MESA - NASDAQ

Thank you for standing by and welcome to Mesa Airlines Q3 Investor Conference Call. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Susan Donofrio, Head of Investor Relations. Ms. Donofrio, you may begin.

Thank you, operator and welcome everyone to Mesa’s earnings call for its third fiscal quarter ended June 30. This call is being recorded and simultaneously webcast. A replay of this call can be found on our website. On the call with me today are Jonathan Ornstein, Mesa’s Chairman and CEO; Brad Rich, EVP and COO; Michael Lotz, President and CFO; and Torque

Thank you very much, Susan. I’d like to start of course by thanking our dedicated people here at Mesa for their continued focus and support throughout this truly unprecedented time. The team’s ability to adapt in a difficult environment while responding to rapid changes in demand is truly a testament to their capabilities and dedication. While Brad and Torque will go through the details, I would like to jump into some of the highlights from this quarter. On the financial side, we reported a pre-tax profit of $5.8 million and net income of $4.3 million or $0.11 per diluted share. We did take delivery of the last 4 Embraer 175 LLs to bring our total flying for the United up to 80 aircraft. We reported a sizable increase in our year-over-year block hours and subsequent to quarter end, we invested in a second electric aircraft company. On the operational side, we have seen a significant increase in activity with our partners. We believe this is mostly due to the volume of vaccination and easing of COVID restrictions. Not only did we increase the number of flights, utilization of our current fleet, but we also took on additional flying at the request of our partners. As domestic traffic continues to improve, this increase in flight demand has created some challenges, primarily around supply chain and MRO production capabilities. As a result, we have seen a significant increase in the time of our contracted heavy maintenance providers having to perform C-checks on our CRJ-900 fleet. Costs have also increased in part due to interior refurbishments on the 900 fleet and Brad will give you some more details on this later. Besides the continual improvements, upgrades and expansions in our fleet in response to our flying partners’ needs, we are also investing in the next generation of aircraft technology. We believe that more sustainable aviation operations will be essential part of air travel in the future. Remaining at the forefront of that movement, we believe will help ensure the longevity and strength of our company for years to come. We also think that by entering into these new ventures with our major airline partners, we continue to strengthen our long-term relationships. Our investment in Heart Aerospace, which plans to produce the world’s first electric 19-seat aircraft the ES19, is a large part of that investment in a greener fleet. We have ordered and plan to add 100 ES19 aircraft to our regional fleet once they become available, which is targeted for 2026. This would make us one of the first network of carriers to help decarbonize air travel through the use of electric aircraft. We will also be able to fly once again to the dozens of cities that have previously – we have previously flown to that currently have little or no service. As an example, Farmington, New Mexico, where our corporate company was founded and our former headquarters existed, previously had 40 flights per day serving 5 destinations. While there is no commercial service today, we believe that these highly efficient aircraft would allow us to reconnect communities like Farmington to the national transportation system. This goes hand-in-hand with our investment in Archer Aviation with its eVTOL aircraft, which was announced in February of 2021. I would also like to add that beyond the 100 aircraft that we ordered, our partners at United also ordered 100 aircraft. We think that investing in clean aircraft technology is the right decision. Investing with our partners is a better decision and creating a better environment for our children and our children’s children is the best decision both as a responsible company and as responsible individuals. With that, I’d like to turn the call over to Brad to provide an update on our operational performance this quarter. Brad?

