Q4 2024 Blade Air Mobility Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Blade Air Mobility Fiscal Fourth
Speaker Change: As stated in our SEC filings blade disclaims any intent or obligation to update or revise these forward looking statements except as required by law.
Speaker Change: During today's call. We will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance.
Speaker Change: 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.
Speaker Change: Our press release Investor presentation, and Form 10-Q, and 10-K filings are available on the Investor Relations section of our website at IR Dot <unk> Dot com.
Speaker Change: These non-GAAP measures should not be considered in isolation or a substitute for financial results prepared in accordance with GAAP.
Speaker Change: Hosting todays call are Rob Wiesenthal, founder and Chief Executive Officer of Blade and will hate Burke Chief Financial Officer.
Speaker Change: I'll now turn the call over to Rob.
Speaker Change: Thanks, Matt and good morning, everyone.
Speaker Change: As promised we are pleased to deliver our first full year of adjusted EBITDA profitability as significant revenue growth and margin expansion in both medical and passenger drove a $17 8 million year over year improvement in our adjusted EBITDA in 2024.
Speaker Change: This important profitability milestone comes as we continued our rapid growth with revenue, excluding Canada, which we exited in 2024, increasing 22, 1% in Q4 2024 versus the prior year period, while Q4 flight profit increased 40% year over year in Q4.
Speaker Change: Adjusted EBITDA was $4 9 million year over year.
Looking back it's important to note how much progress we've made with adjusted EBITDA improving over $28 million over the last two years.
Speaker Change: This is only the first step in our plan to generate multi year compounding growth and free cash flow and adjusted EBITDA as we onboard new medical customers benefit from underlying growth in transplant volumes and realized continued benefits from passenger growth slight economics optimization and our expected mid term.
Speaker Change: Transition to electric vertical aircrafts or what you might refer to as the detail.
As we continue to drive further cost efficiencies in our passenger business. We remain laser focused on maximizing growth in urban area ability products, such as our New York City Airport transfer service, which saw high teens year over year revenue expansion in Q4 <unk>.
Speaker Change: Services like Blade Airport are key to accelerating and Derisking our planned transition to the next generation of aircraft I mentioned.
Speaker Change: Overall this combination of revenue growth and cost efficiencies enabled us to improve on our achievement of positive trailing 12 month passenger segment adjusted EBITDA last quarter more than one year ahead of our target by posting $3 $6 million of passenger segment adjusted EBITDA for the full year 2024 and $8.
Speaker Change: $6 million increased versus the prior year, we had successfully reposition both the medical and passenger business to benefit from improved economics of scale driven by our aircraft investments in additional capacity purchase agreements that enable us to use our increasing volumes to drive margin expansion, our 119, 6% year over year.
Speaker Change: Year improvement in medical segment adjusted EBITDA this quarter on <unk>.
Speaker Change: 13, 7% revenue growth highlights the benefits of this strategy.
Speaker Change: We're also pleased to report that Q4 was our first quarter with medical segment adjusted EBITDA margins above our 15% near term target.
Speaker Change: Though this metric will show lumpiness quarter to quarter, driven by aircraft maintenance schedules and overall trip volumes and will dip back below target in the first half of 2025, we're happy to be able to demonstrate the scalability of this goal earlier than expected I'll, let will provide a more detailed outlook later in the call.
Speaker Change: The improved performance is driven in large part by our aircraft strategy our own fleet continues to provide much more than just financial benefits as illustrated by our expected launched with two new transplant centers in April following competitive processes that required direct aircraft ownership.
Speaker Change: Early results following our European restructuring had been very encouraging with strong year over year revenue growth and solid profitability improvement in the winter ski season in the Alps to date.
Speaker Change: In addition to our excellent financial results. We made continued progress on strategic initiatives. This week, we announced a strategic partnership with Sky sports infrastructure, a leading provider of ground infrastructure for advanced Air mobility launching a pilot program that will expand blades existing by the seat helicopter trans.
Speaker Change: <unk> service by connecting the downtown Manhattan, Heliport, and John F. Kennedy International Airport.
Speaker Change: This will now be in addition to our preexisting airport routes Schuman from the West and east side of Manhattan, and JFK and Newark airports. The new service will fly passengers transferring children from life at JFK, and addition to long island, and Queens residents communion to or from Manhattan for business or leisure on wheat.
Speaker Change: Days the facility located at the southern tip of Manhattan close to Wall Street is an important New York City hub for short distance aviation and follows Sky ports recent appointment as the operator of the downtown Manhattan Heliport supporting the mandate from New York City officials to transition to <unk> from accommodating just helicopters to also some.
Speaker Change: <unk> next generation <unk>.
As such this program aims to gather data on consumer demands flyer experience and logistics specific to the downtown Manhattan heliport and provide insights to help accelerate and de risk the launch of <unk> operations at the facility in March <unk> introduced a new mobile App that offers an enhanced user experience easy flight booking flexible payment options.
Speaker Change: Trip management functionality and many more features we're getting a great response from our customers that if you haven't yet updated to the latest that we encourage you to give me try today.
