MESA - NASDAQ

Welcome to the Mesa Airlines Q4 Investor Conference Call. All participants are on a listen-only mode until the question-and-answer session. [Operator Instructions] This call is being recorded. If you have any objections, you may 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 fourth fiscal quarter ended September 30th. 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 Torque

Thank you, Susan. Obviously, this was a difficult quarter for Mesa, who would have anticipated that coming out of COVID would be more difficult than going into it. As Brad and Torque will cover in more detail our significantly higher seat cost and span times for the primary driver. Larry Risley, founder of Mesa and my mentor, once told me, in the airline business something happens every year that happens every 10 years. And beginning in 2020, something happened, that happens once a century. The aviation operating environment has been dominated by the pandemic resulting in massive fluctuations in demand, higher attrition, inflationary pressures and supply chain disruption. This has presented a set of circumstances unlike what we have seen before that will remain -- require innovation and cooperation to address successfully. While we believe industry fundamentals remain intact for the long-term, our expectation is that 2022 is likely to be a pandemic transition year. I’d like to thank all of our employees for their dedication throughout the pandemic as we work through this tough environment and the federal government for the PSP program that allowed us to keep all of our people fully employed. Since it is the end of the fiscal year, I would like to go over some of this year’s highlights. First, we added 20 Embraer 175 aircraft to our United Express operation. We put in place a new contract for American to operate 40 of our CRJ-900s for the next five years. We leased 20 CRJ-700s to GoJet another United Express operator for a nine year term. We successfully launched our 737 cargo operation with DHL and in partnership with United, we entered into agreements with electric aircraft manufacturers Archer Aviation and Heart Aerospace. We believe this will lead to significant long-term growth opportunities and make us the industry leaders in green aviation technology. Archer’s electric vertical takeoff aircraft is designed for convenient, economical and low carbon transportation to United hub of airports in congested urban environments like New York, Los Angeles and Chicago. As part of the transaction, Mesa made equity invested in the company and receive warrants. As of the close on Tuesday, the value of our investments is approximately $15 million on a cost basis of $5 million. We also entered into a purchase agreement for another 40 aircraft and 20 options with deliveries expecting to begin in 2025. Another significant benefit we see is that these small aircraft provide a pathway for our new pilots entering the industry to fly our larger regional jets. And another green initiative we made an investment in Heart Aerospace alongside United Airlines and Breakthrough Energy Ventures led by Bill Gates. In addition to our investment we receive warrants and entered into a purchase agreement for 100 aircraft and 50 on option, with deliveries scheduled to begin in 2026. Heart Aerospace is located in Gothenburg, Sweden, plans to be the first provider of all electric 19 seat commercial regional aircraft. Mesa has been -- had previously been the largest operator of 19 seat aircraft and is our hope that these highly efficient environmentally friendly aircraft will allow us to reintroduce service to dozens of cities that lost commercial service over the last 20 years. For example, Farmington, New Mexico, our former headquarters at one time at over 40 flights a day to five destinations and currently has no commercial air service. As a result, the 45,000 people of Farmington have been effectively cut off from the national air transportation system. Heart ES-19 aircraft will reintroduce rural aviation to cities like this clean, efficient, safe and reliable transportation. Our investments in these two companies are designed to position Mesa to be the first regional airline to fly electric aircraft and be in the forefront of decarbonizing air travel and reducing our reliance on fossil fuels. This will allow Mesa to have significant growth opportunities and continue to be a leader in introducing new technology to regional aviation. To put this in perspective, Morgan Stanley has estimated that the eVTOL market could grow to $9 trillion when it is fully developed and we intend on being at the forefront of this development. We’ve also entered into an agreement with SkyDrop formerly known as Flirtey to operate for drones and -- with an option to acquire up to 500 in total. We believe SkyDrop is one of the most technically advanced precision drone delivery systems in the world, with its initial focus on food delivery. We are excited about introducing drone delivery and think about -- think there is a huge potential market, while definitely limiting our risk. We believe we are pioneering an exciting and potentially high growth industry of the future. Subsequent to year end, we finalized our agreement with Gramercy Associates Limited based in London to develop a European based joint venture regional airline. Mesa owns 49% of the new venture. The joint venture will be based in Malta and the certification is expected to be completed in the first half of 2022. We are excited at the potential to bring our regional business model overseas. I’d like to touch on the overall labor situation and the impact of potential shortages going forward. Brad and Torque will be explaining in more detail, but while we are navigating through an uncertain demand environment caused by COVID in 2020, 2021. The shortages of pilots driven by the federally mandated 1,500 hour rule and now exacerbated by early retirements as the major carriers will require our focus -- largest focus over the near-term. This is an industry wide problem that needs to be addressed cooperatively with our partners, the FAA and the federal government, as well as our employees. In response, we increased our recruiting and training efforts back in April, and are looking at other strategic initiatives to respond to this potential pilot labor shortage. We believe we are laying the foundation for a strong future by strengthening our airline partnerships and position ourselves at the forefront of environmentally friendly electric aviation. Throughout our history have always worked together to come up with creative solutions when we’re faced with near-term hurdles and believe this time will be no exception. With that, I’d like to turn the call over to Brad to provide an update on our operational performance this quarter.

