Mesa Air Group Inc (MESA) 2005 Q3 法說會逐字稿

Welcome to the Mesa Air Group third quarter 2005 earnings conference call. At this time all participants are in a listen-only mode. To ask a question during the question and answer session, please press star one. Today's conference is being recorded. If you have any objections, please disconnect at this time. I would now like to introduce Mr. Jonathan Ornstein, Chairman and C.E.O. of Mesa Air Group. Sir, you may begin.

Thank you very much, operator. First, I'd like to just start with our forward looking statement. This conference call will contain various forward-looking statements that are based on management's beliefs as well as assumptions made by and information currently available (indiscernible). While the company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated estimated projected or expected. The company does not intend to update these forward-looking statements made in this call prior to its next filing with the securities exchange commission. With that, I'd like to thank everyone for taking time out of their busy morning to meet with us for this quarter's call.

Okay, on a high-level overview, the company reported second quarter pro forma net income of $16.5 million or 39 cents per share on revenues of $298.6 million. Pro forma net income excluded investment gains of $700,000. While I have only been able to check back to 1995, we believe that this is the most profitable quarter in the company's history. This compares to pro forma earnings of $10.8 million on revenues of $239.6 million or 25 cents per share for the comparable period of fiscal 2004. Last year's third quarter included on an after-tax basis 507,000 one-time compensation and related tax effects and $624,000 in Beech 1900 return costs. On a gap basis, our reported net income was $17.1 million or 40 cents per share as compared to 9.7 million or 23 cents per share for the same period last year.

The primary items of significance affecting the second quarter of 2005 were total operating revenues for the second quarter, increased primarily as a result of 21.9% increase in available seat miles and an increase in certain reimbursable base costs such as fuel. The increase in AFMs primarily reflect an increase in the number of CRJ 900 aircraft that have been placed in service since June 30, 2004, and increased in average stage length. Total operating expenses for the ASM (ph) excluding fuel charges of $81.4 million or 3.5 cents per ASM, which are primarily reimbursible by the company's major partners, decreased approximately 8.3% to 7.7 cents from 8.4 cents for the same quarter 2004. Our nonfuel unit costs improved primarily as a result of cost reduction initiatives implemented by the company during the year. The addition of 13 CRJ 900's since June 30, 2004, and reduced flying in Air Midwest which as you know is a turboprop operator of 19-seat aircraft. Also there was an increase in average stage length. During the quarter, the company took delivery of 5 86-seat CRJ 900's for our America West Express operation. The company is contractually committed to deliver to America West three more 86-seat regional jets, 2 during the remainder of fiscal 2005 and 1 during the third quarter of 2006.

Our total fleet count which I appreciate is something of a moving target, at the end of the third fiscal quarter, it was 182 aircraft, 92 50-seat RJ's, 15 70-seat RJ's, 35 86-seat RJ's, 16 dash eights (ph) and 24-1900's. Excuse me? This represents -- basically there is the net effect of 9 aircraft are being leased to Gulfstream Airlines and Big Sky which we previously announced. This is down from 35 1900-aircraft that we flew at the beginning of fiscal 2005. We expect to have an additional 5 1900-aircraft in February of 2006. We have been surprisingly successful in our ability to sub lease the 1900's.

As mentioned during our second quarter conference call, we continue to make progress in financing our regional jets and aim to close on permanent financing on all of our 15 aircraft currently on interim financing during the remainder of calendar 2005. The company is contractually committed as we mentioned before to deliver 3 additional 86-seat regional jets. Ok. Again, once we fulfill our remaining 900 obligations to America West, America West does have the option for 1,200 additional CRJ 900 aircraft which if they choose to exercise, would begin delivering in mid to late 2006.

On an operational basis, Mesa's air group's operational performance for the quarter ending June 30th, we ran a 99.4% controllable completion rate. Obviously, that excludes such things as weather and air traffic control. While we are satisfied with our quarter to date performance, which is significantly above any of our contractual obligations, we continue to strive for operational excellence in order to provide our partners with an on-time reliable product and to further enhance our customers' experience on Mesa airlines. I'd like to take a special moment to thank all of our hard-working employees and employee leadership for continued success of the company. Again, we have done everything we can here to take a different tact in employer relations. We spend quite a bit of time on communication, and we work closely with -- not only with the employee groups that are organized but all of our employees, and we talk directly with the employees at every opportunity. We are confident we will continue to move forward with our transition and growth plan as a result of this.

