SkyWest Inc (SKYW) 2015 Q2 法說會逐字稿

Good afternoon. And welcome to the SkyWest, Incorporated, second quarter 2015 earnings conference call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions.

Please note this event is being recorded.

I would now like to turn the conference over to Mr. Chip Childs, President of SkyWest, Incorporated. Please go ahead.

Thank you, Allison, and good afternoon. We're pleased to have everybody here on the call this afternoon to discuss the results of our second quarter of this year.

Before we get started, let me introduce some of the key players we have on our team here, as well as an outline of what we'll go over during the call.

Present here today besides myself, is Rob Simmons, our new Chief Financial Officer. We have Wade Steel, our Chief Commercial Officer with us. And we also have Eric Woodward, our Chief Accounting Officer here, along with other various staff members to assist with any of the other questions.

The call will go as follows. We'll start out with having Eric take care of some housekeeping with the forward-looking statement disclosure. Rob will give us the financial results and some commentary related to that. Wade will give a brief update on our fleet and our commercial initiatives and updates. And then I will provide some key updates on our strategy and progress. Afterwards, we'll open it up for some questions.

So let's go ahead and proceed in that order and start with you, Eric.

Thank you, Chip. We will be making statements on today's call which are considered forward-looking. Such statements are based on our current beliefs, expectations, and assumptions regarding future events and are subject to risks and uncertainties.

All forward-looking statements expressed in today's call are based on information available to us at this time. We assume no obligation to update any forward-looking statement.

Actual results will likely vary and may vary materially from those anticipated, estimated, or projected for a number of reasons. Some of the factors that may cause such differences are included in our 2014 form 10K and other reports and filings with the Securities and Exchange Commission. Rob.

Today we reported net income of $31.5 million or $0.61 per diluted share for the second quarter of 2015. Our operating income of $70 million for the quarter is the best quarter performance since 2008.

The improvement in our financial results and earnings momentum was generated from our operating leverage in three areas. One, the change in our aircraft mix under our fleet transition plan. Two, the use of our capital strength to add accretive new aircraft to our system. And three, the improvement in our operating performance and related operating efficiencies.

With respect to changes in our fleet mix, I want to give you additional color on the net change in our operating fleet year over year. At June 30th 2014, we had 752 aircraft scheduled for service. Over the last 12 months, we've removed 134 aircraft, or 18% of our June 2014 operating fleet. These aircraft were operating under unprofitable or less profitable agreements.

Over the same period, we added 58 aircraft to our fleet, including 30 E175s, which have been nicely accretive to our earnings.

Although we have a net decrease to our fleet size and block hour production from June 2014, the accretive aircraft additions, combined with the removal of less profitable aircraft, were significant drivers to our improved profitability.

We've included a summary of our block hour production by aircraft type at the end of the press release that illustrates the fleet production changes. And we anticipate continuing to provide similar production information in our monthly traffic releases.

Wade will speak more to the fleet in a moment.

The strength of our balance sheet, disciplined capital improvement, improving fleet mix and strong operating performance are the levers that have contributed to our significant turnaround from 2014, and provide the catalyst to position us well going forward with our major partners.

We believe these actions give us a competitive advantage in the market and allow us to continue to access attractive aircraft financing rates. Our solid operating performance builds on our strong relationships with our major airline partners and also generates additional economics from contract performance incentives and operating efficiencies.

In terms of year-over-year changes to our revenue and operating expenses, the theme for the second quarter is relatively consistent with the first quarter. As outlined in the release, the anticipated revenue decreased from a reduced fleet size and scheduled production was partially offset by incremental revenue from our E175 aircraft, accretive 50-seat aircraft additions, contract rate improvements under various existing agreements from renewals, improved flight completion rates, and higher contract performance incentives earned.

Compared to last year, we've removed some of our negative, no and low-margin revenue, and partially replaced it with more profitable flying, two levers contributing to our profit momentum.

Combined, our revenues decreased by $28 million from the second quarter of 2014. Over the same period, the reduced fleet size and related lower production combined with operating efficiencies from improved performance and various cost initiatives, resulted in a decrease in operating and other expenses of $86 million from the second quarter of 2014.

Lower fuel costs in our pro rate business was a benefit of about $9 million, or 10% of the year-over-year decrease in expenses.