Thank you, Jonathan and good afternoon to everyone. Again, thank you for joining us today. First of all, the health and safety of our employees and our passengers remains one of our top priorities. We continue to work cooperatively with our partners and we are following the CDC’s latest guidance. Additionally, the flying with our mainline partners remains a cornerstone of our strategy and we remain committed to meeting their performance and capacity objectives. By way of review of the June quarter, we flew 85,162 block hours, which is 169.3% increase from last year and a 15.2% increase above last quarter. We are pleased to see demand for air travel recovering and returning closer to pre-pandemic levels. Based on current guidance from our partners, we expect the September quarter’s daily aircraft utilization in our United operations to be at about 88% of pre-COVID levels and slightly over 100% in our American operation. We currently believe that demand levels will remain strong throughout the balance of the year. That being said, we remain flexible to changes in the demand environment and in our partners’ requirements. During the June quarter, our combined controllable completion factor was 99.7% compared to 100% a year ago. Our controllable on-time departure rate was 88% versus 94.1% a year ago. Overall, our main objective continues to be providing high quality, reliable service for our partners and customers as we have done for almost 4 years. We recognize however that the entire aviation industry continues to face historical challenges, including the rapid increase in demand, employee turnover and hiring, MRO production issues and an overall shortage of parts and materials. Despite our focus on solving these challenges, we are not immune to these factors impacting our operation. To further review the parts and materials industry challenge, we continue to see interruptions in parts availability, which is driving costs higher associated with scheduled heavy maintenance and interior refurbishment upgrades. This also lengthened the time span of our heavy checks, thus impeding our ability to return our aircraft into service and to add additional aircraft into heavy maintenance. The result has been a reduction in the number of spare aircraft to support our daily operations. We anticipate elevated costs of C-check times – and C-check times will remain a challenge into the next fiscal year as the supply chain recovers. It’s important to note that these issues are primarily impacting our CRJ-900 fleet. With regard to our United operation, we took delivery of the last 4 E-175 LLs in the quarter, bringing our total E-175 fleet to 80 aircraft. Our controllable completion factor was 100% and our controllable on-time departure rate was 94.8% for the quarter. We are very pleased with our United performance, which places us in the top tier ranking versus our peers during the quarter. In addition to adding all of the new E-175 LL aircraft, we also completed our transition training for our CRJ-700 pilots to the Embraer aircraft. Additionally, we are hiring and upgrading at an elevated pace to make sure we stay ahead of attrition and are positioned to meet the increasing demand in the United network. We have removed all of the CRJ-700s from our operations and we continue the transition process of leasing these 20 CRJ-700 aircraft to GoJet Airlines as part of the previously announced agreement, which ends in 2030. 13 of these aircrafts have been transitioned, with the remaining 7 scheduled by the end of the calendar year. Now, I would like to provide a quick update on our American operation. As I previously mentioned, our CRJ-900s have been particularly impacted by part shortages and 900s makeup our entire American fleet. In the June quarter, we met performance expectations in April and May, but we have had more challenges in June and July with the increased capacity. The aforementioned concerns with parts were a key driver of this and led to a lack of spare aircraft to support the operation. For August, we remain to have a very high level of focus on our American operation. As a reminder, we agreed to fly 5 additional lines of flying over the summer that expire in mid-August. These aircraft will become available as spare aircraft to support the American system, which we believe will contribute to enhanced operational performance and reliability. With our continued focus on performance, we are making significant investments in the CRJ-900 fleet in heavy checks and cabin interior improvements. It’s important to note our current C-check volume is at a historical high and more than double the normal planned run-rate. Our DHL operation continues to perform well and we are making progress in bringing on a third 737 that we expect to provide operational support and additional flying opportunities. I would like to make some additional comments about our outlook on labor. We remain very focused on hiring and training to meet increasing staffing requirements in nearly all of our operational divisions. Our applicant pools remain strong and we believe in our ability to hire across the airline. We remain active in the hiring of pilots and have hired 250 pilots since April with training in full capacity. Furthermore, we feel like we are well positioned to be an attractive option for regional pilots through opportunities such as The United Aviate program, where we are one of few regional airlines able to offer a direct pathway for our pilots to become a career pilot for United Airlines. The 737 aircraft, we are the only regional airline offering the opportunity to fly larger aircraft and earn the highest pay in the regional industry. We are well positioned with crew domiciles across the country that allow our pilots the opportunity to live where they desire and commute easily to work. We are also offering upgrade opportunities and actively recruiting from hundreds of aviation schools across the country. With that, I would now like to turn the time over to Torque to walk through our financial performance.