Thank you, Jonathan, and good afternoon to everyone. Thank you for joining us today. We remain focused on the health and safety of our people and our customers, and as you would expect, we continue to follow the CDC latest guidance and are working cooperatively with our major partners to ensure consistency across our network. Our partnerships with United and American remain the cornerstone of our business, and we are committed to not only meeting their performance and capacity objectives, but remain flexible and responsive to often rapidly changing industry conditions. We are pleased to see demand for air travel recovering. In the September quarter we flew 94,868 block hours, which is a 64.6% increase from last year and an 11.4% above last quarter. Our combined controllable completion factor was 99.7%, compared to 100% a year ago. Our current production is below our 2019 levels, primarily driven by our reduction in flying for Americans as a result of our smaller fleet under contract. Looking ahead to 2022, while demand has been recovering, there continues to be uncertainty as new variants of COVID-19 arise, our ability to meet our airline partners demand will likely be dependent upon the severity of the pandemic. Additionally, our industry continues to face significant obstacles, often magnified by the impact of COVID. This includes the rapid changes in demand, employee retention as hiring, increases in the cost of heavy maintenance, often due to supply chain issues and increasing labor costs, and a more expensive overall operating environment due to inflationary pressures. That being said, while we remain focused on solving these difficulties, we are not immune to these industry wide issues. Let me discuss a few of the issues. In spite of issues obtaining parts and materials, the primary factor driving increased scheduled heavy maintenance expenses is the volume of scheduled C-checks, which are at historical highs and aircraft interior refurbishment upgrades. This also lengthened the time span of our heavy checks, thus impeding our ability to return our aircraft into service and do add additional aircraft into heavy maintenance. The result has been reduction in the number of spare aircraft to support daily operations. We anticipate elevated costs and C-check times will remain in place 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. Regarding our United operation, our E-175 fleet remains at 80 aircraft. Our controllable completion factor remains strong throughout the quarter at 99.8%. Our United performance has consistently placed us in the top tier rankings versus our peers and this quarter was no exception. 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 ending in 2030. 14 of the aircraft have been delivered as of September 30, 2021, with four additional aircraft transitioning into December quarter and the two remaining aircraft will be delivered by the end of March of 2022. I’d like to provide a quick update on our American operation, which consists entirely of CRJ-900s. Last quarter, we mentioned the issues we faced with our CRJ-900 fleet. These aircrafts were particularly impacted by parts shortages and the timing of heavy maintenance events. Additionally, at the request of Americans, we added an additional five lines of flying through the summer schedule. This increase capacity extended through mid-August and combined with the additional C-checks reduced the number of spare aircraft available to the company. As previously mentioned, our C-check volume is at a historical high and more than double the company’s normalized scheduled C-check rates. Our DHL operation continues to perform very well operationally. We’ve completed our first full year of operations. We -- for DHL our controllable completion factor was 99.26% for the year and our on time performance rate was 97.65. Both have exceeded DHL’s performance goals and our performance. The third 730 -- the 7 -- the third 737 aircraft delivery has been postponed by the lessor due to deliveries in conversion, maintenance and certification. I’d now like to make some additional comments about our outlook on labor. We remain focused on hiring and training to meet increasing staffing requirements in all of our operational divisions. For pilots, this was exacerbated by an increase in early retirements at the majors, as has resulted in higher attrition. While we put our training back into full capacity in May, we have seen further elevated attrition levels over the past 60 days. While we have been able to successfully recruit a sufficient number of new hire pilots and currently have over 200 pilots in training, there is a gap between the resignations and when the new hire training is completed. In addition, we’ve removed five aircraft that has been added for the summer peak from our off American operations, and as a result for the December quarter, we are currently anticipating a block hour reduction in flying of 8% from the September 2021 quarter. Furthermore, we feel like we are very well positioned to be an attractive option for regional pilots through opportunities such as our fleet consists entirely of 76 passenger or narrow-body 737 aircraft and does not have turboprop or 50 passenger aircraft. We offer The United Aviate program, we’re one of few regional airlines able to offer a direct pathway for our pilots to become a career pilot for United Airlines. Our 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 -- we have well positioned crew domiciles across the country that allow our pilots the opportunity to live where they desire and commute easily to work. We’re currently offering captain upgrade opportunities. We’re actively recruiting from hundreds of aviation schools across the country. We have competitive new higher pay with enhanced bonus opportunities. And we are pursuing other creative initiatives to attract and retain new pilot candidates. With respect to mechanics, while we are continuing to deal with attrition, we have been able to hire a sufficient number to keep pace with attrition thus far. That being said, we continue to remain highly focused in this critical area. As an example, we implemented a new pay scale effective in October of 2021 and implemented other incentives and retention programs. With that, I’d now like to turn the time over Torque to walk through our financial performance.

