Q2 2023 Blade Air Mobility Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Blade Air mobility fiscal second quarter 2023 earnings release Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone and you will then inherent automated message advising your hand is raised to withdraw your question. Please press star one one.
Again as a reminder, this call is being recorded I would now like to turn the conference over to Mr. Ravi Johnny Vice President of Investor Relations you may begin.
Thanks, and good morning, Thank you for standing by and welcome to the Blade Air Mobility Conference call and webcast for the quarter ended June 30th 2023, we appreciate everyone. Joining us today before we get started I would like to remind you of the company's forward looking statements and Safe Harbor language statements made in there.
This conference call that are not historical facts, including statements about future time periods may be deemed to constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are subject to risks and uncertainties and actual future results, mainly she really differ from those expressed or implied by the forward looking statements.
We refer you to our SEC filings, including our annual report on Form 10-K filed with the SEC for a more detailed discussion of the risk factors that could cause these differences.
Forward looking statements provided during this conference call are made only as of the date of this call as stated in our SEC filings laid disclaims any intent or obligation to update or revise these forward looking statements except as required by law. During today's call. We will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performer.
A reconciliation of the most directly comparable consolidated GAAP financial measures and other non-GAAP financial measures is provided in our earnings press release and Investor presentation.
Our press release Investor presentation, and our Form 10-Q are available on the Investor Relations section of our website at IR Dot Dot com. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
During today's call are Rob Wiesenthal, founder and Chief Executive Officer of Blade, and will Haver and Chief Financial Officer, I will now turn the call over to Rob Wiesenthal Rob.
Thank you Ravi good morning, everyone. This morning, we reported record second quarter results with revenue in the June 2023 quarter, increasing 71% to $61 million versus $35 $6 million in the comparable 2022 period we.
We saw very strong growth across both our passenger and medical segments, a testament to the resilience of our diversified business model and the enduring value we provide to our customers.
I'm pleased that this is now our eighth consecutive quarter with results ahead of our internal forecasts on all key metrics.
Slight profit increased 103% to $10 $4 million in the June 2023 quarter versus $5 $1 million in the comparable 2022 period, representing a roughly three percentage point increase in our flight margin to 17% versus 14, 3% in the comparable 2022 period.
Adjusted EBITDA improved by 1.7 million to negative $4 4 million in Q2, 2023 versus a negative $6 $1 million in the comparable 2022 period and demonstrates continued progress on our path to profitability as a percentage of revenue adjusted EBITDA.
Margin improved by 10 percentage points to negative 7% in the June 2023 quarter versus negative 17% in the comparable 2022 period. This was driven by a significant increase in flight profit that outpaced growth both on our adjusted corporate expense and revenue as evidenced.
By the quarter's results, we remain on track with our commitment to deliver a meaningful improvement in full year adjusted EBITDA in 2023 versus 2022, and we also expect further year over year adjusted EBITDA improvement in the second half of 2023.
Turning to some highlights from the quarter and our men and mobility, Oregon Transport business, we delivered another record quarter with 99% organic growth driven by hospital wins continued expansion with existing hospitals and strong end market growth, we remain very bullish on the outlook for <unk> mobility.
Particularly as advances in Oregon preservation, and perfusion technology continue to increase the size of our addressable market.
Both in terms of the number of Oregon's being transplanted as well as the distance Oregon's can travel in order to get from the Oregon donor to the transplant recipient. We believe this is a megatrend that is in the early innings and could support multiple years of above trend market growth, which is consistent with what we are seeing both in public data.
And amongst our own customers to give a recent example during the quarter. We were proud to provide air transport and logistics services to our partners at mass General Hospital, and Paragon <unk> technologies are leader in Oregon Preservation technology. This supported a record breaking transplant case in which a donor heart travelled over to.
<unk> thousand 506 nautical miles from Juneau, Alaska to Boston, Massachusetts. This mission set the record for the longest distance a donor heart as ever traveled to recipients with more than 20 aircrafts, 100% dedicated to blade with 24 hours seven days, a week coverage and many more.
<unk> through our asset light platform. We believe we have built the most reliable and cost effective national network for Oregon transportation in the United States, helping to deliver thousands of Oregon's every year.
Moving on to our passenger business short distance delivered another quarter of significant growth with revenue up 75% driven by our acquisitions in Europe and growth across our short distance route network.
And our Blade Airport service, which provides passengers with the ability to book individual seats in five minute flights between Manhattan, New York area airports revenue grew by approximately 65% compared to the same period last year, making it the fastest growing product in our passenger portfolio.
