Q2 2023 Global Crossing Airlines Group Inc Earnings Call
And good afternoon, everyone. Thanks for joining us today.
So that we can discuss our second quarter results.
Our second quarter was a success both in terms of the number of block hours flown as well as the preparatory work we completed.
To get ready for the summer flying through the rest of this year through the rest of 2023.
During the quarter also we negotiated our $35 million financing.
Over the course of May and June , which we closed in July so combination of all of those things are very good quarter for us setting us up for success in the future.
Like every other airline in the world today, we have been impacted.
The supply chain and staffing issues at the MRO is where we do our heavy maintenance checks as well as from the MRO. So we're converting our <unk> hundred 20 wants to freighter.
For instance.
Just to give you an example, our seconds greater <unk>.
Originally scheduled for delivery in October of last year 2022.
In January of this year, then March and June was finally delivered and we were able to place it on our certificate to start revenue flying.
On June 21st.
While we had built in 90 days of flying for that airplane in 90 days of revenue for the quarter. We only got 10 days again because of.
Staffing issues and supply chain issues at <unk>. The other side of that coin is that the delay in new aircraft deliveries.
From the Oems and they face the same <unk>.
Apply chain and staffing issues that that we face.
Resulted in us flying longer term AC Mike charter contracts for several airlines and we see that business to continue for us over the next few years.
Until those issues have resolved themselves.
As well during the quarter, we lost the equivalent of two aircraft months.
Because of delays in getting two of our aircraft out of their scheduled heavy maintenance checks. So they went through their normal cycle of about a month that we had scheduled for these and because of supply chain against staffing issues. Both of these airplanes were delayed getting out of their maintenance checks and.
In an airplane, that's not available to us cannot generate revenue in that slightly impacted our revenue.
In the quarter, which we'll discuss in a moment.
We fought through those issues and we flew 3500 block hours in Q2, a testament to the 520 team members of Global X, We'll make sure we flew every charter and maximize the efficiency and scheduling our fleet.
Hats off to them for.
For having pulled this off in a tough environment.
We see any supply chain issues of easing over the next year to 18 months.
We are working now to ensure we can cover all of our flying contracted on aircraft delivered late to us and.
And we expect to make some announcement soon about partnerships with European HDMI Airlines to accomplish this as well as expanding our summer European flying.
Our objective to recruit hire and train enough pilots to fly our summer schedule into the winter was very successful during the quarter.
And we're pleased to state that we have a little over four crews per aircrafts right, where we should be.
And we have a robust pipeline of pilots you have signed letters to start classes in September and October and we are starting to fill the November class now.
Our August glass for instance, as five captains and our September classes eight captains already hired.
The August classes started September class will start right after labor day.
And we continue to fill our pipeline with very qualified captains and first officers.
And then our aircrafts and to fly our schedule.
As a subsequent event to the second quarter.
We closed the financing with XR capital management, which we will walk you through in a moment.
We have finalized the financing and lease of our new maintenance facility at Fort Lauderdale International Airport.
And we expect to break ground on that finally within the next 60 to 90 days and.
And we signed leases for two more <unk> hundred 20 aircraft <unk> hundred Twenty's, which are very very good airplanes for us.
Which will be delivered later this year.
We will also make some announcements soon about some additional freighters that we have signed four.
During the rest of this year as well as for delivery in 2024.
So we have a robust pipeline of pilots a robust pipeline of aircraft to be delivered to us.
Put on our certificate and most importantly, a very robust list of clients and charter contracts that we're signing to utilize those pilots and those aircrafts.
Well.
So with that we'd like to get into a short presentation that we have about the quarter.
And then after that we'll answer some questions. So we'll go through the extra financing will comment on the quarter and our results give you an update on 2023 fleet update.
Some updates on cargo and then an investor update in terms of our exchange listings.
So I'll ask Ryan Goepel, who was that was our main negotiator on the extra financing to walk us through the terms of that agreement alright. Thank you Ed.
With a with an August 2nd we closed our financing with extra capital <unk>, a $2 $3 billion fund.
As has experience in aviation and we believe is going to be a great partner for us going forward.
One of the key aspects of this and one of the things we're looking to secure as we're looking to secure not only a partner, but the capital required to execute on our growth plan and I recognized in this current interest rate environment. Some of these numbers might seem high but recognize this is the lowest cost of capital. We've raised since we started as an airline part of this we are doing all equity raises when you.
Factoring in deal fees warrants offered all were at significantly higher cost of capital and the cost of this capital that we raised.
With this with this capital wherever we can we believe we have enough cash to operate our business plan to grow our fleet and to execute what we have been basically forecasting for the last six to 12 months.
Deal terms are $35 million loan repayable over six years with the ability to repay with.
With after two years, a 15% interest rate of 175% OID and 10 million warrants priced at a dollar with semiannual interest payments with the proceeds from this.
We refinanced eight and a half million dollars worth of debt, which was coming due in the next 12 months and rates at which were at higher rates and so again, we're very excited have XR on part of the team we're excited to be working with them.
And we're incredibly excited to have this as this is the financing in place, which is going allow us to execute on our plan, Yes, Let me just comment.
I'll make a few calls.
