MESA - NASDAQ

Thank you for standing by, and welcome to the Mesa Airlines' Q1 Fiscal Year 2023 Conference Call. All participants are in a listen-only mode until the question-and-answer session of today's call. [Operator Instructions] This call is being recorded. If you have any objections, disconnect at this time. I would now like to turn the call over to Doug Cooper, Head of Investor Relations. Mr. Cooper, you may now begin.

Thank you, Christina and welcome everyone to Mesa's earnings conference call for its fiscal first quarter 2023 ended December 31st, 2022. On the call with me today are Jonathan Ornstein, Mesa's Chairman and Chief Executive Officer; Brad Rich, Executive Vice President and Chief Operating Officer; Michael Lotz, President; Torque

Thank you, Doug, and thank you everyone for being on with us today. We're pleased to be speaking to you again after introducing several major developments at Mesa on our fourth quarter call six weeks ago. As you may know, we had a busy December quarter, negotiating and finalizing significant agreements with our airline partners and other key financial parties. We expect these new agreements will substantially enhance our operational performance and both our income statement and balance sheet. Since our last call, we have been working diligently as we prepare to wind down our loss-making operation with American Airlines and transition our CRJ-900 flying to United Airlines next month. For the quarter, we had an adjusted net loss of $4.3 million on revenue of $147.2 million. While traffic remained strong and our pilot pipeline has improved significantly, capacity remains constrained as we catchup with unprecedented attrition experienced as a result of the industry-wide pilot shortage. Here's a quick overview of what we have recently accomplished. First and foremost, we eliminated our loss-making operation at American Airlines effective April 3rd, 2023. Pursuant to that wind down, United agreed to add up to 40 CRJ-900s previously operated for American. To improve our balance sheet, we sold our remaining 8 CRJ-550s and agreed to sell down 11 CRJ-900s and 30 GE engines, reducing approximately $90 million of debt and generating approximately $70 million of cash. Additionally, United replaced our $16 million balance on our revolving credit line and provide an additional $25 million loan. We also restructured our RASPRO leases and EDC debt. Finally, we implemented new pay scales with our pilots and a new agreement with our flight attendants. Looking forward, the current quarter is all about a successful transition. Working closely with United, we intend to keep all the related crew domiciles and maintenance bases open. With our significant focus on operations, we believe the new United 900 flying will perform at levels similar to our existing E-Jet flying at United. In some good news on the pilot front, we continue to see strong levels of applications and reduced attrition. Currently, our monthly pilot attrition declined and has now stabilized approximately near pre-COVID levels. This week, we announced a direct entry captain position for qualified candidates. Highlights of the program include a 24-month flow to United Airlines and an industry-leading $110,000 sign-on bonus. Combined with our industry-leading pay rates, we believe this may be the best opportunity in the history of regional aviation for pilots to advance their careers. We are continuing to focus on pilot training, throughput, and have increased our resources around it. Brad will get into more detail on this later on. Last fall, we officially launched our Mesa Pilot Development or MPD program and recently welcomed our first graduates to the Mesa regional pilot ranks. As our -- with our significantly increased pay scale and participation in United Aviate program as well as our expanding training pipeline provided by MPD program and our new direct entry captain program, we believe Mesa provides a reliable and rapid path for pilots to join the regional industry and transition to United Airlines. We are pleased to be within the United ecosystem and are committed to training, retaining, and promoting pilots through to United. I'm also pleased to announce that we are adding a 737-800 freighter to our DHL operation. We have taken delivery of the aircraft and expect it to enter service in March. This brings our total cargo fleet to three 737-400s and one next-gen 737-800. At this point, I'd like to turn to highlights from the past few months that speak to the leadership position that Mesa is building in the future of regional aviation and the greater sustainability that we hope to help enable the industry in years ahead. The two electric flight partnerships we invested in with United, Archer and Heart recently achieved significant milestones. Archer unveiled its new five-seat eVTOL titled Midnight in November. Midnight is set to provide a sustainable form of aviation that can service short distance trips between regional airports and city centers. Heart Aerospace also continued to make progress, meaning a number of milestones and garnering additional commercial aircraft orders. We believe Mesa is the vanguard of innovation in eco-friendly electric aviation and will continue to assess opportunities going forward. Meanwhile, our European joint venture, FLYHT [ph], is on track to complete its operating certificate this spring, while initially operate regional jets, we believe FLYHT could also be a platform for us to expand new technology and eco-friendly flying in environmentally sensitive European markets. With that, I will hand it over to Brad Rich to go over more of the details of our operational performance this quarter.