At Air Midwest, as we previously announced the company's end agreement to lease a total of 15 (indiscernible) Beech 1900 aircraft previously operated by Air Midwest subsidiary to Gulfstream International and Bigsky, these actions are in further to (ph) the company's vigorous pursuit of reducing unprofitable 19-seat flying that do not have government subsidies from the essential air service program. Per our latest fleet program we will now be down to 21 1900's by February '06. We are currently operating 24 and will deliver 5 remaining aircraft between now and February 2006. As of June 30, 2005, AirMidwest operated only 18 lines of revenue service. I know that's a little confusing, but the long and short of it is we are continuing to move out of 1900 flying and reducing all of our -- or eliminating all the flying done by 1900's that does not receive a direct subsidy from the federal government under essential air service.

While Air Midwest continues to be unprofitable, generating and operating loss of $1.3 million in the third quarter, we believe this consolidation will positively impact Air Midwest profitability and improve our ability to provide the best service throughout the remainder of our turboprop network, absent any further increases in fuel prices. And even with the small number of aircraft we operate, the fuel increases have impacted us rather significantly as you can imagine. We continue to expect America Midwest to operate profitably at a steady break-even once these efforts are complete in the current fuel environment.

For the balance of fiscal 2005, Mesa predicts ASM's of 2.3 billion. ASM's for 2005 and 2006 will a function of final delivery schedules for our ordered aircraft. The marketing schedules of our partners require us to fly and finalization of the transition plan for aircraft transitioning from USAirways to United and Delta. Obviously, if those delivery dates and transition plans change from our current assumptions, or (indiscernible) change versus today, ASM's may be impacted. For fiscal 2006, based on our current assumption, Mesa projects ASM's of $9.36 billion.

I will say the transition had been a primary concern of ours in our last call. We have made what I would consider to be very good progress. All of our partners are being quite helpful. We have very much appreciated the cooperation and coordination they have made to make this transition as smooth as possible. And I think our -- while we still are highly focused on this, the level of concern that we have had has, in fact, lessened over the last 90 days.

Based on what we know today, we remain comfortable of the upper range of the first call earnings for the fourth quarter and the $1.10 for fiscal year ending September, 2006. However, our earnings could be impacted again by changes of the delivery schedule, marketing schedule, timing of maintenance and training events, and again, clearly the biggest driver will be the transition from US Airways to Delta and United. This doesn't take into effect any potential growth opportunities for which I think there will be many. It does not take into effect any of the other cost reduction programs that we are implementing.

But just at this point in time these are the numbers that we certainly are going to be able to tell people we feel comfortable with. I'd also like to mention that we continue to work vigorously with our stocks compliance. This is no small order. I want to thank all of our people internally who often go unthanked here on the administrative side who have worked hard to make sure that Mesa is prepared for this obviously very serious new level of regulatory compliance. I'm sure there are a number of questions regarding the America West-US Airways proposed merger and how it may affect Mesa. There are some I would like to address specifically and then answer any questions that should arise in the question and answer period.

Should the merger of America West and USAirways be completed, and it seems as if that will happen, indications that are a portion of our 900 flying will move east to support the flying of the merge entity. We also as a result of that - I think both America West and US Air knowing that we are -- will be transitioning aircraft within their system. USAir and America West have been helpful putting together our transition plan to suit our schedule for Delta and United. It's one of those things where it needs to work for everybody. We in fact are finalizing now a series of agreements with America West that I think put to bed some of these issues that put to be some older issues that had come up. We feel that this is an indication on both of our companies' part that we feel that we have a strong future together, and I think that given that we look forward to further opportunities to expand our relationships with that new entity.

Obviously, we have mixed emotions about ending our US Airways relationship. We had been with US Airways through thick and thin. But again, we want to wish all the folks there well. We think that this merger has worked remarkably well in terms of its ability to refinance the airline, and we think that it puts the company on strong ground moving forward from a financial perspective, and we're confident that the team at America West will do a good job in terms of putting the 2 carriers together. As you know, they are our closest partner in terms of geographic distance and we're in touch with them literally every day.

