Q3 2022 Global Crossing Airlines Group, Inc Earnings Call
So aircraft for a total of 11.
In the first quarter of next year, we will take a another freighter aircraft and other <unk> hundred 21 freighter, a second <unk> hundred 19, and we agreed on terms today for another <unk> hundred 20 coming out of Alaska with full Wi Fi and.
And that aircraft has already been booked with a VIP customer for the balance of the year.
So at the end of 2023, we anticipate project 14 passenger aircraft nine cargo 24 that grows by another five passenger aircraft to 19, another six cargo aircrafts to 15.
And then by the end of 2025, we will have 25 passenger in 'twenty five cargo aircraft. So we're on track to meet.
Meet these goals certainly will meet them for 2022 2023 of the airplanes have been lined up on the cargo side.
We're still looking for 200 <unk> hundred <unk> for the second half of 2023, we don't anticipate any problem and identifying those aircrafts and getting them on our certificate. So we've got good growth. We've got good growth at our client base. We've got good growth in the number of clients that we service.
Good growth within each of the client categories of the number of block hours that we fly for them. We are developing a reputation for being an on time and reliable charter airline with modern aircraft <unk> hundred <unk> some of them with Wi Fi all of them are well equipped.
The interiors are in great shape, and we are getting more than our fair share of the business.
So we're very very pleased with where we are in our fleet growth.
And our ability to sell the hours on those on those aircrafts.
So.
Let's talk about some of our.
Key achievements profitability.
Profitability within one full year of operations first quarter was a stub so.
In quarter three of 2021 as we look at.
The last four quarters, we've reached profitability.
We have $6 million in debt.
So when you look at the amount of capital that we have raised equity plus debt.
To get to where we are today I think that proves that we are very prudent.
And very frugal in how we spend our money to get to profitability with seven aircraft to more freighter aircrafts coming as well as another <unk> hundred 21.
What we're trying to do is we look at 2023 and the uncertainty in the economic environment that we're in.
We know we will enter a recession every expert has told us that.
We are focused on charter clients, who are largely recession proof.
And they're flying and those are sports teams colleges and universities, especially division won that we fly.
We will fly whether there's a recession or not.
We do a lot of U S government flying and we anticipate being certified to fly department of defense or military flights within about 60 to 75 days from now obviously those flights.
<unk> group as well, but a lot of what we do and we estimate about 90% of our current charter base is recession proof, we fly to Cuba. Those flights will continue we fly to Santa Domingo and other points in the Caribbean based on the parameters of that at that clientele, we know.
That those flights are needed and we will continue in a recession. So we feel very good about our business base going into 2023.
Given what we have been through Covid omicron.
Pilots.
Other issues.
All of which we have weathered through our first year and gotten to profitability. We look forward to 2023 with a great sense of optimism about our business and what we can achieve our.
Our first cargo aircraft as I said will be here in Miami by mid November .
We are working very hard to put that into revenue service by the fourth week of November So we will start flying revenue.
This month second and third aircraft. The second aircraft will be as I said here in Miami.
<unk> mid December .
Depending upon some last minute adjustments and the conversion, but that will be operating certainly by Christmas that aircraft has been contracted and our third aircraft.
Freighter 321 will be here sometime late February and that aircraft as well as a contract ready to sign on it. So first three aircraft are fully booked.
Next five aircrafts in 2023, we are working very diligently on contracts and we anticipate being able to place all of those aircrafts.
In service with long term contracts.
By the end of January beginning of February of next year. So we're very optimistic about our cargo business that drives our growth.
Along with our passenger business.
And also diversifies our revenue streams into.
Into both cargo and passenger so those are our achievements we had a good quarter. We look forward through the balance of the fourth quarter and this year.
Look forward to reporting those results.
Sometime in early February so with that grant I'll turn it back to you and we will we're ready for questions.
Thank you John .
So.
Minor bulks bottom of your screen there is a Q&A button.
Please submit your questions through that.
Just to put something in perspective, while the question they are loading going back and having a look at women's company started trading in late June 'twenty.