Color comments on this but we're very pleased with with XR.
They understand our business they have invested in airlines before.
They've invested in charter airlines before so we have a partner who speaks our language and knows what we are doing.
They are also very good people to work with.
And I think that and I know that going forward there'll be very very good partners.
With us for us, especially.
Especially if other opportunities presented to us as we grow.
And other airlines may want to try to work with us. So very pleased with this we were able to reduce our cost of the interest rate on our current debt.
Significantly by about 25% to 30% lower interest cost on that portion of the debt.
The terms are very very good and in this market given this given where we are in our lifecycle as a company as we grow.
We believe that these terms.
Our excellent for us.
And shows that <unk> is very very willing to work with us.
To ensure that we've got the financing that we need about Jefferies and Roth capital advised us on this financing.
They both agree that we got very good terms and they both agree that we have a very very good financing partner and XR not to move forward with us as we execute our business plan.
Some of the highlights from Q2, which you've seen some of these in some of our press releases as we've gone through but just to summarize.
We signed an LOI for two more <unk> hundred 20 passenger aircrafts and two more <unk> hundred 21 freighters that was just in that quarter. In Q3, we are signing more loi's, which we'll be making announcements about over the next few weeks.
So we recruited hired and trained 35 pilots with an additional 22 and training.
As of the end of the quarter.
And 36 flight attendants, those 35 pilots with the additional 22, but what we needed to fly the summer schedule, which is very very intense we will talk about that but we're over 250 hours per aircraft per month in Q3, and so we needed to ramp up very quickly.
Cockpit and cabin crews to be able to fly that schedule. We were successful in doing that and now with the financing thats in place.
We look very very strong to the outside world.
More and more pilots are coming to us, saying this is where they want to come and work. So we feel very very good about that.
We received our United Kingdom third country, operator authorization.
Which is a complement to the the Asa Tcl third country, operator authorization that we received a few months ago we.
We are getting requests now to fly into the UK and from the United Kingdom into Europe , and we will be using this TCR very soon very very pleased that we're able to put that in place.
During the quarter also we flew for with one of the leading <unk> in Europe , we flew 250 hours and.
About a three week period, they ask for a longer term on the contract, but because we're so busy here this summer as well as two airplanes flying for TUI, we were unable to do that but we believe that we will be getting more and more flying from Wiz and other airlines like them in Europe .
Over the next few months.
And we also started flying a wet lease contract for links in Canada, We've just.
<unk> concluded that flying in August we started it in the second quarter. We ended August seven.
Almost flawless.
Our performance for US 100% completion that are 98% on time controllable on time performance on that.
And those are two examples of airlines that have had their deliveries delayed from the factory.
Their new Wizard.
Or is there new <unk> hundred 20, <unk> and it links there are 737 Max aircraft.
So they needed to turn to an airline like us.
Likewise for them, which they had published and it flows and it sold tickets on they needed someone to quickly step in and assist them and we were there with the airplanes and the crews and all of the certifications needed to be able to do that so.
In a lot of ways. This is what this airline was built to do was to provide supplemental lift additional lift to other airlines that need it.
And we proved in this quarter that we can do just that and we can react very quickly and provide them what they need.
Just give you a sense of that.
The breadth and depth of our operation. So this is over the last.
Last year since August of 2022, we've had 2500 flights, we visited 51 countries and 116 cities.
In Europe , Latin America, North American Canada, So we feel very good about that certainly underlines the word global in our name.
And we expect to do more and more of this we've been asked to put airplanes operating out of the middle East.
We've been asked operate airplanes out of eastern Europe .
And we've been asked operate.
Airplanes with crews out of the United Kingdom for two of the major airlines that are located there so.
Worried about our abilities to perform.
The state of our equipment, which is excellent.
The performance of our crews which is excellent.
Word is spreading and we received.
We receive calls every day from airlines around the world that would like us to fly for them.
And I believe at this point, we're quoting about $2 million worth of business every day.
So that gives you a sense of the size of the market as well as our ability to gain market share within that market.
So let's talk about Q2, a little bit I wanted to start.
<unk> Q2, 2023, we had revenue of $31 5 million.
Actual EBITDA of negative $6 3 million adjusted EBITDA of negative $1 5 million. The adjustments. We made were effectively for share based comp and for pilot training in excess pilots of our current requirements. Basically this is the investment we've made in cruise as Ed talked about the number we've hired the number we've trained and the number of required in order to operate.
We continually talk discuss our global is made up of three assets are first assets or certification, which we continue to add to it as our aircraft, which we continue to lease and add more aircrafts and ultimately our crews and you need all three assets in order to operate and execute on its business plan and we made a big investment in that in Q1 and in Q2.
Which is starting to pay off in Q3, our actual EBITDAR of 498000, and adjusted EBITDAR of $5 two.
Our ultimate impacts to the quarter had they not occurred would have actually increased our EBITDA.
$5, one aircraft months lost a maintenance and delivery delays impacted us on a $1 3 million basis freighter delivery days, obviously, the plane not being available on the first of the quarter versus the end of the quarter at a large impact.
We accelerated crew training required for the summer that was the $4 two.
There has been zero ice worked for us.
