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spk03: Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the SkyWest Incorporated first quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star 1. Thank you. It's now my pleasure to turn the call over to Mr. Robert Simmons, Chief Financial Officer. Sir, please go ahead.
spk01: Thanks, everyone, for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer, Wade Steele, Chief Commercial Officer, and Eric Woodward, Chief Accounting Officer. I'd like to start today by asking Eric to read the Safe Harbor, then I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results, then Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our cell site analyst, Eric.
spk02: Today's discussion contains forward-looking statements that represent our current beliefs, expectations, and assumptions regarding future events and are subject to risks and uncertainties. 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 2021 Form 10-K and other reports and filings with the Securities and Exchange Commission. And now I'll turn the call over to Chip.
spk04: Thank you, Rob and Eric. Good afternoon, everyone. Thank you for joining us on the call today. Demand for SkyWest product during the first quarter remained exceptionally high, with our main constraint being the crude imbalance we discussed last quarter. Following our efforts to stabilize after the industry-wide challenges of Omicron at the beginning of the year, the first quarter results were slightly better than we anticipated. We reported pre-tax income of $25 million and that income of $18 million. The improvement was in part due to stronger March production and maintenance costs better than anticipated. We expect to place 46 new E175s into service within the next 12 months. putting us at 240 E175s in service by early next year. Our refleeting that has been in progress for the last several years continues to be a priority as we execute on our long-term strategy. During the first quarter, 78% of our block hours were flown utilizing our dual-class fleet. While demand is solid, we're facing headwinds as the pandemic transitions to endemic. SkyWest is fortunate to maintain a robust hiring pipeline and strategy for all work groups and to have new hire pilot classes filled through the summer. We have long been preparing for an increase in mainline pilot retirements. However, the 6,000 early retirements taken at the majors during COVID and the steep demand recovery has resulted in a new, much higher demand for experienced SkyWest pilots, particularly captains. This demand has created an imbalance of pilots here and across the regional industry. Of course, pilot attrition was anticipated and planned for in our models and strategies. However, rapid increase in captain attrition was not. With the return to travel and the new industry-wide demand has resulted in SkyWest pilots being the most sought after in the industry. As we discussed briefly last quarter, we've taken a number of steps to address this imbalance. First and foremost, we continue working with our major partners to manage and reduce schedules to ensure we're able to deliver a solid and reliable product. We have worked with our pilot group to implement upgrade and captain retention incentives. We're also offering our pilots sustainable career pathways, including guaranteed pilot interview programs for our captains. Altogether, these programs provide more stability, opportunity, and options than any other regional carrier can provide. Overall, these discipline strategies work with both our partners and our pilot group have already begun producing results. But given the timing required for training and upgrades, this imbalance will likely constrain production into late 2023 to early 2024. We will make continued improvements and investments in our captains and working together with our people to ensure we remain the best positions to manage this imbalance aggressively. With 46 new E175s going into service by early next year, we continue to play the long game. We've embedded flexibility within our prorate model to allow for the flex up and down of our prorate flying and are utilizing that flexibility going forward to significantly reduce prorate so that we can continue to deliver the highest reliability across our operation. We made the very difficult decision to file a 90-day termination notice with the Department of Transportation for 29 communities as we work through our staffing imbalance. We're also evaluating various other options to ensure these markets maintain connectivity to the broader national transportation infrastructure. With an existing investment in Southern Airways, we expect to explore more ways, including other Part 135 options, to help maintain the strong and reliable air service that so many small and medium-sized markets rely on. We're honored to be one of Forbes' best large employers for the second year running in 2022. The past couple of years have been incredibly challenging for all of our teams And our ability to work together with our people is the reason for our success. I want to thank our nearly 15,000 employees for their dedication and teamwork. While demand for our product has never been stronger, the current staffing imbalance and ongoing refleeting doesn't allow us to monetize that demand in the short term. While the environment is similar to what we discussed a couple of months ago, we've made progress in finding new ways to improve our outlook. We expect 2022 production to be reduced by about 5% from 2021 production, slightly better than we previously thought. We expect the second quarter will be better than the first quarter, with the second half of the year lower than the first half due to the crew imbalance. There are three components in the environment today that give us great confidence in SkyWest as an investment. First, there is undoubtedly massive demand for regional flying. As people migrated away from urban areas to small and medium-sized communities during the pandemic, these communities have an even greater need for connection to global networks. Second, our strong pilot pipeline and our ability to attract, train, and retain captains is far greater than our competitors and will continue to get better. And third, SkyWest asset value is unparalleled in the market. Our disciplined approach over the last decade in acquiring profitable assets at strong economics will enhance our ability to meet our objectives in this new economy. Although we expect the recovery will remain choppy as we work through some headwinds over the next couple of years, we remain aggressive and deliberate in the steps we're taking now to ensure we're well positioned for 2024 and beyond. Rob will now take us through the financial data.