Thank you, Jonathan and good afternoon to everyone. I'd like to start by reviewing our quarterly operating results. In the December quarter, we flew 50,940 block hours, 9.6% below last quarter, roughly in line with our previous forecast. Our March quarter block hours are projected to be roughly flat versus the December quarter. Mesa, like many regional airlines, continues to contend with the challenges of the industry-wide pilot shortage on our block hour production. However, we finally have a line of sight to relief. As Jonathan mentioned, attrition has come down materially over the past few months, and our classes are filled with a combination of new hires and captain upgrades. Pilot production remains our highest priority. We continue to increase our in-house training capacity from the additional CRJ and E-Jet instructors that we have hired. We have also contracted with CAE to provide both instructors and more sim capacity this year. We remain focused on our transition to United and are continuing to work closely with their teams to prepare facilities, crews and maintenance efforts for CRJ-900 flying. The rollout that we outlined on last quarter's call remains unchanged. We expect to operate our current 24 lines of flying with American through February 28th before reducing flights throughout March and ceasing American operations on April 3rd. We will begin operating CRJ-900s for United on March 3rd and will transition all the flying by May. As previously mentioned, United is covering the expenses to reconfigure and rebrand the CRJ-900 aircraft. With that, I'll now turn the call over to Torque to walk through our financial performance.

Thank you, Brad. I'll take this opportunity now to review our financial performance and our balance sheet. For the first quarter of fiscal year 2023, revenue was $147.2 million, relatively flat compared to $147.8 million in Q1 2022. Contract revenues fell by $8.4 million year-over-year, driven primarily by lower block hours, partially offset by increased block hour revenue for our new pilot pay scale. Pass-through and other revenue increased by $7.9 million, primarily due to E-Jet maintenance, faster revenue and deferred revenue. Mesa's Q1 2023 results include, per GAAP, the recognition of $5.3 million of previously deferred revenue versus the recognition of $4.2 million in Q1 2022. The remaining deferred revenue balance of $18.8 million will be recognized as flights are completed over the remaining terms of the contract. On the expense side, Mesa's overall operating expenses for Q1 2023 were $144.7 million, down $7 million versus Q1 2022. This decrease was driven by lower maintenance expense, which fell $10.7 million or 18.1%versus Q1 2022 to $48.3 million. It's primarily due to fewer seat checks than in the first quarter last year as well as lower aircraft rent, which fell by $5.5 million and depreciation and amortization expense, which fell by $5.8 million. The decline in depreciation and amortization expense is primarily due to reduced asset values as a result of assets held for sale and year-end impairments. These factors were partially offset by higher flat operational expense of $10.7 million due to increased training costs and the implementation of higher pilot pay scale as well as $3.7 million in intangible asset impairment. On the bottom-line, we reported a net loss of $9.1 million or $0.25 per diluted share compared to a net loss of $14.3 million or $0.40 per diluted share for Q1 2022. On an adjusted basis, Mesa reported a loss of $4.3 million or $0.12 per share compared to a net loss of $9.3 million or $0.26 per share a year ago. The adjusted loss of Q1 2023 excludes a $3.7 million impairment loss and another $1.7 million mark-to-market non-cash loss on our investments in equity securities. Adjusted results from Q1 2022 excludes a $6.5 million mark-to-market non-cash loss on our investments in equity securities. Next, let me turn to cash and liquidity. Cash for the quarter, excluding restricted cash, decreased by $1.6 million from the prior quarter ending September 30th, 2022, at $56.1 million, in line with the projection on our fourth quarter call. This amount excludes net proceeds from the sales that were not closed as of December period end, including our eight CRJ-550s, 11 900s, and the spared engines that Jonathan reviewed at the top of the call. Total debt at the end of the quarter was $701.3 million, up $86 million from the prior quarter. This amount includes $64.2 million corresponding to the GAAP reclassification from our operating lease to finance lease on 15 CRJ-900s. Additionally, we borrowed $25.5 million in the form of term loan from United, of which $15 million is forgivable upon the meeting of certain performance criteria. During the quarter, we also made scheduled debt payments of $17.5 million and finance lease payments of $3.5 million. As a reminder, we have $74 million of scheduled principal payments remaining in 2023 and after the repayment of debt associated with asset sales, we expect fiscal year 2023 year-end debt of approximately $535 million. This updated total from $435 million that we were expecting as of last quarter's call, primarily reflects the net impact of the reclassification of the RASPRO operating lease to a finance lease. With regard to fiscal full year 2023, given the ongoing major developments at Mesa that we will not be providing specific financial guidance at this time other than the block hours for the March quarter that was discussed by Brad earlier, and the total debt figure that I just mentioned. We would like to point out that this quarter had favorable adjustments of $7 million. Based on our transition with American, we expect our deferred revenue to decrease by $11 million next quarter. Additionally, given the United's equity stake in Mesa is 10%, our current share count is approximately 40 million. With that, I'd like to now turn it back over to Jonathan for closing remarks.