Compared to where you are now and again in late June of 'twenty that was a year plus before you even ask certification and your market capitalization. When you started trading close to its highest point as well. It was about four times with your market cap is today, which shows you how much of a disconnect there has been.
Psychology in the market and as you know things have been pretty Topsy turvy world and in the market over the past eight months in particular.
But.
You've done a hell of a job.
And.
It was pretty good data for global.
On the market.
Based on volume and devoted.
8% increase or so on the price.
So we're going to start taking questions with that.
The other thing is that based on what you've laid out what you've achieved I think it's becoming easier and easier for people to.
Track the future of this company.
Because we keep delivering so youre getting many more check marks so we'll leave it up to people to draw their own conclusions as to what 23 could look like here.
Okay.
Okay do you want to you want to read the questions Grant <unk> from union into them now okay.
First.
John Chamberlain, given the current administration's approach to reestablishing relations with Venezuela, how does that affect your opportunities for South American operations.
Well that's a good question if the current administration opens up nonstop flights again by U S Airlines to Venezuela.
Venezuela continues in category two with the FAA that would bode very very well for our global X I would anticipate we would almost immediately start.
For some of our clients.
A daily Nonstop Miami Caracas.
And perhaps one other city in Venezuela, So, we probably would have to daily flights.
And that would increase I would guess to three daily flights very quickly. After after that's established so all in all will be very good for us.
Next from the Olson whats the status of the Fort Lauderdale facility.
We are or are.
Designer developer builder, which is a subsidiary of Oaktree capital.
Has finalized their lease agreement with the.
The Broward County Aviation Department.
They are completing their environmental studies to see what litigation might be needed in the soil and we anticipate breaking ground on that facility within the next 60 days, we still hope to be in that facility by the end of 2023.
We've already been approached by some airlines to rent out some of the hangar space for their own needs at the airports. Some very major airlines have already approached us.
This facility will be one of the hottest investments at Fort Lauderdale Airport.
It will be the largest hangar there it can take an <unk> hundred 30, or 300, <unk> hundred 20, and we have parking on the ramp for up to six airplanes. So this will be a great facility for us.
<unk> will be part of the South Florida.
Asian community and being able to offer that facility to all of the airlines that operate down here.
Which will help us with our strategic alliances and our relationships but.
Again, the short answer to your question is we will be in that facility as soon as we possibly can.
And we think thats, 13% to 14 months from now.
Per box axle, Brian congratulations on the quarter.
Yeah.
And I don't know how far you want to grow but do you expect profitability again in Q4 and second part of that wise.
What is the status of our NASDAQ countless.
Can we talk about Q4.
We anticipate a profitable quarter and in the fourth quarter.
That's about as much as I, probably allowed to say maybe too much too much what I'm allowed to say, but quarter four should be a good quarter for us status of the up listing to NASDAQ will require us to have more assets on the balance sheet.
Given our now profitability and as.
As we see in the share price today.
Today, the movement up we think that our ability to.
Get additional financing, which would give us the assets, which we need to uplift.
B.
Forthcoming here very shortly.
And we've always said and I think we've said it multiple times, we wanted to demonstrate four quarters of revenue growth, we wanted to demonstrate profitability.
This demonstrates our cargo operations up and running before we anticipated any sort of help us opportunity.
With November we'll have ticked all three boxes.
Yeah.
Jean will.
Sorry.
Questions.
<unk>.
Please walk us through the individual components of the $3 3 million working capital inflow experience during Q3.
I don't necessarily think I can do that off the top of my head.
By and large that was driven by as we grow or as we grow our business keep in mind, we will get paid in advance we get paid deposits, which is a big contributor to generating cash. We also generated a profit which also allowed us.
To generate more cash for them.
For the company and also is as we get bigger as we relate to end the quarter with revenue and you do have some payables that have grown a bit.
And proportion of revenue.
So another question here looking forward I'll.
I expect your answer would be any different but could you. Please comment on your expectations for future growth.
Profitability and cash flow and thank you and great quarter.
Yeah.
The increase in.