This growth was fueled by a 40% increase in seats flown in the second quarter of 2023 versus the comparable prior year period combined with double digit improvement in average revenue per seat. A notable highlight is that over half our unique airport passengers. This quarter were first time blade fliers highlighting this.
Strength and efficiency of our marketing and customer acquisition efforts.
Furthermore, during this past quarter, our longest running blade airport route connecting the west side of Manhattan, and JFK was profitable for the first time, giving us confidence that the investments, we're making in our service and schedule continue to pay off while building our loyal urban air mobility Flyer base with respect to recent trends in.
Blade Airport, we are very encouraged by the continued strong passenger growth and pricing trends, we have seen thus far in the third quarter.
Our customers see the value in this product as evidenced by our continued growth in average revenue per seat, which has been above $300 in recent weeks as more of our flyers choose from.
Upgraded options and fare classes, which we continue to optimize within our on demand based pricing model.
Meanwhile, our partnership with Jetblue continues to gain traction nearly one year. After launch we are pleased to see the benefits in full force in recent weeks, we've consistently seen jetblue drive more than 100 Flyers to blade airport per week. This success highlights the importance of building strong relationships with corporate and air travel partners to enhance product awareness and we.
Look forward to bring on many more corporate partners in the coming quarters.
Moving to Blake Europe during the second quarter, we introduced thousands of European and international passengers to the blade brand and welcome them to our new terminals in Monaco niece and can't from a market standpoint, we did notice that travel patterns and our specific regions normalize relative to record levels experienced last year. Additionally, our.
Ration of the three acquired European businesses.
Is moving slower than we had planned which combined with lower fleet availability due to aircraft maintenance delays has added to our integration and operating costs in the region.
We will discuss the financials in more detail, but we remain committed to the long term opportunity to grow our business in Europe in the short term we are adapting to this market environment by focusing on what we can control dynamically adjusting our pricing model and coordinating our integration work to enjoy the cost efficiencies that were a key tenant of our acquisition with the goal of delivering some.
<unk> profitability in the region. Moreover, we are encouraged by the positive feedback and reception from European passengers, who have experienced the blade brands. Their response reinforces our dedication to providing exceptional service for every blade passenger worldwide.
Now on the topic of electric vertical aircraft or ebay or it is also known as E. VTOL. It has been an eventful few months for the industry with perhaps the most notable development being the release of the FAA has advanced air mobility or AAM implementation plan in July which provides for the gradual.
Introduction of EMEA into our aerospace with the goal of reaching scale operations in one or more cities by 2028. We believe this timeline is both credible and achievable and most importantly believe this approach is perfectly aligned with blade strategy focused on establishing exclusive passenger terminals.
Existing Hello ports and airports and the most active air mobility corridors operating around the world today.
Today, we have 16 exclusive passenger terminals around the world that service existing rotorcraft today.
As well as EV a in the future. We believe this presence creates a significant competitive moat for blade and even one CVA certified in the future as new EMEA infrastructure will take considerable time for local and regulatory approvals and frankly on a timeline the market has not yet considered.
So that ends our recently announced agreement in May to operate and revitalize the Newport Helistop in Jersey City, New Jersey. It gives access to one of the largest and most successful mixed use communities in the Hudson River waterfront as part of the agreement we launched a pilot program for charter flights and are analyzing the viability of the first ever scheduled by the sea.
Service between this new Jersey, Helistop in New York area airports and Hello courts.
Meanwhile, on the international front, we are excited to announce a significant extension of our partnership with Eva Air mobility as unveiled at the 54th International Paris Air Show in June we are taking the first steps to transform air transportation in Europe , starting with France, Our collaboration with Eve aims to integrate their state of the art electric vertical aircraft and.
Two blades expansive European route network subject to the necessary regulatory approvals and certifications.
This aligns with the Eve is a testament to blades commitment to being equipment agnostic by working together with our industry partners, we intend to usher in a new era of safe quiet and sustainable air travel enhancing connectivity and mobility and all of our major regions with that I'll turn the call over to will.
Thank you Rob I'll walk through a few highlights from our business segments in the second quarter.
We will start with medical where revenue increased 99% to $34 4 million in the second quarter of 2023 versus $17 $2 million in the comparable 2022 period.
Notably revenue increased 29% sequentially in the second quarter of 2023 versus the first quarter of 2023, given our acquisition of Trinity Air Medical was completed in September of 2021, all of the growth this quarter and for the full year 2023 is organic.
