Cargojet Inc.

This conference is being recorded. Cette conférence est enregistrée. All participants, please stand by. Your conference is ready to begin. Good morning, ladies and gentlemen. Welcome to the Cargo Jet Conference Call. I would like to turn the meeting over to Ms. Pauline Dillon. Please go ahead, Ms.

Dillon. Thank you, Marie. Good morning, everyone, and thank you for joining us today for our first quarter 2023 results. With me on the call today is A.J. Romani, our President and Chief Executive Officer, Jamie Porteus, our Chief Strategy Officer, Scott Calvert, our Chief Financial Officer, and Sanjeev Mani, our Senior Vice President of Finance. After opening remarks about the quarter, we will open the call for questions. I would like to point out certain statements made on this call, such as those relating to our forward to our forecasted revenues, costs, and strategic plans are forward-looking within the meaning of the applicable securities laws. This also includes reference to non-GAAP measures like adjusted ESA, adjusted earnings per share, and return on invested capital. Please refer to our most recent press release in MD&A for important assumptions and cautionary statements relating to forward-looking information and for reconciliations of non-GAAP measures to GAAP income. I will now turn the call over to AJ for his remarks.

Thank you, Pauline. Good morning, everyone, and thank you for joining us on our first quarter earnings call. Given the tough industry and macroeconomic backdrop, we are pleased with our stable Q1 performance. Another factor that has had a disproportionate impact on our volumes is the shift in consumer spending away from goods to spending on travel and leisure activities during the post-pandemic period. Consumers were not able to travel or go to restaurants, theaters, or movies during the past two years of COVID. We are seeing a higher proportion of disposable income being spent on travel and leisure activities versus pre-pandemic levels. We expect this mix to normalize in the later part of this year. Our strategic decision to place a hike conviction bet on building ACMI business has allowed us to soften the volatility of earnings despite a challenging economic environment and a lopsided consumer spending mix. ACMI business now accounts for one-third of our overall revenues. Let us now touch on the more immediate task of managing in a challenging economic environment. Softer industry results, as well as the challenging macroeconomic data, remains a major headwind for our business. Despite the recent downward trend in the inflation rate over the last few months, we do not expect interest rates to decline in the near term. Therefore, we are focusing hard on our cost management across the entire business, and more specifically, number one, working closely with our largest customers to right-size our network to reduce block hours while maintaining delivery standards. Block hours are the key driver of our direct costs, and if we can find opportunities without sacrificing services, we can drive efficiency. Number two, identifying opportunities for four to five surplus B757 aircraft for ACMI contracts or drive ease options. We believe these actions will significantly offset aircraft costs and depreciation expense. Number three, with our second flight simulator coming online in Q3 of this year, we plan to operationalize 100% of pilot training in Hamilton, our house. This will result in significant cost savings in travel, hotel, and crew expenses. Number four, with a greater ability to plan our maintenance schedules, we are targeting a significant improvement in our maintenance productivity. Given the hectic peak flying over the past few years, such planning was sub-optimized. Number five, we have eliminated all temporary labor in our operational areas and are targeting zero overtime goal. Number six, We are reviewing every line item and focused on reducing overall expenditure in all areas and have frozen non-essential hires. Our cost reduction initiatives are in the early stages of implementation. We expect to see additional benefits from these in the coming quarters. On the capital expenditure side, At the last quarter call, we shared our desire to exercise options to delay aircraft conversions. We are exercising the optionality to better align the timing of capital expenditures closer to the planned conversion dates of aircraft scheduled to support future growth. We are going to be targeting significantly lower CapEx in 2023 than previously announced. Scott will give you more details. on our capex spend. Despite a challenging economic environment, we remain focused on identifying new revenue opportunities and are aggressively pursuing new ECMI and ad hoc charter opportunities. We believe we can help our customers further streamline their networks. We'll continue to strike the right balance between cost management and staying prepared for opportunities when the tide turns. It is a delicate balancing act. Training pilots and maintenance personnel takes time. Likewise, securing aircraft and bringing them on over certificates and making them operational takes time. For a highly capital intensive business, long-term planning is just as important as the short-term cost reduction. With a strong balance sheet and a solid liquidity position, blue-chip portfolio of customers and partnerships, and a superior on-time track record, we are well positioned to weather this storm. While we cannot predict economic cycles, our business model remains resilient and long-term macro trends that drive our business remain intact. We expect to resume growth trajectory as soon as the economy turns to the corner. With a strong, committed team, We remain focused on executing on our long-term strategy and creating shareholder value. I will now pass on the call to our CFO, Scott Calver, for an update on the business.