Speaker Change: In medical our Oregon placement service offerings hops ended the year with six contracted customers and a strong sales pipeline <unk> has continued to drive additional benefits for our customers and blades logistics business, enabling transplant centers to evaluate and ultimately accept more oregon's for those in need the program.
Speaker Change: <unk> also gives us the opportunity to build trust and demonstrate our high level of service to new customers, who may choose to utilize our logistics editions tops.
Speaker Change: Working alongside our friends at organized we are preparing for an April launch of the first phase of our multifaceted strategic partnership. This initial phase will enable transplant centers and organ procurement organizations to utilize Oregon access Metro machine perfusion device on a case by case basis match.
Speaker Change: Metro is a perfusion device for the liver, which represents the majority of the heart liver and lung transplants that typically require dedicated air logistics perfusion technology allows transplant centers to accept more organs for transplant recipients and increase the amount of time Oregon's remain viable outside the body.
We are pre positioning metro devices are key blade aviation hubs, enabling rapid transport to organize customer locations. In this first phase the metro device will be used for perfusion only at a customer location or in the ground vehicle. However, we are working closely with the Oregon X gene to prepare for potential future imply perfusion.
Speaker Change: Completing aircraft testing and modifications now so that will be ready to hit the ground running assuming <unk> is approved to profuse in flight at a later date.
Speaker Change: With respect to our balance sheet, we remain careful stewards of our shareholders' capital focusing on recent investments on aircraft and vehicles that generate great returns for our medical business, while continuing our evaluation of additional tuck in acquisitions to expand our logistics platform with $127 million in cash and short term investment.
Speaker Change: At the end of 2024, we believe we are well positioned to capitalize on such opportunities with that I will turn it over goodwill.
Speaker Change: Thank you Rob I'll now walk through the financial highlights from the quarter starting with passenger.
Excluding Canada, which we exited in August 2024, short fitness revenue increased 18% year over year, driven primarily by growth in New York Airport leisure and other U S short distance.
Speaker Change: And she had another revenue increased 85% year over year, driven by strong flight volume combined with a relatively easy comp versus 2024.
We continue to see significant profitability improvement in passenger this quarter at passenger segment adjusted EBITDA margin expanded by over 16 percentage points year over year to approach breakeven. This was driven by a 630 basis point improvement in flight margin, along with an 18% reduction in passenger.
Speaker Change: Adjusted SG&A.
Speaker Change: The profitability improvement passenger was broad based driven by improvements in short distance jet and other our exit from Canada and SG&A cost efficiencies.
Speaker Change: Turning to our medical business.
Speaker Change: Medical revenue Rose 13, 7% year over year to $36 4 million the increase in air revenue was driven primarily by trip volume, partially offset by a reduction in block hours per trip a natural result of our strategy to increase the size of our dedicated fleet and position those aircrafts closer to our customers.
Speaker Change: We continue to believe that this strategy is a win win and importantly, the right one for our customers, enabling lower cost and shorter call out times and it's ultimately gives us a pricing advantage versus our competition.
Speaker Change: Rounding out medical revenue ground in tops also contributed to revenue growth compared to the prior year period.
On a sequential basis medical revenue increased about 1% in Q4 versus Q3 2020 for somewhat less than we anticipated largely due to softer industry transplant volumes heart liver lung transplant volumes fell approximately 2% sequentially in Q4 2024.
Speaker Change: Versus Q3, 2024 compared to our expectation of a low single digit increase sequentially.
Speaker Change: Medical segment profitability improved on a year over year basis, and rebounded relative to Q3 2024 results medical segment adjusted EBITA margin improved by over 700 basis points year over year to 15, 1% in Q4 2024.
Speaker Change: The profitability improvement in medical was driven primarily by improved performance of our own fleet and dedicated aircraft along with lower adjusted SG&A relative to the year ago period, which had an elevated expense level.
Speaker Change: Moving to unallocated corporate expense and software development.
Speaker Change: For the full year 2024 expenses fell 3% year over year, but we saw an increase of 12% year over year in Q4 2024, partially due to the timing of incentive compensation associated with financial over performance for the year, along with higher legal and professional fees in the quarter on the cash flow front the differ.
Speaker Change: Between our Q4, adjusted EBITDA of negative <unk> 4 million and cash from operations of negative $1 8 million in the quarter was primarily driven by nonrecurring items, including legal and restructuring expenses.
Speaker Change: Our capital expenditures inclusive of capitalized software development costs were $5 million in the quarter and driven primarily by $3 $2 million of aircraft acquisition payments, while capitalized aircraft maintenance was approximately $1 1 million. We currently have 10 aircraft in operation and we're focused on optimizing the financial performance of the <unk>.
Speaker Change: Given the significant strategic and financial benefits of our owned aircraft, we expect to add a low single digit number of similarly priced aircraft to the fleet over the next year or two.
Speaker Change: We ended the quarter with no debt and $127 1 million of cash and short term investments, providing flexibility for strategic investments in aircrafts and acquisitions and medical.
Turning to the 2025 outlook, we expect revenue in the range of $245 million to $265 million and double digit adjusted EBITDA and passenger we expect revenue of $90 million to $100 million in 2025, an increase from our previous expectation of $85 million to $95 million.