Approximately half of this quarter's growth was driven by the addition of new customers with the remainder driven by growth with existing clients as well as strong overall market growth to.
To serve this growing demand we have continued to add to our dedicated aircraft network with minimal increases in fixed costs and continued high ROI given our asset light model. This has resulted in flight profit and EBITDA growth significantly outpacing revenue growth as evidenced by this quarter in which medical flight profit increased by $3 one.
Or 118% to $5 7 million in the current quarter versus $2 6 million in Q2 2022.
Medical segment, adjusted EBITDA was $3 million in the current quarter, an increase of $1 9 million or 172% versus $1 1 million in the comparable 2022 period. This remarkable performance reflects revenue growth improved pricing and a strong operational leverage of our cost base.
With respect to the forward outlook in medical it's worth noting that our revenue increase this quarter was higher than the approximate 20% sequential growth. We previously anticipated a portion of the incremental growth versus our expectations was attributable to revenue from one specific transplant center that we're supporting on a temporary basis, which we do not expect to continue.
Sure.
As a result, we expect Q3 2023 medical revenue to be similar to second quarter levels, which equates to high double digit year over year growth followed by a return to single digit sequential growth in the fourth quarter.
Turning to our passenger business and short distance revenues were up 75% to $19 2 million in the second quarter of 2023 versus $11 million in the comparable 2022 period.
Growth was driven by our acquisition of Bleed Europe , which closed on September one 2022 significant volume and pricing growth in our blade airport business and strong growth across our U S short distance portfolio.
On a pro forma basis short distance revenue increased 5% versus the prior year second quarter, including results from acquisitions in both periods and adjusting for currency translation.
Few highlights from specific short distance products.
Our northeast leisure markets continue to see pricing elasticity benefiting from higher passenger volume utilization and margins.
And our New York Airport business, we saw another quarter of significant passenger and revenue per seat growth.
Airport by the seat revenue in the second quarter of 2023 increased approximately 65% versus the comparable 2022 period, driven by strong volume and double digit pricing growth Blade Airport is our fastest growing passenger product line and we continue to expect this product to be a meaningful driver of top and bottom line growth in the future.
With respect to Europe as Rob mentioned in his remarks performance was lower than expected this quarter.
We saw a slight decline in industry wide helicopter activity across our key European destinations, partially driven by new landing volume restrictions and Sandra pay in addition, our integration of the three separate entities. We acquired is moving more slowly than anticipated integration issues, coupled with lower fleet availability due to maintenance that delays.
Led to lower volumes and lower than expected flight profit margins as we have not yet fully optimized use of the fleet for maximum potential.
Amidst this backdrop, we expect improvement in the performance of the business as we fortify our integration efforts to garner economies of scale.
Blade Europe was a strategic acquisition and southern Europe is one of the top three consumer helicopter markets in the world. We fully expect it to be a long term revenue and profitability driver for our passenger business.
Passenger segment flight profit increased by $2 2 million or <unk>, 87% to $4 6 million in the second quarter of 2023 from $2 5 million in the same period of 2020 to the.
The increase was attributable primarily to the acquisition of Glade, Europe , which closed in September 2022 increased volumes and average seed pricing for our New York Airport transfer service increased volumes of northeast helicopter charters and growth in our northeast commuter products.
Passenger segment adjusted EBITDA was negative $2 1 million in the second quarter of 2023 versus negative $1 1 million in the prior year period, the increase loss versus the prior year, primarily reflects our startup results in blade Europe and the establishment of a performance based short term incentive plan, partially offset by an improvement in.
Profitability across our U S short distance portfolio.
On the corporate expenses front, our cost efficiency program is showing meaningful results as adjusted unallocated corporate expenses and software development, which relates to the overall blades shared services platform decreased 12% in Q2 2023 versus the prior year period, despite our significant growth there.
Performance reflects significant cost savings measures taken across the business, partially offset by the establishment of a short term incentive plan for our corporate employees and a further effort to accelerate our transition to overall corporate profitability.
Let's turn now to a few highlights from our consolidated results.
We're very pleased with our flight profits this quarter, which increased 103% the $10 4 million in Q2 2023 versus $5 1 million in the prior year period, well ahead of our already strong topline growth.
We saw this growth despite the ongoing ramp of blade airport, which continued to operate below breakeven in the quarter as we are rapidly growing the business absent the blade airport ramp up we estimate the flight margin would've been approximately 100 basis points higher in the second quarter of 2023, which is an improvement from a 150 to 200 basis point drew.