Great. Thank you, Brad. Let me do a review of our financial performance and then provide some more detail on our business outlook. After that, I’ll discuss our capital outlook and balance sheet. For the fourth quarter of fiscal year 2021, we reported a net loss of $7.5 million or $0.21 per diluted share and an adjusted net loss of $2.1 million or $0.06 per diluted share, excluding the $6.8 million mark-to-market non-cash losses on our investments in equity securities and related impact on our income tax expense. For the full year 2021, we reported net income of $16.6 million or $0.43 per diluted share and adjusted net income of $24.6 million or $0.64 per diluted share. These adjustments include the aforementioned mark-to-market non-cash losses on investments in equity securities, as well as a loss on a lease termination and a gain on extinguishment of debt. As Brad mentioned, we’ve been investing in our fleet getting them through heavy maintenance that has been deferred during COVID-19. Overall, maintenance expense was up $14 million versus prior year. Fleet check volumes were double the normal run rate in the quarter. The associated cost was roughly $9 million higher than Q4 2020. Similarly, our rotable and expendable expenses were elevated due to a catch up on parts removed in fiscal year 2020 that were not needed at lower flying levels but are now being repaired and put back into service to support the higher flying activity. These add another $3 million of expense net of one-time through outs with one of our maintenance vendors. Let me review where we are on cash and liquidity, cash for the quarter excluding restricted cash decreased by $59.9 million to $120.5 million. This amount is slightly above where we forecast it to be last quarter. The reduction from Q3 to Q4 was primarily due to its planned scheduled debt payments of $45 million, which included a one-time deferred debt payment of $19 million, partner true-ups of roughly $23 million, a $5 million investment in Archer Aviation, a $5 million investment in Heart Aerospace during the quarter and the purchase of a new spare engine. Total debt at the end of the quarter was $670.3 million, which is down $43.4 million from the prior quarter. Assuming no additional debt, the balance will be reduced by roughly $100 million on average in each fiscal year 2022 and 2023. This brings the total debt balance down to roughly $470 million at fiscal year-end 2023. There was $9 million of CapEx in the quarter, which primarily consisted of the purchase of a new spare engine and rotable spare parts. For fiscal year 2022, we still have four additional new spare engine deliveries and no other major planned capital expenditures. Effective October 2021, all temporary partner rate reductions related to PSP are no longer in effect as the PSP program ended at the end of September. Let me now touch on guidance. Although, the environment is still recovering, we did want to provide guidance in a few areas. As Brad outlined, our Q1 2022 block hours are anticipated to be 8% lower than the previous quarter. We also anticipate increased pilot training costs as we have our training center at full capacity for new hire training and captain upgrades. And like most regionals, we have enhanced new hire pilot compensation to attract a sufficient number of qualified trainees. Our heavy maintenance expense levels will continue to be elevated for the first two quarters of the fiscal year 2022. This includes both an interior refresh program at American, as well as our regularly scheduled heavy maintenance visits. For our pass-through maintenance expense, as you know, this is has zero P&L impact and it’s not related to our level of operations. This is more related to the timing events, so we provided our best estimates in our press release. We see 2022 as a transitional year, primarily in the first two quarters. We are coming to the end of the elevated C-check activity we’ve seen in the past year. We see travel demand increasing, given that pilot hiring at major carriers is expected to be at elevated levels, we are focused on making sure we keep our pilot hiring and recruiting activity at full throttle. Our success in this area will have a direct impact upon our financial performance. Now I’d like to turn it back over to Jonathan.