We expect our -- We do think that Delta obviously a new partner to Mesa. We have had several meetings with the folks there to ensure a smooth start and are excited about the prospect of working with them. We expect our first ERJ aircraft to be in revenue service with Delta beginning in October. We think those aircraft will remain on the east coast with a large portion of those aircraft flying not too far from where they are today. In Orlando, Florida, that has been very helpful in terms of our maintenance bases and our people. These aircraft will be supported by our current ERJ base as I mentioned in Charlotte. We will have the first 5 aircraft in October. We expect the aircraft to be phased into revenue service at the rate of 2 or 3 aircraft per month and thereafter until we put all 30 into service.

Finally, with United, we expect to put 15 of the additional 50-seat aircraft into service during October. By early 2006, all 30 aircraft should be in service with United Express. Please note at this moment we are short one aircraft. We will source additional aircraft to fulfill our commitment. As I mentioned in the last call, we are also in the process of negotiating or renegotiating and sourcing replacement aircraft for up to 15 aircraft that we have coming off lease over the next two years. 50-seat aircraft. We believe this represents a significant opportunity for Mesa to renegotiate these leases downward as the market conditions are such that 50-seat aircraft have, in fact, softened up in the marketplace.

I wanted to mention a couple things on this transition because I know there has been some concerns and there has been a lot of talk about what the potential impact of that would be. We took this quarter. And again, this is a high overview. I want to caveat that because clearly there could be some changes, but we took this quarter and assumed that we had full-up completed the transition. No expenses involved in the transition. Just a steady state run rate. And the numbers actually were pretty interesting. If you took this quarter and we were full up with United and Delta. We think that our number for the quarter would have been approximately 35 cents. If you assume a savings on the 15 aircraft of approximately $20,000 a month, which they think is actually a pretty easy target, we would have earned 36 cents. And if you were to make the further leap of faith that - well for one reason or another we did not have the expense associated with the (indiscernible) 328 product that we have taken on some level of responsibility for, our earnings would actually have been approximately something north of 40 cents. You know 40, 41 cents a share.

So I wanted to put to rest some people's concerns that Mesa had gone out and in order to place the aircraft that were with US Air had bought the business by degrading our existing earnings capability. Clearly there has been some but I think it's probably less than most people had anticipated. Again, that's going to require a very good execution of the plan. It would depend on a lot of things regarding the 328's, our ability to sublet them or if for some reason Delta was no longer on the hook for those aircraft as a result of a filing, that liability also would leave us as well.

I also wanted to mention we did a little quick overview on our cash position. We ended the quarter with $258 million in cash. That is the -- from what we can tell the second highest cash position in the industry. Only exceeded by Skywest. I also would like to mention we are in the process of finalizing between 2 or 3 parties the sale of our parts inventory and management of that inventory which would generate enough cash that would put us comfortably over $300 million by the end of the year, and there is, I would suggest to you, a high probability that that would be completed over the next few weeks.

All in all, we think we had a good quarter, clearly. We think it's a testament to our business model. I also think that our management folks have done a remarkable job in terms of maintaining costs. Our maintenance people have done a terrific job in terms of reliability, flight operations, and certainly most importantly our people out on the front line have executed this plan I think with incredible capability and dedication, and I want to make sure to thank all those people for making that happen. It's from these kind of results where we can operate both profitably and reliably that we feel strongly positioning the company for significant growth opportunities over the next few years as the whole industry continues to make what is obviously very significant changes.

So with that, I'd like to again thank all of you for taking the time and open up the floor for any questions you may have.

Thank you. At this time we're ready to begin the question and answer session. If you would like to ask a question, please press star one, and you will be announced prior to asking your question. To withdraw your question, press star two. Again, at this time if you would like to ask a question, please press star one. Our first question does come from Michael Linenberg from Merrill Lynch. Sir, you may ask your question.

Hey guys. I guess a couple of questions. Jonathan, maybe you provided this number, but what do you anticipate the transition costs will be, and is that something that we're going to see mostly in the fourth quarter since the startup is in October or is it (indiscernible) over 2 or 3 quarters since it sounds like it will take you until the spring of 2006 to get airplanes - to get all the fleets placed at Delta and United?

Yeah. I think that we will see it over the next 2 or 3 quarters. You know, as I mentioned before in the last call, we had - you know, I think - and we expressed a fairly high level of concern over the transition, and to what extent we could get all the partners to sort of work together. I think our feeling now is we've gotten very good cooperation. All of them have made adjustments to their schedule to help us and to make it as least painful as possible. We have definitely programmed some pretty significant numbers into our numbers and feel that at this point in time, unless there is some serious breakdown which I don't foresee, that these numbers will more than adequately cover us in terms of the transition.

