Global Crossing Airlines Group Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Global Crossing Airlines financial results for the third quarter of 2024. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Joining us today are Chris Yamros, Executive Chairman of Global Crossing Airlines, and the company's President and CFO, Ryan Coppell. Please be advised that this conference will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filing with the SEC. Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. expect as required by law, the company undertakes to obligate or publicly update or revise any forward-looking statements. The company's presentation also includes certain non-JAP financial measures, which including EBITDA as supplemental measures of performance of the business. All non-JAP measures have been reconciled to the most direct comparable GAP measures in accordance with SEC rules. You will find reconciliation tables on other important information in the earning press release and form 8K furnished to the SEC yesterday, which are currently available in the company's Edgar page on the SEC's website and will be available on the company's investor relations section of its website within approximately 24 hours after this call has ended. And now I'll turn the call over to company's executive chairman, Chris Amross. Chris, please go ahead.

Good morning, everyone, and thank you, operator. Thank you for everyone joining us. Third quarter results highlight the resilience and adaptability of our operating model with another period of year-over-year growth and improved profitability on a per aircraft per hour basis, which is a key metric we track in our business. Our operational model proved its strength and adaptability in September, handling unforeseen maintenance challenges caused by severe weather, multiple bird strikes, and damage from a third-party vendor. It is absolutely unprecedented that an airline would have effectively lost more than a third of its fleet in a single month. But thanks to the efficiency and resilience of our processes, the competence of our management team, four of the five effective passenger aircraft were back in service by early October. I should mention that all those events impacted our cash cow, which is our passenger side of the business. The robust framework allowed us to minimize disruptions for our customers and maintain momentum despite these unprecedented and unexpected hurdles. Over the past year, we've remained focused on our vision of becoming the largest charter airline in the U.S. with a commitment to leading the industry in on-time performance and reliability. This objective is core to our strategy and central to earning the trust and loyalty from our customer and partners. And despite these challenges, we have not lost momentum on that front, and Ryan will tell you more about that. We've concentrated on strengthening our core operations, improving processes, and fostering strong, lasting relationships while expanding our fleet to meet the rising demand, which is absolutely key to our strategic growth strategy. By enhancing operational efficiency and building capacity, we are well positioned to capture growth opportunities and provide consistent dependable service on a go-forward basis. Before I turn over to Ryan, I want to reiterate our commitment to maximizing shareholder value through scalable growth and improved profitability. By sharpening our focus on corporations, we are building a robust business model geared toward a long-term success. And with that, I will now hand it over to Ryan, our president and CFO, to elaborate on GlobalX's third quarter operation and financial highlights. Ryan?

Thank you, Chris, and good morning, everyone. As Chris mentioned, we experienced several unforeseen events in September that took approximately 35% of our fleet offline for almost two weeks. The reduced fleet availability impacted our revenue, required a spike in non-revenue flying, and additional subservice to cover obligations driving the majority of the loss reported. Despite the challenges we faced in the quarter, we still delivered double-digit revenue growth with record block hours flown. Our strong top-line growth was driven by our ACMI business, which almost doubled to 37 million in revenue compared to the year-ago quarter. The growth in ACMI was preliminary driven by the increase in our fleet, continued strong customer demand, and further growth in a key government-agency relationship. We also shifted aircraft from our charter segment to ACMI as it tends to be long-term, predictable work driving higher margins. As a result of the shifts, charter revenue decreased 31% year-over-year to $15 million. During the quarter, we booked a record 8,064 block hours, including subservice, between ACMI and charter, which is a 17% increase compared to the year-ago period. On a sequential basis, we generated a 15% increase in block hours flown, reflecting our ability to win new business and effectively deploy our fleet. For ACMI and Q3, we booked 6,571 block hours, an increase of 42% compared to Q3 of 2023. For charter, we booked 1,254 block hours compared to 2,256 in the year-ago quarter. Due to the maintenance events discussed earlier, we saw a decrease in the average utilization for aircraft compared to the year-ago period. More specifically, passenger aircraft utilization was down 7% from 735 hours in Q3 to 594 hours per aircraft in Q3 2024, which is also a byproduct of our two aircraft operating in Europe at 400 hours each per month being a smaller percentage of the fleet in 2024 versus 2023. Cargo utilization was down 77% from 450 hours to 101 hours due to the loss of the U.S. Postal Service contract that was canceled as part of the move from FedEx to UPS. On a sequential basis, total aircraft utilization grew 7% to 491 block hours per available aircraft. As I mentioned earlier, we have purposely shifted our revenue mix to prioritize ACMI as it carries higher utilization per aircraft in a month with the minimum hour guarantees and hence a higher margin profile compared to one-off charters. As a reminder, while ACMI typically generates lower revenue per flight hour than our charter services, it also comes with reduced costs. as the customer covers expenses like fuel, demand and price risks, and handles landing, airport, and other operational fees. We are seeing accelerating momentum in the passenger market, resulting in higher utilization rates across our passenger fleet. This growth is driven and fueled by several key factors, an ongoing supply shortage, reduced direct competition, and a rising demand for air charter services amongst colleges, corporate groups, and other organizations seeking flexible travel solutions. Together, these dynamics are driving sustained, robust growth in the passenger segment, underscoring its critical role in our broader strategy. To generate sustainable growth, it's critical that we consistently examine our business to optimize our cost structure and unlock operating efficiencies. This is reflected by our growth and average revenue per block hour. For ACMI, we generated an average of $5,607 per block hour, which is an increase of 37% over the prior year quarter. Per charter, average revenue per block hour grew 24% to $11,951 compared to $9,672 in Q3 of 2023. These gains are primarily achieved through successful renegotiation of key contracts for