spk01: Today we reported first quarter gap net income of $17.7 million, or 35 cents diluted earnings per share. Q1 pre-tax income was $24.8 million. Our diluted share count for Q1 was 50.7 million shares, and our effective tax rate in Q1 was 28%. First, let's talk about revenue. Total Q1 revenue of $735 million is down 5% sequentially from Q4 21 and up 38% from Q1 2021. Q1 revenue breaks down with contract revenue down 2% from Q4 2021 and up 42% from Q1. Pro-rate revenue was $79 million in Q1 down 28% from Q4 21 and up 15% from Q1 2021. Leasing and other revenue is up 7% sequentially and 16% year over year. These gap results include the effect of a release of $11 million of deferred revenue this quarter compared to $23 million released in Q4 and $21 million that was deferred during Q1 2021. As of the end of Q1, we have $84 million of cumulative deferred revenue that will be recognized in future periods. As discussed last quarter, the timing and amount of future deferrals or reversals into revenue depends on the shape and cadence of the recovery of our flying. All deferred revenue will be reversed into revenue by the end of the various contract periods. Let me move to the balance sheet. We ended the quarter with cash of $856 million, essentially flat from $860 million last quarter. Our CapEx during the first quarter was $114 million for four new E-175 aircraft and other fixed assets. Total 2022 CapEx is expected to be approximately $800 million, including the purchase of 28 new E-175 aircraft compared to $556 million in 2021. We ended Q1 with debt of $3.2 billion, up slightly from $3.1 billion as of year-end 2021. Just a reminder that the only government debt we have on our balance sheet is a total of $201 million in PSP 10-year unsecured no amortization low coupon loans. Let me say a couple things about liquidity. As of March 31st, 2022, our cash position of $856 million included the effect this quarter of having repaid an incremental $94 million of debt before adding $83 million of debt financing for four new E175s and $103 million in engine financing. We also have over $1 billion of unpledged collateral that could be deployed for additional liquidity if ever needed. As of the end of Q1 2022, our debt net of cash balance is lower than it was pre-COVID at the end of 2019. Additional flexibility comes from the fact that including partner-owned aircraft, over 50% of our fleet in service now has no financing obligations. Especially in volatile times like this and consistent with our policy and practice, we are not in a position to give any specific EPS guidance at this time. But let me give you a little color. First, at this time, we expect 2022 to be better than we thought last quarter. Last quarter, we thought that 2022 could show break-even profitability. We now expect to be profitable this year. Q1 results were slightly better than expected for a variety of reasons referenced earlier by Chip, including optimizing our schedules by aircraft type and strong demand that we monetized opportunistically. The Q2 schedules currently in place would indicate that Q2 earnings and production will likely be better than Q1. The second half of 22, however, will likely be worse than the first half of 2022, with the second half of 2022 approximately breakeven to slightly profitable because of projected capped attrition. We don't expect to have this pilot imbalance challenge mitigated until the back half of 2023. Second, we expect block hour production in 2022 to be down less than we thought last quarter compared to 2021 production while still being limited by the pilot staffing imbalance. Last quarter, we estimated that 2022 block hours would be down 10 to 15% compared to 2021. We now believe that number could be closer to 5% down for 2022. We continue to expect to focus on growing our ERJ fleet and pulling down some of our CRJ fleet. We won't see the full year impact of the 47 accretive new E-175 aircraft going into service in 2022 and early 2023 until 2024. Fourth, we will continue to focus on liquidity and expect to end 2022 with a strong cash balance in spite of a strong delivery pipeline of 28 accretive new E-175s this year. We believe that the actions we are taking now to invest in the growth of our ERJ fleet, work through the pilot imbalance affecting the industry, and preserve the optionality of monetizing strong demand opportunities over time will position us strongly in the regional sector. Wade?