During this quarter with title 42 wrapping up it was kind of a freeze on all of that work that being said that's picking up significantly in August and September .
And then again on sales is a small parts program. We had we had escalated what happened thats been pushed to Q3, and so had all of those things not happened or happened. We would have increased our EBITDA actual EBITDA by a significant amount. So there is an opportunity there for us going forward to improve their results and we understand that some people might be disappointed with the loss that were we.
We made an investment in our future, which I think already discussed 2023, youre going to see the impact.
And in certain of those line items, we're putting in place programs.
Seizures, so that.
These do not impact us as much going forward.
Working with the <unk>.
And doing a lot of maintenance planning now for.
For our airplanes go into heavy maintenance and we believe we will reduce those delays going forward.
The freighter delivery delays are starting to ease up as more <unk> hundred 21 freighters get converted.
The conversion shops are able to become more efficient in doing those conversions.
Two of the freighters that will be getting over the next several months have already been converted to freighter.
Which means that we've eliminated those potential built in delays.
So where we're learning to adjust to this environment, where we've got difficulties getting aircraft out of maintenance for.
For our freighters out of conversion.
And we will see these delays become significantly reduced.
It would.
With future deliveries.
Aircraft as well as conversions of our freighters.
We took a lot of pain in the quarter.
As Ryan Asay.
To get our.
Onboard in order to be able to fly the summer schedule.
Just to give you a sense, we flew 3500 hours in Q2.
In July alone.
We flew 2500 hours, we're unable to do that because we ramped up the number of <unk>.
Rocket and cabin crew members that we had.
That said, that's an impact in terms of profitability.
Profitability, but it is a.
Asset that we now have which is very very valuable the ice work as Ryan said.
Was shut down for a period of time. It is now full full full force again.
And we've been asked in the next few months to provide as many as four full time airplanes to that program.
Looking to see how we can do that.
We can eventually provide those airplanes, but we have so much of the work that we've got a.
Work all of this in but it's a good problem to have.
So with that we believe that the financial results for Q2 are in line with what we wanted in terms of the adjustments.
And when we look at the impacts.
Which were largely out of our control.
We feel very very good.
With what we accomplished in Q2, which sets us up for the future.
And clearly.
As we briefed, our new financial Investor.
They understood all of the dynamics of this.
But they look forward as we do and they see that we built the platform.
And spent the money to do that which now allows us.
To fully leverage that platform for revenue and profitability.
And speaking of leverage one of the things in the finance side and US as a company are looking at is how are we performing as it relates to growth has a very sort of cost and in one of the things we need to kind of point out is <unk>.
Each quarter, it's difficult to compare quarter to sequential quarters. As Q1 is a very different market for us as Q2 and Q3 is very different from Q2 and Q4 is very different from Q3, so the most accurate adjustment.
To look at is to look year over year. So how do we do versus Q2 of last year, which has a similar customer base.
<unk> revenue stream similar kind of pricing, what we manage to do as we grew our revenue by 80%, but we only grew our cost by 59%.
We grew our available aircraft by 33%, while we grew our block hours by 70%. So what this means is as we are operating with.
With more aircraft, but we're using the aircraft we have more.
This is getting us much better utilization, we're also adding revenue to our bottom line without increasing our costs, increasing our cost at a lower rate. So this is a key focus for us and one of the things we're going to point out and won't be much more detailed about this when he talked about our Q3 results as I need to remind everyone. We have two types of revenue we have a semi revenue and full charter revenue.
<unk> revenue is around between three and $5000 an hour all charter revenue, which excludes fuel and basically an all in price tends to be two and a half to three times higher so the mix of ACM iron charter revenue will impact the ultimate revenue number but not necessarily the margin. So again, we will talk about a significantly more in Q3.
Results and we'll have that disclosure broken out in our 10-Q, but again revenue isn't the only metric. It's one of a couple of metrics block hours is another one.
So what we're seeing here is a couple of dynamics going on which we.
We had talked about in the previous quarters, why we wanted to get to the number of airplanes that we have as quickly as we got to them.
Youre seeing that the variable costs.
Our increasing as we increase revenue fixed costs not not increasing as much. So we've got the foundation in place to operate more airplanes than what we currently have and so as we.
As we add airplanes are costs are increasing on the variable cost side not as much on the fixed cost side. So we could grow revenue, 80%, but our costs are much lower than that.
As well, we're seeing the power of the network. So the more aircraft that you have.
The more likely it is that you can get charter contracts because it means that you've got more airplanes that are positioned around the country and it's easier to fit all of the puzzle pieces together. So that you can pick up additional flying and as aircraft standing by nearby where that charter will originate so we're seeing as we.
Add airplanes.
Increasing the block hours were getting better utilization out of the airplanes, because they're spread a bit more across the country or across the Caribbean.
And we have more airplanes. So we can have one airplane take a client to a city and then the second airplane swoop in and the next day to take them back to where they need to do.
So again, it's the power of the network additional aircraft allow us better utilization of all aircrafts and allow us the opportunity to bid on more contracts beyond just the incremental increase in the number of airplanes.
So looking forward. These are our key what we call non our financial key metrics, which we which we released in the past we have added July just to kind of reinforce the point. So when you look at our average so what we're adding if you look at the bottom right. The number of aircraft days per month is growing around 100.