Jonathan, when you say numbers, is this something like a $5 million to 10 million dollar type hit over the coming quarters? Is it more than -- I'm just trying to get a sense.

Hey, Mike, it's Peter. What we said last call was I believe was $8 million to $10 million after tax for the entire transition, and we're still at that number, but we -- we have better confidence that, that in fact, is going to be the number from an accounting standpoint. You basically amortize that as each aircraft goes into service.

Then my second question, referring to the (indiscernible), the 328 jets. I know, Jonathan, you alluded to, obviously, there is some financial impact that you will take from that. Just for modeling, what is that on a quarterly basis? And are there opportunities for those 328 jets? Do you see..

I think that we have seen a number of opportunities. We're talking to a number of different parties. You know, large carriers, in fact. There is a number of different configurations that the aircraft can be used for, but again I think it's important and it depends on what you -- how you feel about Delta at this point in time. And again, I don't want to cast any negative - anything negative on Delta. But there is a lot of speculation about what they are going to do going forward from a financial perspective if they were to file, we would no longer have these obligations.

We are working as if they are not going to file, and we, like I said, feel that there are opportunities to place these aircraft because the fact is that while the aircraft may not make a lot of sense at $65,000, $75,000 a month, clearly it may make a lot of sense at $25,000 a month, which would cut our obligation significantly. All the numbers that we gave you assume the worst, except for that last analysis where I said if we were to be relieved of that obligation where our earnings would be based on this transition plan.

Ok. So the 40 cents, 41 cents, we can kind of back into it, 47 million shares. A couple million a month at most.

That's for sure.

Nice quarter. Thank you.

Our next question does some from Sam Panella from Raymond James. You can ask your question.

Going back to the transition costs, I thought you said previously the majority would be incurred in the September quarter, but if you're beginning to really place these aircraft with Delta and United in October, does that mean it's going to be more spread out now?

Yes, Sam, we had actually hoped to get most of the expenses expensed during the fourth quarter. We've committed to a lot of the expenses. However, under the new accounting rules, until the aircraft actually starts flying, we can't expense it until then. So from a cash standpoint, we probably will have incurred most of the expenses by the end of this fiscal year into the calendar year. But we won't show it from a p&l standpoint until at least each aircraft goes into service.

Ok. Do you still have the firm orders for the seven C.R.J. 900's in fiscal 2006? Since I don't believe you have any places to put them yet can you defer these deliveries?

We already have the firm deliveries and we have options. Our view is while we don't have anything done at this point, we are in discussion with a number of parties and feel that there will be opportunities for those aircraft.

And when are those scheduled to start entering your fleet?

What's the timing on it? Second half of the year. Latter half of 2006.

Ok. Thank you.

Ray Nidell (ph) of Calihoun (ph) Securities, you may ask your question.

Jonathan, just to go a little bit into detail on your costs. I know the airline has grown quite a bit. It looks like maintenance and G&A were up significantly while at the same time promotion in sales were up significantly in the quarter. Could you just go over what happened there?

I'm sorry, Ray. You said that maintenance was up significantly?

Let's see. It looks like maintenance is up 43 to 52 over the year?

Remember, we did add a significant number of 900's, and the maintenance expense, if you will, on a per-aircraft basis is higher for 900's. If you look at it on a unit per aircraft basis, it should have been up higher.

Peter, correct me if I'm wrong, but in my briefing we also transitioned a bunch of 900's out of the system. 1900's out of the system. There was a significant amount of maintenance done to transition those aircraft out to make them - put them in conditions flyable to our sub lessors.

Not that we were operating substandard 1900's, but given we are a long-term 1900 operator, we are allowed to operate them under different parameters than someone who is brand-new.

How much is the expense on the 1900's for the quarter?

There was probably $1 million worth of expense that was related to that alone. It's a large, large number. Now, we will recoup some of that over time because what we have ended up doing, if you will, is putting the aircraft into better condition than we would normally have to fly in the return conditions from them will -- they will have to give it back to us in the same conditions. But it is an expense. The other thing is we took some additional engine expenses during the -- during the year for some engine mod work that was done, so that's on the maintenance side. On the promotion and sales, I believe you said you saw that go down. A lot of that has to do with the fact that we are getting out of some of the station handling at United as well as reduced air Midwest flying on the G&A side that increased primarily due to some additional reserves that we took as well as some increase in health and workers comp insurance.