So when you look at the question comment for future growth.
We've outlined how we get to 50 aircraft by the end of 2025 2023, we add.
We basically doubled in size.
The size of this company.
And along with that goes the cash flow so.
Basic rule of thumb in this businesses you need.
6% to seven airplanes to get to at least breakeven.
So that you cover your fixed costs and we have fixed costs in terms of our operations control and staffing finance all of the various departments that are needed as part of the infrastructure of this airline once we have covered that fixed cost, which you do with seven airplanes.
Then everything after that.
Increases the percentage that goes to the bottom line so.
Our plans to increase our cash flow our plans to increase our share price our plans to increase the size of the company are all driven by adding additional aircraft units both passenger and cargo.
Two our certificate that drives our growth that drives our profitability.
And that should drive our share price.
Well deferred costs related to aircraft deposits fee return once the aircrafts are delivered to global X.
Yes, that's not exactly how our financials are set up so.
Airplane deposits paid airplane positive state of lessors, as an asset which at.
At the returning the aircraft will be part of the reconciliation on the return.
When we look at customer deposits.
That are paying us for the flights that we fly they are factored into either they are used as part of to pay for their flights are there return once we settle up with the customer that they've covered all the costs.
How it works on the balance sheet.
We addressed the potential addition of the B 17 aircrafts various media sources reported potential initiatives can be 717.
We're looking at that aircraft.
The 707.
There is probably no I will say it is the best regional aircraft ever built.
Based off of the MD 80 series aircraft.
Eventually became the MD, 95%.
And then the $71 seven one Boeing bought Mcdonnell Douglas Delta operates 90 of them Hawaiian operates 20 of the airplanes. The 717 and Qantas operates 20 of them.
And that has proven to be a very good aircraft for both delta and Hawaiian as well as Qantas.
And so we've looked at that aircraft because what we have seen in this charter market.
Is that about half of the clients that we talk to work with.
Need an aircraft that can fly for three hours and carry 60 60 to 80 passengers.
700, 700 fits perfectly within those parameters.
And it is for us would be very cheap aircraft to operate but also a lot of MD 80 qualified pilots.
Which would ease the strain on our acquisition of <unk> hundred 20 pilots.
Now the airplane.
As we've looked at the various deals proposed to us would be a very very cheap aircraft breast awkward.
We havent made any decisions on that we analyze a lot of things all at the same time.
So we're analyzing this airplane we're analyzing this versus more <unk> hundred 19, <unk> now we're analyzing this versus perhaps going immediately to <unk> hundred 30 <unk>.
But if we had this airplanes in our fleet right now it would be an exceptional performer for us.
We balance that against the complexity of operating two aircraft types within a small airline like global X. So were weighing the pros and cons were very very interested in the aircraft. We're probably the only U S airline that could take these airplanes that are starting to come out of the fleets of all the tea has gotten out of the.
Our fleet, because they couldnt get more of them.
So.
Short answer is we're very interested in the airplane, we're doing a lot of analysis.
We briefed our board and they've given us.
So our mandates in terms of the questions that need to be asked.
And more analysis that needs to be done. So we will have more on this in the future.
A very real possibility, but no decisions have been made.
Excellent Canada, Geoff why isn't just for the people who are attending who may not remember or have forgotten in July or in 'twenty, one global ex spun out Canada jet lines will be on two shares of global you got one share of Canada jet lines and dividend.
And Canada jet lines started commercial operations.
Past September with the question is.
Today kind of the jetliners received approvals to operate flights to the U S can global X leverage that.
<unk> connecting Canadian cities with the U S.
I'm going to ask Ryan to answer that.
Answer that question Ryan as our representative on the board of Canada jet lines.
Let me just first say that we're very proud of Canada jet lines and what they did to get certified.
From transport, Canada, they went through.
Probably more hoops than they were should've been required to go through just because of the economic environment that we're in we're very proud that they have their first airplane and now sign for their second airplane.
And have started some scheduled service.
So we have constant.
Dialogue with with jet lines to the extent that we can since as.