Speaker Change: This represents low single digit revenue growth in short distance, excluding Canada, and an approximate 5% to 10% decline in jet and other that's given the exceptional result in 2024 combined with low future visibility into this product.
Charter volumes have remained strong year to date, but this business lines, particularly exposed to macro impacts on both demand and pricing, hence our caution in terms of guidance at this early point in the year.
Speaker Change: As we realize the full year impact of recent cost reduction programs and continue our growth plans, we expect a low to mid single digit million dollar increase in passenger segment adjusted EBITDA for 2025 versus 2024.
Speaker Change: In medical we continue to expect double digit revenue growth in 2025, though as I will shortly explain we now see some uncertainty around meeting its target.
Speaker Change: There are several data points driving our outlook in medical for 2025 first industry transplant volume growth moderated throughout the year in 2024 with high single digit growth in the first half of the year followed by mid single digit growth in the second half of the year, while industry transplant growth has rebounded in the first two months of 2025.
Speaker Change: In light of the second half 'twenty 'twenty four slowdown, we're taking a slightly more conservative view of industry volume growth given the volatility we see as we kick off the year.
Speaker Change: Second while it's a very small sample size, we have seen heightened variability in our own revenue for Q1 2025 to date. Despite the industry recovery after low single digit year over year growth in January we saw year over year decline in February while March to date is trending well above 2024 as such.
Speaker Change: We're a bit more cautious on Q1 expecting top line could be flat or slightly down versus the prior year.
Speaker Change: There are a few factors at play in Q1, 2025, including a particularly tough comp in the first half of 2024 relative to the second half and the first half of 2024 medical segment revenue grew approximately 22% year over year compared with 11% growth in the second half of 2024.
Speaker Change: Lastly, as we've discussed previously our strategy has been focused on utilizing owned and dedicated aircrafts better positioned closer to our customers, reducing repositioning costs for our customers. While we see higher profit per trip on these aircrafts. There was a modest revenue headwind from lower repositioning hours and as mentioned earlier the strategy.
Speaker Change: US save money for our customers and creates a pricing advantage versus competitors.
Given all the dynamics discussed above we expect medical revenues to be flat to up year over year in the first half of 2025 before returning to double digit growth in the second half of 2025 has mentioned the comparison base eases in the second half of 2025, and several new customer contracts will ramp up throughout Q2 and <unk>.
Speaker Change: Q3, 2025, all of this means that we won't have much improved visibility by the time. We report first quarter earnings in May and we expect to provide an update on our outlook at that time.
Speaker Change: Our medical business is always a bit lumpy and can be unpredictable at times as has been our practice, we will call out when we see unusually low or high activity in the short term, but I want to stress that we remain incredibly positive on the opportunity for continued growth market share expansion increased operating leverage and business line extensions turning.
Margins were pleased this quarter to have delivered medical segment adjusted EBITDA margins above our 15% target for 2025, demonstrating the obtain ability at this target.
Speaker Change: However margins will be somewhat volatile driven primarily by regularly scheduled maintenance required on our owned aircraft in 2025, the cadence of time based scheduled maintenance on our own fleet is expected to be above normal, resulting in additional maintenance downtime and lower aircraft utilization for the owned fleet the heaviest maintenance period will be in the.
Speaker Change: First half of the year before improving in the second half and 2026, we expect less scheduled maintenance and associated downtime relative to 2025 and 2024.
Speaker Change: Given the revenue improvement, we're expecting for the year, along with the timing of maintenance downtime for our own fleet. We expect the medical segment adjusted EBITDA margins to start the year slightly above 10% in Q1 and improved throughout 2025 with the second half of the year, averaging above our 15% target.
Speaker Change: We still expect an approximately 15% medical segment adjusted EBITDA margin for the year in 2025, but this could slip below our full year 2025 target depending on the timing of completion scheduled maintenance during the year.
Moving on we remain focused on costs and adjusted unallocated corporate expenses and software development is expected to decline slightly year over year in 2025 flat.
Lastly, barring any large unforeseen nonrecurring items, we continue to expect to generate positive free cash flow before aircraft acquisitions cash flow will be burdened by elevated maintenance spending on our own fleets and we expect capital expenditures before aircraft acquisitions of approximately $8 million in 2025.
Of which $5 million relates to aircraft maintenance that will be weighted towards the first half of the year, which is expected to moderate in 2026.
Speaker Change: Capitalized software development is expected to be in the range of $1 million to $2 million in 2025 with the remainder of capital expenditures driven by vehicle purchases and lease hold improvements.
Despite the near term variability in medical the underlying factors contributing to our positive medium and long term view of the business remains sound and we continue to expect attractive organ transplant industry growth rates, driven primarily by regulatory change increased perfusion technology adoption and lower costs are the same and we remained.
Speaker Change: Confident in our ability to continue market share gains by winning new accounts and converting tops customers to add logistics, all while leveraging our experienced sales team and reliable service.
Speaker Change: We have several adjacent growth opportunities in medical including ground, our Oregon placement service offering along with the opportunity to expand into new time critical logistics verticals, where we have recently made key sales hires.