spk05: Thank you, Rob. I'll provide a fleet and production status update as well as an update on our prorate and leasing businesses. We continue a strong delivery schedule this year as we discussed in recent quarters. We previously announced an agreement with Delta for 16 new E-175s to replace 16 older SkyWest-owned CRJ-900s. We anticipate these E-175s will be placed into service beginning in the middle of this year through the first part of 2023. After we receive these aircraft, We will have 87 E-175s under long-term contracts with Delta. Under our American contract, we have 20 new E-175s scheduled for service throughout this year. We have received 18 of those aircraft during the third and fourth quarter of 2021 and will receive two in the middle of this year. We have an agreement with Alaska to add 11 E-175s to our contract. We expect to place 10 of those aircraft into service this year and one more during the first half of 2023 for a total of 43 aircraft under long-term contracts with Alaska. Clearly, demand for our E-175 product remains very strong. Following delivery of those currently on order, our E-175 fleet will be 240 aircraft. Let me review our current production. Based on the current schedules we have from our major partners for the second quarter of 2022, we anticipate that our block hours and revenue will be up slightly from the first quarter. As we look to Q3, we anticipate that our second half block hours will be down from the first half of this year. Let me talk a little about our prorate business. As we've discussed, we are experiencing a crew imbalance that is impacting our ability to fully meet the strong demand for our product, and we have intentionally built flexibility into our prorate model to flex up and down with our operating resources. As a result of this imbalance, during the first quarter, we filed a 90-day notice with the DOT to discontinue service to 29 essential air service communities. This was a very difficult decision and one we would have preferred not to make. We have been serving most of these communities for several years. We continue working through this challenge and remain committed to helping find a good solution for these communities. Additionally, as Chip said, we own part of Southern Airways, a Part 135 airline. and we expect to explore ways to work with additional airlines flying under Part 135 towards a viable solution for these communities. Shifting gears to our leasing business, we currently have 39 CRJ700s and 900s under long-term leases with third parties. This line of business has very good cash flow and strong margin characteristics. Demand for our engine leasing business is returning, and we anticipate placing several engines under long-term leases this year. We have a strong delivery schedule this year and will continue working efficiently to allocate our resources as we optimize our fleet mix. We have spent the last several years reducing risk and enhancing fleet and financing flexibility to ensure we're well positioned. This flexibility will continue to be a differentiator for us and we are committed to continuing our work with each of our major partners to provide creative solutions.
spk01: Okay, operator, we're ready for our Q&A.
spk03: At this time, I would like to remind everyone in order to ask a question, press star followed by the number 1 on your telephone keypad. We'll pause for a moment to compile our Q&A roster. Your first question comes from the line of Savi Sif with Raymond James. Your line is open.
spk06: Hey, good afternoon everyone. Just going off of the block hour kind of outlook looking better, is that because your pilot hiring turned out or pilot kind of training and things turned out better than when you were sitting kind of three months ago or a few months ago? Or was there some other reason that the production was better? And along those lines, I was wondering if you could just give us update on versus earlier to see if attrition rates are getting better, worse, or how you're thinking about it from that perspective.
spk05: Hey, Savi, this is Wade. I'll answer the block hour question. As we kind of went through this quarter and did lots of allocations of block hours and how we're going to do some flying, we were able to optimize it based on some fleet mix changes that we anticipated. We've also found a little bit of stabilization in some of our models, and so it's been helpful for us to be able to predict our block hours a little bit more accurately.
spk04: Savi, this is Jeff. To your second question relative to attrition, I would only... We don't talk a ton about it, but I would say that we're basically flat ever since we talked about it last quarter. Each of the months are running relatively consistently. We anticipate the summer will be a bit lighter and then it will pick up again strong in the fall, so that's just some general direction of where we are. All of that being said, we continue to be able to outpace it through our pipeline, and so At this point, the imbalance continues to be something that we are aggressive about addressing, but a lot of it is mathematics about making sure we get enough flight time for the FOs to become captains.
