable.
From what we understand the aircraft are performing very well they have a very good payload.
Hum, especially transporter services et cetera, and the interesting thing is that the demand because of the online purchasing thats going on in smaller communities in remote areas and that sort of thing.
I think that's that.
That puts us in a pretty good place.
I think purolator has a very strong position in that market as well. So we will continue to work with them to identify new opportunities and ways of growing growing that business. So we're optimistic.
Positive things will continue to occur there.
It's an interesting business to us and we're very focused on the relationship and growing it.
Okay, that's great to hear and thanks for the color and thanks for taking my questions I'll pass the line now.
Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star one on your telephone keypad now.
Your next question comes from Connor <unk> of Scotiabank. Please go ahead.
Thank you operator, and good morning, everyone.
Alright, good morning.
Good morning, guys. So maybe.
Dean to Capex, you had a little bit for next year.
So I think you guys mentioned.
Two a $400 million aircraft acquisitions next year, perhaps and that seems like an opportunity based on more like more than a set up of committed capex at this point. So let's say you do 300 to 400 next year on the aircraft.
If we look historically like that could be possibly six to eight large aircraft like 81 DS.
If we go with smaller it's probably 10 to 15 regional aircraft. So can you give us some sense I guess theyre going to be a mix of both maybe.
Aircraft and smaller aircrafts Soviet anywhere between call. It eight to 10 or 12 aircraft, possibly extend the sites that you're anticipating next year.
It's carrier it could be a there'll be a mix of those types of aircraft, we're not giving specific guidance on the aircraft, but giving a range for the capex and to your point it will depend on the deals that.
We are focusing on and we're able to complete but.
Your ranges Werent I don't believe off.
Yes, the opportunities I mentioned, the crossover airplanes with respect to the twos and the 8% to 20 and of course now ATR are starting to pick up in terms of their manufacturing rate as well.
ATR 70, twos potentially could be in the mix.
No.
The manufacturing of catastrophe for hundreds has been suspended.
So there's not a lot of activity in that regard, but in terms of new metal.
Those are the three aircraft types, but of course, they vary quite a bit in terms of their acquisition cost and its hard to say exactly what the mix will be.
But.
But you are right.
The number of airplanes is clearly.
It has to be reflected.
And the mix of the $403 to 400.
Okay that makes sense in that kind of probably puts you back somewhere towards pre.
Pre pandemic.
Kind of a goal for FY 'twenty aircraft or so.
It seems like it's headed there.
Now with respect to non aircraft Capex.
I know, it's still a bit premature, but like we have seen perhaps not the significant variation this year versus 2020.
And maybe before but.
Is it fair to expect the non aircraft Capex is more or less similar in 2022.
And any incremental ramp up your expense.
It's Gary here can't really give you a good flavor for that at this point in time as the operation ramps up to over one would expect that that would ramp up a bit but the.
If you look at particularly for jazz things had changed with the Embraer is coming into play too so.
I think its little early to give you give your guidance for next year.
Okay.
Thank you so much for that and then lastly for me.
And with respect to the remarketed aircraft. So I think you have done about.
11 of those so far in the two coming out shortly as well so.
And I think if I'm reading it correctly, you mentioned somewhere in the disclosure.
The fix I think spreading over the next 12 months, so so essentially Guinea.
Can you provide any sense as to should we expect.
The ramp up remarketed aircraft placed into the leasing revenue too.
To be linear over the next three to four quarters, starting from Q4 or should we expect like a big bumps.
And one or two quarters.
I think.
Scary here I think it would be more linear but it could change I know the deliveries in the timeframe.
It moved around a little bit.
With Emerald and other carriers, so they could it could be it could be a spike or it could be more linear but for modeling I would probably use more of a linear approach.
Okay that makes sense. Thank you so much thanks guys.
Yes.
Okay.
There are no further questions from the phone lines. So at this point I will turn the conference back over to Natalie Mckim for closing remarks.
Thank you Michelle and thank you everyone for being present on this call and we look forward to speaking with you all.
Have a great day.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
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