Matt: Lastly, we expect to continue to see significant margin expansion in the business over the coming years as medical segment adjusted EBITDA margins rise towards our high teens midterm target given our increased scale and solidification of our owned aircraft strategy with that I'll turn it back over to Matt for Q&A.
Matt: Thanks, well, we will start by taking analysts questions will follow up with questions from the say Q&A platform.
Matt: Now I'll turn it over the operator to the operator for analysts' questions.
Matt: To ask a question. Please press star one on your telephone and wait for your name to be announced.
Matt: Withdraw your question. Please press star one again.
Matt: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from Jason <unk> with Oppenheimer. Your line is open.
Jason Oppenheimer: Hey, good morning, everyone and thanks for taking my question, so really nice to see the movement to positive EBITDA in the improvement there.
Speaker Change: So I guess, how are you thinking about we've obviously seen kind of moderated.
Jason Oppenheimer: SG&A.
Jason Oppenheimer: What is the catalyst I guess in each of the two businesses that would make you want to lean more into growth and I guess as you think about medical how much of it has to do with kind of.
Jason Oppenheimer: Some of the kind of new partnerships.
Speaker Change: And new technology, you want to deploy that's question one and then number two Rob.
Jason Oppenheimer: I mean.
Jason Oppenheimer: What's your latest.
Jason Oppenheimer: Kind of timing on when you could see passengers.
Jason Oppenheimer: <unk> you had to guess thank you.
Jason Oppenheimer: Sure why don't we start with well.
Jason Oppenheimer: Sure on the SG&A front expect to see continued savings in the passenger business in particular as you know some of the actions we took towards the end of 2024, specifically exiting the Canadian market and restructuring our European operations, you haven't yet seen the full year impact of that so the combination of that and our.
Patient of continued growth is what's going to lead to that low to mid single digit million dollar improvement in passenger segment adjusted EBITDA in 2025.
Jason Oppenheimer: We don't think fit.
Jason Oppenheimer: We're making a trade off in terms of growth. We think we are optimizing the business and focusing on the areas that the biggest growth potential. So that's really our focus there and passenger and in medical.
Jason Oppenheimer: We talked about how we have a number of new customers that are coming online in Q2 and in Q3 and so those are what will drive kind of the larger step function change and growth in medical as the revenue base gets bigger obviously, winning a big new contract.
Jason Oppenheimer: It doesn't move the needle as much so you see a little bit of that but we're very excited and optimistic about our ability to continue winning those big new customers and the fact that the Onboarding. We have line of sight to right. Now is more Q2 Q3 is why we've guided for more of that double digit growth in the back half of 2025, but there.
Jason Oppenheimer: No Theres no tradeoff in medical of of cost savings that are reducing growth there.
Jason Oppenheimer: And then I think your last question was around the partnerships.
Jason Oppenheimer: Very excited particularly about the Oregon, Alex partnership. This first phase will be a little smaller than future phase, where if they get the approval to fly the device while it's for fusing in flight, we expect that to have a larger overall impact. So we're preparing to be able to do that with the <unk>.
Spectation that'll happen later in the year, but the timing of that is uncertain. So for now we're really helping our customers that don't yet have an organ ox device get one for a case by case usage and the back to base model will there be fusing at the OPO or at the hospital, so we'd expect that to ramp.
Jason Oppenheimer: A little more once the devices approved to perfused in flight and we'll keep giving updates we have more information.
Speaker Change: Okay, Jason Yes, I think what you might be alluding to is.
Speaker Change: Recently, some of the leading Oems have kind of in a way pushback that deployment schedules at least for the U S.
Speaker Change: And I think so we're kind of looking at as you I think youll be seeing you. The aircraft. These FERC aircrafts EMEA or VTOL.
Speaker Change: In the Middle East.
Speaker Change: Probably first quarter of 2006, maybe a little bit very end of that.
25, just because they've really fast tracked everything I think that'll be a little bit more exhibition oriented but people will be able to see the technology get excited about it and then I would assume probably late 'twenty seven.
Speaker Change: For the the U S being here and maybe like full commercialization could even be 'twenty.
<unk> 2008 first quarter, but that being said what I'm really enthusiastic about it now that we're fully profitable in passenger we have this engine that is growing and acquiring passengers. The brand keeps getting better we got more routes. We have more ways to people who are experienced urban air mobility. So.
Speaker Change: I think our view is that we're just going to be coming that much stronger as a platform for urban air mobility with enhanced infrastructure routes revenues associated with that international exposure and just flying more and more people. So at that point when that transition begins.
Speaker Change: I think that we just become.
Speaker Change: <unk>.
Speaker Change: That mature fortified and we're kind of in a way.
Speaker Change: Reducing the kind of onboarding risk to shifting people from helicopters too.
Speaker Change: EPA or VTOL I hope that does that answer your question.
Speaker Change: Yes.
Speaker Change: That's helpful color. Thanks, yes.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question comes from.
Speaker Change: Madison you with Deutsche Bank. Your line is open.
Speaker Change: Hey, good morning, Thanks for taking our questions.
