Q3 2024 Blade Air Mobility Inc Earnings Call

Good morning, ladies and gentlemen, and welcome to the plate Air mobility fiscal third quarter 2024 earnings release Conference call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

As a reminder, this call is being recorded.

Speaker Change: I'd now like to turn the conference over to Matt Schneider, Vice President of Investor Relations and strategic Finance Matthew you may begin.

Matt Schneider: Thank you for standing by and welcome to Bleed Air Mobility Conference call and webcast for the quarter ended September 30th 2024, we appreciate everyone joining us today.

Matt Schneider: Before we get started I would like to remind you of the company's forward looking statements and safe Harbor language.

Matt Schneider: Statements made in 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.

Matt Schneider: These forward looking statements are subject to risks and uncertainties and actual future results may differ materially 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.

Any forward looking statements provided during this conference call are made only as of the date of this call.

Matt Schneider: As stated in our SEC filings <unk> disclaims any intent or obligation to update or revise these forward looking statements except as required by law.

Matt Schneider: During today's call. We will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance.

Matt Schneider: A reconciliation of the most directly historical comparable consolidated GAAP financial measures to those historical non-GAAP financial measures is provided in our earnings press release and Investor presentation.

Matt Schneider: Our press release Investor presentation, and our Form 10-Q, and 10-K filings are available on the Investor Relations section of our website at IR Dot blade Dot com.

Matt Schneider: These non-GAAP measures should not be considered in isolation or a substitute for financial results prepared in accordance with GAAP.

Matt Schneider: Hosting todays call are Rob Wiesenthal, founder and Chief Executive Officer of Blade and will Heber chief.

National Officer, I will now turn the call over to Rob.

Rob Wiesenthal: Thank you, Matt and good morning, everyone I'm extremely proud of our team's effort in achieving an important milestone this quarter in our passenger business achieving positive segment adjusted EBITDA and a trailing 12 month period, ending September 32020 for more than a full year ahead of our previous guidance to achieve profitability.

Rob Wiesenthal: By the end of 2025.

Rob Wiesenthal: In Q3 2024, we saw significant margin expansion driven by both our passenger and medical segments, resulting in a 27, 3% year over year increase in flight profit, while adjusted EBITDA of $4 $2 million increased more than fivefold compared to the $8 million in the prior year period.

Rob Wiesenthal: We're also pleased to see strong conversion of adjusted EBITDA into cash flow as we generated $6 4 million of operating cash flow and $3 7 million of free cash flow before aircraft acquisitions in the quarter I will now review the key business operational and strategic highlights for Q3 2024, starting with passenger.

Rob Wiesenthal: We had a strong summer season, particularly for northeast leisure that drove Q3, 2024 short distance revenue up six 5% year over year or nine 8%, excluding our discontinued Canadian operations.

Rob Wiesenthal: Our passenger segment enjoyed a significant improvement in profitability in the quarter with passenger flight profit rising 31%. The prior year period, while passenger segment adjusted EBITDA doubling versus the prior period and passenger segment adjusted EBITDA margin rising to a 14, 4% versus seven 3% in the year.

Rob Wiesenthal: Year ago period.

A strong underlying customer demand several factors contributed to a faster path to profitability and passenger we've taken actions to exit unprofitable business lines and focus on routes with the most attractive growth and profitability characteristics that are strategic in nature. For example, we formally exited the western Canada market during.

Q3, 2024, and pension we discussed on our Q2 earnings call.

Rob Wiesenthal: In Europe, our management team has taken several aggressive steps to improve profitability. During Q3, we restructured our European operations, which is expected to generate significant cost savings and enable stronger organizational and commercial alignment with our local partner as a result, we expect to see improvement in profitability for a year.

Rob Wiesenthal: Which will mostly manifest itself during the busy summer months, given the seasonality of that market. We've also been laser focused on maximizing cost efficiencies across passenger with year to date segment adjusted SG&A falling approximately 6% compared to the same period in 2023.

Rob Wiesenthal: Okay.

Rob Wiesenthal: <unk> vertical transportation platform is now stronger than ever and well positioned for the transition to electric vertical aircrafts or what we call EMEA or EV and industry pilots is transition from conventional rotorcraft seaplane EMEA is now coming closer into focus following the fda's recent release of the necessary Guy.

Rob Wiesenthal: Lines for EMEA operations as well as the incoming administrations stated agenda of achieving adoption ahead of other countries. The timing couldn't be better for play. We've always said that our strategy is to create an urban air mobility platform that can operate profitably at scale today using conventional aircraft.

Rob Wiesenthal: Before the introduction of DVA, which we expect will lead to an abundance of conveniently located landing locations throughout all major metropolitan areas as well as lower cost of operations.

Rob Wiesenthal: Today, we've achieved a key milestone.