So a decrease in revenues of $28 million, combined with lower expenses of $86 million, nets to our year-over-year improvement of $58 million in pretax income.

Our 10Q, expected to be filed in early August, will include our operating segment information. But let me give you a little preview. We are very pleased to report that ExpressJet had a pretax loss of just $3 million during the quarter, compared to a $36 million loss in the second quarter of 2014.

ExpressJet contributed $33 million of the consolidated $58 million improvement in pretax income, compared to Q2 2014.

With respect to our cash and liquidity position, we ended the quarter with $505 million in cash and marketable securities. The primary items impacting our cash during the quarter include, of course, our pretax income of $52 million. We also used $36 million toward ownership for the nine E175s delivered during the quarter. And we used $18.7 million to repurchase 1.2 million of our shares.

For the second half of 2015, we are forecasting to use $18 million in the third quarter and about $11 million in the fourth quarter as ownership towards seven E175 aircraft purchases.

We anticipate our other capital expenditures will range between $20 million and $25 million in Q3 and then be slightly lower in Q4.

Lastly, we're scheduled to present at a conference hosted by Cowen and Company in Boston, and conferences hosted by Deutsche Bank and Imperial Capital in New York, all three of which are scheduled for this September.

We appreciate the portfolio managers that we have spoken with over the phone this quarter and those that met with us in New York and Baltimore, as we look to continue to tell the SkyWest story to a broader investor base. We look forward to meeting with those of you interested in following our story more closely. Wade.

Thanks, Rob. With respect to key changes in our fleet over the past year, at June 30th, 2014, we had 752 aircraft operating scheduled service. Over the past 12 months, we removed 66 ERJ145s from United's contracts, 23 CRJ200s from various contracts, and 45 EMB120 turboprops.

This totals 134 aircraft removals, or 18% of our June 2014 operating fleet. All removed aircraft were operating under unprofitable or less profitable agreements.

Over the same 12-month period, we added 30 E175 aircraft under our United and Alaska agreements, 16 ERJ145s under our American agreement, and 12CRJ200s, under our Delta agreement. This totals 58 additions, or 9% of our June 2015 operating fleet of 676 aircraft. All editions have been accretive to our earnings.

During the last six months of 2015, we anticipate to remove 23 ERJ145s from our United contracts, and 16 CRJ200 from various other contracts.

As of June 30, 2015, we have taken delivery of 35 of the 40 E175 aircraft from our United contract. We anticipate delivery of the remaining five aircraft during the third quarter of 2015.

Additionally, on June 15th, we announced that SkyWest Airlines will place eight traditional E175 aircraft into service with Alaska airlines, for a total of 15 E175s to fly under that partnership.

As of June 30th 2015, SkyWest has taken delivery of 13 -- of 3 of the 15 aircraft and it's scheduled to take delivery of the remaining 12 between Q4 2015 and Q4 2016. We remain focused on execution of our fleet optimization plan through 2016. Turn it back to Chip.

Thanks, Wade and Rob. So the second quarter demonstrated, obviously, some positive momentum. And it's worth noting that this is the most profitable quarter for SkyWest, Inc., since 2008.

The strategy that we began executing 15 months ago is showing meaningful improvement, and we're very pleased with the results. However, that said, we remain focused on continued execution of our fleet optimization plan and continued discipline in our commitments with our partners.

Key parts of this quarter's profitability is result of continued operational performance, delivering improved operating incentives, and continued execution of our fleet optimization plan.

Within each airline's operations, we're focused on delivering strong, predictable operating performance and reliability. Our ability to deliver strong product to our partners is a key part of our competitive position. And we remain focused on reliability and delivering on our commitments to our partners.

SkyWest and ExpressJet continue to produce strong operational performance, and with ExpressJet producing 99.8% adjusted completion and improving [D08] points quarter over quarter, ExpressJet has been the top performing United express partner in terms of completion for several months, with SkyWest just behind them this quarter. Both carriers are also top tier with Delta Connection portfolio.

The benefits of producing a strong product are realized financially through performance incentives, contract revenues on completed flights, and added value to our partners.

During the quarter, we continued executing our aforementioned fleet optimization plans resulting in a smaller fleet, and improved aircraft mix.

For the quarter, [we] removed unprofitable aircraft. This resulted in a better fleet mix and improved profitability on fewer block hours.