Great. Your stock buy back program. It's obvious why you're buying back your stock. You think it's cheap. There seem to be so many opportunities out there. Acquisitions, expansions, restructurings. Wouldn't you want to preserve your cash at this point to maybe take advantage of some of those opportunities?

We have a fair amount of cash. I would be surprised, frankly, if we weren't closer to $300 million at the end of the year. You know, buying back the stock, while we have spent some money, I think we have purchased about 1.1 million shares this last quarter. We think it's well within our ability to do that at the same time to take advantage of other opportunities. But frankly, you know, we felt and probably still at this point feel that the best opportunity is still Mesa. You know, the question really becomes do we buy back -- you know, what does our buyback look like going forward? That will depend obviously on how the market responds to our numbers going forward. But I think that, you know, if I had to go out and buy an airline, I would still buy Mesa.

Ok. Finally, you went over this in detail, but I just want to clarify the USAir situation. You're moving your aircraft out of US Airways to United and Delta and then with US Airways probably merging with America West, you will be back with them. This combined company, I'm assuming, is going to have a lot of capability of using the 190's. I'm just wondering if that's an airplane that is going to be big in Mesa's future.

Well, I think we'll certainly look at it. We talked to them obviously about opportunities. As we mentioned in our last call, we had some concerns regarding the combined entity, but given the enthusiasm that the market has obviously embraced the merger, we feel a lot more comfortable today than we did 90 - than we did years ago. They have shored up their balance sheet to a tremendous extent which we're delighted that's occurred. They also have some additional opportunity because of the way their scope clauses read.

They have a certain number of 190's they can put into service, a certain number of 170's they can put into service and a certain number of 900's. We're going to continue to look at opportunities to place 900's which I believe under their existing scope clause they have room for another 17 aircraft. Also we will look at the 190's as well. The question becomes how fast can we get certain aircraft. I think that may probably play as big a role as anybody else, not similar to when we took on the additional 145's back to satisfy requirements of USAir back in 19 -- well, 1999.

Jonathan, are you interested in either of the Delta regionals if they come up for sale?

I hate to give you the same answer probably everyone does. We clearly will look at anything. That will be a question of what the structure would look like, you know, where Delta is and how -- how we view the long-term future of that particular aircraft. So I think there is a lot of variables there, but clearly we would be interested. Given our cash position, we would be anxious to put it to work. I can also tell you that in spite of sometimes our reputation, we are very conservative in terms of how we deploy our cash in regards to these acquisitions and would probably look to do anything maybe potentially with a financial partner.

Ok. Good quarter, guys. Thanks a lot.

Glenn Engel from Goldman Sachs, you may ask your question.

Thank you. A couple of questions. First, if I look at your margins in the June quarter, especially taking out the losses from the 19 seaters, they are around 12%, 12% to 13%. That seems high to me. So why were the margins so high, especially with transition costs and is the normal long-term range you still feel in the 9% or 10% type range?

I think that, you know, we have worked hard to lower our operating costs through a number of initiatives in terms of cost savings, plus in terms of, for example, maintenance as we become more familiar with the aircraft. We just had an extension on a number of our maintenance items that, you know, have significant savings. When you, for example, can do a seat check and you get a third more time between seat checks, for example. We also have been very careful about our overhead in terms of we have added a lot of aircraft and we have tried to keep our overhead at levels that allow us to improve our margins. Additionally, I think our view is that we have to continue to grow the company just to take advantage of, again, opportunities exist where we do not have the sort of super seniority that a lot of these carriers have found themselves with.

One of the keys for Southwest's success is that they have been able to maintain seniority that has been below most of the other carriers because they continue to grow. That's going to be our challenge going forward. I think we need to continue to do that. I do think these margins are probably higher than we would anticipate going forward to on a long-term basis. Again, as we continue to grow and as we continue to institute further cost savings through the company, we'd like to think that we continue to have returns that are certainly high single-digit type returns consistently going forward. I believe that this is now what? Our 28th out of 29 quarters of profitability, and we have been fairly consistent in terms of our ability to make sure that we come at least reasonably close if not exceed the numbers that have been put forward by Wall Street.