Rob Wiesenthal: <unk> segment adjusted EBITDA positive year for the 12 months ending September 32024 over one full year earlier than expected I couldnt be more proud of the hard work from our team to make this possible our passenger business given its captive infrastructure proprietary technology large flyer base and strong.

Rob Wiesenthal: Brand has never been more valuable to our customers and the manufacturers of BVA.

Rob Wiesenthal: Les has only fortified our position as the largest operating vertical transportation company for <unk>.

Rob Wiesenthal: <unk> in the World and we are without competitors for many of our key services.

Rob Wiesenthal: Turning to medical segment adjusted EBITDA grew 15, 1% in Q3 2024 versus the prior year period with margins expanding 70 basis points year over year, despite a softer than expected quarter for U S. Oregon transplant volumes will it's going to provide more detailed medical margins later in the call, but I am pleased to report that we saw.

Rob Wiesenthal: A significant rebound in activity for October with our medical segment, achieving one of the highest monthly revenue levels in company history, we remain extremely bullish regarding the long term opportunities for our medical business.

Rob Wiesenthal: Fundamental growth drivers of organ transplants in America continue to gain momentum as well as our ability to continue to gain market share. We're seeing increased adoption of existing and rapidly emerging technologies to increase the supply of donor organs in the U S, including organ perfusion and preservation devices procedures like <unk>.

Regional perfusion or MRP, and a thriving industry of companies to provide the surgical staffing necessary for hospitals to increase recovery by.

Rob Wiesenthal: This reinforces the validity of our strategy to remain agnostic as to the technologies procedures and services embraced by our hospital partners and we welcome the opportunity to work directly with these innovative companies whenever the need arises to that end, we're excited to announce the strategic alliance with Oregon knocks you broadened.

Rob Wiesenthal: Access to their metric perfusion device, which extends liver preservation times AIDS in the identification of viable donor livers enables longer distance transportation and increases the utilization of donor organs org.

Rob Wiesenthal: Oregon, Axel preposition metro devices at strategic locations across the United States utilizing blade air and ground logistics to enable rapid deployment of transplant centers for on ground use.

Rob Wiesenthal: We know from speaking with our customers that demand for organizes metro device currently exceeds the supply of available machines. This partnership will enable higher utilization of available devices through rapid distribution to centers, who need them on a case by case basis as livers makeup for more than half of all heart.

Rob Wiesenthal: And lung transplants in the U S. This illustrates the significant potential impact on our medical business are.

Rob Wiesenthal: Our medical platform continues to strengthen with 10 owns in 'twenty dedicated aircraft strategically positioned near our customers a growing ground logistics capability with nine hubs at 45 vehicles around the country at Oregon placement services offering that we call tops that is gaining traction in the industry with five signed customer.

And a strong sales pipeline.

Rob Wiesenthal: Looking through the quarter to quarter volatility our continued market share gains are highlighted in our performance and reinforce the strength of our platform in fact in the last two months, we won competitive rfps for two new high volume transplant centers that we expect to begin flying for an early 2025.

Rob Wiesenthal: Importantly over the last year, we have not lost a single contracted customer.

Rob Wiesenthal: Estimates of the service and value that we're providing.

Turning to our medical aircrafts strategy seven of the eight previously announced aircraft acquisitions, we're operational in the quarter with the eight aircraft entering service in the last week of September after significant entry into service delay, we signed agreements to acquire two additional aircrafts. During Q3 that are expected to enter service by early 2020.

Rob Wiesenthal: Five and increase our own fleet size to 10 aircrafts.

Rob Wiesenthal: This strategy is already bearing fruit, enabling us to win new medical contracts in recent months that required aircraft ownership. It's important to note that at our fleet size of 10 are owned fleet will only represent approximately one third of our medical flying hours with a majority remaining on third party aircraft.

Rob Wiesenthal: Yes.

Rob Wiesenthal: We remain focused on maintaining a strong balance sheet that blade at our capital allocation priorities remain unchanged prioritizing low risk financially accretive investments and medical aircraft ground vehicles as well as bolt on acquisitions in medical that enhance our competitive posture or enable the expansion into us.

Rob Wiesenthal: Other time critical logistics verticals that include industrial manufacturing parts for ground the aircraft or other medical cargo use cases during Q3, we completed a tuck in acquisition to medical to geographically expand our captive network of ground vehicles. We will continue to weigh these acquisition priorities relative to.

Speaker Change: Mystic share repurchases as well with that I'll turn it over to will.

Will Heber: Thank you Rob I'll now walk through the financial highlights from the quarter, starting with passenger short distance revenue for Q3, 2024 increased six 5% year over year or nine 8%, excluding Canada as we formally exited the western Canada market at the end of August and yet another revenues declined 15% year over year driven primarily.