SkyWest Airlines completed its transition to an all-jet fleet in May. As noted last quarter, the overall cost savings and associated improvements from a simple five fleet were realized in this, the second quarter.

SkyWest Airlines successfully launched the E175 flying for Alaska Airline in the quarter as well. More specifically, in July. Overall fleet flexibility and disciplined approach to our commitments are key to our ongoing strategy moving forward, and we continue executing on that strategy in the second quarter.

We believe a large part of our ability to deliver a reliable product remains attracting and retaining the industry's very best professionals, and that's something we continue making progress on in the second quarter.

In terms of factoring these improvements into our financial model, we will continue our practice of not providing specific EPS guidance at this point. However, we anticipate the second half of 2015 should reflect moderate improvement from the second half of 2014. Excluding the 2014 special items.

In terms of preliminary view of 2016, we anticipate 2016 should reflect moderate improvement from 2015. And as we have disclosed in recent quarters, we continue to work through our fleet transition. We could potentially have some noise later in 2015 or 2016, with respect to potential aircraft related cash or non-cash special charges.

To summarize, we built momentum on our strategic plans during the second quarter and we're optimistic about the positive direction. We remain very focused on fleet flexibility and discipline, strong operating performance, and ensuring we remain positioned to deliver the best what are major airline partners request of us.

Our strong performance and progress in our business during the quarter is because of more than 20,000 aviation professionals across both of our operations. There is not a better group of people in the industry, and we're very proud of what they continue to accomplish.

With that, we will turn the time back to the operator for some additional questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) At this time, we will pause momentarily to assemble our roster. Savi Syth from Raymond James.

Thanks for the level of details that you're sharing on the monthly reports and with this release. Really appreciate it. Just when thinking of the second half 2015, historically third quarter has been stronger than the second quarter. Is there any reason to believe that that won't be the case now? Is something different about the business model that might change that?

Savi, thanks for your question. And I would say that there's no reason to believe that that wouldn't be modestly consistent with what it's been in the past, no.

Got it. And just then on the -- you've shared [when] other competitors [are] having issues of pilot over sourcing. And I was just wondering how much of an improvement you're seeing today as a result of maybe your partners needing to turn to you to get extra flying, and then maybe what's the potential opportunity going forward there?

That's a very good question. Let me kind of redirect the question to a little bit of more of what our strategy is. I mean, I think that from the dynamics and the fluidity of the market that we see today, there's always ongoing dialogue with our partners all the time.

We're focused on making sure that we are executing our fleet flexibility strategies and we remain very disciplined in those commitments.

At the same time, it all goes back to our strategy also of making sure that we're attracting the industry's best and delivering exceptional performance so that we can become a strong airline partner. But I think that the name of the game today relative to the circumstances we see in the marketplace today is maintaining strong discipline in making sure that we can deliver what we're committing to.

Got it. And if I might just ask one quick question on the pro rate side. What was kind of the benefit to the pro rate side from maybe fuel savings? I'm guessing that all of the fuel numbers going through your income statement are -- some of that's past through, I would assume.

I'll let Wade kind of comment on that.

Yes. So as far as, thanks for the questions, Savi. So first of all, with the benefit, Rob, in his prepared remarks, talked about a $9 million benefit in the pro rate fuel area.

A couple other things with pro rate. We actually have decreased our capacity slightly during the quarter, but we still see some benefit from it.

All right. Great. I missed that. Thank you very much.

Michael Linenberg from Deutsche Bank.

This is actually Richa Talwar filling in for Mike. So first, I wanted to ask about margin and profitability differences as you move out of sort of the less profitable aircraft you alluded to and into more accretive ones and gain more experience that some of the new models you've introduced.

And along those lines, is there a target margin or earnings figure long-term? We're just want to get a sense of steady state of earnings for SkyWest down the line. Thanks.

So, yes. I think that from the detail perspective part of -- the first part of your question, I think we're going to kind of leave the detail out of our answer.

But to give you some guidance, I certainly believe that we could -- our objective is to try to get to a 10% operating margin. We think as we continue to execute on our strategies, that that could be something that's going to take some time. But we're going to be very disciplined in how we do that.

We're about 8.8 today. Yet, at the same time, we went to go back and make sure that it's not just what the target is, but we want to be very disciplined and make sure that we're managing partner relationships and providing the operating value to them in that process.