Thank you very much Torque. We appreciate the financial recap. To sum up, we strengthened our partnership with United for the addition of 20 aircraft and our partnership in electric aviation. We were also able to successfully enter into a new contract with American in the midst of the pandemic. We believe we have a plan to attract and retain qualified employees. We also feel like DHL cargo flying and our European growth plans are just start as we continue to look for and pursue new growth opportunities. Finally, we remain the low cost regional airline and intend on being the regional airline leader in decarbonisation and electric aircraft. While we certainly face some significant near-term issues, we believe that the fundamentals of our industry remain unchanged over the long-term. At this point, Operator, please open up the call as I’d be happy to answer any questions that the analysts may have.

Thank you so much. [Operator Instructions] And our first question comes from Savi Syth. Go ahead please. Your line is open.

Hey. Good afternoon, everybody. I am just a bit confused, if I look at your results delivered relative to your guidance, your -- for this quarter, your block hour production came in higher, your kind of recognition of deferred revenue was higher and some of the non-pass-through engine and C-check maintenance cost estimates were actually lower. What seems to be different maybe is the five American aircraft leaving a little sooner and maybe slower aircraft with GoJet. So I’m just kind of curious, were you expecting a loss -- a non-GAAP loss in the September quarter previously or something else happened during the quarter that that drove that? And also along those lines is, you expect some of these costs to continue for another couple of quarters? Do you -- should we be expecting non-GAAP losses for a couple more quarters as well?

Savi, this is Johnson. I’m going to just give you a high level view from my perspective in terms of what drove this quarter and I’ll let Torque and Mike maybe at chime in. But clearly what drove things here was just the elevated level of heavy maintenance primarily in C-check, the cost, the duration, the number. I think it’s important to point out that, we have 64 aircraft on property, we’re only flying 42, we had five additional aircraft. But in the meantime, we were actually maintaining all of them and I don’t imagine that just -- that will not continue. We had a lot of aircraft that were in also, as part of our new agreement with American, we put them through various types of mods, whether it be electric seat mods, interior mods, paint mods, so we were funding an additional, I believe was five lines of aircraft that otherwise would either been available for spares are been parked and the expense of maintaining those aircraft would not be there. So a lot of this is related to that transition into the new American contract, and again, in the higher costs associated with primarily heavy check that came through. And again, on those C-checks, they were more, they took longer due to supply chain issues and they were more expensive as a result.

And Jonathan, maybe I can just add, it’s not only the C-checks, but the -- there was a -- an increase in the quarter related to parts support, which is some of its tied to the C-check, when the C-checks are in for that expanded period of time, there are significant parts expenses that we had related to the C-checks and the parts related to the interiors, like Jonathan alluded to, we’re flying more aircraft than in the CPA, some of them to support for spares, some of them to support for programs that we’re doing with the American fleet. So those are the two major items, the heavy maintenance and the part support related to them.