Will Heber: By lower revenue per flight, given softer jet charter industry pricing.

Will Heber: As Rob mentioned, we saw significant margin improvement in passenger this quarter as passenger flight margin and adjusted EBITDA margin expanded by approximately 700 basis points year over year.

Will Heber: <unk> ability improvement in passenger was driven by several factors, including strength in our northeast leisure routes improved pricing higher load factor in New York Airport transfers and early benefits from our European restructuring.

Will Heber: Turning now to our medical business medical revenue Rose seven 8% year over year to $36 1 million on a sequential basis medical revenue fell five 9% versus Q2 2024 blades are trip volumes declined in line with industry heart liver lung transplant volumes in Q3 versus Q2.

2024, Bill our sequential revenue decline was slightly higher than the industry given the reduction in empty lag aircrafts repositioning as we've increased the size of our dedicated aircraft fleet and maybe it's more aircraft at the home airports of our customers were able to significantly reduce empty aircraft repositioning time and costs.

Will Heber: Fortifying our value proposition to hospitals and making many other operators uncompetitive in these regions.

Will Heber: Is that a discrete impact on revenue in Q3, but it is the right decision for us and for our customers long term. This is a win win saving money for our customers, enabling sort of call out times and longer trips while at the same time. These well positioned dedicated aircraft generate more flight profit dollars per hour and per trip.

Will Heber: For example, even in Q3 2020 for a quarter was unusually high owned aircraft related expenses and lower than expected volumes. We saw nearly 20% increase in flight profit per flight hour and are approximately 10% increase in average site profit per air trip, despite only a low single digit increase.

Will Heber: And flight revenue per hour flown which is consistent with our contractual annual escalators with customers.

Will Heber: Medical segment profitability metrics continued to improve on a year over year basis, but declined sequentially in the quarter medical slight margin expanded 240 basis points year over year to 28% in Q3 2024 up from 18, 4% in a year ago period, and a sequential basis medical flight margin declined by 280 basis points.

Will Heber: Medical segment, adjusted EBITDA margin increased by 70 basis points year over year to 10, 7% in Q3 2024 up from 10% in Q3 2023, but declined 370 basis points sequentially. Several factors contributed to the sequential medical margin decline in the quarter. The majority of which are timing related and set to improve from.

Will Heber: The lower revenue sequentially drove negative fixed cost leverage in the quarter and addition above average maintenance downtime and owned fleet expenses also contributed to the sequential margin decline, including startup costs and delays in aircraft Onboarding for the owned fleet.

Will Heber: The good news is we've seen a quick rebound in industry volumes and medical segment revenue and we expect to see a meaningful improvement in margins and our own fleet performance in Q4 2024 relative to Q4 2023, driven by increased volumes a normalization in maintenance downtime the entry into service of our eight aircrafts.

Will Heber: And then normalization of other owned fleet costs. This outlook is consistent with our actual financial performance in the month of October.

Will Heber: Moving forward, we think it's reasonable to expect quarter to quarter variability in our medical business given the non linear growth of organ transplant volumes in our own fleet that brings with it some unpredictability with respect to timing of certain expenses and maintenance downtime.

Speaker Change: As Rob mentioned in Q3, we completed a small tuck in acquisition of one of our ground, Oregon transportation providers at approximately four times normalized cash flow.

Speaker Change: We'll continue to look for accretive opportunities like this to deploy our significant cash position.

Speaker Change: Before moving off medical.

Speaker Change: I'd like to highlight some data around an exciting industry trend poised to drive even faster growth in availability of donor organs normal thermic regional perfusion or in RP, we're seeing higher adoption of this technique, which improves transplant outcomes in yields meaning the total number of usable Oregon's recovered from one donor and recover.

Speaker Change: <unk> from donors that have undergone cardiac death hospitals in organ procurement organizations can often utilize off the shelf equipment to perform this technique at low cost and we've seen a more than threefold increase in the number of an RP recoveries performed by our transplant center customers year to date in 2024 versus 2023.

Speaker Change: <unk> is still a low single digit percentage of our total recoveries and based on our conversations with customers. We believe its still early days for this exciting growth driver.

Speaker Change: Moving to unallocated corporate expenses, we continue to focus on controlling these overhead costs, which declined one 3% year over year in Q3, 2024, and shrunk 50 basis points as a percentage of revenues to 7%.

Speaker Change: On the cash flow front the difference between our adjusted EBITDA $4 2 million and cash from operations of $6 4 million in the quarter was primarily driven by cash inflow from working capital.

Speaker Change: Our capital expenditures inclusive of software development costs were $9 9 million in the quarter and driven primarily by $7 $3 million of aircraft acquisition payments, while capitalized aircraft maintenance was approximately 900000.