But if you had to target something, would focus on a 10% operating margin.

Any color on the differential between the profitability of the new aircraft and then the less efficient aircraft?

I don't know that it's necessarily so much the type of aircraft more than it is the type of circumstances and things that we're flying the fleet under.

We're not going to get into the details on this call as to exactly what those matrix are. I think that you can take your model and look at how the fleet has adjusted and probably make some good assumptions as to how those movements and those variables are going to take place.

I'll also let Rob give some commentary on this as well.

No. Thanks. Actually, I think if you look at, as we talked about, it's about a mix shift. So if you look at the planes that we took out, those were either unprofitable, marginally profitable planes. And so there's kind of two leverage points. As you take those planes -- an unprofitable or marginally profitable plane out and replace it with something that's much more reasonable in terms of margin, in terms of what it represents for a return on capital for us, you start to see nice leverage points emerging from that mix.

Okay. That was helpful. Thank you. And then somewhat related to Savi's question on the labor front. One of your competitors has announced labor issues as a key reason for not being able to maintain their schedules this year.

I'm just wondering if that's a concern of yours with your own labor situation. And if you think your competitors' issues sets up opportunities for you this year and potentially next year?

Well, again, I'll probably answer a lot the same effect as I did with the previous question. I think that there has always been, and this was something we've seen for a while. There's always a fluid market out there that we work with with our major partners.

And there's a lot of things going on. I think that everything that we do relative to with our major partners when it comes to the people that we have for resources to execute our commitments, is to exercise great discipline and making sure that we do not get into a position where we are not applying our resources appropriately.

We have strong relationships with all of our people today. We continue to have great ongoing dialogue centered around our overall focus with all of our entities to create long-term sustainable business models, because I think everybody benefits from that.

And from that perspective, we just need to continue to work hard to deliver what our partners want and be disciplined in that effort.

All right. And if I could just squeeze in one more. You mentioned incentive payments. Are you willing to share how much in incentive payments you got in the June quarter?

I don't think we're paired to kind of disclose that level of detail on the call. Apologize for that. But I think if you can kind of take a look back historically at some of the models and some of the things that we've done in the past, you might be able to figure a little bit about that out. But we prefer to not disclose that on this call.

Okay, that's fair. Thank you.

Helane Becker with Cowen and Company.

And I'll echo my colleagues and say thanks for the detail. It's really terrific. Any way you can provide us similar detail for 2016 or first half of 2016, at least?

Well, Helane, my goodness. We're ready to disclose it out, and you guys want more. That's a great question, actually.

I don't think we're prepared to certainly give this level of detail.

But, Rob, maybe you've got some thoughts on what we can do in the future to --

Sure. Helane, I mean, look, I think that at this point the only thing that we're prepared to say is what we said already on the call. And that was that as we right now look out at the 2016 landscape, we see that there's a nice opportunity for us to have a moderate year-over-year improvement. As we look at the second half of 2015, we think there's a this opportunity to have the moderate improvement over the second half of 2014.

So obviously, as we kind of dial other things in and you see more news out about -- we'll talk more about this in future quarters. But right now, that's the level of kind of confidence we have in detail that were prepared to give.

Okay. That's fair. Can I ask the question maybe slightly differently? You guys are kind of self, I guess funding, if you will, your [any] pilot attrition, right? You got rid of over 100 aircraft. You're putting some of your pilots through training.

I mean, can you just maybe say why salaries declined year over year, given the shift in mix to bigger aircraft? I would have thought, obviously wrongly, that your guys would have gotten increases for flying bigger equipment. No?

I mean, yes. I'm not sure what you're looking at, Helane. But I think that the salary line probably went down year over year, primarily just due to reduction of the fleet.

Okay.

I think if you look at the release and some of Wade's comments about this reduction in fleet, you can see that all of the costs are down relatively strong. But it's mostly due to our fleet optimization plan, some of the discipline we're trying to exercise in removal of unprofitable fleet.

So yes, hopefully that'll help you kind of reconcile a little bit about what that does.

Okay. Did you say what pilot attrition is right now?