Speaker Change: First question follow up on the on the <unk>.
Speaker Change: Now how do you think about the the time it takes.
Speaker Change: <unk> to ramp.
Speaker Change: It's mainly in the context of obviously these are new novel aircraft.
Speaker Change: Just put out kind of late 2000 and 728.
Speaker Change: How much does that factor in to kind of get acquainted with the aircrafts the performance and then also.
Speaker Change: In the beginning would you envision your take for an ownership aircraft or leveraging that through some other type of financial partner.
Speaker Change: Can you just repeat the first part of your question I got the last part, but its your very first part.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes, the time it takes to.
Speaker Change: Get acquainted with the aircraft or just to get familiar enough to operate it.
Speaker Change: Yes.
Speaker Change: Yeah got it okay. So.
Speaker Change: I think what Youll see in the beginning is that the Oems will be doing.
Speaker Change: Very limited flights I don't want to call them exhibition I don't know, what the what I'll call them.
Speaker Change: Really testing out these aircraft in the wild so to speak.
Speaker Change: We're looking at two miles in terms of our using these aircraft one would be.
Speaker Change: Enabling our current operators to purchase and as you know a lot of the leading manufacturers.
Speaker Change: Or in the business of selling those aircrafts and we today have facilitate.
Speaker Change: Our.
Speaker Change: Our facilitate our partners our operating partners.
Speaker Change: To help them buy aircraft by giving them capacity usage agreements, so they'll actually work with Airbus or work with.
Speaker Change: The Allianz se.
Speaker Change: I have a commitment from blade for X number of hours I'd like to buy an aircraft make in finance against that the same thing is going to happen.
Speaker Change: <unk>.
Speaker Change: VTOL.
Speaker Change: And then that is one model and the other models there are bidding a number of.
Speaker Change: OEM manufacturers, who said we would like to give you two to own. These in late you.
Speaker Change: Decide where they go and what they do and will even operate them for you. So those are the kind of the two models.
Speaker Change: That will that will see I think it's important to mention that as I understand is that in the beginning there will be a cohabitation phase, which makes blade even more important in the development of the vitol ecosystem that is because not all of these aircrafts are going to be able to go to all the different routes we have take all.
Speaker Change: Different types of Havent, Michigan, all the same types of emissions, whether it be medical our short to the airport or longer to leisure markets or in weather. So you got to need the portfolio different type of vertical aircraft, including helicopters in the beginning it will take some time and so anybody.
Speaker Change: Our fleet is 100%.
Speaker Change: <unk> electric.
Speaker Change: Understood understood.
Speaker Change: Question different topic Europe, it seems youre getting quite a bit of good traction. There can you just remind us I know you mentioned the growth, but in terms of the profitability maybe how much the magnitude of improvement has been since you turned.
Speaker Change: That turned that around.
Speaker Change: Hey, you added some well here, we pulled out several million dollars of hard cost.
Speaker Change: From Europe, So I think that we feel really good about the growth as you remember.
Speaker Change: Close to 50% of the revenue comes through in Q3. So we're happy that the ski season is going well, but the big chunk is in that summer season, and so we'll have to wait and see how that goes before we can give you a view on the top line growth, but we did really pull out hard costs. So that's a significant driver.
Speaker Change: And that low to mid single digit million dollar improvement and passenger segment adjusted EBITDA that we're talking about for 2025. This is a big it's been a big part.
Speaker Change: Prior in prior some of the drag we had.
Speaker Change: On passenger and I think that the improvements in Europe really accelerated essence of profitability.
Speaker Change: Played a big role here as well said.
Speaker Change: It's been a great ski season, and I think that we're kind of happy where our average sea legs. It took some time, but.
Speaker Change: <unk>.
Speaker Change: The business is really working over there pre.
Speaker Change: Preorders on Monica Grand Prix look good.
Speaker Change: My expectations for the summer in terms of international travel remain unabated. Despite what you may have heard from.
Speaker Change: Certain.
Speaker Change: Airlines as such obviously a lot of this can be weather dependent and the summer also so it can get a little bit choppy, but we feel really good about where we are with Europe.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you art.
Speaker Change: Our next question comes from Bill Peterson with Jpmorgan. Your line is open.
Bill Peterson: Yes, hi, good morning, and thanks for taking the questions it looks like even when excluding Canada.
Speaker Change: Borrowers are slightly down year on year.
Speaker Change: Can you touch on what how that impacted I understand you're driving higher pricing. So that's a positive.
Speaker Change: And I guess.
Speaker Change: When you think about passenger margins more broadly.
Speaker Change: Surprisingly that aside how should we think about that trajectory through 2025.
Bill Peterson: And Bill you were asking about seat count did I hear you right.
Speaker Change: Yes.
Speaker Change: Yes, I think thats a function of us optimizing the business.
Speaker Change: In 2024.
Speaker Change: In Europe trying to offer the right schedule for our scheduled route between Nielsen Monaco give people seats when they want them, but also not offer as many seats when there's not as much demand same same approach to our New York Airport service and so youre seeing.
Speaker Change: <unk> revenue growth there and we're just trying to optimize actually give people more seats during the time that they want them.