35%, but our total block hours per month has grown at 246% what that means is we're flying we're growing our fleet or also flying our fleet that we have grown more often.
And that's reflected in the average block hour per aircraft.
Now one of the big drivers of that is the pilot pool, which we talked on the bottom left now one thing I am going to make a point out for Q3 is kind of a leading indicator in Q1 and Q2 the percentage of flights that were flown on an <unk> basis, which is the lower revenue number per hour is in the <unk> for.
For Q3 that number is going to be in the <unk>. So what that means is you're not going to see a dollar for dollar increase in revenue for the block hours, but you will see it will have an impact on our profitability. So I just again will make when we have the numbers for Q3 to show.
We will demonstrate that but we just want to make sure people understand that dynamic and every quarter is pretty unique on the percentage of ACI in charter and then the rates for <unk> and charter. So again, there's multiple dynamics are going to do much better job and I think a more detailed job explaining it going forward. So people can understand what's going on.
But we are growing we're growing quickly and we're getting better utilization of our assets, which is the key grow the company.
So how does that translate into our outlook for 2023.
We're looking to increase our revenue forecast over $150 million with 75% are currently contracted with over $50 million and identify targets outstanding quotes for a period of August through December which translates into 13000 hours contracted for 2023 to date with the potential to add up to another 7000 items. This compares to 10000 hours 600000.
Themed total hours contracted in 2022, all significant growth on the leading indicators for this is our pilot count and our fleet count and so we're executing on this plan, we're very optimistic with this plan and as Ed pointed out we're quoting over $2 million a day help fill this for this year and next year, our target fleet size by the end of the year is 12 passenger aircraft.
And six our cargo aircraft and Obama delivery, specifically in a few slides.
So we're currently at about $112 million to $115 million.
Revenue contracted which means sign with a deposit.
Probably another $10 million or so where that is out for contract and then another $50 million that we have identified targets and we've got quotes out there we close about 80%.
Of our quotes at this point.
We're comfortable now and raising our revenue target to $150 million up from 140.
It's all dependent on getting aircraft delivered but we are comfortable.
Comfortable.
With the new aircraft delivery dates that we built into our schedule.
Based on the delays that we've seen with other aircrafts.
So we're comfortable with $150 million, we will probably beat that but 150 is what we're comfortable with providing guidance at this point.
This is our next airplane that will be delivered this is another example of this airplane should've been delivered about six months ago.
It's continuous delays because of various supply chain issues.
But it's an <unk> hundred 19.
It's a great airplane.
Once we get it on onto our certificate.
It will be converted for a period of time this winter into a VIP configuration with 68 seats and this airplane is already almost fully booked up on its while its in VIP configuration, and then it will make an excellent airplane.
In a two class or of one class configuration.
For many of the support teams that we fly.
D&C double a at some of the other teams. So this airplane should be here and on the certificate by the third week in August and again, it's pretty solidly booked.
Because of its economics, and the way that we're going to configure this airplane.
Into the fall and winter.
Here's our delivery plan.
Our current our target plan is now our current plan.
The plan was contingent largely on the financing which is now in place and so this is our current plan.
Our ninth.
<unk> hundred 20 passenger aircraft was delivered as well as our second a freighter that was delivered during the quarter.
That brings us to nine.
Passenger aircraft and two freighters now.
Now the current plan will take the 8019, we've just showed you the picture of that that'll be in August .
This month by the third week of this month, we should have that airplane on the certificate.
Now we're taking another freighter late in Q3.
And then a mix of passenger aircraft and freighters through the end of the year.
The.
The <unk> hundred <unk> number seven is actually a passenger aircraft not a freighter.
So we expect to be at 12.
Passenger airplanes and six gray.
Freighter aircraft by the end of this year.
And we have all of the capital that's required to bring those airplanes on many of the deposits have already been made even in advance of the financing that we just put in place so.
Great shape in terms of bringing these airplanes into the fleet. We paid the deposits we have the pilots and the crew standing by to fly these airplanes and we have a pipeline of pilots to make sure that we've got enough as we get to 18 airplanes to fly the entire fleet.
Our cargo side continues to ramp up to freighters as I said are currently in operation those are fully sold.
Getting an average of 200 hours per month per aircrafts.
And as freight forwarders and others see.
The operating performance and the economics of this airplane.
We're competing against $75 seven freighters.
In many cases 737, 800 freighters and this airplane pencils out both on the operating and financial performance are better than those two aircrafts.
Our fuel burn is much less than a 757, and we carry 50% more than a 737 eight hundreds.
About the same fuel burn so we feel very confident as we present this airplane and pitch it to freight forwarders.
Other airlines cargo units.
That we pitch very well because of those performance characteristics of the airplane.
But we've got seven aircraft that we at this point have allocated we don't have seven we've got obviously to do it.
Another forthcoming this year.
But we think that within the U S government post office and other agencies weekend assigned two airplanes are Miami to Caribbean business is taking off literally we've got one airplane assigned to that that we're flying regularly now to taking cargo to Cuba.
Go to Jamaica cargo to Senate Dominican Republic.