As a U S investor we can only have so much influence about what they do but Ryan again is on the board of jet lines and is up to speed on our discussions with them. So why don't you share highlights and so as you know, Canada jet lines as announced flights to Calgary, and Toronto, Calgary, and Toronto, and Vancouver, with Theyre going to use with their initial metal.
We're looking at destinations once they get their ability to sell into the United States today's announcements a big is a big part of that the ability to sell in the U S with dictate flying through the U S. Global crossing has made our aircraft available to fly for them. So basically jet lines can be bigger faster.
Which is really in the game of scale. That's a key component. So we are working with our commercial team to identify which areas makes sense, but the economics makes sense and so yes. So the idea always has been.
For chat lines to leverage the relationship with global X to get bigger faster because really that's what it is about airlines.
And we will be working on announcements have come again, but they've been focused on is getting permission to do it and then secondly, getting the key to that given there are more of a charter model.
Have a mixed risk to their ability to sell tickets and get the distribution and the relationships in place we want to make sure all of that is in place and effective before we commit to the cost of applying for supplying south.
The European summer flights ran into complications to permitting this year and so if your Q3 Q3 results.
Yes.
That you were compensated due to contractual obligations can you provide any further detail and do you expect to be flying in here and in Europe during summer 'twenty three.
Well I'll take the first part of that and then Ryan will talk about.
Flying in the future. He has just worked out some deals in Europe .
Very very favorable to the company.
We just talk about the issues in Europe . This summer.
So as you know we had a contract with TUI, which is one of the major tour operators in Europe .
They advised us that the approvals that they had received.
From the Dutch authorities, the Dutch Caa for us to operate more sufficient for the operations that we would conduct for them.
We thought otherwise, but they assured us.
That the Dutch authorities.
It cleared all protocols within the asset and that we were cleared to fly.
That wasn't the case in the asset required us to stop flying and to meet the requirements for what's called a <unk>.
<unk>, our third country, operator authorization within Europe .
TUI very very standup organization.
Well run.
And a very ethical.
<unk>.
Continued to pay us through.
About mid the mid part of August .
At that point, we felt it prudent to bring our airplanes home, while we went through the final phases.
Of the TCM process with <unk> of the European Aviation Safety Agency.
The amount that they that they paid us.
It wasn't a windfall because they were paying us for <unk> So aircraft crew.
Maintenance and insurance and so about 90% to 95% of what they paid us we have to pay out and lease costs and crew costs.
Daily maintenance costs on our airplanes in the insurance for the aircraft so.
Any of the flying that we would have done in.
In Europe all of the other expenses would have been paid directly by TUI. So we'd never would've received those revenues.
So.
In fact, we received and paid out as much as we would have paid out had we followed the flights.
We have established an excellent relationship with Tuohy, primarily because of Ryan's discussions and negotiations with them.
They saw how we operated with them getting our crews and our airplanes to Europe to.
To start the operation.
They saw how well we maintained our operation while we were waiting to get our Tcl and worked with them and so they came to us quickly after.
At the end of the summer and said, we would like to establish a long term relationship with global X weave senior airplanes. We've trained some of our flight attendants to fly with you we've seen your flight attendants and cockpit crews and how they conducted themselves in Europe .
For about six weeks and so we want you to.
B our partner for the years to come.
And so why Ryan to talk about the negotiations discussions really with TUI.
And what we project to do with them over the next three to five years, yes.
I alluded to we basically have we'd like to think we have a great working relationship with them and they see the need for our aircraft and our services for a significant number of years.
We've come to terms.
On a three year agreement with rates and we're working through the details of the contract.
Before anything formal can be announced and booked.
There is a strong demand for our services over there.
We are well positioned to support them in their operations they have a need for it pretty much every summer.
Looking forward to an incredibly long relationship with TUI and another charter operators airline operators in Europe in the summer.
With our <unk> in place.
The aircraft type we have.
And with our ability to execute on the work. We believe there are significant opportunities in Europe , not only in 'twenty three 'twenty four 'twenty five 'twenty six.