spk06: Can I follow up on that, Chip? Do you need to invest in the training footprint to make it larger, or are you getting enough FOs in the door, and it really is about just a timing issue as you have to spend time to then kind of build that captain pipeline?
spk04: Yeah, Sabi, the major thing is time. You know, if you go back to when we were not doing a lot of flying, I mean, this is pandemic generated, combined with just massive demand, you know, with the major carriers. And like I said, the 6,000 retirements, all of that's creating a bit of a perfect storm. But the major component of This is going to be time to make sure that we can get the time and experience for these first officers to upgrade. We do have a strong complement of first officers that could upgrade to captain. We're working on some programs to enhance, you know, how we take care of our captains. I will say it will be a good day to be a captain at SkyWest as we continue to work through that for the rest of this year. And we've got a lot of opportunities to move the dial here, but we need to continue to be extremely aggressive in our approach.
spk06: Just one follow-up to that. As the costs go higher on that, are you a partner sharing in that cost, or is that something that in the near term you do see that in the expense, and over time as contracts get negotiated, that will eventually be a pass-through?
spk04: I would suggest that as demand is strong, we are certainly not going to have immediate recovery for some of the things that we would like to do with captains. It is going to be some short-term pain in nature. But we have a strong strategy of how we will manage the contracts. And our partners are very engaged in this process as well. And so we're going to do it for long-term sustainability and look for the long game as we usually do. Back to your previous question, I wanted to also emphasize this is not a training capacity problem. Relative to what our outlook is, we're not going to be constrained in any of the SIMs or facilities or any of that nature. This is just mostly making sure we get the experience for the first officers to upgrade.
spk06: I'll get back on the queue. Thank you.
spk03: Again, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from Catherine O'Brien. Sorry, your next question comes from, again, from Savi Sis with Raymond James.
spk06: All right, thanks. Just on the part 135 options, is that something that you are kind of looking to just partner with? And I guess I didn't realize that you had a stake in kind of Southern Airways, but just is that something of you to just partner with, or is there an option to kind of bring in more Part 135 flying within SkyWest?
spk04: So fundamentally, you know, we're a 121 certificate. We do not have a 135 certificate. So we actually have been working with a lot of 135 operators and utilize them very strong within our existing pipelines. As Wade mentioned, when we unfortunately had to notify the Department of Transportation, the 29 cities that we needed to pull out of, these were profitable cities. Some of our strong profitability, these are great markets. It's just impossible to serve those with the other contractual obligations that we had. So to be candid, when we went through the process, our emphasis is going to be to make sure these communities are well served at the same level of of safety and quality that we have because we've invested tens of millions of dollars in all of these cities, and we hate leaving these markets. So to the extent that we've been working with some 135 operators to help backfill and have a smooth transition, it continues to enhance some of our existing thinking with CRJ200s, and we have plenty of those that are not doing anything today, and there's a lot of 135 operators that are certified to fly the CRJ200, At this time, we don't anticipate supplying it with pilots, but there's some good opportunities with 135 operators to help utilize that asset and product to backfill some of the things that we've been doing. As you know, for several decades, we've been the leader with the CRJ200 product. We've got great engine deals. They're paid-for assets, and there could be some opportunity here, but it's still It's still relatively early, and we'll update you more probably next quarter on some of the things we can do here.
spk06: Chip, just taking a step back, the industry has kind of gone through several shifts. I think the last time was 2012, 2013, 2014 timeframe when some of the rules changed. Do you see any kind of longer-term changes? kind of implications of what you're seeing today. It does seem like it's kind of a near-term issue, as you mentioned, as a result of the pandemic. And we will kind of normalize at some point. But does this cause for kind of maybe for our partners thinking about consolidation more? Are there any kind of longer-term implications? And is there a chance that like how many 50-seat RJs will be flying in 2024 coming out of
spk04: coming out of this? Well, there's a lot of questions in there, so I'll try to address as many as I possibly can. I think to the latter part of what you asked, how many CRJ-200s could be flying in 2024 remains to be seen. 135 operators certainly have a different level of flexibility than what we do. Back to some of your earlier points, we're actually not looking to, you know, modify any law, particularly with, you know, 1,500 hours is a component that's out there. We think it's a terrible way to train pilots, but we don't think that the reality of, you know, what's happening in D.C. is going to necessarily, you know, make a move in that area. But it also, in certain, you know, that rule has probably put us where we are with captains, because if we didn't have that rule, we would probably have more captains and better trained captains by now. But at the same time, I think that given the situation that we're in, we're going to be aggressive in a multitude of other areas to address this. And like I said earlier, the CRJ200 with some potential 135 operators is one of those, but there's a lot of 135 operators that don't. By the CRJ200, they're going to be exceptional in servicing some of these existing cities. I think there's a lot to remain to be seen with single class aircraft in the near future. Going back to my main point, though, demand for small cities is extraordinarily strong and probably is going to get stronger by 2024.