Speaker Change: This aircraft acquisition amount includes payments for our eight aircraft delivered in the last week in the quarter along with two additional aircraft to be purchased during the quarter, but that did not begin flying we have approximately $1 9 million of remaining payments on the 10 aircraft that we expect to pay in Q4 2024.

Speaker Change: And the 10 aircraft acquisition as previously discussed we do not have any other aircraft purchases and process currently and our focus right now is on Onboarding. The final two plans and optimizing the financial performance of the current fleet. However, given the significant strategic and financial benefits of our owned aircraft, we will opportunistically consider adding a low single digit number of similarly.

Speaker Change: <unk> aircrafts the fleet over the next nine to 12 months.

Speaker Change: We ended the quarter with no debt and $136 million of cash and short term investments providing flexibility for strategic investments in aircraft acquisitions in medical and opportunistic share repurchases.

Speaker Change: Turning to the outlook, we are reiterating our 2020 for revenue guidance for between $240 and $250 million and our guide for positive 2020 for adjusted EBITDA for.

Speaker Change: For 2024, while stronger passenger segment adjusted EBITDA performance in Q3 was partially offset by a lower medical segment adjusted EBITDA in Q3, we expect Q4 to land on plan, leading to a reiteration of prior guidance and medical we expect revenue to grow a low single digit percentage sequentially in Q4 2024 versus <unk>.

Speaker Change: Q3, we expect medical slight margin to rebound in Q4 2024 to the low to mid 20% range versus our prior expectation to exit the year at 25%. This is largely driven by the ramp up of our top service offering. The currently has a lower than segment average margin as we rapidly scale the business along.

Speaker Change: Along with an assumption that owned fleet costs could remain elevated in Q4 as we work to onboard two recently acquired aircraft that are not yet performing revenue flights.

Going forward, we are shifting our medical segment profitability guidance from plate profit to adjusted EBITDA in order to provide a more comprehensive view of our profitability expectations for the segment.

Speaker Change: We expect medical segment adjusted EBITDA margins to rebound in Q4 2024 versus Q3 2024 levels for 2025, we expect medical segment adjusted EBITDA margins of approximately 15%, while we don't expect to provide medical slight margin guidance moving forward. This 2025 medical segment adjusted EBITDA margin implies a mid <unk>.

Speaker Change: 20% medical flight market.

Speaker Change: For the next few years, we expect medical segment adjusted EBITDA margins to rise towards the high teens and passenger we expect revenue of approximately $13 million in Q4, 2024, reflecting a $3 million year over year impact from our Western Canada exit low single digit year over year growth in short distance and jet and other.

Speaker Change: Revenue did is about flat compared to the prior year.

Speaker Change: Lastly, we expect adjusted unallocated corporate expenses to be flat to down in Q4 2024 versus last year.

Speaker Change: For 2025, we are reiterating our expectation of double digit adjusted EBITDA, we expect medical revenue to grow double digits year over year and in passenger we expect revenue of $85 million to $95 million in 2025, reflecting an approximate $7 million impact from our exit in Canada low single digit revenue grew.

Speaker Change: And our core short distance business and flat to down jet and other revenue.

Speaker Change: In 2025, we expect to generate positive free cash flow before aircraft acquisitions, barring any large unforeseen nonrecurring items with that I'll turn it back over to Matt for Q&A.

Will Heber: Thanks will we will start by taking questions from the analyst community and we'll follow with questions from the say Q&A platform I'll now turn it over to the operator for analyst questions.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Speaker Change: Yeah.

Speaker Change: And our first question comes from Jason <unk> at Oppenheimer <unk> Company. Your line is open.

Speaker Change: Thanks, Good morning, everybody. So just first some questions on medical so just so just elaborate a bit more obviously there were some factors that went on in the quarter.

Speaker Change: Industry trends <unk> talked about it just broadly talk about why the industry has had kind of headwinds in the quarter.

Speaker Change: Again kind of why you see those headwinds abating.

Speaker Change: And then it would also seem like.

Speaker Change: <unk>.

Speaker Change: There was a general I guess.

Speaker Change: More downtime of the planes.

Speaker Change: You sided that and try and met excited it seriously.

Speaker Change: There's something going on with just getting kind of I don't know if necessary.

Speaker Change: Since we're et cetera, which is why were there more playing down on average this quarter and then with the higher.

Speaker Change: Fleet ownership is.

Is there a way to leverage.

Speaker Change: Potentially any downtime in those planes for passengers with any synergies there.

Speaker Change: And then I might have one follow up but let's just start with that and medical thank you.

Will Heber: Thanks, Jason will here, we'll start on the Q3.