Go to <unk> as well as to the eastern Caribbean, but we've got a full slate of flights to quarter, Spain, Barbados, St Lucia and Guyana. So that this business will continue to increase for us I see the number that we assigned to the Caribbean will increase next year.
I would project that we will have three freighters operating almost full time in the Caribbean by this time next year.
Central America is also a focus for us.
This is the right sized airplane to come out of the U S into Central America.
One of our next airplanes will be assigned.
Out of Miami to fly for freight forwarders into Guatemala, Honduras, Salvador, Costa Rica, etc.
So we feel good about that business.
Our partners at a scent will keep one airplane busy.
Because we only have two.
But difficult to schedule some of those flights the third airplane will be assigned to ascent.
We will move that airplane to be based in Texas to start flying for them.
And we anticipate that we will get our monthly revenue targets met with that airplane flying in the automotive market.
Latin America, we are progressing with our Colombian Aoc, we're now in phase III, we expect to get that Aoc finalized and issued to us by late September or October .
It will effectively assigned one aircraft to that Aoc that aircraft acquired from Latin America into the U S with Latin pilots, which will ease some of the pressure on our pilot force here in the U S, but we see that business growing.
Number of Airlines in Latin America have approached us about flying that airplane for them.
Think that that number will increase from 1% to three airplanes over the next.
12 to 18 months, but we also want a sphere.
And an aircraft that can provide additional capacity for any of those business lines to be assigned at some point. So effectively we've got the allocation for the first seven airplanes.
We are starting to formulate our plans for the next five airplanes. After that so cargo demand. We're seeing is increasing while the volumes are down for the wide body freighters coming from Asia. The intra regional cargo demands into the Caribbean and into Latin America remains strong and this airplane outperform.
Arms any of its competitors and so we will win more than our fair share of the market because of that.
Sure. So the question we get on every Q&A relates to uplifting I'd, probably get it pretty much daily.
There with the Ax or financing there is no pressing need to raise capital in generally the reason you go through the extensive and up listing is to raise capital.
That being said it is clear our the way our stock has performed.
On the right exchange and that needs to be addressed.
But what we do have is because of the capital raised we have the option determine when is the best time to uplift based on market conditions share price and financial performance.
There are two real kind of hurdles that we have to cover we need a share price over $2 and we need positive shareholder equity of positive shareholder equity is generally dressed through a race, which we feel very comfortable we could accomplish at the time.
Be more comfortable doing it for three or $4 a share.
All that being said is we are monitoring it at.
Ed and I are spending significant amount of time talking to investors talking institutional investors getting our story out as.
So when the time is right to uplift will be well received.
For people, who are existing shareholders for wanting to uplift so they can sell their shares.
Economists say you don't want to you need you need buyers on the other side of that or you don't or it doesn't work and so we are thinking through that on a long term, we're working towards it and we understand the value and getting to a different exchange are on the right. We have an updated cap table per post the financial close.
<unk> breaks out the common class a class b and the warrant structure that exists. So we have total outstanding shares of $57 million.
Fully diluted shares of $85 million.
And with that I think that yes, I think I think it's important to understand that.
The MSR financing.
Does a number of things for us most.
Most importantly put cash on the balance sheet, which is important but that cash.
And that financial strength allows Ryan and his finance team to put.
Better credit lines in place for us for fuel.
Round handling for use of <unk>.
For maintenance.
<unk>.
It frees up a lot of our capital to invest in the business.
And it shows our competitors our alliance partners and everyone that we have got.
The capital.
To stay.
And grow and I think that's very very important, especially when we're talking to clients about providing airplanes over in Europe .
Or airplanes for instance supply to Hawaii after we get our.
Etops certification.
And so forth so.
This.
This financing gives us room to breathe and allows us to execute our plan.
It allows us to increase our credit lines with our key vendors and it gives everyone. The confidence that we are here to stay.
And we will continue to grow.
To become the preeminent narrow body charter operator in the U S.
Again, just to wrap up.
We feel this is a very very successful quarter for us.
In terms of setting us up for the future, making sure that we've got the aircrafts.
Under LOI to be delivered later this year.
To get our maintenance facility built.
To get the pilots that we needed on the payroll trained and ready to fly.
So this has set us up for a <unk>.
Great future along with the Ax, our financing so again a successful quarter.
We are seeing.
The benefits of all that we've done over the past six months here in July and August and moving forward. So.
We are in very very good shape, and we are very very confident about our future and our projections.
And what we will do to become the best charter airline in the U S.
So with that grant will turn it back to you and happy to answer any questions.
Thank you Ed and Brian .
We have some questions already and just as a reminder to the participants there is a Q&A feature at the bottom of your screen. So please use that to submit your questions and.
We will get to them in a moment.
A lot of discussion understandably about XR and the flexibility it built into your future plans Ryan when you and I spoke on the recorded interview that was released after the Axa announcement when that you addressed which I thought was important.
It's a little further to what has already been stated.
You talked about the <unk>.
Certainty that this introduces going into 2024 and the commitments that you can make.
There is much more management comfort around the objectives that have been stated for 2024.
Yes.
Ultimately, we do need capital in order to execute patient capital to execute on a day to day basis.
So our growth brands are significant.