<unk> in the comparable prior year period.
Looking ahead to the third quarter of 2023, we expect to see a sequential improvement in flight profit and flight margin relative to the second quarter.
Let's turn now to corporate expenses, which include software development general and administrative and selling and marketing expenses when adjusting for noncash and nonrecurring items, our adjusted corporate expenses totaled $14 8 million in the second quarter of 2023, an increase of approximately 32% versus the second quarter of 2022.
This was largely driven by the completion of our European acquisitions and it compares favorably to a total revenue increase of 71% and a slight profit improvement of a 103%, resulting in adjusted corporate expenses as a percentage of revenues declining 24% of revenue in the second quarter of 2023 versus <unk> 32.
2% in the prior year period with.
The sequential results are even more impressive with adjusted corporate expense this quarter approximately flat with Q1 2023, despite 35% sequential growth in revenue and 45% sequential growth and slight profit from Q1 'twenty three to Q2 'twenty three.
We are pleased to see that blade to underlying operational platform is creating economic leverage and we continue to look for opportunities to optimize our cost structure to drive further operating expense leverage as.
As we look to the third quarter of 2023, we expect total adjusted corporate expenses to increase by a high single digit percentage relative to the $14 8 million expense in the second quarter of 2023.
This is driven primarily by typical seasonal head count and marketing spend while we will continue to improve as a percentage of revenues.
Adjusted EBITDA in the second quarter of 2023 was a loss of $4 4 million, representing a $1 7 million improvement versus a loss of $6 $1 million in the comparable prior year period, notably adjusted EBITDA as a percentage of revenue improved to negative 7% in the second quarter of 2023 from negative 17%.
In the comparable prior year period.
This outcome was a result of the strong revenue in flight profit growth, which significantly outpaced growth in adjusted corporate expense.
We expect the continued growth and cost efficiencies will lead to further year over year improvement in adjusted EBITDA in the second half of the year.
With respect to our balance sheet, we continue to have zero debt and approximately $170 million in cash and short term securities as at the end of the second quarter of 2023.
With that I'll turn it back over to Rob for a few closing remarks.
Thanks, well in short we are proud of the work the team did to deliver outstanding second quarter results and we look forward to building on the significant momentum in the second half of the year before turning to Q&A I want to take a moment to discuss an aspect of our cash preservation strategy that has been noticed by some third party financial information firms.
So our automatic sell to cover mechanism for the vesting of employee restricted stock units are skus the.
The automatic sell to cover mechanism is designed to fulfill our obligations to withhold taxes on our skus awarded to our employees upon vesting.
<unk> employees are liable for taxes on the value of the shares receipts to ensure compliance with tax regulations.
We facilitate the automatic sale of a portion of the vested <unk> to cover their tax liabilities.
It's crucial to emphasize that these sales are solely for tax purposes with proceeds paid directly to tax authorities and are not indicative of management sentiment towards the company's performance of the stock in fact, we as an organization have elected to utilize the cell to cover method to minimize using our cash to <unk>.
On tax payments, which we believe is fiscally responsible. Please remember this if he noticed reports of employee stock sales in the future.
As always we remain laser focused on driving profitable growth innovation and delivering exceptional performance for our customers and our shareholders. Thank you for all your continued support with that I will turn it over to Ravi for questions.
Thanks, Rob before we open the line to calls from the analyst community, we want to address some of the questions received from shareholders in the Q&A platform that was launched last week.
We received a number of excellent questions. We'll combine those that address similar themes. Our first question from Andreas S is whether the successive blade and urban air mobility is contingent on government regulation and whether blade is in active conversations with governments.
Thanks for the question Andreas.
Obviously aviation is one of the most highly regulated industries in the entire world and so of course govern regulation plays a significant role in our industry in particular regulators will decide when it's safe for passengers to utilize.
The new quiet, an emission free electric vertical aircrafts our Eva.
These <unk> are being developed by several companies many of which are partner with blade. However, blades approach is quite different from the others in the advanced and mobility space in two ways that are very relevant to your question.
First latest focused on markets and geographies that work and can grow today using conventional aircrafts. We do believe that the introduction of BVA will result in more places to land, which will increase our addressable market, but our business is healthy and growing with conventional aircraft using our numerous exclusive passenger.
Terminals throughout the world in the meantime, while we wait for government regulators to finish this work we continue building our business.
Two our manufacturer agnostic approach means we aren't dependent on government approval of any specific EBITDA, we'll wait and see which aircraft are most appropriate and reliable for our medical and passenger businesses and in fact, we expect to utilize many different DVA alongside conventional aircraft depending on the mission requirements, we have for all our businesses across.