Speaker Change: But put less inventory on the shelves when there's less traffic and there is more of an opportunity for us to lose money. During those times. If we don't have the load factor on each flight in and actually ties right into your question on margins. We do expect to see continued increases in our margins both because of those actions.
Speaker Change: We've taken on pricing in the passenger business on optimizing the schedule and then also once you get to the point that we're at now where we have a profitable business and we have a profitable scheduled product find people between Manhattan and the airport for example that incremental seat that we sell on a flight that already had several paying <unk>.
Speaker Change: <unk> that seat is going to drop down at close to a 100% margin contribution and so the gearing is really in a great place and Thats. Another important contribution contributor to this inflection we're seeing in passenger profitability right now I'll just add to that Phil I mean this is Ben.
Speaker Change: What youre seeing is been conscious a conscious effort on our parts accelerates the profitability I think that we made the assessment that within the New York area, where we have 100% market share in the <unk> business, which is really an urban mobility product that is most geared toward what.
Speaker Change: Electric will be in a couple of years and in Europe, where we have leading market share and number one market share that it didn't make sense for us to kind of like chase our tail of just get as many butts in seats is P.
Speaker Change: Possible, if it was going to sacrifice.
Speaker Change: Profitability. So the idea is to optimize that schedule taken as much price as we can and kind of have cut fruit. It grew.
Speaker Change: Growth with it.
Speaker Change: With profitability coming first if we got into a different type of environment and we wanted it was competitive and we wanted to really open up schedule or be more aggressive on price we could do that.
Speaker Change: And then at that point, because obviously a lot more awareness of the product. There's a lot more going on that should be good for everybody, but at this point is one of one we felt this is the right way to do our business and especially when you think about the timeline for <unk>.
Speaker Change: VTOL being stretched out when it continue growing profitably and in a manner and keep growing that base or that much stronger winter arise.
Okay.
Speaker Change: Yes, that's a good lead into my second question and recognizing it's probably going to a few years before we see electric aircraft, but I think several companies. Nonetheless are trying to have service between the downtown Manhattan, heliport, and JFK and you're you're going to be I guess, an early beneficiary of that but if we think more longer term.
Speaker Change: What would be a differentiator for your offering.
Speaker Change: I think in the past you've talked about barriers to entries in some cases.
Speaker Change: If I have an exclusivity which doesn't appear to be the case here in other cases, just by having sort of infrastructure.
Speaker Change: How should we think about your new York opportunity over the longer period of time, given probably New York wouldn't really want to add exclusive landing zones.
Speaker Change: You kind of broke over the last part of what you were asking can you just repeat the second part of your question.
Speaker Change: Long term durability of your New York.
Speaker Change: Business given us.
Speaker Change: Probably appears unlikely that New York would want to have exclusivity in terms of landing zones.
I guess, it's slide.
Speaker Change: Difference that I think that youll see in the beginning that we <unk>.
Very well may have exclusivity in terms of in terms of passenger terminals. If you can't aggregate. Your passengers you can have your own distinct terminal.
Speaker Change: Space to do that you are working at a general aviation and were processing tons of passenger turning them around every five minutes and cases.
Speaker Change: So I think in the beginning until their new landing zones.
Speaker Change: That's kind of the benefit of our companies that we have this incumbent infrastructure both here and in Europe. It is true that.
Speaker Change: Anybody can land in any of these public use.
Speaker Change: Hello ports, but whether it be by contract, where we have exclusivity whereby it is pure.
Speaker Change: Geography in terms of where you would put another facility.
Speaker Change: We feel that we are fully entrenched in New York City that would be really difficult to compete with us on that.
Speaker Change: And Bill I would just add from a financial perspective that you because we've aggregated still months demand over so many years, including folks that have annual passes that they are renewing every year, we've solved that difficult problem.
Speaker Change: Having enough people on every flight to have money at it to make money and having enough flights in order to utilize the aircraft enough that it's economical to fly the aircraft on the routes. So there's two layers of utilization that you have to accomplish and so it puts us in a position to have a much broader schedule.
Speaker Change: And have an actual profitable product that we're offering our customers versus the ramp could be very expensive. If you don't already have that demand aggregated. The last thing I would add bill is that when we look at and we've done a lot of work on this the first people who will be flying Ibiza. The most likely people are going to be higher income and half.
Speaker Change: Alone in helicopters Thats. Your first that everybody else is going to be a lot of other people with me a wait and see so I think in the beginning you should really see.
Speaker Change: Very strong.
Speaker Change: Kind of pull from the blade customers switching to this new type of aircraft, whereas other people may be a little bit more wait and see on it. So I feel really good in terms of Ah witness arrives.
A hell of a lot more optimistic about the opportunity that I am worried about the competition this fitness market.
Speaker Change: Especially in New York.
Speaker Change: Okay. Thanks for the comments there maybe my last one I'm sorry for cutting out.
Speaker Change: Might have missed it but on some of those maintenance youre under taken in your medical segment in the first half of the year.
Speaker Change: I might have missed it but.
Speaker Change: Is this something that we should take a somewhat of a.