We effectively we're doing this with little to no capital.
Prior to this and so having that that fuel or not.
Call back because it's pretty critical for us.
Alright, let's get to the questions.
A couple here from me Chris Rob.
Secondly, the same question, where he was asking about when do you anticipate youll turn the corner and.
When Youll report a profitable quarter.
Q3.
It was direct.
Jason's M&A, how long do you expect the crew hiring and training to continue as a drag.
As it continues to be a significant cost quarter over quarter.
So as we move forward the percentage of percentage of our total costs that are represented by pilot.
Hiring and training will be reduced.
So we're going from two to four airplanes.
That's a significant drag or when you're going from seven airplanes to 12 as a significant drag in the future. As you go from say 20 airplanes to 'twenty one airplanes, that's a much less significant drag on on cash.
And our profitability as we move forward with a steady increase in number of airplanes that percentage that that represents of our overall cost of our overall revenues will get significantly less.
Okay.
Alright, it may be the executive class I guess, an 80% acceptance of quotes do you think you have room to price more aggressively.
Yes, and we are.
Okay.
Jeff Lee Your press release mentioned LOI as letters of intent to a $3 21 freighters in both Q2 and Q3 can you confirm that those are different and referred to four freighters in total.
Yes, I can so we will announce.
We signed LOI for two freighters that will be delivered this year on top of the other two and the.
Other LOI is for our per aircraft that will be delivered in Q1 and Q2 of 2024.
Randy Hill brand he was asking what is ice immigration.
Immigration and customs in the U S. I believe I'm correct from Ellen.
Right, So ice which is our customs.
And immigration enforcement agency.
It has as many as.
Minimum of 12 as many as 20 airplanes operating at any one time.
To move.
People people.
<unk>.
Across the U S and also from the U S back to their home countries in Central America, and South America.
So those programs are ramping up.
And.
We're seeing a great increase.
And the number of airplanes that they need in that program and we've been asked to provide as I said before as many as four airplanes. Later this year into that program as well, we're flying right now I'll apply a five or six trips a week.
It's essential America under that program.
Okay.
A question here.
It pertains to some degree you.
You mentioned that there've been a lot of discussions with <unk>.
Institutional investors as you look down the road to announce deck listing when the timing is right.
Perhaps you can provide a little more clarity.
Around the nature of those discussions and the type of reception that you are receiving.
So you know over the last three of the fundraise process, we probably talked to 70 to 80 different institutional investors.
Many of them.
If you can say why they did or did not participate in a lot of it is.
Our credit funds and we don't have a lot of assets or their equity funds in our deals to small.
That's kind of a goldilocks goldilocks problem.
But we're on all the radars shining in the last quarter I participated in four different investor conferences.
Conducted between that and either conducted about 71 on ones.
And we think we're going to continue that volume in a lot of what institutional will do is they'll put you on the radar and now what your results for two or three quarters, and then they'll decide if theyre going to invest they have a much longer cycle and much more diligent by cycle than you would expect from maybe some of the other investors out there and so we worked through it and we were trying to transparent.
We try and hit the targets, we said, we're going to hit and I think our track record of execution is going to ultimately pay off.
Ultimately the biggest value of an up listing is actually the road show that goes with it that gives you the exposure to these institutional investors, which now I'd like to think we've found a pumps. When we are ready to do that well we have a receptive audience.
Thank you from Chris Rock for the direct answer on the profitability and you stated. It was Q3 now we've got three questions from Helane Becker.
And just as a reminder to folks who are listening in that lane.
Currently.
Airline transportation analyst with Cowen.
Out of New York, and as an advisor to global X.
So I'll start with your first question do you fly the aircraft in and out of <unk> with the same crews if not how do you ensure the safety of the crews in Haiti and elsewhere and risky markets.
So we've done a S total safety and security assessment of 80.
We're going to start flying Theyre fine Theyre now with the freighter and next month we.
We anticipate starting to fly.
Once a day to quarter Princeton once a day to capitation.
Spirit Jetblue American.
All fly into 80.
There are protocols there on the ground at the airport to ensure the safety and security of all of the crews and the aircraft.
There are protocols in the event that we have to stay overnight there or any any reason.
Don't plan to.
To do that but on the off chance that we have to.
We have worked with spirit and Jetblue.
And we're going to piggyback off of their programs in all three of us will support each other.
When if a situation occurs that requires us to stay overnight. So we've done a full security assessment, we've got consultants come in and do that for us as well as put in place programs for us.
To get our people to our hotel and back to the airport.
The next morning, if that situation arises so we're very comfortable with.
The programs are in place again American plays there out of Miami Several times, a day spirit of Jetblue as well so there's international traffic in and out of there all day long and will just be part of that international community of airlines that support each other in.
In difficult situations like that.
And second question, how do you think the bankruptcy of Western Global will affect you are there opportunities to pick up either equipment or business.
So western global as a operates seven 400 sevens and MD 11 freighters.
Which obviously a wide body aircrafts.
A very dissimilar to the <unk> hundred 21 freighters that we fly.
So their business has been severely impacted.
With the package business coming from Asia to the U S.
In Europe to the U S.