Great. Thank you, Brad. Let me do a quick review of our financial performance and then provide some color on our business outlook. I will wrap up with a discussion of our capital outlook and balance sheet. For the third quarter of fiscal year 2021, we reported net income of $4.3 million or $0.11 per diluted share. This compares favorably to net income of $3.4 million for the same quarter last year or $0.10 per diluted share. Let me review where we are in cash and liquidity, cash for the quarter, excluding restricted cash, increased by $32.5 million to $180.4 million. As we have previously reported, we expect our fiscal year ending cash balance will be approximately $100 million to $110 million. The reduction from Q3 to Q4 is primarily due to higher-than-normal scheduled debt payments of $27 million, one-time deferred debt payments of $19 million, and partner true-ups of roughly $25 million. Total debt at the end of the quarter was $713.7 million, which is down $11 million from the prior quarter. Assuming no additional debt, the balance will be reduced by $46 million in the fourth quarter of 2021 and by roughly $100 million in each of the fiscal years 2022 and 2023. This brings the total debt balance down to roughly $465 million at fiscal year end 2023. There was $5.4 million of CapEx in the quarter, of which $2.8 million was inventory and $2.4 million was capitalized C-checks. Going forward, CapEx for Q4 is forecast at $10 million. For fiscal year 2022, we still have 4 additional engine deliveries and no other major capital expenditures. Lastly, on liquidity, the company received $52.2 million in PSP3 funds in Q3, covering the period April through September 2021. Consistent with PSP1 and PSP2, we are providing our partners with temporary rate reductions over the covered period. Rates will return to prior levels after September. Turning now to provide you with a brief update on our European joint venture investment with Gramercy Associates Limited, we continue to make progress on the project and we are expecting to start operations in calendar year 2022. Due to EU regulations, Mesa will be a minority partner in the JV, but Mesa will be providing technical support and expertise to help with the startup. Let me now touch on guidance. Although the environment is still volatile, we did want to provide guidance in a few areas. So, block hours are straightforward and we expect similar levels for the September 2021 through March 2022 quarters. For our pass-through maintenance expense, and as you know, this has a zero P&L impact and it’s not related to our level of ops and more related to timing of events. So, we have provided to you our best estimates in our press release. For heavy maintenance, which is engine and C-checks, we have provided our estimates in our press release. These amounts are higher than what we would consider normal run-rates. Much of this work is a result of deferred C-checks, which as Brad touched on are taking longer and costing more than anticipated for the CRJ-900 fleet. This is expected to spill into next fiscal year. For Q4, we anticipate maintenance expense, including C-check maintenance, to be roughly $6 million higher than Q3. Also in Q4 and leading into fiscal year 2022, we will see an increase in flight ops costs relative to block hours as we spool up the pilot training program to meet anticipated demand going forward. I would now like to turn it over to Jonathan. Jonathan?

Yes, hi. Sorry about that. I muted myself for Torque. Thank you, Torque. We appreciate the financial recap. While we remain focused on our core business, we are also strengthening our partner relationships through investments in cutting-edge technology companies. We intend to be the regional leader in decarbonization and electric aircraft with the goal of reintroducing commercial air service to rural America and decongesting our cities. Finally, we believe our DHL cargo flying and our European growth plans are just a start as we continue to look for and pursue new growth opportunities. At this point, operator, please open up the call. And we would all be happy to answer any questions that the analysts may have.

Thank you. [Operator Instructions] Our first question comes from Savi Syth from Raymond James. Your line is open.

Hey, good afternoon. Just following up on the June operational performance, I am guessing that the controllable operation performance at American is related to the maintenance side. You do have 19 CR-J900s that are kind of spares or kind of not doing anything. Are those just not available, because the required maintenance hasn’t been caught up or kind of curious why that was – why those can’t be used, sorry?