The globe.
Rob we had a similar question around the government's role in air mobility infrastructure any thoughts there. This.
This is quite timely as I mentioned earlier the FAA just released a blueprint for urban air mobility in July and it outlines a gradual transition to Eva utilizing existing air traffic control systems and infrastructure.
This approach truly validates our unique strategy that we've had from day, one focusing on our exclusive blade terminals at existing Hello ports and airports and the most active air mobility quarters operating around the world today as I previously mentioned future new EMEA infrastructure will take considerable time for local and regulatory approval.
And we do not think many new entrants fully appreciate this fact.
Given our combination of our technology platform brand customer base and exclusive terminal infrastructure No company is better positioned to enable the gradual transition of today's air mobility Flyers from helicopters to Eva which is the very blueprint for the industry as set forth by the FAA.
The next question is from Brandon <unk> with blade consider an acquisition or merger with an EPA or drone company to expand into different adjacent avenues will do you want to take that one.
Sure. Thanks for the question.
Look we're economic animals, so we're constantly exploring opportunities that align with our strategic objectives and create value for our shareholders, but as Rob mentioned earlier today is an independent we believe we have a significant competitive advantage and our manufacturer agnostic approach and that we're not dependent on any one aircraft.
Design being suitable for all of our needs.
Nor are we subject to the risk of a soul OEM experiencing rollout delays today, we use a wide variety of rotorcraft and fixed wing aircraft, depending on the mission requirements and we know our customers appreciate our unique ability to provide them with the right aircraft for their specific use case. Additionally from an acquisition standpoint.
Our focus remains on profitable businesses that will generate immediate returns for our investors. So we will be cautious about investing in experimental technologies with long or questionable payback periods. Our goal is to ensure that any strategic move we makes aligns with our commitment to accelerating the transition to profitability, while delivering sustainable growth and value.
To our shareholders.
The next question is from William K, what are some short and long term goals blade is focused on to achieve profitability and to remain as the dominant force in the industry.
Great question and I think this quarter really demonstrated the operating leverage of the <unk> platform and you see it with flight profit growth exceeding revenue growth and our total adjusted corporate expenses continuing to shrink as a percentage of revenues and in fact, if you just look the platform specific costs, the adjusted unallocated corporate and software development.
<unk>, they actually decreased on a dollar basis year over year. Meanwhile, medical was particularly impressive 172% segment adjusted EBITDA growth year over year on just 99% revenue growth showing off the leverage that we get from the platform and passenger we still saw continued progress with <unk>.
Port as passenger growth in seed price growth led to our first full quarter flight profit for the route between JFK and the west side of Manhattan. So in short our goal is to continue doing all of this and drive the rapid revenue growth, while maintaining the discipline. We've shown around costs and this is the combination that ultimately is going to bring.
To overall corporate profitability.
The final question is from William K since blade is recognized by many as an upper level brand servicing the rich with services like weekend right. So the hamptons.
As blade strategy and marketing efforts on acquiring middle income customers.
Customers, who use blade for services like flying from Manhattan to JFK.
Thanks for your question William if.
If you take a look at our blade airport business, specifically flights between Manhattan, and JFK or new airports that most powerful message. We focus on is the fact that we have broken new group black barrier or airport pricing, which starts at $195 routinely be super black pricing and often <unk>.
And with the purchase of $795 Airport pass.
Flyers can actually fly to or from the airports for as little as $95.
We have done a very great job hammering home the point that blade is not an intelligence. It is simply faster and more in a more enjoyable way to get to or from the airport with pricing that is competitive with ground transportation and in fact, we've seen meaningful success.
By advertising on the Uber App platform at the time when people are booking car rides to the airport.
Enjoyed tremendous conversion piece.
People, who would normally take ground transport.
Two blade and we continue thinking of innovative ways to get to that consumer to hammer home that point. Once again that this is not a product for the rich in fact, when we take a look at our data associated demographic information that we have shows us that people buy their business or leisure travelers from all income classes are starting to edge.
<unk> played airport.
Now we will open the call for questions from analysts and investors on the call today reporters if any inquiries to me directly operator, we're now ready for analyst questions.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for our first question.
Okay.
Yes.
Our first question comes from Jason <unk> with Oppenheimer. Your line is open.
Hi, Thanks for your questions first Ken can airport the accretive overall gross profit next year, what do you plan to reinvest the upside in route and schedule expansion and then just broadly how are you thinking about.