That makes sense. And just on that, the non-GAAP, should we be expecting the losses for another couple of quarters here? Is there something that changes here in the next couple of quarters?

Well, we’re not giving any guidance on earnings. But we -- as Torque alluded to and I think Jonathan did is the heavy maintenance, a lot of it was for work that took longer than expected and that is going to be tailing off in, it’ll go through Q1, part of Q2, but then certainly by Q3 and Q4 we will be through that whole cycle and we’ll probably be under run rate at that point, right, we’re kind of flipped to a lower point.

Got it. And if I might just ask, on the pilot front as, could you talk about, like, any color on levels and if this is what you’re seeing a little bit of a transitionary issue, as you mentioned, where takes time for the pilots that are in training to catch up or do you see this kind of a treadmill that you’re on lasting quite a bit longer?

I’m going to -- I’ll make my comment, again I want Brad to give you more color. During COVID, there was trend -- the attrition literally went to zero. I mean, when I’m talking zero, six, eight, 10, 12 pilots a month, which for us, obviously, and given the fact that we were flying so much reduced. The fact is, we also felt that this was not a long-term -- this was not going to be long-term that there was, when it turned it would turn. And as we mentioned in the call, we really began back in April, while we said, how an air -- we still had pilots on voluntary leave, we fired up the training center and started to move forward. The attrition levels increased and then increased again. And I guess, at this point, we’re not counting on them coming down. I do think that they could moderate somewhat, but to moderate to what would still be considered elevated level. We’re also talking to our partners about it and how we might work together, as I mentioned to, that we have to work this problem together and just coming up with a solution on how to best handle this, due to the fact that we -- there is, in fact, that lag that Brad talked about and we need to be able to operate within this new paradigm, where the demand for pilots is it appears to be just very powerful. And again, it was absolutely exacerbated by the early retirements that were offered during the pandemic, which effectively accelerated the impact of the pilot shortage, which, I think, we all know has been artificially created by government regulation regarding the 1,500 hour rule. But Brad, do you want to add something on that?

Yeah. Jonathan, I think, you’ve covered it. I mean, I don’t have really anything meaningful to add. That’s the issue.

Okay. Thank you, guys.

And our next question comes from Helane Becker. Go ahead, please. Your line is open.

Oh! Thanks very much, Operator. All right. That’s the second mile clock goes off. Hi, everybody. Thank you for the time. Just a couple of questions here on the five -- to clarify on the five aircraft that were spares that aren’t being flown now, just that -- did that free up pilots or did they immediately go into or did they immediately leave and go to other airlines?

Oh! No. We -- the five aircraft, we’re just transitioned out of service. We have had attrition levels that, from best we can tell, and again, this is anecdotal at best. But talking to our partners and talking to other people around the industry, this is not something you need to make by any stretch. At American, for example, our utilization levels, because we did pull the aircraft out, we’re higher than other carriers. But again, is the question of how fast can we train versus how many people we lose, it took us a little bit of time to spool up training, because it’s -- it just leaves us roughly 90 days footprint at best and so it just takes time to catch up with that lag. But as Brad mentioned, we have over 200 pilots in training and we think that we’re going to be able to continue to fulfill our pilot requirements going forward, as best we can tell. I mean, the environment is very volatile and that’s for sure.

Got you. And then are there issues with people other than pilots that exists and I know you outsourced most of your maintenance and you already talked about that. But are there other issues…

I will let Brad talk about maintenance, but let me just give you an example, where when we say that there’s just labor shortage coming out of, we just are -- it’s amazing. I mean, we have generally fairly high level of attrition within flight attendants. But to give you an example, I mean, this is not even remotely close to the kind of numbers that we’ve seen a trip out and flight attendants, which, thankfully, we can train quickly and we have thousands of applicants. But just to give you an example, one of our partners hired 22 of our flight attendants in eight days. I mean, so their demand levels have exploded. So it’s just like I said, it’s a new regime and we just have to come to grips with it and we are, in fact, acting as fast as we can. But you would never think for a second that you’d be dealing with flight attendant attrition the way it is and effectively a shortage in flight. So, yes, it affects everybody, and I’ll let Brad to talk about the next, obviously, critical is highly trained mechanics. Brad, you want to make a comment.