No. Relative to pilot attrition, I think we're going to keep those rates to ourselves. But I'll tell you something relative to what we're seeing. We have not, in 2015, been surprised at what our predictions have been and what our pilot attrition has been. We had some very strong recruitment programs at both entities, hiring is keeping pace with what our flying commitments are. And we're maintaining strong discipline with our commitments and making sure that -- I mean, we feel very comfortable in the position that we're in throughout the rest of 2015.

And we continue to work on our fleet plans through 2016. And we keep all those things in mind when we look at what we can commit to. And most importantly, the type of fleet flexibility we have to be able to respond to any different assumptions of what happens with pilot attrition. But we've not been surprised. We're exercising discipline. And we're keeping up with our staffing.

Okay. And then the last question I have is -- promise -- is on the margin. Your contracts provide for pretty nice margins. Are you worried that the airlines will come back and say we change our mind, we're paying you too well?

Not certainly when they're making the kind of margins they're making. Maybe that's the best way to put it. At the end of the day, here's the guy you that we see.

Our strategy is still to make sure that we're providing the right type of value that they're willing to pay for. And part of our ongoing conversation with our partners is continuing to be transparent about what their needs are and what we can do on a very proactive basis to provide for what they want us to perfect. And it has to come at the right economic model for our shareholders. And we're very transparent about that.

And from that perspective, I can tell you that our relationships are strong and the dialogue is very, very positive as we continue to look at opportunities to further evolve our fleet.

Great. Thanks. Thank you so much for all that clarity and your help. I appreciate it.

.

(Operator Instructions) Duane Pfennigwerth from Evercore ISI.

I wonder if I could come back to the pilot question. Maybe you could just help us because it's very relevant right now.

Just to execute your business plan, how many typically leave? How many do you need to hire? What is the rate that you need to sort of get pilots in the door maybe per month to execute your business plan? And I think if you give us that detail, maybe how many you're freeing up for these aircraft that you're getting out of, that might help us sort of understand that variable and get some comfort with it.

Well, I think, to be candid, if you go through the release and you look at the block hours that we have from quarter to quarter, I think there's enough data within the release and some of the commentary we've had on our fleet flexibility, that, like a say, Duane, we're very comfortable throughout the rest of 2015.

We're going through the process of estimating what that's going to be in 2016. We sit down with our partners and are transparent with them about what that is in 2016. They need to be transparent with us about what they think that they may hire from us.

And the other variable about that is what the fleet's going to be. And to be honest, you can see from the overall ASM and block hour production the model is to shrink the fleet in the short term. That puts us in a great position relative to making sure that we can fly within our commitments and deliver to our partners. That takes some discipline relative to that.

And you can see by the operating performance within this last quarter that the execution of all those variables should give you some very good comfort that we're on top of as much as we possibly can be, the pilot situation and making sure we're delivering on our promises.

Okay. I mean, how practically does that work? So if you turn back in an E145 and you have crews related to that E145, what's the process to sort of train them over or move them to a different certificate so that they could fly an E175? Or am I thinking about it the wrong way?

Yes. I think what we're doing, Duane, I think that the thing that we need to clarify is that we are right now managing this clearly by entity. There's absolutely no fungibility between the entities by design and strategy.

But the process that we're going through to evaluate the flying needs of the partners, predicting the hiring model, and predicting what pilots will be available and predicting if there's more fleet that we want to get out of due to low margins or losing money, all of that is being done at a more granular level, some by entity, some by fleet type.

And we feel very good with our models about how that works.

So typically today, within each of the certificates, we're not crossing over back and forth and having to retrain a pilot in one or the other, with the exception of a couple of things that how they may work out at SkyWest Airlines going from CRJ to ERJ.

But from that perspective, it's actually worked out very, very clean. It just so happens that most of our fleet flexibility is coming in the right spots and the model over the last several months -- this is not new.

I mean, it's also important, Duane, to understand this is not a new challenge for us. We've had this challenge for quite some time now. I understand that it's kind of come to a head in certain circumstances. But we've been doing this for quite some time and we're very comfortable with how our models are going to produce good reliability going forward with pilots.

And Duane, Rob here. Remember that over the next four to six quarters, at least, we're going to continue executing on this plan with fewer planes, fewer block hours, but a much better mix and better profitability. That's our model kind of through 2016, at least.

Okay, that's helpful. Just a housekeeping one. Can you say what operating cash flow was in the quarter?

Let's see. Rob?