We've actually discussed with them at their at their suggestion that we establish our own Aoc in Europe , probably a multi aoc.
Which would allow us to increase the number of aircraft, we could operate for them in the summers.
From two aircrafts to up to as many as four or five aircrafts. So we're analyzing that and.
And discussing that with them and see if that makes sense and looking at the expense of that.
But there is an opportunity to greatly expand our relationship with TUI.
In terms of the number of aircrafts that we operate for them and obviously the revenue base.
More of a comment here some of them would love to see you on Vietnam and CNBC we offered.
And.
Mark a question you can answer at this point.
See you there someday.
From the Nols and what are your primary hubs.
Well, we don't operate as a scheduled airline as you know we're a charter operators so.
Our hubs are somewhat fluid it depends on where our charter clients are based it depends on the time of year, but we're starting to settle down into a couple of areas. A couple of cities I should say that.
In geographical areas, where we know we will have a high concentration of charters that originate. So obviously Miami is our home base our main base.
We do a lot of flying out of Miami to into the Caribbean.
Into Latin America.
Cuba and into Mexico.
<unk> is a is as our primary basis, where our current maintenance spaces, It's where our operations control center is and of course, our senior.
Management staff, we've established a base in San Antonio with both maintenance.
And flight attendants, we do a lot of government flying that originates in Texas in San Antonio is a great place to position a hub.
It's also a great place to recruit.
Staff that we need both in maintenance and.
Cabin crew and we will probably establish a cockpit through a pilot base there in San Antonio cost of living in Texas in San Antonio is lower than it is here in Miami.
And so we're actually looking at perhaps we're still studying this moving some functions.
The airline to Texas, and we're analyzing some other locations in the country, we have a base of flight attendant based in Las Vegas.
We're going to be doing more and more west coast.
Flying flying into Las Vegas flying at the Phoenix flying onto the West Coast and so we've established a beachhead there in Las Vegas with flight attendants.
As we get more aircraft, we anticipate basic one or two aircrafts permanently in Las Vegas.
And as we as we grow our business in the West we maintain a base in Atlantic City.
With our relationship with spirit there for maintenance.
It is a place where we often very airplanes after they complete their charter flights in the northeast as they're waiting for their next assignment. So we want to continue to build the Atlantic City base, So that would give us Atlantic City Miami, San Antonio in Las Vegas, So that covers the country for us.
As we grow larger and get more aircrafts and.
And we can more specialized in certain areas of the country. We may look to put something up in the northwest.
But we certainly want to say as much as we can below the snow or freezing line in the U S, where we keep our aircrafts.
Good afternoon, Ral financing, how do you envision financing in this environment.
Well I'll, let Brian speak about some specifics but.
Given given our growth.
Given one of the primary assets of this company, which is.
The.
Deals that we have put in place for a fleet of <unk> hundred 21 freighter aircrafts.
And given what we've done so far.
A very very small budget in terms of our financing to date.
You can imagine that we have.
We've had many inquiries about being able to invest in this company. So we've got options.
None of which we have decided on.
We are continuing to grow our aircraft fleet.
Want to grow our profitability and we hopefully we will see.
A concurrent rise in our share price, which makes.
The potential for selling equity EBIT more attractive for US right now, it's not attractive even at even at today's stock price, even with a 20% gain so we will need additional cash as we take on additional aircraft to get to 50 aircraft. We certainly could not do it on the equity base that we have today.
We hope and expect that we will be able to raise equity at higher share prices in the future.
I don't know if you want to yes, I think I would reiterate.
I think if anything we've demonstrated over the last two and a half years.
Is a reticence to give equity away and we really haven't we've been really disciplined about when we raise money how much we've raised.
As indicative in the last raise in March when we raised $6 million of debt when some warrants.
Think our inclination at this stage is not to raise in the form of equity given the price point.
Our convertible or something about the warrants as much more palatable. It makes a lot more sense, but again, we see a pretty big disconnect between the level of activity.
Our projections and our ensuing share price.
And I think this is a fluid situation that changes every day so.
What we focus on is executing we focus on growing our revenue growing profitably.