Will Heber: Well look what I would say is that you look at Q1 and Q2 for US are sequential trip growth was well ahead of the industry volume growth and then in Q3. If you look at our trip volumes, we were right in line with the industry volume declines. So there is always going to be some lumpiness. It has to do with a lot of different factors that can be vague.

Will Heber: Station schedules for individual surgeons that can just be ebbs and flows of the availability of donors, but what we're really confident in is that we're going to continue to outperform the market in the long term for two simple reasons. We continue to take market share we are winning new customers and we're not losing any customers. So you might see.

See some quarter to quarter volatility, but because of that fact, we feel really good but we're going to keep outpacing the market.

Will Heber: Like we did in the beginning of the year.

Will Heber: Moving over to your question around the downtime of the aircrafts with this this is a new program for us, but let's just put this strategy in broader context, there is always going to be some some quarter to quarter unexpected maintenance, but if you look at the trend of this strategy and you look year over year at Q3.

Will Heber: This year versus Q3 last year, we're seeing growth in our quite profit per flight hour flown that's up 18% year over year, we're seeing growth in the average flight profit generated per trip, that's up about 11% year over year, and we're doing that without having to take price beyond the built in red.

<unk> growth in our contractual escalators in our contracts. So I think looking at the overall trend. We're happy that things are going in the right direction and then you look to October we've seen a bounce back not only in the overall volumes that we're performing for our customers, but also in the performance of the fleet. So I don't think there is.

Speaker Change: Anything industrywide, Jason to your question that is causing the downtime but.

Speaker Change: We're happy to see that things are bouncing back to the level that we expected in Q2 of course was an exceptionally great performance both on the volume side and we've got the fixed cost leverage there, but also and just not having much maintenance downtime at all and Jason I would just add.

Speaker Change: Despite any month to month vagaries in terms of.

Speaker Change: When you own the aircraft, whether it be unscheduled maintenance or.

Speaker Change: Any kind of Lumpiness that you would see the margins from owning these aircrafts even in this quarter versus the.

Speaker Change: The margins on a.

Speaker Change: Non owns aircrafts are far superior.

Speaker Change: At the same time, we're starting to strike a balance between owned.

Speaker Change: Dedicated aircraft versus non dedicated aircraft and it's still a minority of our of our trips.

Speaker Change: Better xenon.

Speaker Change: On the dedicated aircraft also as I said earlier, if you take a look at October October was an incredibly strong performance. So I think youre going to continue to see this kind of thing and obviously Q3 is as will said because of the summer surgeons on vacation I mean, there are a whole bunch of reasons why Q3 historically.

Speaker Change: It has been soft versus other quarters and I think your last question was around just opportunities to leverage the fleet for other business lines. Certainly there is some incremental capacity on those aircrafts and we're exploring opportunities to you.

Speaker Change: Use for example, empty legs to move passengers and also exploring nexium opportunity within other time critical cargo. So we definitely see that as an opportunity.

Speaker Change: Fortunately, we've been blessed that we have so much demand on the medical side that these planes are flying quite a bit but thats definitely something we'll look to leverage more as the fleet gets to kind of a steady state size, we wanted to and Jason as you would know.

Speaker Change: Very well when you think even about the largest charter a quarter in the world, which is New York with South, Florida, having planes.

Speaker Change: Peterborough you had a situation where there might not be enough cushion of duty hours for a medical mission that plant could easily go down into a passenger mission.

Speaker Change: Florida set set in Florida, they are circuit certain certain circumstances.

Speaker Change: And Jim and Rob.

Speaker Change: A bigger picture question, so with kind of.

Speaker Change: Republican sweep into the election, how do you think about that impacting potential expansion of.

Speaker Change: The passenger business.

Speaker Change: On the traditional side. So you did highlight you think it would accelerate E VTOL kind of potential approval et cetera, but did you think you get more reprieve around.

Speaker Change: Hello, copper access or really this is still yes.

Speaker Change: I think thats all about EV battery, Gary Yes, that's a very good question I think as you know there's been.

A fair amount of discussion about existing.

Speaker Change: Hello ports and airports curfews.

Speaker Change: Issues on fueling types of fuel in a.

Speaker Change: A whole bunch of things and I think that it's clear that this administration and even a lot of the local representatives that were elected at this time are very.

Pro urban air mobility, whether it be with helicopters today or electric vertical aircraft tomorrow. So we definitely are looking forward to a bit of a reprieve.

Speaker Change: I really think that the people who have I've spoken to.

Speaker Change: Who are amidst this current incoming administration understand the importance of the infrastructure. We have now because when EV electric vertical aircraft are here they will be using our infrastructure to start or the infrastructure that we use and then clearly our as you know our proprietary terminals and such are going to be critical.

Speaker Change: For that early period before new infrastructure is built so.

Speaker Change: I agree with the statement said thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Laura Lee of Deutsche Bank. Your line is open.