Brad or Mike, do you guys want to take that? I think we all are pretty familiar with that subject.

Sure Jonathan. I will be happy to address it. Savi, it’s a very good question. Obviously, as we were all going through the pandemic and looking for ways to conserve cash, certainly, some of the heavy checks and things were deferred in anticipation of going to agreement that was around 40 or so aircraft. And when we signed the extension and then agreed to do additional flying, we knew that we had to get additional C-checks in motion. We signed up additional vendors, put a lot more airplanes in C-check, and as we described, the very quick answer is due to the reasons that we have talked about, the airplanes just have not come out of C-check on the time spans that we expected. And so that’s what’s created the lack of support airplane to fly the system.

That makes sense. Just regarding both kind of flight operations and kind of the maintenance on a kind of per block hour basis, I know your maintenance you said will remain elevated into kind of next fiscal year. What do you kind of expect the new normal for these two kind of line items to be and when do you think is likely that we get there?

Hey, Savi, it’s Mike. I will take that. I think on the pilot cost per block hour. It’s actually on a per block hour basis. It’s been relatively high due to the – we have kept most of the employees on the payroll and had obviously depressed number of block hours. And we are just spooling up the training again now. So we would like to get back to kind of run-rate kind of pilot block hour – cost per block hour, probably by the second or third quarter of 2022.

And what was that roughly, Mike, because I know previously, it was a bit elevated because you were catching up on training and we were going to get to a new level, but I was kind of curious what that new normal is?

Yes, it was around $450 million prior to COVID.

Got it. And then on the maintenance side?

Maintenance is – on the block hour side, again, probably in the second or third quarter, but the bigger piece of the maintenance is the C-checks and the engines and the C-checks, again, not till the third quarter of 2022, we see it start going back down to where kind of a more normal run-rate would be.

Got it. Appreciate it. Thank you.

Yes. And if I could just add something, Savi, when we talk about an increased span on the C-checks, I mean, we had planned in very close cooperation with our vendors, for C-checks to last 30 to 35 days. And unfortunately and this is really focusing on the 900 fleet, because of delays in parts from the manufacturer, we saw that timeframe extend out past 60, 65 days on average and in some cases even further. That’s just something that the supply chain has to work out. But it did cause the delay. And not only did it delay the aircraft in C-check, it then delayed those who were lining up to get into C-check. And so that’s how we end up with while we have extensively 19 spare aircraft, a much fewer number as those aircraft just take much longer to get through than what had been projected by us and by the vendors.

That makes sense. And clearly, not something just you are seeing, you are seeing that across the industry. Appreciate the responses.

Our next question comes from Helane Becker from Cowen. Your line is open.

Thanks very much, operator. Hi, everybody. Thank you very much for your time this afternoon. So, one question with respect to operational issues in America and I know there were some issues in Dallas with weather. Are you seeing those kind of issues too, like weather-related issues that are causing flight cancellations or are they operational because crews are at a place? Is it a combination of both? Maybe some color on that?

Jonathan, do you want me to take that one?

Sure. Go right ahead.

Yes, sure. I’ll give it the first shot. And Helane, obviously, you are paying very close attention to the industry and your observation is obviously very accurate. And yes, the weather certainly has impacted the operation. But look, the main focus – I mean, we are not having crew shortages. I mean our flight attendant numbers have been really good. Our pilot situation, especially on the American side is healthy. So the weather impact to us, yes, it causes all those related issues on crews timing out and all of that issue. But look, our primary issue has been that when we have the weather-related operational interruption. The inability to reset the system with adequate spare ratio has really been the core of our problem.

Okay, alright. That’s very helpful. Thanks Brad. And then the other question I had was on – and you answered one of them, which is any issues with flight attendants showing up to work. But the other one is on attrition. You mentioned that you want to stay ahead of attrition on the pilot hiring and you hired 250 since April. Can you say actually what your attrition rate is?