Thank you, Torque. In summary, our first fiscal quarter of 2023 was a critically important one for Mesa and one in which we believe we achieved a lot and made significant progress. That said, we have a lot of work ahead of us. We continue to focus on pilot development in order to increase our block hour production first and foremost. At this point, please open up for additional questions that the analysts may have.

Thank you. [Operator Instructions] Our first question today comes from Savi Syth with Raymond James. Go ahead please, your line is open.

Hey, good afternoon everyone. Just as wondering, with this December quarter, you talked about losing about $5 million a month on the American contract. And in light of that, it seems like the earnings result is pretty good. Is that a function of some of that deferred revenues showing up? Or if this trend holds, why shouldn't we expect kind of profitability by kind of the June quarter?

Yes, hey Savi, this is Torque. Yes, we recognized a fair amount of deferred revenue just given the change in the contract term with American Airlines. That's the biggest change in the quarter.

Okay. So, kind of going forward, I should kind of consider the underlying ex that as the base going forward?

Not quite clear, Savi. Could you repeat?

Yes. So, just for the -- I guess, as we think about the core United earnings power here, should we think about it as take out the revenue recognition and maybe take out the $15 million in losses that will go away, and that's your core until you start building up your block hours? Is that how we should think about it?

Yes, we have some tail with American Airlines, expenses that are covered for the next upcoming quarter. But yes, if you defer the -- or eliminate the deferred revenue, then yes, that would be close to what we would expect moving forward.

Got it. And then if I might, on the pilot side, which is kind of good news. If kind of the attrition levels here hold at close to pre-pandemic levels, how long -- given your kind of increased trading throughput, how long do you think it will take to then be able to fly the full complement that you want to fly?

Savi, this is Jonathan. It's really depend on, to some degree, the mix of aircraft. We are moving CRJs over. But I mean, I think our preference and United's preference should be to fly as many of the 175s as we can. And so we've got sort of two training pipelines going. I would suggest, depending on what you call maximum utilization, for example, if we could fly 11.5 hours, we'd probably be at the outside, call it, it could be as long as 18 months, and that would be conservative. However, in spite of the fact that we'd like to fly as much as possible, sometimes network is just not capable of getting that much time on every airplane. So, if we are around 10 hours, it could be probably 12 months, maybe a little better than that based on the current trends. But I do have to warrant everyone. I mean, these trends are very volatile. And we got a good jump with what we did in terms of the pay rates and some of the programs we put in place. We've got a really strong development program now with Mesa pilot development. But as you know, one of the problems that has been created by this legislation has been the fact that we've had this big attrition throughout the regional industry. And we're just running out of people to upgrade to captain and that is becoming an overwhelming issue where you're going to end up with trying to get people to 1,000 hours and get them to upgrade and not immediately get hired away by another carrier. Now, with the aviate program in place and with our pay structure, we think we will have addressed that to some degree. But there is definitely still a big log jam on the FOs that has been, again, another unforeseen consequence of this ill-conceived and ill-advised legislation.

Makes sense. That’s helpful. Thank you.

Our next question comes from Helane Becker with Cowen. Go ahead please, your line is open.

Thanks very operator and thanks for the time everybody this afternoon. So, just a couple of questions, and these are just kind of clarifying questions, Torque. On the investment loss in the quarter, can you just mention what that's related to? I mean there was a big improvement from September to December. And I'm just wondering how I should think about that from December to March?

Yes. So Helane, this is one that I have been involved in, so I can answer quickly. If you want to be able to judge whether we're going to have investment gain or loss, you're just going to look at the price of Archer because that's really all it amounts to is just the price of Archer. We are currently long as part of our deal, about 2.2 million shares of Archer. We have more coming down the road. But that really -- and Torque, correct me, but I think that really is the entire mark-to-market is on Archer's stock.

Yes. That is correct.

