Global Crossing Airlines Group Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's conference call to discuss Global Crossing Airlines financial results for the fourth quarter and full year of 2024. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Joining us on the call today are Chris Jamros, Chief Executive Officer of Global Crossing Airlines, and the company's President and CFO, Ryan Gospell. Please be advised that a conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. The 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 filings 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. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements. Please refer to the company's earnings press release for important risks and assumptions associated with such forward-looking statements. The company's presentation also includes certain non-GAAP financial measures, including adjusted net income or loss. EBITDA or EBITDA has supplemented measures of performance of the business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the SEC rules. You will find reconciliation tables and other important information in the press release. and on form 8K furnished to the SEC yesterday, which are currently available on the company's EDGAR page on the SEC's website and will be available to the company's investor relations section of its website within approximately 24 hours after this call has ended. Now I will turn the call over to the company's executive chairman, Christian Ross. Chris, please go ahead.

Thank you, operator. Good morning, everyone. Obviously, after a setback in Q3, a much better quarter. Effectively, what you're seeing here, compounding returns of our focus on execution, professionalizing of operations, improving service quality, and a whole slew of commercial wins coming from the entire spectrum of charter customers. So we are pleased with what we printed in Q4, and I think we are well positioned for future growth, especially as the demand for our charter services is growing, given the fact that we far surpassed the service quality or industry benchmark for service quality for Charter Airline. And I think we are going to dominate that niche of high quality on-time performance and incredible customer service. And then we continue to see a growing demand for overall chartered services, and our platform is the right one, and I think our business model is continuing to prove itself through the cycle. Throughout the quarter, we scaled up our ACMI operations, which has always been I continue because this is high-quality flying. We expanded our fleet, optimized our fleet utilization, and all of those contributed to a meaningfully improved financial results. We continue to top-tier all functions and the leadership team across the business as we are professionalizing operations, like I said, and we're expanding our relationships with commercial customers and government customers across the spectrum. Before I turn over to Ryan, I do want to reaffirm our continued commitment to the path to sustained profitability. We do think that this year is the year that we will shine. We have built the business model. We've reinforced our platform and the strength of our commercial business. is giving us or fueling us with confidence in our ability to deliver on our budgets. With that, I will now hand over to our President and CFO, Ryan Gopal, to elaborate on GlobalX's fourth quarter operational financial habits. Ryan?

Great. Thank you, Chris, and good morning, everyone. As Chris mentioned, the fourth quarter concluded a remarkable year for GlobalX. We achieved the high end of our Q4 and fiscal year 2024 guidance for revenue EBITDA, EBITDAR, and block hours loan. These accomplishments highlight the effectiveness of our management team, our focus on operational efficiency, and the execution of our strategic plan. Our strong revenue performance was driven by the scaling of our ACMI business, which grew more than 3x to $36 million in revenue compared to the year-ago quarter. The growth in ACMI was primarily driven by an increase in our fleet, continued strong customer demand, and further growth in our government business. As we've mentioned before, we've strategically allocated aircraft from our charter segment ACMI to take advantage of its higher margin profile. As a result, charter revenue decreased to $22 million, now accounting for only 36% of total revenue compared to 75% in the same quarter last year. On the other hand, ACMI increased to 60% of total revenue compared to 22% in Q4 of 2023, reflecting the major shift in our business model from charter to ACMI. During the quarter, we flew 7,745 block hours, including subservice between ACMI and charter, a 26% increase compared to the year-ago period, demonstrating our ability to secure new contracts and optimize fleet utilization. In Q4, we increased block hours flown for ACMI by more than 2x to 5,758 compared to Q4 of 2023. For charter, we flew 1,477 block hours compared to 3,395 in the year-ago quarter in line with our strategic shift On the cargo side, we have surpassed 1,600 block hours flown in Q4, marking our strongest quarter of cargo in Global X history. While challenges continue to persist in the cargo market, their impact is less than significantly compared to last year, and we believe we have stabilized the business moving forward. Our average utilization for aircraft available increased 12% to 473 block hours compared to the year-ago quarter. We continue to see accelerating demand in the past-year market driven by college sports teams, corporate groups, U.S. government, and other organizations, seeking flexible travel solutions, along with the ongoing supply shortage and reduced direct competition. This demand is fueling our strong growth in the passenger segment, underscoring its importance within our overall strategy. To ensure sustainable growth, we consistently assess our operations to optimize our pricing strategies and maximize revenue generation. This commitment is reflected in our rising revenue per block hour, highlighting the effectiveness of our strategic approach. For ACMI, we generated an average of $6,191 per block hour, an increase of 47% to the prior year quarter. For charter, average revenue per block hour stayed relatively flat at $11,868 compared to $11,896 in Q4 of 2023. On a sequential basis, we generated a 10% increase in revenue per block hour for ACMI. The increase in ACMI revenue per block hour is primarily driven by contract negotiations that secure higher rates. By capitalizing on strong market