The correct question is on America West. You have the right to fly 90 seaters. I don't know where USAir is on their contract. When do the America West-USAir pilots get merged and what's the risk that you may no longer be able to fly for the combined companies?

There is no risk whatsoever. The issue, in fact, is how many more aircraft we can add. They feel at a minimum if you take the most restrictive of the cope clauses, it's 55. We have 38 in service. There are those that argue that. It's the combination of the two. Which would put that number much higher. So I don't think there is any risk at all that we can't operate them because both contracts allow the operation of 900's. I think the bigger opportunity, frankly, is changing of scope clauses at other carriers where there may be some opportunity because there is very little doubt I think in anyone's mind that the 900 is by far the most efficient aircraft currently in service of regional jets.

In fact, there are a lot of folks that pointed to the 190, but the nice thing about the C.R.J., it has significantly lower fuel burn, about 20%. In this environment of high fuel prices, the 90 on a relative basis continues to become more attractive. And I think it's an absolutely fabulous airplane, tremendously flexible. Our cost per seat mile on the 900 I think it's fair to say is probably fairly significantly below that of most of the legacy carriers. Narrow body, cost per seat mile. And the flexibility we offer them I think is such that this could be a very key aircraft going forward, not just in this merger but potentially other opportunities as well with other carriers.

Finally, on the 19 seaters, what is the current co-chair relationship you have on them?

We currently have a very small code share relationship with America West where we operate three or four aircraft. We have a small code share relationship with USAir where we operate maybe -- I think it's about 15 aircraft. There is about four or five aircraft that are independent. But again, while the code share is obviously helpful and we're glad to operate them under a code, these -- these routes are prime airly being funded to a large extent by the essential air service program.

Thank you very much.

Once again, if you would like to ask a question, please press star one. Our next question does come from Helene Becker of Benchmark.

Hi, guys. I know you probably answered this. With respect to Delta, if they were to file, your contract goes ahead of plan, is that correct?

I think that's a great question. If Delta files, there is a lot of things that could happen. Delta has the right to terminate our contract. We feel that that would be highly unlikely. We have been told, you know, at least indirectly that our cost structure is extremely attractive to them, and that I think that in all likelihood it would open up significant opportunities for us. The one thing I do know is that our responsibility, any responsibility we have - and again, so there is not a misunderstanding, our responsibility is not 100% of the lease clause. It is a portion of it. That responsibility would terminate upon their filing.

Right.

And the question you have is does the low cost producer of regional jets, A.S.M.'s have an opportunity with Delta which then could basically start from scratch effectively in their entire program? I think one of the knocks that Mesa has had in the past has been well, our partners are not as strong as the other guys. We now have all the same partners as the other guys. Delta and United. So we think that -- and we frankly feel that because of our cost structure, we would probably be at least as well positioned as anyone else in terms of, a, keeping our business, and b, potentially garnering significant additional business.

Right. Ok. All right. That makes perfect sense. Thank you. My other question just before you go away is block hours for this quarter, do you have that?

I will talk to you afterwards.

All right. Those were all my questions. Thank you.

Thank you very much. We appreciate it.

At this time we show no further questions.

Well, everyone, thank you very much. There has been a -- this has been a good quarter. We're working hard to make this transition as smooth as possible. We think that there is significant opportunity for us going forward to further grow our business, enhance our earnings, provide opportunities for our employees, and strengthen the long-term relationships that we've developed now with our code share partners. Clearly, there is a lot going on within the industry. There are other opportunities as well that we're going to be very careful before we just jump. There had been some questions as to why we didn't play a more active role in some of these restructurings, but again we'll take a conservative approach.

We have had good solid growth the last few years. We're start to go see the benefit of that in terms of these earnings. We fully expect to see these benefits continue. We are going to be very careful as we go forward in terms of how we further deploy our assets, both aircraft, people, and cash. I think one of the things I would like to take away is that while we are opportunistic, we also are going to run the company in a way that ensures long-term future for everyone. Again, I want to thank you for your time. If you have any additional questions, please feel free to call myself or Peter and we will be glad to answer them as best as possible. Thank you, and have a great week. We look forward to talking to you the next quarterly call.

This concludes the audio portion of today's call. We thank you for your participation. You may disconnect at this time.