Gross margin next year can we assume kind of slow and steady improvement in overall gross margin each year. That's question one question two.
You did talk about kind of some of the headwinds in Europe , maybe help us how are you thinking about.
How is it tracking for the full year versus what you previously expected and then just the contingent payment was in G&A I just wanted you to confirm that thanks.
Jason will here thanks for the questions on the airport side the unit economics.
A really good as you know we breakeven.
About two and a half at a six seats sold.
So if you got to the average utilization that we have in our mature routes you would have overall flight margin the same or better than what we see in some of our other products now it's a two way products. So that's why we set up the unit economics. The way they are a little bit actually lower breakeven than we see in some of our mature routes.
So I think the answer is once we get that utilization, where we want it should be accretive to gross profit and I think this quarter showed a lot of progress because the west side to JFK route.
To be profitable for the first time, so we're moving in the right direction for the quarter for the quarter and I think that in particular, we talked about it being a 100 basis point drag on overall gross margins airport as a whole this quarter. So you see the potential to have at least that much improvement. If you take the airport drag away and then there is some.
Other businesses, we've talked about medical as we onboard new customers that will contribute to better gross margins over time. It takes a little bit of time for us to move to supply around so I think you've got a lot of tailwind on the margin side going into next year, and Jay and Jason One quick thing on airport.
There are only a fixed number of time slots in any given day to fly. The fact that every airport growing at 65% in the quarter versus last year. So thats grown passenger business. We had you can see that utilization really kind of increasing rapidly.
Rapid Lake.
And then just in terms of the expectation on Europe as well.
<unk> talked about <unk>.
Integration is going a little slower than we hoped we think we're making good progress, but it's probably going to be closer to breakeven. This year, we don't break it out separately, but versus our expectation that's kind of where we think it's headed for the full year. This year.
Hello.
Philip.
Last payment last question was just on the contingent payment Oh, yes the.
The contingent payment is all related to Trinity, that's just kind of our best guess of what we might have to pay the portion related to the first half of the year and this last year of the earn out. So after the year 2023, there is no more earn out for Trinity and one more thing on Europe .
When you take a look at the full year, obviously July and August is a huge part of their business.
Kind of central PE and that basically putting a lot of the.
All of the resort business. So those numbers are starting to come in and I think we'll have a much better view of that this coming quarter.
Thank you.
One moment for our next question.
Yes.
Our next question comes from Hillary <unk> with Deutsche Bank. Your line is open.
Hi, Thanks for taking my question.
The revitalization of the Newport Helen could.
Could you talk about how the pilot program for the charter flights are going in.
What you're looking at in order to tip fee.
The buy the full operation and whether or not you're looking at any other new markets are Hello Quint.
Sure I mean this was a this was an incredible task because this is the first.
Hello Port really open a decades. This is only a couple in the New York area that is.
Basically a couple of football fields away from Manhattan, So it's quite useful for people flying from New Jersey.
Two airports to the say also to the city, we control it we operate it.
And it's a lot of mixed use both commercial and residential relatively high.
As well.
For our buyers, but were being extremely careful starting out with <unk>.
<unk>, we have a pretty good take up rate right now by a lot of developers who are marketing plan, that's going to be going to.
The residents of the area and employees, but now that we're seeing profitability.
Airports side, we're going to be extremely careful about what at what time were going to be introducing any kind of by the sea routes and will probably be bundled in a sense that there'll be utilizing aircraft that are already coming back for say Kennedy Airport.
And.
We could we're looking at things like stop that things anything where we could mitigate any type of <unk>.
<unk> of any kind of low utilization. So we're looking for very low risk approach when it comes to the buy the seed business.
In fact, we ended up doing it but we have other <unk>. So we're looking at re lighting.
And I think the fact that we've now been doing this for eight years. We're just really light years ahead of anybody and as you read in the AAM report from FAA FAA, saying when it comes to Eva existing Hello ports and airports are going to be where people are landing and I think a number of exclusive Hello horse. We have 16 worldwide is a huge competitive moat.
Got it. Thank you and then just just in Europe it.
It sounds like there was it just depend if an item is just driving good activity could you talk about like what are some of the more more permanent issues like it sounds like the new lending volume kitchen, that's probably a little more permanent.
Fleet availability that sound.
Probably more temporary might be able to detect.
Can you just shortly.
We typically provide a little more color on like what.
What's having more of an impact with my complaint.
Tom.
What about it.
Okay.