Speaker Change: Hey, Thank you for taking my question and congratulations on a great.

Speaker Change: Great quarter.

So my first question I thought the passenger segment.

Speaker Change: What's your thoughts on Jakafi.

This is Earl.

Speaker Change: 85% to 95 million, so the midpoint should be down to flight.

Speaker Change: Just wanted to make sure out there any other factors, we should consider except Canada axes.

But the biggest factor on the topline for passenger is just as part of our overall drive towards profitability, we decided to exit the western Canada market.

Speaker Change: Which was not giving us the strategic advantage, we thought and we didn't believe it had the growth of profitability potential that we were looking for in the near term. So thats why youre seeing the new guidance on passenger for the remainder of the short distance business. We continue to expect single digit revenue growth and were bare.

Speaker Change: Enthusiastic about continued performance improvements, we're seeing for growing products like our airport transfer products here in New York City.

Speaker Change: And also profitability improvements that come along with that.

Speaker Change: Just a couple of things I.

Speaker Change: I would add we are in this period right now since in many markets. We're one of one without competition. So there's been a definitely a focus.

Speaker Change: Not growth at all cost its smart growth and being profitable, which we've accelerated through our restructuring in Europe, which was just completed and by getting out of Western Canada, which we just didn't see the short term mid term opportunity there and as we looked at an airport in October just as an example, we had a record passenger count monthly passenger car.

Speaker Change: This past October so youre going to.

Speaker Change: Let's call. It considered growth is what our strategy is to ensure that we have the continued profitability in passenger as you saw.

Speaker Change: <unk> originally said in our last couple.

Speaker Change: A couple of calls we put out guidance.

Speaker Change: On passenger that wed be profitable in 2025, and we've actually achieved that over a year. Early this last 12 months and obviously for all of 24. So I think the strategy is working.

Okay.

Speaker Change: Okay I appreciate that.

Also I'll get a question about the medical segment.

Speaker Change: I think you mentioned for.

Speaker Change: For this quarter.

Block hours for change something like that.

Speaker Change: I'm just curious can you tell your strategy moving.

Speaker Change: Closer to the large hospital clients.

Speaker Change: Has that made economic sense for blade or it's mainly <unk>.

Speaker Change: All the competitors.

Speaker Change: It does make economic sense for blade, because our margins on a per hour and per trip basis. The slight profit dollars. If we make are higher with dedicated aircrafts and then by moving the aircraft closer to our customers. We had a number of advantages for our customer and for us most.

Speaker Change: Importantly, we don't have to bill our customers for repositioning and still on average, we're making more dollars with slight profit per trip. So that's a win win there but also operationally when your aircraft is based near your customer you have more time to go pick up in Oregon, because youre not burning crude duty to repossess.

Speaker Change: <unk> net aircraft and so it gives our customers more flexibility and increases the aperture of how far they could fly and how long they can afford to wait to pick up in Oregon and also reduces the call last time, if something comes in very last minute and the aircraft is already sitting right next to your customer you have a much.

Speaker Change: Or chance of being able to go right away. So strategically we think it's absolutely the right move to your point it does help us competitively as well so thats difficult to compete with if we built a strategy around that and financially it still makes sense, but most important to US is it gives us a strategic advantage that we think is <unk>.

Speaker Change: Leading to us continuing to win new customers and not losing our existing customer set floor I'd say three things.

Speaker Change: Better economics.

On a per trip basis for these kind of trips.

Speaker Change: Strategic in terms of really improving outcomes, which is the most important thing because we're getting to.

Speaker Change: Do the mission faster, that's the transplant happening faster.

Speaker Change: Versus our competition, if you're competing for a contract versus blade and you have just you know aircraft all over the place everywhere home basis, and youre not going to be at the hospital.

Speaker Change: Youre going to youre, not going to be better so that helps getting new customers.

Speaker Change: And the fact that we have owned aircraft now has also been extremely important in getting those new customers as well.

Speaker Change: Okay Gotcha.

Speaker Change: Helpful. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Bill Peterson of Jpmorgan. Your line is open.

Speaker Change: Hi, This is <unk> on for Bill.

Speaker Change: Thanks, so much for sharing more about the partnership with Oregon Ox and can you maybe elaborate on what share of the market that metric profusion kind of a counselor and was it sort of incremental market opportunity on top of what you are already expecting to support medical growth and then maybe as a follow up and it sounds like Oregon access technologies supply constraint.

Speaker Change: Other than demand constrained.

Speaker Change: Does that give you additional pricing power on that shaft.

Jamie: Thanks, Jamie.

Speaker Change: Hey, David Thanks for the questions look we don't have market share data across the country for organ ox, specifically, but what we can tell us from talking to our customers.