We have the ability to grow with our existing resources, but again as if we want to get to 50 aircraft in two and a half years.
There is there will be a need to bring in extra cash to accelerate it but it's not required it's not a survival issue its I'd say.
Speed of growth issue so.
We're going to continue to execute on our plan and just as we have bandwidth every other decision. We've made the incredibly optimistic right. When we see aircraft for really cheap we go get it.
When we see a great asset that makes sense. We go get it when we see routes. We can go fly the flag when we see customers who need help while we go help them. So I don't think that's our approach has been pretty disciplined over the last two and a half years and I don't see that changing.
Speaking of assets from a longtime shareholder Mike Harrison you mentioned that you are anticipating putting capital assets on our books.
This suggested that your strategy of acquiring aircraft may be different than on the first seven planes.
But I think what youre driving in your question. There is would we buy aircraft as opposed to leasing them.
We still see incredible.
Deals leasing aircraft in this market.
The aircraft leasing market is starting to firm up.
And aircraft lease rates are.
Not as soft as they were say a year ago, although we're still driving some very very good deals.
As we look ahead, we think Europe will have a difficult time over the next year, we think that the airline growth in Europe will slow down.
And there may be some airlines that cease operating.
So we will be particularly opportunistic for additional <unk> hundred twenty's over the next year.
As Europe .
Perhaps certain parts of Asia will continue to have some issues.
So we look to drive very very good deals on leased aircraft that also means that there will be aircraft for sale. We certainly don't have the equity on our balance sheet to go buy aircraft.
We have talked to certain financing sources about creating an aircraft acquisition facility for us.
Where we could put in a very very sliver piece of equity and they would finance the bulk of the aircrafts. So that we either put the aircraft on a finance lease.
Or some way that we could acquire the aircraft we'd love to put some aircraft assets on our balance sheet.
Obviously don't have the capability currently to do that but we are constantly looking at ways to do that.
Key questions in and around people can you give us some insight on your ability to hire pilots mechanics and the other one related so I know that you have a new pilot class. Starting every three weeks are you having any issues in recruitment or retention at this point on the competitive nature of the airlines today.
Great quarter.
So we've been.
Okay.
Actively recruiting pilots since over the last 18 months certainly well before we received our certificate.
We've gotten very good at it we've got a couple of different sources, where we we draw pilots from.
We obviously go to all of the pilot recruiting conferences, we have signed an agreement with OSA Aviation Academy here in Fort Lauderdale, which is owned by the owner of North Atlantic Airways.
And we've gotten our first four first officers from that program with another six in training.
In terms of captains, which is really the most the most important of the two positions.
We have been very very successful in recruiting.
U S qualified pilots who are flying overseas are flying in the middle East they're flying in Asia.
And they want to come home.
They are at an age let's call. It mid 50 to 60, where they don't want to go to United or Delta or American and sit in the right seat for the last part of their career.
And get the less less favorable flying assignments that those airlines they would rather come to us.
Where they become a direct entry captains.
We are competitive in PE.
We're more than competitive and lifestyle in terms of South, Florida, and the types of flying that we do.
So we have been successful so far and ensuring we've got enough captains.
To crew our aircraft we've got enough.
<unk> now that have been with us.
Over the past year, we can now start upgrading to captain.
Backfill those <unk> from the OSF Academy.
And from other sources. So for now we feel very very good where we are with with pilots. It is a constant battle out there. We're battling the majors, we're battling spirit and frontier and Allegiant and Jetblue.
But we offer certain elements of our lifestyle here that is different from Klein for those airlines.
And we are attracting very experienced very qualified captains.
We see the potential here they see the growth.
They know that their pay will be increased.
In line with what our competitors and even.
Allegiant and some others are paying as we grow and our profitability. So right now we feel comfortable we feel confident.
We think that the hiring in the U S will slow down next year.
For various reasons and we think that we will be able to retain.
The vast majority of the pilots that we have recruited hired and trained.
As we move forward.
In terms of.
Maintenance personnel, we have some relationships with some of the maintenance schools here in Miami.