spk06: And then if I might just ask one last question on the maintenance side. We were expecting maintenance to come down. It looks like maybe it came down a little bit faster. Was that a timing issue? Are you seeing any kind of improvements on how you're thinking about the maintenance front? And maybe some of it is just as you fly less as well, that that's helping.
spk05: Hey, Tavi, this is Wade. So yeah, we've been talking about our maintenance expense coming down for the last several quarters. And we've made very large investments over the past couple of years in our fleet, both in engines and airframes. And we're starting to see the dividends of that. We've also, you know, as part of what we've been doing, we optimized, we've been optimizing our maintenance expense to what we think will be flying in our fleet for the rest of the year. And so, yeah, we will continue to see, you know, maintenance approximately at these levels throughout the rest of the year.
spk06: Excellent. And then just, I apologize, one last question, and maybe for Rob. Just, you know, CAPEX seems to have come down a little bit of, expectations, but maybe I have that wrong. Any kind of revised thoughts on kind of capital use and just cash flow, given that it might take longer here for things to recover?
spk01: No real changes, Savi. I mean, we've got, you know, these 28 new E175s that are the bulk of the 800, you know, plus million dollars of CapEx that we expect to do this year. Obviously, Given the number of new deliveries, which we're obviously very excited about, CapEx is a little heavier than normal this year, but for great reasons.
spk06: Got it. All right. Thank you.
spk03: Your next question comes from the line of Katie O'Brien with Goldman Sachs. Your line is open.
spk07: Hey, good afternoon, everyone. Sorry about that. I was anxious and pressed star one again and accidentally took myself out of the queue for that last one, but got quite a few here, so I'll get started. So I guess, you know, pilot shortage, major theme on every call this season. I guess first, just a follow-up to Sabi's question, can you just give us some more details on, like, what exactly were you able to optimize in terms of, like, your aircraft allocation, to be able to reduce there's been a 10-point improvement in your block hour production for this year. That just feels pretty significant. I guess that's the first one.
spk05: Katie, this is Wade. The biggest thing we did was just looked at our training footprints and how we're training folks, what we're doing, what aircraft we're putting them in, making sure that it's the most efficient training footprints that we can. We've made some very good progress during this quarter on on optimizing both our training footprints and where we are going to be, what airplanes we are going to be flying, and made some decisions to say these are the levels we're going to be flying, and it helped out on some other aircraft types. And so a lot of it's just with the training footprint, which airplanes we're going to be prioritizing, and really getting our pilot professionals through the training footprints as quickly as we can.
spk07: Okay, got it. And then, you know, I know there are going to be a lot of puts and takes, but given the trends you're seeing now on attrition and your training for puts and an ability to build your pipeline, when do you think you'll have the pilot, you know, roughly to get back to 2019 block hour production? Or is there a chance you're going to be a smaller company on a fairly longer term basis?
spk04: So, Katie, that's a great question. This is Chip. And I think that our perspective is to be prepared for a wide range of outcomes. I think that when you look at what we're focused on, we've kind of indicated in the script the way the math works under existing attrition models as well as what we have from a comfort level within the hiring pipeline and the data around first officer upgrades particularly coming out of a pandemic, the data is pointing that we can recover and get the pilots we need starting late 2023 and going into 2024. So at that point also, Katie, you can imagine that our fleet looks entirely different in 2024 than it did in 2019. A lot more dual-class aircraft, a lot less single-class aircraft, So, you know, again, I think the main element here is we're looking at a wide range of opportunities. Demand is driving us from a business perspective to take a look at our assets that are, you know, particularly in this economy, well-priced, well-financed, and it's given us some good flexibility to determine what we want to do, you know, through some of these challenges. And I think that from our perspective, we're We are tooled and have the right things on our side to make sure that we can capitalize on some very good, strong things as long as we're disciplined and aggressive by the time we get to 2024.