There is more demand for this machine in the current available supply we've talked about that a little bit in the press release and so what we're going to do with them is take extra machines that will be around the country and rather than have been hit.

Speaker Change: At one customer for the occasional use just thats, a low volume customer will fly or drive the machine to folks that need them on a one off basis, and then fly them over to the next customers. So we expect to be able to significantly increase the utilization of those machines and help organize get greater market penetration.

Speaker Change: There are one of the reasons from talking to our customers that we think that really interested US machine is this is really economical relative to some of the alternatives that are out there and thats going to allow them to allocate their dollars towards more organs by using a machine like this in all sorts of benefits in terms of giving centers additional time.

Speaker Change: To evaluate if a liver is a good fit for their recipient extending the amount of time that it can travel so hard to put sort of firm numbers around what the market share is today and what it's going to be in the future, but really this is an example of US hearing from our customers that this is something that they want greater access to and then work.

Speaker Change: <unk> directly with the manufacturer to come up with a win win strategic alliance to make that possible.

Speaker Change: Okay. Thank you that's helpful and then passenger margins really outpaced this quarter.

Speaker Change: Optimization is made in Europe with the restructuring and the exit from Canada can you touch on your steady state assumption for this business.

Speaker Change: Or are there sort of pricing power from the tiered pricing that you guys did.

Speaker Change: You had seen kind of in the past.

Speaker Change: Yes, I think one of the more underappreciated benefits that we've seen in the passenger business is just increasing the load factor and products like our New York Airport transfer service.

Speaker Change: One the clock that was really almost at breakeven slight profit a year ago, and now starting to get closer to where we'd like it to be targeted still not at our overall target margins for the passenger business. So we have some room to continue there, particularly using strategies like the one you just described.

Speaker Change: Having folks pick a higher priced spear class for more flexibility.

Speaker Change: So I think that there is definitely an opportunity to see continued margin expansion and passenger and also remember we just completed our restructuring in Europe, which we think is going to improve the profitability of that business and we've just exited the western Canada market, which was the drag on our overall profitability.

<unk>, so it's pretty exciting to me a bit in Q3, when you really aren't seeing the full benefit of either of those things that we had such a fantastic performance in passenger and I do think the best is yet to come when one last thing on what your point about different payer classes and upgrades and things like that we've consistently added or fare classes with more benefits for our path.

Speaker Change: <unk> more add ons and what you find is when this business started when it was $195.

Speaker Change: I think now we are well north of 300 on an average checkout, but the important thing is giving passengers the ability to play the spectrum, they want something thats kind of low cost and low flexibility.

Speaker Change: Out of FERC, they could purchase that or if they want something where they have flexibility in changing their fair. They have extra luggage they want a car on the other end when they arrive.

Speaker Change: People are opting for that and that has helped over the past year kind of supercharge, those average checkout prices, which in which.

Speaker Change: Ultimately.

Speaker Change: Ends up with higher margins for us So we're pretty happy with that performance.

Speaker Change: Okay.

Speaker Change: Okay. Thank you so much I'll hop back in the queue.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jon Hickman of Ladenburg Thalmann. Your line is open.

Speaker Change: John Your line is open.

Speaker Change: Hi can you hear me, we can hear you now okay. Okay sorry.

Speaker Change: I'm Mike.

Speaker Change: My questions have.

Speaker Change: Actually been answered I was just about to raise.

Speaker Change: Raise my hand, but.

Speaker Change: Could you go over your guidance for the.

Speaker Change: I couldnt write down fast enough, but could.

Speaker Change: You have your guidance for the.

Speaker Change: Okay.

Speaker Change: On the passenger side for Q4.

Speaker Change: Okay.

Speaker Change: Sure for Q4, and passenger we expect about $13 million of topline revenue and that reflects the Canadian business being discontinued and then we expect to see.

Speaker Change: Roughly flat jet and other revenue year over year and continued single digits year over year growth in the short distance business John.

Speaker Change: Okay. Thank you so much.

Speaker Change: Helpful.

Speaker Change: Got it down this time.

Speaker Change: I appreciate it and congratulations on the quarter.

Speaker Change: Thanks, Chuck thank.

Speaker Change: Thank you I'm showing no further questions I would like to turn it back to Matt Schneider.

Matt Schneider: Great. So we're going to take a few questions from our say Q&A platform, we're going to start with a few questions for Rob on a veto.

Our EMEA.

First question is do we believe the manufacturers are going to work with blade as they kind of expand their fleet of aircraft over time, and which manufacturers are we most excited about.

Matt Schneider: I think we have great relationships with all the manufacturers now we speak to them.

Matt Schneider: Extremely often almost every week I'd say at this point.