higher rates, a strategy that reflects our commitment to maximizing revenue per block hour. By securing more favorable terms, we're able to capitalize on the increasing demand and beneficial market conditions While we continue to leverage this approach as a cornerstone of our growth strategy to derive sustained improvements in revenue and profitability across our fleet. In the third quarter, we took delivery of two additional aircraft, one 320 and one 321 passenger aircraft, bringing our total fleet to a total of 18. We expect to take delivery of our 19th aircraft in December, and as of today, we have signed letters of intent for four additional aircraft, which we expect to bring online in the second half of next year. Commenting on the leasing market, it is impacted, in my view, by higher than normal engine values due to the strong demand for engines. My personal view is the demand for older aircraft that we will target will start to soften in 2025, and we are looking at opportunities to not only lease but purchase aircraft or airframes to strengthen our balance sheet going forward. In September, we announced a new partnership with Airblocks, a digital platform for air freight capacity and financing. Through this partnership, we operated round-trip cargo flights between Chicago and San Juan three times a week. This service, which is exclusively available through the Airbus platform, utilizes state-of-the-art Airbus A321 freighter, offering 25 tons of capacity in each direction on Tuesdays, Thursdays, and Saturdays. During the quarter, we did not have a couple of additional flights, and we're looking to add to that schedule throughout the fourth quarter. The A321 freighters deliver 14% more containerized capacity than the 757-200, along with a 19% reduction in fuel consumption. This combination allows us to offer industry-leading pricing and operational efficiency. We are thrilled to partner with Airbox and look forward to building a mutually beneficial partnership. To achieve our long-term vision at GlobalX, it's essential to bring executives aligning with our goals, and high-performance culture. With that in mind, October, we welcome Lori Villa as our Chief People Officer to lead our human capital management functions. Lori's role will focus on recruiting, developing and retaining top talent, supporting crew and team member relations, driving performance management, and fostering a culture rooted in our core values to support our rapid growth. With over 30 years of global leadership experience, including roles as the Chief People Officer at JetBlue and a Chief Human Resource Officer at Spirit Airlines, Lori brings a wealth of experience to GlobalX. We're excited to have her join us and look forward to her invaluable contributions. During the quarter, we made considerable progress in strengthening our partnerships with both new and existing customers, fostering deep relationships and aligning our services more closely with our needs. To start, our Top Flight Charters team has secured contracts with more than 10 college basketball teams for the 23-24 season beginning this month. This is a notable increase compared to last season and reflects our strength and reputation in the collegiate sports sector and our team's ability to meet the unique demands of high-profile athletic programs. In our cargo business, we have already secured full bookings for three of our four cargo aircraft in the fourth quarter, positioning us well to capitalize on the traditionally high demand driven by the holiday season. This advanced booking reflects both the reliability of our cargo operations and the trust our clients place in us to support the critical seasonal needs. For our international business, we operated in the quarter 1,600 block hours in Europe using two aircraft in Q3. We are planning to expand our European operations with a third aircraft in 2025, enabling us to meet the rising demand and better serve our clients across the region. This expansion underscores our commitment to strategic growth and simplifies our presence in key international markets. For the U.S. government, we operated over 4,500 block hours in the third quarter, which includes almost 250 hours for the Department of Defense a relatively new customer to ours. Now turning to the financial results. Please note that all financial results discussed today or over our three-month period ended in September 30, 2024, while various commentaries on a year-over-year basis unless stated otherwise. Revenue in the third quarter increased 23 percent to $52.4 million compared to $42.6 million in a year-ago period, driven primarily by higher block hours flown and aircraft fleet expansion. as well as the increased revenue per block hour for both passenger ACMI and charter. Charter revenue in Q3 was $15 million compared to $21.8 million. ACMI revenue increased 93% to $36.8 million compared to $19.1 million. Total operating expense was $54.9 million compared to $44.9 million, driven primarily by our higher aircraft rent and personnel costs associated with the expansion of our fleet, as well as higher travel costs related to the expansion of the government contract. Net loss is flat at 4.9 million compared to the year-ago quarter. Net loss per share remained unchanged as well as a negative 8% per share . EBITDA increased approximately two times to 15.4 million compared to 7.6 million, driven primarily by the increase in revenue, improved operating margins, and higher average rates for block-hour phone for both passenger and charter, turning to a liquidity. We ended the third quarter with cash and restricted cash at $7.8 million compared to $10.4 million at June 30, 2024, and $17.7 million at December 31, 2023. We're targeting to get that number over $10 million by year-end. With that, we remain comfortable with our liquidity position, which gives us a runway we need to execute on our growth profitability objectives and turn it to cash flow positives. Looking ahead to Q4 and full year 2024, we are forecasting a revenue range of $55 to $61 million and annual revenues driving annual revenues of $218 to $224 million. Annually, this would represent a 34 to 40% increase compared to full year 2023. On an EBITDA basis in Q4, Q4, we're forecasting a range of $16 to $19 million and for the year, $60 to $63 million. This annual growth represents 195% to 215% increase over full year 2023. These results will be impacted by the level of flying, which is difficult to predict, and could be improved if we're able to bring online our 19th aircraft or pair of damaged aircraft sooner than estimated. That being said, all of our passenger aircraft through August of next year are effectively spoken for. It is a matter of us determining what is the best market for us to expand into and what can be done to increase the utilization per month for aircraft. Our focus is all on about how we get that last 20 to 30 hours per aircraft per month sold in places where we have gaps in our schedule as those last 20 to 30 hours are highly accreted. Over the last year, we've built a solid foundation to drive sustained growth and profitability with our expanding fleet, growing customer base, and continued strong demand for ACMI operations. We are well-positioned to close out 2024 on a strong note and deliver another record year in 2025. This concludes our prepared remarks. I now open the call for Q&A. Operator, back to you.