Speaker Change: Future seasonality, meaning you're going to be doing a certain times of year or youre has taken advantage of and I was just trying to get a sense for how to think about if we need to think about modeling. This type of maintenance on a go forward basis.
Speaker Change: For example, next year and beyond.
Bill Peterson: Yes, Bill this is time based maintenance so it's required scheduled maintenance that happens.
Bill Peterson: For example engines every 2500 hours and what we're calling out is that the cadence in the first half is well above what would you what you would expect to be the average. So for example, we've got 10 aircrafts based on the amount of flying that we do you would expect to need to do two sets of engines.
Bill Peterson: Every year just to put it in perspective, we have four sets of engines that we need to do in 2025. So it's just elevated relative to the average cadence that you would expect and so as we called out 2026, we have far fewer.
Bill Peterson: Need to do then you would expect on average so we will keep giving guidance, it's a bit of a moving target because the more you fly the earlier that that maintenance event comes up but we will continue to keep you appraised whenever there is a situation where it's it's above average and remember that's not just the capex situation for.
Bill Peterson: It also means the downtime of the planes is going to be elevated and so that will impact our ability to get operating leverage on the planes during that time period, which is why we gave a note of caution for the first half on our medical segment adjusted EBITDA margins I think I just.
Bill Peterson: I want to add to that.
Bill Peterson: New for a lot of blade investors in terms of obviously owning this portion of this fleet, albeit it purely for medical.
Bill Peterson: Depending on the timing of when you buy these specific aircraft of where they are in their lifecycle ends up being when you end up having these kind of major maintenance overhauls that are accounting into our ROI and encountering into the kind of margins to the <unk>.
Bill Peterson: Yes, we do that to make sure that we know this was a smart deal and it hasnt its mark here both on year on an increase in margins and an increase of return on capital basis, but you can't.
Bill Peterson: Pick the weighting these when the schedule happens it depends on the year.
Bill Peterson: Here the plane and when you bought it it just happens to be that the timing is such that we're going to have a fair amount of the scheduled maintenance this year and we want to get investors comfortable with some of this lumpiness, but however.
Bill Peterson: Over time and over any given certain amount of full year.
Bill Peterson: We are seeing and we expect to continue to see the benefits of having this ownership. So I want to make sure everybody understands that this is not an unforeseen maintenance and not.
If it has anything to do with something that was not planned when we originally purchased these aircrafts.
Speaker Change: Okay, that's clear.
Bill Peterson: Catching up very soon.
Speaker Change: Great you shortly.
Speaker Change: Thank you as a reminder to ask a question via the phone. Please press star one one.
Speaker Change: That is star one to ask a question.
Ben: Our next question comes from Ben Please split Lake Street Capital markets. Your line is open.
Ben: Alright, Thanks for taking my questions. Congratulations on a nice under the Goodyear here first question on the passenger segment I'm wondering if you can elaborate a bit on this pilot program at the downtown heliport and kind of talk about kind of really what your what your objectives are from a data analysis perspective, and then also comment on if you think this could evolve.
Ben: <unk> to be.
Ben: To go from a pilot project.
Ben: Kind of a more notable revenue contributor.
Ben: Before the emergence of <unk>.
Ben: Sure.
And great to hear you on the call.
Ben: So yes im very excited about this.
Ben: This aligns with Sky ports as you probably know Skype ports has been a leader working with both <unk> and Archer and other companies in terms of around the world building verdict ports that are kind of EV <unk> first.
Ben: And I think that we are seeing is what we alluded to before their timeline has been stretched a bit and I think in terms of the deployment of a VTOL and.
Ben: They see then see that is that they have a desire and the <unk>.
Ben: And the willingness and need to work with us on the rotorcraft side to really provide that transition because it's really going to help de risk and accelerate that transition.
Ben: Over time, so we've come up with a structure, where we do not take economic risk.
Ben: And we have.
Ben: Using this telephone.
Speaker Change: Imagine, we probably know more about vertical transportation Newark area than anybody.
Ben: <unk> Wall Street has not been.
Ben: The strongest of <unk> for our customers, but they are putting a lot of money in terms of capital to make this a kind of a world class facility. So I think the information we're trying to get a lot of it has to be about really the flow of passengers and where people, leaving living where people are working as to whether or not there is a.
Ben: A viable group.
Ben: Fliers, where this becomes highly valuable and I think it actually will.
Ben: Over time, so I think that we have.
Ben: The best of both worlds, we get to try this out not have downside risk and if it works for us and Sky ports clearly.
Ben: We're going to continue with this is now our third place in Manhattan, which is kind of amazing. If you think about most major cities that you can actually pick if you want to fly into the east side into the west side or into Wall Street from any airport or depart from any of those zones.
Ben: At this point, we pretty much have it a bit from my perspective locked up that no. Other landing zones right now in New York City and in the beginning as we all know what the Vitol.
Vitol is deployed.
Ben: You are going to be using incumbent infrastructure and we have terminals in both.
Ben: The <unk> website and will be re commissioning.
Ben: Allows that we've had in the past in Wall Street and in terms of the data.