conditions and rising demand, we expect to continue driving sustained profitability across our passenger fleet. Subsequent to quarter end, we took delivery of one additional A321 passenger aircraft, expanding our fleet to a total of 19 aircraft. We expect further increases of our fleet in the second half of 2025 by more than 20%. Integrating aircraft into our fleet is complex, multi-step process requiring regulatory certifications and approvals, as well as maintenance checks. Additionally, the aircraft market remains highly competitive with supply constraints driven by increased global demand. Our disciplined approach ensures that we lease new aircraft at the best possible rates while maintaining operational efficiency, positioning for sustained growth and expected profitability in quarters ahead. As part of our long-term strategy, we're beginning to acquire and take ownership of airframes while leasing engines. Airframes have a lifespan of 30 to 40 years, making them durable and valuable asset, providing long-term value and greater control over maintenance and modifications. Whereas engines, given their high production costs, maintenance and market demand, are significantly more expensive to acquire and maintain, making it more cost-effective to lease. This strategic shift allows us to optimize our capital deployment and maintain a strong balance sheet with operational flexibility. To further this initiative, we signed a letter of intent to acquire our first airframe with expected delivery in the second quarter. This marks a key milestone in our fleet expansion plan, ensuring we are well positioned to meet the increasing demand and enhance long-term profitability. During the quarter, we strengthened our relationship with both new and existing customers, by deepening collaboration and tailoring our service to better meet their needs. As part of our ongoing strategy, we're always looking to convert contracts into multi-year partnerships, ensuring sustained growth and stability for our business, while delivering long-term value to our clients. To start, we finalized a contract for this year's college basketball finals tournament, providing four dedicated aircraft for a minimum of $5 million in revenue. Additionally, we flew 12 college basketball teams during the regular season. reflecting our strong reputation in the collegiate sports sector and our team's ability to meet unique demands of high-profile athletic programs. To support this, we customized three aircraft into VIP configurations for the January-February basketball season, enhancing the onboard experience for the teams and their staff. With a total of three VIP-configured aircraft in our fleet, we continue to offer tailored, high-comfort travel solutions for sports teams and other premium clients, further solidifying our position in this specialized market. We've also secured a VIP charter contract to support a world-renowned band's North American tour beginning in April of 2025. This partnership further exemplifies our ability to deliver premium, flexible travel solutions tailored to high-profile clients with complex logistical needs. In our cargo business, we signed a six-month ACMI contract with DHL. This is our first contract with this major operator, further diversifying our cargo portfolio while delivering consistent revenues. We also renewed a six-month cargo contract with a Caribbean cargo company, guaranteeing a total of 200 hours per month across two cargo aircraft. This renewal underscores the continued demand for reliable cargo operations and reinforces our commitment to serving key logistical partners. Turning to international operations, we also expanded our partnership with TUI Airways to include a third dedicated aircraft for the summer of 2025, guaranteeing a minimum of $5 million of additional revenue. Additionally, we have secured a seven-month ACMI contract with a South American tour operator, guaranteeing over 1,800 block hours. These international wins reflect our growing presence abroad and our ability to meet increasing travel demand. Now turn to the financial results. Please note that all financial results discussed today are for the three-month period ended December 31, 2024, while variance commentary is on a year-over-year basis unless stated otherwise. Revenue in the fourth quarter increased 11% to $59.9 million compared to $53.9 million in the year-ago period, driven primarily by higher block hours flown and aircraft fleet expansion, as well as increased revenue per block hour for ACMI. ACMI revenue increased approximately 3x to $35 million compared to $11 million. Charter revenue in Q4 was $21 million compared to $40 million. Total operating expenses were $56.6 million compared to $55.2 million, driven primarily by higher aircraft rent, maintenance, and personnel expenses tied to the continued expansion of the global fleet. Part of our ongoing cost optimization efforts we negotiated as a 35% reduction in insurance rates resulted in an expected $2 million savings in 2025. Net loss improved to 0.6 million compared to 2.6 million. Loss per share also improved to 0.01 cent per share, basic and diluted share, compared to 0.04 for basic and diluted share. Net income was impacted by a one-time $1.3 million charge related to the guarantee for lease return conditions provided to Alessor in 2021 to support the launch of Canada Jetline. This lease was returned to Alessor following Canada Jetline's bankruptcy. Adjusted net income increased to $1.2 million compared to adjusted net loss of $1.8 million in the year-ago period. EBITDA increased to $5.1 million compared to $0.4 million loss. EBITDA increased to $19.3 million compared to $11.4 million. This is primarily driven by increased revenue, fleet expansion, higher average rates per block hour flown for passenger ACMI. Turning to our liquidity, we ended the fourth quarter with cash and restricted cash of approximately $14 million compared to $7.8 million in September 30th of 2024 and $17.7 million in December 31st, 2023. We are pleased with our Q4 and our full year 2024 performance, which highlights our strong foundation and growing momentum as a leading narrow-body ACMI charter airline. Looking ahead, our summer schedules are fully booked, and when combined with our expanding fleet, our focus on securing higher margin ACMI contracts and a commitment to operational excellence, we are well positioned to deliver another record year of results in 2025. This concludes our prepared remarks. I now like to open the call for Q&A. Operator, back to you.