So they've seen the number of block hours that they fly significantly reduced because of that we don't we don't operate in those markets and so we have not seen that level of reduction of volume of cargo volumes and the narrow body market, particularly in the markets that we operate in the automotive.
The express business into the Caribbean and a lot of what we fly into Cuba and into Kingston and in into Haiti is DHL business.
That's been that has been contracted to us.
So.
We're not really interested in any western global's equipment, it looks like they do.
<unk> got essentially a pre packaged bankruptcy that they will put western global through.
And they'll come out the other side.
I would assume to be much leaner lower cost operation that will allow them to survive until.
Their cargo volumes from Asia pick up again.
So we don't really see any impact to us.
<unk>.
It's not like we could pick up flights that they're not flying because they are bankrupt there just a different different equipment size. So it doesn't really impact what we do in any way.
And your third question relates to ice with transportation.
People and ensure she is asking.
Or what can global ex ensure the best humane treatment for those people that Youre flying.
So we have a lot of protocols that we have in place with both.
And we fly for a number of agencies. So we fly for customs and border patrol, we fly for ice.
We fly for.
S health and human services.
So we we essentially don't do much on the airplane our flight attendants are there in case of an emergency.
The.
Passengers are monitored by guards that are placed on board the airplane by one of those agencies.
And we have not seen in the time that we've been flying.
Not seeing any.
Inhumane treatment of any of the passengers.
There have been threats made to our crew members.
And they are specially trained to deal with those.
But we haven't seen any any mistreatment.
At all.
We do run some flights that contain.
We'll include passengers, who are being deported because of criminal activity in the U S.
And so they may be there may be more guards of war security involved around that but.
But we have never had a problem or an incident.
In any of those flights.
Question here about <unk>.
A recession global would deal with that there is a variety of opinions, whether or not there will be a recession, a mild recession a soft landing.
Are any recession whatsoever, but should there be a severe recession.
Do you have any contingency plans in place or how will you handle that.
So a couple of things and then I'll, let Ryan also provide some color. We built this airline to be is recession proof as possible. When you look at the list of clients that we fly in slide four.
U S government agencies.
NCWA Division one teams at fly, whether there's a recession or not because of the size of their programs.
The charter operations, where we're moving.
The VFR traffic visiting friends and relatives to Cuba, Santo Domingo and 80.
Those flights will continue in a recession.
As is normal.
And so we calculate that as much as 85% of our business our current business.
Is effectively recession group.
And that those past those clients will continue to come to us and we will continue to need.
Air lift.
For their requirements so.
Severe recession is not really forecast some as you say grant some analysts are saying it'll be a very soft landing some are saying we may be able to avoid it.
Completely.
What we're seeing in Europe right now.
Where we could have.
If we add the capability to do so we could have moved our entire fleet over to Europe to fly for airlines over there this summer.
And Europe is arguably and worse economic shaped in the U S. We're not seeing any degradation in the number of charter flights that are being requested.
Or the number of people who are traveling on charters.
Particularly this summer so if that's a leading indicator.
We think that the traffic will hold but again.
The vast majority of our business is recession proof.
And the final one we have here so far ask you for an update on the phase III 30 trader plans, but in the presentation I believe I'm correct that you said that right now you could use seven freighters. So obviously theres a lot of growing demand there more demand.
And you currently have capacity to handle so I don't know if you want to provide any additional comments on that yes. So again, the narrow body and wide body freighter markets are two different markets. So we're seeing good demand for our airplane because it competes well against its competitors set of aircrafts.
And because there is a need for additional lift into the Caribbean Central America.
And out of the U S into Latin America, but not with wide bodies.
The acreage thirties.
That we very much want to add to our certificate, we would start with the passenger aircrafts.
Because we can't get an <unk> hundred 30 freighter now and frankly, even if we could get an $8 30 freighter I think we would want to wait until.
The volumes come back up on the long haul cargo markets before we added that $8 30 freighter.
We have already gotten a lot of interest and demand for and <unk> hundred 30 passenger aircraft.
With some of our clients.
We have received board approval to start the certification process, which is a very low risk.
Reject or exercise to start this we can do that with internal resources, it's modifying a number of our manuals, putting together some training programs and getting the FAA to sign off and approve those and we can do all of that before we spend any money on.
On a full certification process with the 300 <unk>. So a lot of the prep work is being done now.
But to add the $3 32, the certificate again, we've been given the greenlight by our board to move forward and certification.
We'll have to come back to them before we start spending any real money on that.
But I think that thats something that we will execute on sometime next year.
With the hope to have <unk> hundred 30 slides for next summer.
The freighters, it's impossible to get an <unk> hundred 30 freighter and.
And even if we could get one I think that we'd want to push that off until we're a little bit more comfortable in the long haul cargo markets.
And their rebound.
Back to.
Well I mean, just to give you a sense that the cargo levels are back to 2019 levels, they're not back to 2021 levels when.
They were flying wide bodies and mass between Asia, and the U S with the.
With.
There are all sorts of package.
Packages and also PPE.
So.
Both the 330 passenger and freighter on the radar will do passenger first we've got demand for that airplane, it's easier for us to do that.
And once we have full board approval, we will move forward into those programs.
As we can.
Couple of question just came in.
Both related to the stock market.