Well, I’ll answer it this way. With 250 pilots in the pipeline right now, that is – that should be, we certainly believe, that’s going to be adequate to stay ahead of the attrition. And Jonathan, I don’t know if you want to give more specific guidance than that.

Yes. I mean, Helane, just a couple of things. On the pilot side, during the pandemic, our pilot attrition was literally in single digit. We saw a spike as things started to pick up to a somewhat higher number, but still below where we were pre-pandemic. 250 would be more than adequate, assuming those numbers stay about at those levels. I think that what instructions that we’ve basically told the training department is we’re long on the American side. We know we’re going to take on more flying, we know that we’ve got more flying at United. There is things that we can do. Just go out there, and we’re not hiring for attrition right now. We’re hiring to build up a additional cushion so that we can continue to take on more flying. Interestingly, in spite of the fact that we’re flying fewer airplanes for American, we are flying higher utilization rates than we did pre-pandemic in terms of per day flying. So I think we just want to be on the safe side and just get ahead of the game and stay ahead of the game. On the question you had about the aircraft, I just want to mention again, when you have 19 spare aircraft, 19 additional aircraft, you don’t think of not having enough aircraft is an issue. But the C-check problem, which – it did affect other parties in the industry, not everybody, but it did affect quite a few of the other CRJ operators, is not insignificant. We are starting to see some improvement right now, but it was very quickly sucked up a lot of those spares that we had counted on in particular, after we had taken on the five additional flying – five additional aircraft flying that American asked us to, which we were delighted to be able to accommodate. But clearly, we had anticipated these aircraft coming through C-check in 30 days, not 65 to 70 days.

Right. Got it. That’s helpful, Jonathan. And then the other question I had was on your EV investments because I know you’re really passionate about that. And so now you have this investment with Heart and you have an investment with Archer.

Archer.

Yes, with Archer right. Sorry, that’s my clock. Should we think about others? I mean, are you like a full service – are you going to be a full service operator of all of these or are you limiting yourself? How should we think about your passion for this business?

I appreciate that. And I think – as you know, we’ve been – we had partnered with United on these first two, and we would frankly love to expand our partnerships with our other partner, American Airlines, if possible. I think the best way to look at it is when Scott, Kirby and I discussed it was we’re making investments in technology. Some of the technology will work, some may not. But that – we’re basically going to be out there as a leader so that we can determine first what we think is going to be successful. So along with the new United ventures head up by Mike Leskinen. I think that we will continue to look and to take – make opportunities occur where we see long-term growth and a marketplace for them and the technology as it develops. There is a lot of interesting technology out there today. I’ve continued to visit companies. I actually visited the company today that was very exciting. And these are cutting-edge companies. And I think to ignore what’s going on, electric is inevitable. And for any company to ignore that, I mean, they are going to be dinosaurs. And I think that United has taken a lead on this. American just did something on eVTOL. Now we’ve done it. I think it’s really important that we continue to move forward and continue to look at opportunities as they develop.

Thank you. Thanks, Jonathan and Mike.

Thank you.

Our next question comes from Bert Subin from Stifel. Your line is open.

Hey, good afternoon Thanks for the time. Jonathan, I asked you this question, I think, two quarters ago when the passenger recovery story was maybe a little less understood. Today, the Delta variant’s sort of creating some additional concerns – potentially temporary concerns around travel. But cargo side, things remain really strong, and the supply story is certainly more constrained. Where we stand today, are you seeing the best organic growth opportunities still on the regional passenger side or is it – do you think it’s starting to tilt toward cargo?