Okay. And then my other question is just, again, a clarification question as I -- and it's kind of what Savi asked, I think, just differently. As we think about the wind down of American, how am I thinking about the block hour, the revenue components? Is the increase that we saw from $10 million to $18 million because that's where the United reimbursements are showing up related to the pilots and the decrease from $137 million to $128 million is related to the block hour decline? I mean I know it means to be stupid, but obviously, I'm not getting it.

So Helane, yeah, our block hours were down about 41% from the year-over-year piece. And so -- but our revenue was roughly flat. That's because we did get increase in -- for pilot pay from United as well as we had the deferred revenue that we recognized in the quarter. Those are the two big pieces that made the overall revenue about flat with last year. Does that help? So moving forward, we're obviously there's not a lot of deferred revenue to recognize that there'll be some that we'll recognize in other quarters. But moving forward, it will be -- we'll have compensation for the new pilot rates. But in this next quarter, we also -- we still have the American wind down that we aren't getting fully compensated for pilots in that just so you're aware.

Okay. That's very helpful. Thanks very much.

You bet, Helane.

[Operator Instructions] Our next question comes from Andrew Didora with Bank of America. Go ahead, please, your line is open.

Hey, everyone, good afternoon. Similar line of questioning to the revenues, but on the cost line, when we take a look at kind of cost per block hour in the quarter, it seems like kind of reset around $1,100 per block hour getting 20% step-up from where you were kind of trending in the back half of last year. Is this a good sort of run rate going forward, any one-timers in that number? I'm just trying to think of a baseline here given the new pilot pay and I know a lot more training costs?

Hey, this is Mike Lotz. Hi, Andrew. I think the $1,100 is the only thing that would change down the road from that is that we are on the maintenance side, probably a little lower than we would be on a normal run rate just because of the timing, we hit a peak last year and then we're on the lower side of that. And then offsetting that, I think, is the pilot cost because we have so many pilots in training, and we're hoping that, that -- the attrition kind of levels out and we catch up, then the pilot per block hour would start to come down, certainly not to where it used to because of the pay scale difference. But those are, I think, the two items that we need to continue to look at.

Okay. Got it. And then maybe Jonathan, what is the risk that the CRJ flying for United just gets pushed out a little bit just in terms of like who's doing the retrofits for the planes? Is the space already locked in for this type of work? Just curious what you think the risk is there?

I think it's a fair question. I mean, it took a little time for us to come up with a LOPA that would work for everyone. We went back and forth a few times, just to try to keep it as simple as possible. But I think we're able to do that. Now my understanding is the conversion -- well, now the -- excuse me, I take that back, that there had been some discussion about changing the seats. But now we position that we always recommended was that we just have them remain at 76 seats. And so there won't be a change there. We're sprucing up the cabins, we're taking out a bunch of it. Brad, why don't you go, because you --

Yeah. I mean, look, we don't expect any real delays or issues with the fleet itself. We've got a good transition plan. The plan is being executed. It involves, as Jonathan said, some refreshing of the cabin in some cases, not extensive, but I'd just call them more refreshes and then exterior paint. We've got all that lined out and scheduled, and I don't expect any delays relative to the fleet.

Yeah, I think it's fair to say, and I think understandably that obviously, both American -- excuse me, United and Mesa, we're taking a reasonably cautious approach. We're not going to just throw 38 airplanes into service. I think we're going to just schedule them in overtime and just make sure that everything goes smoothly. And so far, the schedules that we've been receiving have been excellent, have been very productive. I think it's going to keep all of our pilots in place. We do plan on opening up a new base in Denver, which is going to be very popular with our crews. And so we think the transition will go well. And again, the biggest variable, and I hate to keep saying this, but it's just -- it's not going to be equipment, it's not going to be our maintenance capability. It really boils down to pilots and attrition and our ability to continue to put out a good number of pilots through our training program, which we have worked really hard on expanding. And I think we've done a decent job, and we're starting to see some of those results.

Got it. Thank you.

Question comes from Michael Linenberg with Deutsche Bank. Go ahead please, your mind is open.

Oh, yeah. Hey, a good afternoon, everyone. Jonathan, just the 38 CRJ-900s, how do we think about them sort of longer term? Are they more of a stop gap measure once you start to staff up the Embraers that are currently parked? Like if we were to fast forward two or three years from now, is it 38 CRJ-900s or is it maybe a dozen? Is it 20 or is it going to be a core fleet? I'm just sort of thinking about it within the context of some of the restrictions out there within your partners' contracts, et cetera?