Yes, I think there are couple of things to deal with the landing issues, but we're really proud of all it's only on the interface side. There had been some restrictions placed on landing. However, when it's really more about the ones that are close to the.
The beach and maybe there are other ones that are 15 minutes away. So it's really more of a redistribution of where people are landing and I would say.
<unk> of those.
The ones, where we do have a lot of capacity are pretty good youre still beating a couple of hours of traffic coming from Easter can so we're not overly concerned with that and then also we are identifying new landing zone everyday and adding them. So the restrictions are really about the number of flights per landing zone, and we're increasing the number of landing zones. So.
Not exactly exactly when you see when you read about.
Atlantic zones are theirs.
There is a restriction.
It doesn't it doesn't impact our ability to acquire new lending because it back maybe.
Closer to where people want to go so there I think that's going to drive that.
Also I think it's important we've talked with the integration being a bit delayed.
There were some supply chain issues in terms of the winter schedule of maintenance for these aircrafts. They are typically maintained after this ski season.
That took a lot longer and as a result in this quarter. We did not have the number of aircrafts that would've optimize our economics or the number of flights that we can do for passengers I'm happy to say those helicopters are back online and we hopefully should enjoy the benefits of it again as I mentioned in the last question.
July August is critical and we're still the initial indications for July are good we got to wait for August .
And we'll see how they are but we're trying to be as conservative as we can the integration has taken longer but again when you think about the three biggest markets in the world.
Southern Europe is.
Next we have in New York, the most important and we're in there we have.
Market share three of the four major companies and we're going to get this right. It is taking a little bit longer than we expected on the integration side.
Got it very helpful. Thank you very much.
One moment for our next question.
Yeah.
Our next question comes from Bill Peterson with Jpmorgan. Your line is open.
Yes, hi, good morning, Thanks for taking the questions first question on the <unk> system.
Obviously airport it really drove the growth trying to get a sense for what the growth rate would have been I guess without the impact of of Europe .
And then maybe just similarly, you didn't really talk about Canada, I realize I believe Canada's kind of seasonally low, but any sort of color you can provide on sort of year on year trend our quarterly trends.
Here in the second quarter.
Sure Bill Thanks for the questions on short distance.
We don't break it out that way exactly but I would say if you took Europe out of both quarters the growth in short distance would've been closer to around 20%. So we're really happy with how all the other businesses are growing and obviously airport is a huge part of that.
As it relates to Canada Youre right. This is a seasonally low quarter for us. So we were happy to see kind of some single digit growth in the <unk>.
He has been on the top line in Canada.
I think moving forward the initiatives that we're focused on as we get back into the busier season are really trying to drive more demand using blade from consumers. If you recall that business is heavily b to b and so we think theres a big opportunity.
Both just with the existing transportation products. They had also attach.
The attack in the tourism angle in Vancouver, as well, which is definitely starting to come back with cruise ships coming back and so that's a big initiative for us as we head into the bigger bigger season there.
Yes.
Yeah, great. Thanks for that and then kind of a further question on flight margins for met and mobility.
Take care.
I believe you talked about that somewhere in the maybe mid to high teens range would be the right way to think about it did basically at 17%.
To get a sense on where we're conducting rebound be.
Presumably you have some opportunities with your existing customers to drive that higher maybe less so.
And to penetrate new customers, but how should we think about the trends on that and where is the upper bound on the flight margins there.
Yes, I think 15% to 20% is the right range to talk about.
Getting towards 20% as we have longer tenure with the customers and the way we get there is twofold on the one hand, we can optimize our dedicated aircraft fleet. So that aircraft are closer to our customers. It saves them repositioning cost less but also allows us to generate.
A higher margin on those flights. So it's kind of a win win for everybody. When we can optimize the fleet and then two as we start to get scale and geographic locations, we will do things like bringing our owned our own owned licensed sirens Suvs to do the ground that will allow us to get sometimes close.
Sure to 40 or 50% margins on the ground component, which will bring that average up so given the growth. We've had both in terms of new customers, but also just in terms of customers being able to fly more and the number of Oregon's theyre being transplanted in terms of heart liver lung that growth just in the units.
Is in the mid to high teens, if you look at the Q2 units data.
We're really able to weaponize that scale and help our customers save money and help get our margins higher in ways, we never could before so I think.
Everything is moving in the right direction in that business.
Thanks for that color.
One moment for our next question.
Yes.
Okay.
Our next question comes from Stephen Ju with Credit Suisse. Your line is open.