Well, it’s interesting that you say that. Prior to the Delta variant impacting as widely as it has, I think we all began to believe that the passenger side really had the sort of most upside from – on a relative basis. I’m a little concerned. I think most people are about what that impact is going to be going into the fall. On the cargo side, we continue to see very good strength. We’re adding this third aircraft. The question is where do we go from here? I think if we’re going to continue to add aircraft, we may have to look at the 737-400 is sort of limited. I think that the 737-800 may be the next aircraft we look at. But the strength within the cargo market is there. It’s just that I think it’s also fairly well known that you’re not going to get an order for 25 aircrafts. The cargo operators go much more incrementally. And thankfully, we’ve always taken a long-term view. So I think our position is we will just keep plugging along. We’re doing an excellent job for DHL, that I’m very confident of. And then as we continue to develop that kind of relationship with DHL, I’m confident that will continue to grow. But I still feel that on the passenger side and with our partners, there still continues to be a significant amount of opportunity as the domestic traffic at least continues to be strong.

Just as a clarification maybe on the cargo side, going from two. I guess you’re going from two to three. The third one, though, is not under contract. You’re just sparing it. What’s the gap in going from two to four to six? Is that just having a track record in the space? And then ultimately, over time, you build the operations?

Yes. I think the track record is clearly important. But I have to say, I mean, I think our people have done an excellent job developing that track record. I talk to the folks there at DHL pretty frequently. One of our former Board members worked with them as well. I think that we added the third just because at the time when we started that process, we were concerned about reliability with only two aircraft. The reliability actually has been excellent. We continue to move forward with it because DHL had said that they have plenty of work to do with the aircraft just on an ad hoc basis. So I think it’s just a matter of time, and we just continue down the path and say, we’re in this for the long haul, and we’re proving ourselves operationally every day. And then our commitment, I think, is important to DHL also. And by taking on the third aircraft, I think we’re showing really extraordinary commitment that we want this to work. So all in all, I’m convinced it’s the right thing to do by taking on that third airplane. And I think ultimately, they will find a home for that aircraft pretty quickly.

Got it. Thanks for that. Just one last question for me, probably for Mike, just, I would say, probably more theoretical in nature. But how should we think about the long-term sustainability of your cost advantage? Pilots sort of interestingly went from a shortage to a surplus now back to a shortage. Can you just walk us through maybe what gives you conviction that you can continue to run a leaner operation than peers when we get on the other side of COVID? Thanks for the time.

Sure. I mean, look, I think the best way to answer it is that I’ve been getting this question for 20 years is can you continue to maintain a cost advantage over your peers? And we’ve been able to do it over time. And there is nothing that I see going forward that would prevent us to continue to have that advantage over our peers. It’s kind of – it’s the kind of way we run the company. We’re very conscientious of where we’re spending our money. We try to get as much efficiencies from our crews that we can, which we’ve been very successful at.

Yes. And I would say, too, that we have some structural benefits right now that I think make it hard for anyone to catch it, not the least of which is because we’ve expanded so much over the last 5 years, we have a relatively junior workforce. There was a point in time a year ago where half of our employees had less than 3 years seniority. I think that we – that’s an advantage on the cost side that’s going to be hard to overcome. And any growth that we have on top of that will just further enhance that advantage.

[Operator Instructions] Our next question comes from Savi Syth from Raymond James. Your line is open. Savi, please check your mute button, your line is open.

Thank you. Sorry about that. Thanks for the follow-up. And just on the European JV side. I know last time you had maybe a couple of aircraft as placeholders there, not in your kind of outlook now. How are you thinking about the timing of when – and the opportunity there?

Yes. So we’re looking at starting up in the first quarter – first calendar quarter of 2022. And look, we are just really looking closely at the cost benefit analysis of taking an FAA Mesa aircraft, reconfiguring it to all coach, getting it [indiscernible] certified versus just potentially leasing an aircraft that may already be over in Europe in that configuration from an experience standpoint of start-up. So we’re still in the evaluation phases. So we’re not sure which way we’re going to go, but we’re still evaluating both options.