Yeah. No. Obviously, what will come into play here is the scope restrictions. And just to be clear, I mean, we are well within the scope. We're not going to -- that's not going to be an issue, obviously. But with that, I think the ultimate goal would be to us to operate all 80 of our E-Jets. So from that standpoint, there may not be room for 900s. Now that being said, there are a lot of other operators that may or may not be able to operate the 7060 aircraft that they have. There may be a way to consolidate a lot of the flying on to fewer shelves. So I think that the 900s may go to 70 seats and fill in. So I think the idea, and I feel pretty confident and I would agree on this is we have training capability, and we've got almost 300 pilots flying the 900s. We're not going to just turn around and tell them we don't need them anymore. I'm pretty sure we're on our way to keep everybody fully utilized. It's going to take a while for the industry to recover from this. And so I think there'll be room for those airplanes for a while. And I think for a while, I'm not saying for 10 years, but I would think that we'd be operating the airplanes in two years down the road. I don't think everyone will recover by then, and we'll still have room for those aircraft within the existing scope.

Jonathan, on that, on that mark, is it is it still true that the CRJ-900s are potentially the lowest cost 76 or 76 cedars in the market today, that those costs, as I recall, you really had a pretty meaningful advantage there historically, with the new pay rates is that still the case? And what is the differential in cost between maybe the E-175 with 76 seats and the CRJ-900 with 76 seats with the new LOPA? Is it a 10% better advantage on a block hour basis, 20%? Any color on that? Because as I recall, that was one of the unique competitive advantages of that shelf.

Yeah. Well, look, the benefit on the 900s is clearly on fuel burn. It's about 8% more fuel effective, right? However, when you look at regional aircraft, and it's just so outsized that you have to take it into account, it really depends on where you are on your engines and what aircraft? I mean, you can normalize your engines, but the fact of the matter is there's probably aircraft out there that will come to an LLP event, which is up to almost $5 million event, and it just will never be done. And so if you take that expense out over the lifetime of the aircraft, that makes whatever aircraft it is going to be very inexpensive. So everything really revolves around engine management and how you look at owning engines or leasing engines. We had been five years ago, when I look back and clearly, given where we are, I don't think anyone would argue that we haven't made mistakes. But the one thing that we did do was make a lot investment in engines. And we just realized that these engines would be strong assets. And we went out and literally started buying every engine, we could get a hold of, use knew it didn't matter. I mean, we had 51 extra engines, and we just sold 30 to United, and we'll net somewhere between $50 million and $60 million net of the debt. And we still have another 21 engines that we own. So, I mean, I think that it really revolves around where you are in the engine cycle. But pound-for-pound, the 900 is definitely a more fuel efficient, faster, lower cost alternatives than Embraer 175. Now, that being said, on a shorter haul flight, it doesn't make as much of a difference. And there's no doubt that the get benefits of the cabin, on the 175 is, obviously is very attractive. And the major carriers have no problems putting 175 into very highly traveled business routes, shuttle markets, for example, that I don't think they would put a CRJ into. So, there is offsetting benefits that newer to the 175 in terms of passenger comfort, acceptance and the satisfaction.

And on that just last point, if I could just sneak in one more about capability, as I recall, that at least the CRJ-700, the capability that they had to go into some of the ski destinations, which is obviously a very important market for United. Can the CRJ-900 go into those same ski, you know, the mountain destinations in whether it's Aspen, for example, the ones where I don't think you can fly an E175, and an Aspen fully loaded. I could be wrong on that, too. But the CRJ-900 have that same capability or they just too heavy versus the 700?

Well, you're right about the 175. There have been ongoing discussions regarding the 900s in terms of their capability, depending on who you ask, but I think our view here is that in all probability, the 900 would not work in places like Aspen or Telluride.

Okay.

Just probably would not work.

Okay. Okay. Fair enough. Thanks for the time.

Sure. Thank you.

[Operator Instructions] Our next question comes from Savi Syth with Raymond James again. Go ahead, please. Your line is open.

Hey, thanks for the follow-up. I just wanted to kind of come back to that cargo announcement that you made that you have one more aircraft that you'll be flying there. I think the previously was that -- you had three aircraft, but maybe the third was a kind of a backup aircraft. And just if you can just provide an update on, what you think cargo blockers are going to be doing and how that program is progressing?