Okay, great. Thank you so Rob I'm wondering if you can weigh in on what the updated organ preservation technology opens up in terms of business.
We could not have conducted before Cosby.
The donor and recipient matches needed to be local and if you could also update us on what the typical sales cycle. It looks like these days with new hospitals.
Sure. Let me, let me just kick off and I'll turn it over to him.
Well to date.
A portion of that question.
There's no question that the market has increased dramatically for our ability to.
Use perfusion devices and do much longer trips.
And that has increased economics, there's increased usage increased the viability of Oregon type of pass it out patients deal with it if you take a look at the units data.
This was the 18% growth this quarter youre going to see potentially mid double digits for the overall market. We right now are in the 20% plus range.
For the market. So we have a lot of <unk>.
Both there.
The good news is that we're agnostic. So we can do use technology from any company you probably saw.
Use of the Paragon X technology, which I know most of our hospitals are extremely.
Comfortable with.
The world's longest Oregon flight from New York from Boston to.
Two Alaska. So that's continuing to continue to be a real growth driver and I also want to mention that because blade is at heart of logistics company. We started this with passenger company the ability for our staff on the ground to facilitate.
The use of these devices.
Putting these devices into aircraft and make sure the secure and making sure that they travel safely is a unique advantage.
It will chime in here, yes look it's expanding the market.
It's really incredible you see it in the data that we just talked about to Bill's question.
What I would say.
You see the significant growth.
We have an oregon's and right now I would say around 10% of the.
The Oregon, they're being moved Youre, using some kind of perfusion technology to enable that.
It comes from a number of different companies. So we're really excited because a lot of those organs that you mentioned wouldn't have had the ability to make it to their recipient without the use of that technology and hospitals are becoming more and more aggressive and this technology is allowing them to do that successfully so I think.
I think it's all really good news and I think blade uniquely has the ability to help hospitals with these <unk>.
Lately more complex missions and goes to your question on the sales cycle.
If a hospital has mostly been doing traditional bold transport and they've been using a local provider that maybe you had a couple of light jets on the certificate.
That probably won't be enough airplanes to do these longer trips. So it actually creates a nice entry point for blade when our centers starts using perfusion and maybe their legacy provider of light jets.
Doesn't have the right capability doesn't have the right size of the aircrafts doesn't have the range for what they need to do so I think thats actually could.
Short circuit, the sales cycle, a little bit for us as it creates new needs for transplant centers that they've never had before but.
It's still a long sales cycle, we still work with people on a non contracted basis, we still sometimes help folks out when theyre, having trouble with their local providers and then they might go back to them as we've talked about we had a little bit of the growth in this quarter was driven by that so.
It's just all about continuing our great reputation of providing excellent service and always having a plan for those transplant centers and over time, we'll continue to see what we've seen which is slowly picking up share.
Thank you.
Thank you Sir.
Reminder, to ask a question you will need to press star one on your telephone and wait for your name to be announced one moment for our next question.
Our next question comes from Jon Hickman with Ladenburg. Your line is open.
Hello.
Could you talk a little bit more about this temporary customer you had in the med mobility.
And why are they.
Not going to use going forward.
Yes happy to John .
We have a lot of folks that are that are not contracted with us that will help out from time to time, usually it's not a big number it just happened to be a big number with one specific customer this quarter. So most of our businesses with folks that are going to give us.
Essentially a first call for every trip they need to take but when folks call in and Theyre not somebody we worked with in the past, we're always willing to help out and we did that for somebody that had some dedicated aircraft on the ground. The day continued using near them. We have obviously long term.
Contracts, John with all the hospitals and then if a hospital has their own.
<unk> fleet and then they run into some issues as well as that will step in there.
But there are a lot of people, who like to kind of keep that.
In house profit.
Okay can you update us on the number of contracted.
Hospitals and transplant centers.
John <unk> John .
So it's probably not the best metric to focus on in terms of the growth the size of the transplant centers can be highly variable and there is also kind of another dynamic going on where we have some customers that are organ procurement organizations, rather than transplant centers and they might be.
<unk> a set of constituent transplant centers that could be four or five different transplant centers underneath that OPO and we're starting to see some of those transplant centers go direct instead of organizing transportation through the IPO. So.
It is not it could be a little bit of a misleading metric to focus on and so it's probably better just to take a look at the <unk>.
Growth, we've seen on the revenue side, because I don't think that that metric is going to tell the whole story.
Okay. Thanks.
Thank you as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Yes.
Yes.
I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Yes.
Okay.
Yes.
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