Matt Schneider: Theyre very excited about working with blade given the fact that we are flying more people by vertical transportation than any other company in the world and have more proprietary infrastructure than any other company I think that I'm very excited about what <unk> and Archer doing specialty in terms of how far along the process. They are in terms of.

Matt Schneider: Patient and what their plans are and I think thats.

Matt Schneider: They are definitely up.

Matt Schneider: In a position, especially given the current administration's tried to expedite.

Matt Schneider: Their time to market.

Speaker Change: Think that really helped will help them remain on time here in the U S.

Speaker Change: The year, so that they have put out there.

Speaker Change: But also I think that there are others out there as well that we've had we have relationships with in terms of.

Speaker Change: Beta.

Speaker Change: I.

Speaker Change: E West and everybody else and I think that look they're all doing a great job and we're looking forward to them getting the certification that's only going to help supercharge plates business.

Great. Our next question is for rail on like margin and the question is generally what's the path for like margin expansion from here.

Speaker Change: Thanks for the question I think we've talked about some of the great leverage that we've already started to pull in the passenger business, including the restructuring in Europe and are exited the western Canada market and then some continued pricing.

Speaker Change: Growth in products like airport, that's going to drive that passenger flight margin on the medical side. We're fortunate that now we're going to get a lot more fixed cost leverage as we grow and as we add flight hours Thats one of the big benefits of having the owned fleet. We're in the middle of Onboarding more.

Speaker Change: Kraft, which does create some near term lumpiness for us.

Speaker Change: And there could be a little bit more of that as we just.

Speaker Change: Announced that we'll be buying more aircraft that are not yet producing revenue flights for us but in the long term the more we fly now the less it costs every hour cost a little bit less to fly. So so thats, how youre going to start to get that adjusted EBITDA margin on segment adjusted medical EBIT to the <unk>.

Speaker Change: High teens over the next few years and we.

Speaker Change: We think there's a really clear path to that.

Speaker Change: Great why don't we take one more will just on medical competition in RP. So the question is the heart of the question is how are you thinking about the competitive landscape evolving as different.

Devices and methods and our PD become more popular.

Speaker Change: Yeah look we've been getting a lot of questions about this it's a really exciting new therapy enormous thermic regional perfusion as we said in the script, we've seen year to date about three times as many volumes of cases, where transplant centers are performing in RFP year to date 2024 versus year to date.

Speaker Change: 2023, so that's really interesting and exciting to see it's still about a low single digit percentage of our overall cases. The other thing. We're seeing is kind of exciting is more and more we see OPO organ procurement organization led an RP, so rather than the transplant center being the driver of selecting.

Speaker Change: The use of an RFP for a donor circulatory death donor, we're seeing the OPO choose to do it and then what happens is maybe they thought they were only going to match the kidney for that particular donor and then after being on an RFP for a bit of time they re offer.

Speaker Change: Our deliver to a few other centers and it gets accepted and so when we talk to some of the Ipos. We work with we've heard from a few folks that its third goal to try to use an RFP for the largest percentage of their donors as they possibly can simply because they see it as increasing the yields that theyre going to get from from those donors. So.

Speaker Change: It's early days for this certainly.

Speaker Change: There is a number of third party service providers that are trying to make this easier and put a bow around it to help both the <unk> and the transplant centers and like we've always said, we're agnostic and we'll work with our customers with whatever device procedure therapy. They want to use we're there to support them no matter what.

Speaker Change: So really excited about the future and definitely will be.

Our growing driver.

More supply of donor organs, becoming available so it too just to add to that.

Speaker Change: In terms of the hospitals that our medical team talks to.

Speaker Change: And NRT often has been.

NRT has often been described as a game changer and I think that we can only we only believe that this is going to help our business going forward on the medical side great.

Speaker Change: <unk> should be exciting to watch this play out over the next.

Rob Wiesenthal: A few years, Rob last question, we're going to take us on capital allocation.

Rob Wiesenthal: The question is just an update on how we're thinking about capital allocation and.

Use of cash sure.

Rob Wiesenthal: Work.

Rob Wiesenthal: Continuing to be prudent smart, but yet aggressive in terms of kind of uncovering the opportunities that we see here you saw that we did a very quick.

Rob Wiesenthal: Quick tuck in single digit multiple accretive day, one acquisition I'd like to say.

Rob Wiesenthal: In the medical side with respect to Graham transportation, we're looking at things everyday both large and small and we're happy to have the size balance sheet that we havent being debt free in order to achieve those calls goes <unk> excuse me and so there'll be a lot more to come. So we're excited about the future with respect to the opportunities that we see and again.

Rob Wiesenthal: Folks will be on the medical side on M&A.

Rob Wiesenthal: Great.

Rob Wiesenthal: That's the end of our Q&A questions operator, we will turn it back over to you.

Speaker Change: Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.