Yeah. I mean, look, Helane, I don’t think it’s any surprise, there’s pressure on all labor groups. The thing and mechanics are no exception. The actual numbers, though, we’ve been able to hire a sufficient number of mechanics to keep pace with attrition. And with mechanics, although, you’re getting an inexperienced mechanic, the training footprint is not nearly as long as it is with a pilot.

Right.

So, although, this pressure, we’ve been keeping up on hiring with the other groups. The pilots have, obviously, get more focus and attention, because of the demand issues or the supply issues and the length of the training footprint.

Got you. That’s very helpful. Thanks, Brad. And just if I can follow up, does the management change, American change anything for you with the American contract?

No. Nothing, certainly, nothing contractually. But -- I mean, but, Doug and I have been friends since the American went bankruptcy. And certainly, we’re starting to see him go to retire, because he’s always been, we’ve viewed him as a friend and an ally. But we’ve also known Robert Isom for a long time. Brad has worked very closely with their operational people, Devon May. So for the folks that we deal with, I don’t see any significant change. So we like Doug a lot, both professionally and personally and wish him the best. I mean, but I don’t think we’ll be hurt by it. I think that the impact would be -- it’ll be the same thing and contractually, there’s no change. Do you have anything, Brad, something to add?

Got you. Thank you. Thanks, guys.

[Operator Instructions] Our next question comes from Mike Linenberg. Go ahead, please. Your line is open.

Oh! Hey. Good afternoon, everyone. Hey, Jonathan. The European operation, the 49%, so I guess you’re going to account for that under the equity method. And when does that start showing up in the P&L? Like, what’s the ramp up there, I guess, their startup costs maybe and I don’t know, if there’s some initial CapEx? Can you just -- can you talk about that, because that’s still like that that was going to be a fiscal year 2022 development?

Well, I’m going to ask Mike to answer that, because he’s been responsible and taking the lead on the European operation. So I’m going to ask Mike to answer those questions.

Great.

Hi, Mike. So, yeah…

Hey.

… this is Michael Lotz. We were expected. We were working with the multi-regulatory authorities where we’re going to have the certificate and be incorporated. We’re going through the process of getting a certificate. We expect to get that certificate, certainly, in Q2, in the first half of calendar 2022. The startup costs will be minimum. We’re talking not millions of dollars, probably more like hundreds of thousands of dollars to start up. And we’ll be looking for customers in the coming months and go from there.

Is -- are you -- like with respect to staffing and bringing in pilots and the like? Is it -- are you going to run into some of the same, is this operation going to run into some of the same issues that we’re seeing in the U.S.? I noticed pilot and mechanic shortage seems to be global. Like anything on that front that that you’re seeing or that you can highlight for us? Thanks.

Yeah. First of all, I want to mention that when Mike said, we’re looking for customers, I think that’s important, because we intend our thought there and our partners thoughts is that we’re going to bring over to Europe much more of a kind of U.S. model capacity purchase agreement. We’ve already begun conversations with large carriers to provide that level of service. As you know, the regional business has been truly decimated in Europe. In terms of personnel, I mean, so I know I’m probably one of the few people in here to keep harping on the 1,500 hour rule, because someone else feels it’s a lost cause, but don’t see the same issues internationally, that you do in the United States, because no other country in the world has adopted these rules. We’ve looked at some situations in other parts of the world as well and when we talk about pilot shortage, they look at us, and say, you know what shortage. So I think that we feel comfortable that with the type of aircraft that we operate there and it likely be a regional jet, we don’t think that that will be a problem. And we feel that we can hire people and retain and attract people without anywhere near the level of difficulty that we have here. And it’s kind of crazy to think of Europe being less regulated in some respects than the United States, but at least when it comes to pilots that’s the case.

Okay. And then, Jonathan or Mike or Brad, can I just sneak in one last one. You talked about the attrition rate being high, did you throw out a number, what percent, what you’re seeing right now, whether it’s pilots or flight attendants, anything on that front would be great? Thanks and thanks for taking my questions.