Yes. EBITDA for the quarter's in the release. It was $135 million this quarter, up from $77 million a year ago.

Okay. I wasn't sure if EBITDA was the same as operating cash flow that will show up on your Q. But thanks for clarifying that. Okay. Those are my questions. Thanks.

We have a follow-up question from Savi Syth from Raymond James.

I just wanted to understand a few [different] things here. On the SkyWest improvement side on a year-over-year basis, was that solely from the growth or were there other things that are happening on that segment too that it's driving greater [profitability], maybe growth and maybe pro rate?

Savi, I'm sorry. I didn't hear the first part of your question. Could you restate that again?

Sure. Just on the SkyWest segment side, the year-over-year improvements, is that just driven by the growth and you getting the E175s and maybe the profitability improvement on the pro rate side or are there other things happening on that entity as well?

No, I think that there's been some good, candidly, some good discipline cost management on the SkyWest side. It has been the removal of the EMB120s, as well as some modest growth on the 175s. It's those three are the key elements on the SkyWest side.

Got it. And then on the ExpressJet side, just looking historically, it seems like you're getting -- your losses are now closer to what you saw in 2012. Is it fair that we've kind of gotten back to the level where maybe we were at 2012? And then going forward, just how much is control, though? Because you've done a lot of good work in improving the operations, and I would think that was the most controllable aspect of it. Is there a lot more that can be done there? And then, on the reworking the contract side, just how much can be done in the near term?

Yes. So I mean, Savi, that's a great question. So as far as expectation going forward with ExpressJet, not having references to 2012 right at hand, I think we're, with what Rob has talked about what they came in at, we are very optimistic about the direction of where they've been and where they are.

There were a couple of variables out there that we will probably get more of an update in Q3 on what's going to take ExpressJet from still losing money in 2015, to the next level of making sure they can break through in the black on a long-term basis.

But when you talk about what still can be done there, I can't say enough about the operating performance and what the teams have done out there to be, candidly, the best in the industry. And Alex and the team and everybody's done a fantastic job of that.

The key element of this, though, is that I think that we've developed a lot of credibility and opportunity with the major carriers over the last 18 months with ExpressJet. And I think that they've recognized the value in that.

And we'll probably give some more visibility in Q3 relative to these things. But it's a good opportunity to make sure that we do some things with several stakeholders in the Company to make sure it's a long-term, sustainable, profitable entity. But we're optimistic about all of those things.

Got it. And then I'm sure you had your fair share of pilot questions, but I just have one more.

If you were to win kind of additional flying with United or American, I know who are both probably looking for additional flying at some point here in the next 12 months, do you have the pilots to be able to address that, any such growth?

I would respond to that, Savi, that it depends on the circumstances. I think that we, again, we have some fleet flexibility. Any future flying opportunity that we're looking out for in the short term is primarily based on existing pilots that we have today and not on the assumption that we need to go and recruit them and bring them in.

So if the question is, do we have the pilots, we have a lot of pilots today. And our strategy would be to be disciplined and use our fleet flexibility to our advantage in any of those opportunities.

All right. And then last one for me. Just on that 10% margin, how aspirational is that? Like what kind of a scenario or what needs to be achieved to be able to get to that level on a system basis?

I think when you say what needs to be achieved, you can see that we are, I think we're seeing improvements that we have to be patient about. I mean, I think we've noted that we're optimistic about 2016. We're seeing some modest improvement in 2016.

It really is, honestly, Savi, a little bit circumstantial about what we see, the marketplace, moving with and what the partners want and how we can deliver that.

So if I were to give you a list of three things of what it would take to get there, they probably wouldn't be the most accurate.

There's no question that the best way to do it is to take what we still have is a portfolio of unprofitable flying and turn it profitable. And then where that lets us be in the mathematical equation of that margin, we're not necessarily focused where that lands us as much as we are making sure we get done more of the granular things that we need to to continue to get it moving in the right direction.

All right. Great. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Childs for any closing remarks.

Okay. Thank you again very much for your interest. We're very pleased that you take an interest in our company.

Again, we're very positive about the strategy that we started about 15 months ago. And we're extremely appreciative of the good, hard work that our 20,000 aviation professionals throughout the Company continue to provide to help us to continue to develop this model that we think we can develop to be a profitable, sustainable entity.

And we will talk to you again in another quarter. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.