Yes. So on the third aircraft is a 737-400. We haven't been particularly pleased with the aircraft and ongoing conversations with DHL to potentially replace that aircraft, maybe with a newer 800, and we're adding this 800, which I personally feel that it really puts us in a sweet spot with DHL. I was just on the phone with them today, they've been very complimentary about our operation. They actually made a comment about how our people have really worked well with their people. And it's just good to hear that there'll be opportunity. That being said, it's obviously taken a long time, and we've been patient. And given the downturn recently in cargo activity, it's probably going to be a little bit slower than we'd hoped for. But we are going to add the fourth airplane, we'll look to figure out what we're going to do with 708, which is the third 737, which came into service, but that aircraft was in fact flying a full line. So we will now move from three line full lines of flying to four full lines of flying. And Brad correct me if I'm wrong, but they do between like 100 and 120 hours a month, about 100, 120 hours a month in utilization. So you can work the math from that.

That's super helpful. And is that so -- is it still kind of a mildly profitable business would you say or is it kind of still you need more scale to really drive profits there?

No, we were fortunate that like the other major carriers DHL appreciate the fact that things have been difficult and so we've made the transaction structured so that our feeling is on a run rate basis going forward. We've been at break, no worse than breakeven. And again, we put a lot of money into the operation to start. So, obviously, we have a way to go to recoup our investment. But we now in the 737 business, we have a nice cargo business. And I think that over time, particularly now that we have 800s on certificate, it could be an opportunity for us going forward to grow that business, as cargo recovers, because there's no doubt that things have slowed down right now.

It makes sense. And if I might on the European JV, any updates on that? I know, it's been six weeks probably not a lot new there, but just curious on how that's progressing.

We're still working on getting the certificate finalized. And I think Mike you feel what we’ve done in March?

March or April.

March or April. And then we looked at place a couple of regional jets out there, and we're talking to a number of carriers about operating those aircraft. I think the feeling that we have is, I mean, it's a very long-term project in that. We think that this could be a platform, for example, for us operate electric aircraft, which we think will be really in high demand in Europe, just given the direction things are going towards sort of environmentally friendly alternatives. And I think that we can continue to find a home for some of the regional jets out there that have been made excess sort of post COVID. And, particularly in the CRJ-900, or in Europe CRJ-1000, it's just a matter of finding the right customer to make that happen. So we continue to plug along, I think that we feel that it's just going to be good to have an operating certificate. And to be frank, I mean, the backstop always was just the fact that we have a certificate is valuable for what we have invested in it, we think we can easily get, frankly, a multiple of that back, if we wanted, if we just were going to sell the certificate. So we've always used -- utilize that method as a backstop. But we have wonderful partners over there, guys who have a tremendous amount of experience in Europe, who really is why we made the investment, because we had so much confidence in them. And I think, over time, we'll be as well positioned to take advantage of opportunities that will develop in Europe, in particularly, given the gaps that have now occurred as a result of so many bankruptcies in the regional business over there. And how it's -- the regional business is much different there than it is here in terms of a lot of small carriers flying multiple pieces of equipment, different types of equipment. I think that our approach will find some opportunity with some of the flag carriers to provide capacity purchase services over the long-term.

Sounds appreciate the insights.

Speakers, I'm showing no further questions at this time. You may proceed.

Okay, well, thank you, everybody. I think, it's fair to say that, we clearly had gone through a rough patch. We had a lot of work to do in terms of putting together multiple agreements all at the same time. We barely mentioned some of the things like the RASPRO agreement, the EDC agreement, obviously -- the Treasury, we made a significant modifications with Treasury, who by the way was very helpful. And now we just have to put it together operationally, we are very focused on pilot production since clearly, that makes a big, big difference. For the last couple of months, we've been on the plus side. In other words, we're putting out more pilots than we're losing. We want to see that number continue to increase. We've added, sims, we've added instructors, we've employed CAE. So I'm hoping, and I think we believe that over time, we'll start to see the benefit of all this, and it will all come together in terms of a much more stable operating platform, and renewed profitability. And also, it would be remiss not to mention the fact that through the wind down, we've been working very closely with American and maintain really good relationship with them. And I think that since we began to wind down, I think we've canceled two flights. We really want to do a good job right to the last day with American. We appreciate their understanding of our situation. And certainly, United is really stepped up and helped us and it's a good thing to know so many people that we have over there, the support that we've gotten from United has been fantastic. And we're on the phone with them literally on the phone every day. And I have to tell you, we've been really appreciative of what they were able to do to help us work through this difficult period. So with that, I'd like to thank everybody for joining us. We continue to work hard, get the company turned around, and we look forward to talking to you next quarter.