spk07: Okay, that's great. And so maybe just a real, you know, a related one coming off from the Satya Share Chip. You know, I know you've given us some color on earnings per share trajectory for this year, but as we think, you know, theoretically about what it takes to get back to 2019 margins, you know, what are the puts and takes? Do we need to wait to the end of 2023 to get closer back to block our production? Or, you know, given the fact that some of the hindrances that your labor force is smaller, right? So the costs that have come out of the system and some other adjustments you've made, in addition to, you know, deferred revenue recognition, and to your point, like, higher concentration, more profitable due class aircraft, like, Could we get back to 2019 margins before we get back to 2019 block hour production? I know it's a packed question, but we'd love your thoughts. Thanks.
spk01: Well, hey, Katie, this is Rob. So I would say, you know, that just a reminder that the biggest tailwind we've got right now, again, is the strong demand that we keep referencing. So, you know, it's not a demand-driven shortfall at this point. It's a constraint of resources. So, Again, as we talked about, the next few years are going to have sort of different cost structures from a labor standpoint. There's no question about that. But I think there are a lot of good things happening. We're investing for the long term. The airplanes that we're putting into service over the next year or two are going to start reading through to our margin and our results starting in 2024. So, I mean, look, I can't tell you when or if our margins will be back to 2019 levels, but I can tell you that there's a lot of good things that we're seeing out there, and we're in a position to be able to invest for that long game in a way that maybe others aren't able to do.
spk07: Got it. And then one more, if I could. think for Wade, probably just, you know, speaking to another one of Chip's points on, you know, well-priced assets, can you give us an update on where you see opportunities to grow your leasing business if you do think there are growth opportunities? I know you mentioned some incremental engine opportunities during the prepared remarks, but, you know, what is the potential pool of aircraft and engines you're looking to lease over the next year or two look like? You know, I'm just trying to think through, like, Aircraft supply is also a bit tight right now. Maybe there's more demand, but then you've got maybe some offset on pilot availability driving some decisions with some of the third parties you're looking to do this with. So just any color would be great. Thanks so much.
spk05: Yeah, Katie, this is Wade. So there's a couple of new and interesting kind of opportunities as we've kind of started to explore – you know, different opportunities out there. A lot of these 135 carriers are definitely reaching out to us about our existing asset base, right? As Chip said, we have over 200 CRJ200s that are extremely well-priced. They've been maintained by the best airline in the country for, you know, 25 years. We have the best engine agreement. And so there's been very good demand from a lot of carriers a lot of small airlines associated with our CRJ platforms. And I'll tell you, the engine interest in that fleet is also extremely strong. We have a very good engine agreement with our OEM, and a lot of the smaller airlines just don't have the size and the buying power that we have associated with that fleet. And so those are probably, those are two very good opportunities right there for us. And then as you look at the engines that are on the 700s, the 900s, there is a very large wave of engine events coming for the industry in the next couple of years. And SkyWest has invested heavily in those engines during 2019, during 2020, during 2021. We made very large investments in those and we are very well prepared for that. We've had a lot of interest from other airlines in potentially helping them through their wave and their model. Hopefully, they could avoid engine events by leasing from us. There are some pretty good opportunities out there, both on our CRJ200 and then the engines associated with the 7th and 900s.
spk07: Really interesting. Thanks for all the time, gentlemen.
spk03: Thanks, Katie. If there are no further questions at this time, I would like to turn the call back over to Mr. Chip Childs.
spk04: Thanks, Brent. Thank you all for joining us on the call today. We really appreciate your interest in SkyWest. I'll close by saying that despite the headwinds, we're facing demand again and strong, and we have the resources and strategy to navigate the long game. And again, I want to thank our people for their great work and continued flexibility. With that, we'll end the call, and we'll talk to you next quarter. Thank you.
spk03: Ladies and gentlemen, thank you for your participation. This concludes today's call. You may now disconnect.
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