Ben: But we really want to get out of this and this is really helpful to sky ports is kind of how it what is the what are best practices to get people on and off aircraft as quickly as we can.
Ben: What our best practices to make sure. This harmonization between people what people's vehicles at that terminal, whether they be ride sharing cars or any other type of transportation and make sure that works as smoothly as possible and they can we can take that knowledge and then kind of.
Ben: Really get that through the DNA of the employees of Wall Street. So they can run the best service possible today and continue that into we VTOL tomorrow.
Ben: Very good that's helpful.
Really exciting development on.
Ben: The medical side for my follow up here.
Ben: Two new transplant centers, you have coming online here that were announced back in November it's great to see the visibility that gives you here in the second half of the year can you talk about the kind of how robust the pipeline is for additional centers to potentially.
Ben: Tom Indeed that would get further visibility here in the second half for maybe into 'twenty six.
Ben: Yeah, we got a great pipeline and we're really excited that now we're kind of seeing two funnels for the pipeline you have the traditional logistics funnel that has driven a lot of growth over the last several years and then we also have the tops funnel and we recently had our first customer that was a.
Ben: <unk> customer and over a course of several months, we impress them with our service our attention to detail help them to be able to evaluate more organs and then they asked us to help them with their logistics needs as well. So we really feel like we're well positioned to have more of those shots on goal to show people why were different why were.
Ben: Better why can we can help there there are hospital become more economical as they go recover organs for folks that need them.
Ben: Very good.
Speaker Change: All right that color. Thanks for taking my questions I'll get back in queue.
Debbie: Thanks, a lot Ben great Debbie on the call.
Speaker Change: Thank you I'm showing no further questions over the phone at this time I would now like to turn it back to Matt Schneider.
Speaker Change: Great. So we're going to take a few questions from the Q&A platform.
Speaker Change: First one for Rob so.
Speaker Change: With blades infrastructure in place on the passenger side, how are we thinking about or considering additional strategic partnerships or alliances.
Speaker Change: Sure.
Speaker Change: And in terms of our infrastructure there.
Speaker Change: A bunch of things that are that are going on.
Speaker Change: Continue actually too.
Speaker Change: Find new.
Speaker Change: Dormant landing zones as we did in New Jersey.
Where we can kind of like I say, we like them and those can be very interest for interesting for corporate and also potential individual travelers, but that's something that we kind of.
Speaker Change: We want to control them, we want to be able to.
Speaker Change: Yes.
Speaker Change: Profitable way introduced products when they make sense, but they are really kind of explode value when a VITAS here. So again, New Jersey is an example of that Atlantic City. The oceans casino is that as well in terms of the.
Speaker Change: The existing infrastructure.
Speaker Change: There are a lot of brand partnerships, we are where we are paid to partner with brands, where they actually to bringing their products or somehow.
Get some type of exposure those are things that are kind of at <unk>.
Speaker Change: <unk>, 90% to 100% margins so that it can be while the revenue numbers are small they are really strong in terms of what falls to the bottom line and I think thats.
Speaker Change: In Europe, where we're really starting to bring the power we have over there and we're looking at bringing partnerships much more on a global level than we have done on a local level in the past and we're getting much more involved in events. We are the official helicopter company for the Ryder Cup, which is probably one of the largest.
Speaker Change: The largest.
Speaker Change: Sportingbet specific with golf.
Speaker Change: Next fall in and that page long Islands, where we have actually eight helipads operating.
Speaker Change: Every day.
Speaker Change: Over a week Formula one is probably the largest movement of non military helicopter in one day.
Speaker Change: Across the World, where we are number one in market share and we actually have our own.
Speaker Change: Lounge within almost within the track of the Monaco Grand Prix and were taking three hour drives plus and moving into settlement of flights. We're already seeing pre sales for that so I think it's about taking the existing infrastructure looking at talking to corporates that are nearby making sure we're communicating with the community.
Speaker Change: The interest in using that brands and also really thinking about how this fits into their network of events as sport.
Speaker Change: <unk> is an entertainment just kind of that much more important across the world as we grow this business.
Speaker Change: Great. The second question is relates to the first question how are we thinking about balancing capital allocation within passenger as we approach the diesel.
Speaker Change: Given our.
Speaker Change: Desire to invest also in the medical business.
Speaker Change: I think.
Speaker Change: As I said before when it comes to large large scale M&A, we're looking at in <unk>.
Speaker Change: On a daily basis, and we really feel like there are a number of actionable deals out there.
But the best deployment of our capital on an ROI basis with respect to companies and large scale transactions right now is on the medical side.
Speaker Change: I think given the fact that passengers profitable we've been working at it for 10 years I think we are in a really good place that being said, we will be opportunistic, but it will do it would be nothing that would either cause any kind of.
Speaker Change: Meaningful impact to our cash flows on the passenger side, nor defer capital that would be needed to medical.
Speaker Change: Great well that concludes our Q&A portion of the call I wanted to thank everyone for joining the call today. Please reach out if you have any questions and we look forward to updating you. When we report Q1 earnings in May.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call.
Thank you for participating you may now disconnect.
Speaker Change: Yeah.
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