Yeah. I mean, the pilot numbers are short all over the Board. Although, I will tell you they have been increasing since we -- I can’t say, look, the -- unfair to say exit COVID. But as COVID had begun to sort of wind down, the numbers went up and it’s all been driven by hiring at the major level and I think that that’s really what’s driven it. But we have in the past under high levels of attrition. We’re -- we’ve seen numbers in the 25 to 30 range, and occasionally, it’s popped up a little bit higher than that in terms of total pilots. Again, it’s just a question of where things level off and what happens? But -- and it’s run higher in a couple months, it’s run lower, but it’s really hard to say right now, because it’s going to be dependent upon where things shake out. And the other thing, too, is, I do believe that our partners realize that this is a problem for all of us. There’s attrition going on throughout the industry, no one is immune, I mean, no one is immune. A lot of regionals like ourselves have had to fly lower ours. I actually am not aware of any regionals that flying at the levels that we were back in 2019 according to our partners. We may be the closest at American. But I think the fact that matter and that’s -- and to be fair, that’s only because we pulled those aircraft out. So, I mean, we’re not, there’s nothing magical there. I think it’s really a question of how effective we are at not just retaining pilots, but also attracting people. And as one of the drums that we have been beating with our partners is, we really need to focus on ways not just to keep people within the United ecosystem or the American ecosystem, but actually to bring people and sort of refill the reservoir of pilots that in, in fact, is being drained with expansion of flying, as well as the -- all the retirements that are occurring.

Thanks. Thanks, Jonathan. Thanks, everyone.

And we have another question from Savi Syth. Go ahead, please. Your line is open.

Hey. Thanks. I was just kind of curious on the cargo fronts. It sounds like you’re executing well there, getting another eight looks on the fleet land, you’re getting that third aircraft as well. Just any update on how you can expand that or what we can expect in the next year or two?

Sure. Clearly we did not enter the cargo business for three aircraft. I mean, it’s just not an efficient operation. It’s -- just there’s lots of reasons why it needs to be bigger. In fact, one of the reasons why we got the third aircraft was just because we were nervous about only having two aircraft and not having a spare. Operationally, we found that we were -- we did operate with only two airplanes and we exceeded -- I can tell you, without a doubt that we exceeded DHL expectations over the year. So I think that we are very well positioned for growth. The DHL’s of the world. Amazon, they don’t add growth nilly -- willy-nilly, they’re very thoughtful. But I think in our conversations with DHL, they are well aware that and are supportive of the fact that for us to be successful long-term and they’ve clearly indicated that they want us in the portfolio and that they’ve made clear without a doubt, that we have to be larger. And can we go to six airplanes, eight airplanes, 10 airplanes, I would say that, it’s probably a fair statement that we’re below eight airplanes, it’s hard for us to really spread our costs around. And I think that the target for us to be to -- to be at least at that number over the next few years. It won’t happen fast. We’ve made a big investment so far, which clearly has impacted our numbers as well. But they have made it very clear that they would like to see us remain in the portfolio and they’re going to help us do that.

Okay. Thank you.

Speakers I’m showing no further questions at this time.

All right. In conclusion, I just want to say finally, it has been a tough quarter for us. My first segment about who would have thought it would be harder to exit COVID than to enter COVID. The rapidity at which demand levels at least domestically increased and the fact that majors were anxious to put so much additional capacity. It’s not as if it caught us by surprise. It’s just that even starting training back in April, while we still had pilots on VLAA [ph]. It’s just taking time, as you know, to get back up to the speed that we want to we would like to be at. The situation has been difficult. We were, as you know, we’ve frankly said that, attrition levels have still not come down, they are still high and we are going to continue to work as best we can to make sure that we can provide as many block hours as possible. I think that we feel that we’ve got these issues to deal with over the near-term. But as I mentioned also, we do feel that not all the fundamentals of the industry are intact long-term, but we think we’ve laid a good base here at Mesa and we’ll see that benefit over the long-term as well. So, with that, we appreciate your time. We will continue to work hard to do the best we can and if you have any additional questions, as always feel free to call any of us after the call or this week, whenever you need to have any additional information. Thank you very much.