<unk> not had a difficulty in attracting maintenance technicians and maintenance staff because of the type of fleet that we operate the <unk> hundred 20, <unk> hundred 21, and we think eventually the <unk> hundred 30 they.
They want to come here, because they see growth, but it can come as maintenance technicians, then they become.
Line ramp supervisors, and they've become maintenance controllers and they continue to move up the chain they can't get that necessarily with other charter airlines in the U S. Right now because those airlines are not growing so so far no issues getting pilots no issues getting maintenance technicians.
And we feel as we grow and grow and profitability.
We will continue to be able to attract good talent to the airline.
Can you.
Elaborate on the.
Aviation potential do you think there are safety issues regarding lithium batteries that might cost passengers to shy away from using E airplanes.
I think our take on that is that slipped them worked out I think there theyre going through their certification process for going through their acceptance.
We're not going to.
I think it's up to them to prove that out and when they are ready to fly will be will be here to or quickly.
So those airplanes won't deliver.
To us for another five years.
We wanted to get in line with an order position that also allows us to talk.
Frequently with the manufacturer of the airplanes. So that we can help in the design.
To help shape, what we want to see in the airplane for the types of operations that we want to.
Operator with that airplane.
And so those discussions are ongoing both on the aviation side with the outlet aircrafts.
And with <unk>, which is the VTOL aircrafts so.
For essentially no money down we now have a place in line for both of those aircrafts and it gives us a seat at the table in terms of being able to shape the aircraft development and what we want to see in those aircrafts.
For our particular operation.
Okay.
You had <unk>.
You've addressed this in part it says you had some unique circumstances during COVID-19 and acquiring aircraft.
Or what's the climate now and can we maintain this competitive advantage going forward.
Well as I said, a moment ago, we are seeing the.
Aircraft operating lease.
Environment.
Turning a bit back towards the lessor, although we still have a significant advantage of significant numbers of <unk> hundred twenty's.
<unk> hundred 20 ones <unk> hundred 19 that are on the market.
And we get probably a dozen calls a day into our aircraft acquisition team.
Offering us more airplanes.
We are.
Next <unk> hundred 21, which will be here in two weeks is a tremendously favorable deal for us. It's all powered by the hour and that aircraft will eventually be converted to freighter and all of that has been financed and built into the into the leases that we signed for that aircraft.
We agreed on terms today for as I said, another <unk> hundred 20 coming out of Alaska.
Excellent terms, maybe just a little bit more than what we're paying for some of the earlier <unk> hundred twenty's that we acquired but not really a material amount of increase in the lease rate.
And in fact this airplane in terms of its age.
Where it is in the maintenance cycle is probably better probably the best <unk> hundred 20, we will have in our fleet. We think this situation will continue for at least another 12 months.
As the excess aircrafts either get.
Remain in storage or sent to be disassembled.
Or perhaps absorbed back into some airlines systems, but we don't see any any new airlines starting here in the U S. <unk>.
Europe will have difficulties next year I doubt many airplanes.
We will be taken out of storage to go into European Airlines next year I think the reverse is going to happen. So I think we're still in a good part of the cycle and we're going to take advantage of that and tie up as many airplanes as we can over the next 12 months to fuel our growth.
The next question go when it comes down to is whether or not you have sufficient number of pilots to staff occurred seven aircrafts.
Yes, we do.
Yes, we do and Thats why we are seeing the increases in block hours.
And the increase in revenues.
We have classes as was earlier stated starting about every three weeks. We've just started one we just recruited.
For our December class, that's already got five captains in it and we hope to get to six or seven now before we close that out so right now we have a.
Sufficient number of crews per aircraft and we have a sufficient number of crews in training.
Sure.
First officers being upgraded to captain.
To be able to crew the first two freighters as well as the next two passenger aircraft. So we are keeping up with the demand for our for our services both on the aircraft side as well as on the.
Cockpit crews.
Okay.
<unk> related to the jet.
B shares.
Part of it is why is there such a disparity.
Between the jet and the jet thought B and C.