Yes. And I think it’s fair to say, Savi, that our view on that has changed somewhat because there are aircraft now available, which were not necessarily available pre-COVID now available at very reasonable rates that, as Mike mentioned, before getting around to the whole conversion, they are just a very attractively priced aircraft right now in the marketplace. And we do think that the gaps in Europe continue to get bigger and the opportunities exist. And I think that – we think there is some real advantages for us going in sort of fresh versus where a lot of the carriers are today. It was crazy. I was at Gutenberg to visit Heart, and it’s a big airport. And I’m there in the middle of the day on a Wednesday. And I counted no kidding, two aircraft on the ramp. And you just know that in some of these cities, the service has been decimated by COVID, and I really do believe that there is an opportunity for us long-term and also an opportunity whereby we could form sort of American-style partnerships, capacity purchase agreements with some of the larger carriers.

And Jonathan remind me again, because in the U.S., you have this kind of pilot arbitrage opportunity and kind of training and pipeline. What’s the advantage that you have in Europe?

Well, I think, one, if I had to rank them, this is just one, a U.S. operating mentality, I think, is no small part of it. A large part too is the fact that a lot of the regional carriers there are effectively vulcanized on the UC carriers there with two of these airplanes, three of those, two of those. We looked at one company that we were potentially going to acquire, and they had purchased, I think, 6 Embraer 175s for $32 million a piece. I mean that’s $8 million more than what we would have paid. I also think that by setting the operation up properly and in particular in a location like Malta, which not surprisingly, a company like Ryanair is a big base. There are advantages to how you set the operation up and where you set it up, something Mike and I became very familiar with when we were over there, operating in Brussels. So I think our expertise, the fact that we have a lot of the operating capability already, I think that – and the relationships that we have, I think all those things would give us an advantage over the existing carriers.

Makes sense. And if I can quickly follow-up on the – your comments on the cargo, if you do end up buying kind of -800 freighters instead of the -400s, Is there a difference in training or cost or anything like that or is that a pretty seamless fleet to introduce?

Well, I mean, if we put larger aircraft 737-800s and some folks have talked about ATRs and some – there is all kinds of aircraft that people – that have been thrown at us as opportunities. Yes, there is always cost in the start-up. But again, looking at it long-term, I just think that we have to be prepared to respond to things that our partners or other partners may – would like to see us operate. So yes, there’d be some expense, but I would say also that the bulk of the expenses are already sunk given the – having put the 737-400s on certificate.

We would – this is Mike. We would have to put it on certificate, but Brad can correct me, but the crews can be cross utilized between 400 and an 800. So we would benefit from that efficiency.

Perfect. Thanks, helpful. Alright, thank you.

We have no additional questions in the queue at this time.

Okay. Well, in conclusion, again, thank you, everybody, for taking the time out. We feel that we’re very pleased to have been profitable and profitable through COVID. I think our people have done a terrific job and really brave out there. I mean I have to say, I can’t think of a better word to describe than brave in this environment through a pandemic. We’ve seen just tremendous dedication across all of the folks, whether it’s pilots, the flight attendants, mechanics, people in our dispatch the people that are coming into the office every day, I just can’t tell you how much – I know all of us on the phone appreciate the work that they have done. We are also – want to thank our partners who have been incredibly supportive having to go through their own challenges right now, both of which have been understanding and helpful. We continue to work very cooperatively with them. We were not entirely pleased with what happened to us in June as a result of the aircraft shortage. But again, that will be worked through the – that issue actually resolves itself when we take back the five airplanes. And as these suppliers start getting – the vendors start getting the aircraft out of C-check, which is now happening. And so I think from our standpoint, the best thing we can do is just keep our nose to the grindstone operationally and continue to do a good job. And lastly, we were pleased to close the Heart deal. We do think that there is a big future in electric and other forms of decarbonization. We’re going to continue to pursue that. We really are pleased to have United as a partner on those two deals and we’d like to expand those partnerships. And we think that longer term, it could be very exciting for the company. So we appreciate all of your support, and we look forward to talking to you at our next call. Thank you very much.