Kaiser asks have the institutional investors indicated what global needs to do from a profitability standpoint, before they would consider adding global to their portfolio.
More specifically institutional investors don't tell you that.
Although expressed interest.
I guess I'll know we've done it when they start buying.
And the second part was do you agree that the only way to get the share price to $2 just to attract institutional investors no. No I don't think so I think retail investors to play a very important role where we have a heavy heavily heavy detail following.
Retail investors' monies as good as institutional investor money.
And so.
I think it would be a disservice to the retail investor we didn't focus on them as well and so that's why we do webinars like this this is why we try to be as transparent as possible.
We send out.
17000, I think it was on our newsletter.
I think you kind of kind of make sure all our new issue a lot of press releases.
And that's to keep the retail investor informed us and so much and so no I don't think the only path to sort of institutional.
It's somewhat easier because you need to get tenants institutional than a thousand retail to kind of do the same volume but.
I think we need to be looking at both and we are well.
And I think it's a little bit more color on that so as Ryan alluded.
Were mentioned.
Through the process.
Raising our what became a $35 million financing for <unk> XR.
We talk to.
I think it was 96 different institutional investors private equity funds.
Other institutional investors to do this deal.
Their focus was do you have a scalable platform, where you can add airplanes and become a major <unk>.
Of course in charter.
In the charter airline world.
Not looking at.
Did you make a couple of dollars this quarter by not hiring pilots and not adding airplanes and skinny down your operations. So that you could have got it eke out a profit at these levels some of their focused on with institutional investors focus on is do you have a platform that can scale.
And that can grow at reasonable rates.
So that you can leverage the power of your network with power of your fleet our of your employee base.
To become sustainably profitable over the long term.
That's what they focus on.
And in terms of the retail investors who.
Can move our stock 10 cents by selling 100 shares we.
We need to get away from those.
Investors they don't understand our business they don't want to understand our business.
They believe that we could have gotten to 50 airplanes with $10 million of capital.
They are on.
Ways Theyre unrealistic, because they're not experienced in our business and I understand that so yes, we do need institutional investors.
We do need retail investors, who understand that what institutional investors look for is do you have a platform that can scale and will be sustainably profitable.
And can we get in at a level, where we can ride that up.
As you scale and our sustainably profitable.
No.
In the second quarter, but we have cut off all pilot hiring but we have delayed every delivery of every airplane that we have hunkered down and made a profit yes and.
And we would have not been able to fly the July through the end of the December schedule, we would not have been able to get the clients that we now have under contract and at some point, we would still have to hire and train those pilots to grow from seven airplanes up to where we need to grow too. So did you take the paint now you take the pain later in.
Institutional investors want you to do and execute your plan now so that the future is sustainably profitable that is what we have done.
And just as an additional note on that have people go look at global stock chart.
January February March of this year.
And then they also look at the volumes.
Through the first quarter of this year, there was a pretty aggressive.
Online push directed at retail investors.
With coordinated with global X and a lot of that came out of this office and with their assistance.
And you look at the volumes and there was tremendous retail support it was almost all retail so it is out there.
I'm just going to take a liberty here I was reading a report from Taro sponge, so to Toronto, and maybe they run more than $1 billion in assets.
But they do have a microcap fund.
I read a couple of lines just conditions in the Microcap world as evidenced by the continuing lackluster performance of the TSA venture are as bad as we've ever witnessed.
Not simply saying that we can't imagine a lot more downside, but we are seeing that as a group. They are being priced so low now that there isn't just much more that they can drop and it goes on and on and on but other newsletter writers. So we're seeing.
And I can say on our almost 35 years the conditions in the junior markets right now are absolutely horrific.
<unk> done a hell of a job in context of everything that.
<unk> had to face here, so with that gentlemen.
Congratulations any closing comments.
No I think I think that's right Greg.
The moving too.
Our up listing to.
Mature exchange is something that we need to do.
Brian and I are two of the largest shareholders in the company.
I believe me our interests are aligned with every shareholder.
Were putting in 12 hour days six days a week to make this work.
Yes.
Follow our stock price.
Obviously very closely.
It's frustrating to see surf air mobility with seven planes seven single engine planes. They haven't made a profit since day one.
They emerged with.
And with another airline and they have a market cap that's twice ours.
And they have losses predicted for the for the.
For the long term, but their market cap is twice our seven single engine planes that have that can carry eight passengers let.
Let me say that again seven single engine planes that can carry eight passengers and their market cap is double ours.
So.
It is.
It's frustrating.
We talked to institutional investors as much as we can.
But if someone wants to sit and sell 150 shares and drop was five <unk>.
We see that happen all the time.
So we want to get support from institutions, hopefully retail investors will talk to each other and say why are we doing this why why do we keep knocking the stock price down.
Right.
Arent reason other than because we can do it.
So we need to get to a mature exchange.
Need to change the mix of our investors and we need people to understand that we are growing this business to be sustainably profitable.
And we are well along the curve making that.
Again, thank you and thank you to our participants and we look forward to all of the announcements that will lead into.
Dissipate or going to be quite wonderful Q3 results. Thank you great. Thanks Grant thanks, everyone.
Yeah.
They are recording has stopped.