You guys are causing confusion among new retail investors you've discussed this before when can you get rid of the jet B shares.
So just a bit of history for those who are new to the story of the Jetblue shares.
Created in order for us to be compliant with the department of Transportation's ownership regulations stipulates, 75% of our voting shareholders.
75% of all voting shares need to be held by U S citizens.
So as a byproduct of our initial formation a merger with Canada jet lines, we had a significant foreign shareholder base, which is primarily Canadian.
It's forced us to push to create jet in jeopardy. The features of the <unk> as it has the exact same economic rights as the shares and they are convertible to jet shares on a one for one basis at any time.
As far as getting rid of the <unk>, we would have to be able to prove to the department of transportation that 75% of the jet shares are owned by U S citizens, which is a little difficult because theres No report I can go to find out who owns all my shares we have 9000 shareholders eight.
<unk> 8000 shareholders owning less than 1000 shares.
And getting passports for all those shareholders with its difficult task.
That being said I think over the course of since we first launched in June of 2020.
We've seen a significant.
Uptick in acquisition of shares by U S citizens.
We're at the point now where we can collapse the b shares into the common.
But by no means have a desire to maintain that any longer than we have.
Through the remainder quickly.
Graduations, we're not raising equity this price appreciate the discipline.
Thanks for all you do.
How are how has the acquisition of <unk> benefit of the airlines.
It's actually benefit us in a number of ways. We've just signed three more contracts.
At <unk> with the Soho House.
And that's driving some significant.
Material revenue for us.
But we haven't focused on it as much as as we have focused on driving the airline to profitability.
But our.
Our media and AD.
Yeah.
Agency.
Has continued to do work on developing the brand, we're talking to more and more.
Similar type companies like Soho House.
To develop the product we're talking to a couple of investors about.
A piece of <unk> and spinning that out we would maintain a significant stake in it.
And all of the charter flights that come out of <unk> with.
We would come to us if we can fly them.
And.
Bringing in outside investors with experience in the travel space the online travel space.
Which would accelerate the growth of flu B and we would want our equity stake to increase in value as well so.
It's led to fiber phy flights, so far for us on a relatively nominal investment that we've made we've positioned it with our social media and website, then and also with our outside agency for a significant growth that we can see in the product.
And we want to bring in some now experts who understand the online space extremely well and get this this product positioned for.
New investment.
An expansion of their capabilities.
Group plan is up to 25 cargo aircrafts do you see partnerships with any major freight forwarders.
Yes, we're talking we talk to all of the package carriers were in discussions with them.
On a weekly basis, they understand what we're doing there.
I understand the capabilities of the aircraft. The <unk> hundred 21 freighter is the replacement for the $705 seven freighter, which on average are over 30 years old.
It also competes extremely well against the competing product, which is the 737 800.
<unk> hundred 21 freighter carries more than 40% more than what at 703 800 freighter will carry.
And so all of the freight forwarders and the package carriers like.
Amazon DHL UBS, they understand the economics of that and what that extra 40% means so we're in discussions with all of them.
We've got some very very good contracts being lined up with airlines to fly this airplane for them.
With the launch launch.
Operator of the 321 freighter and we've got.
15 of them now under firm LOI or lease.
Which is a significant size that is very attractive.
To the larger freight forwarders, and the package carriers I won't say much more than that other than to say that we have the best narrow body aircraft freighter.
Got more than 15 of them and we operate the airplane already with the <unk> hundred 21 passenger aircraft and so we are very very well positioned.
To take this aircrafts and drive significant growth and profitability operating at in the U S and throughout Latin America.
Closing, congratulations well done right with that gentlemen.
That will be the end of the questions.
Thanks, very much grant. Thanks, thanks, everyone on the call for your support.
I know many of you have been following us since June of 2020.
It's a great day for us to be able to announce that we are profitable. We appreciate you hanging in there with us.
We promise to continue to do what we are doing which is to work extremely hard with our shareholders' money.
To create a profitable airline so thanks again grant thanks, everyone and everyone have a great day.
Thank you.
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