SKYW - NASDAQ

Ladies and gentlemen, thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the SkyWest, Inc. First Quarter 2025 Results Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. Now I would like to turn the conference over to Rob Simmons, Chief Financial Officer. Please go ahead.

Thanks, John, and thanks, everyone, for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest, Inc. Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer, Wade Steel, Chief Commercial Officer, and Eric Woodward, Chief Accounting Officer. I'd like to start today by asking Eric to read the safe harbor. Then I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results. Then Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our sell-side analysts. Eric?

Today's discussion contains forward-looking statements that represent our current beliefs, expectations, and assumptions regarding future events and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statement whether as a result of new information, future events, or otherwise. Actual results will likely vary and may vary materially from those anticipated, estimated, or projected for a number of reasons. Some of the factors that may cause such differences are included in our most recent Form 10-K and other reports and filings with the Securities and Exchange Commission. And now I'll turn the call over to Chip.

Thank you, Rob and Eric. Good afternoon, everyone. Thank you for joining us on the call today. Today, SkyWest, Inc. reported net income of $101 million or $2.42 per diluted share for the first quarter of 2025. These results reflect a slight increase in production for the first quarter compared to Q4. Winter quarters are typically the most challenging. However, together, our people completed over 30,000 more flights in the same quarter last year and delivered 99.9% adjusted completion. This quarter's year-over-year increase in the number of departures continues to reflect the improved stability of our staffing. We expect our solid operating leverage to continue to deliver well, with increased production translating into positive returns for our stakeholders. I want to thank our team of nearly 15,000 aviation professionals for their continued teamwork and dedication to excellence. The current macroeconomic uncertainties have translated into some overall industry outlook softening. Demand for our product is strong, and SkyWest, Inc. continues to lead our segment of the industry. We remain disciplined and steady as we execute on our growth opportunities to, one, restore or bring new service to underserved communities, two, redeploy and fully utilize our existing fleet, and three, prepare to receive our upcoming deliveries of 16 new E175s over the next two years. During the quarter, we were pleased to complete an agreement extending more dual-class CRJ aircraft under our Delta partnership, placing nearly all CRJ 700 aircraft under long-term agreements. Additionally, as we receive another 16 E175s over the next couple of years, we will have 278 by the end of 2026. We continue to see strong demand for our dual-class flying and look forward to continuing to deploy additional CRJ 550s for our partners. We will speak more about that in a minute. As we continue to invest in our overall fleet, we expect our CRJ fleet to produce accretively well into the next decade. Our dual-class aircraft generated 87% of our block hour production during the first quarter. The ongoing strong demand and delivery book continue to position us for increased regional market share. As we discussed last quarter, we believe we are now in a place where our pilot staffing, hiring, and production are well matched with a very robust pipeline. We are fully confident the measures we have put into place over the past few years will ensure staffing is stabilized over the long term, and we continue to expect block hour production to be up about 12% to 13% this year compared to 2024. We were pleased during the first quarter to receive the Department of Transportation's tentative approval for SkyWest Charter, or SWC's Part 380 scheduled service authorization. While our plans are to maintain SWC as a small portion of our overall business, we look forward to the DOT's final approval and to serve communities that cannot support Part 121 operations but are seeking a higher standard of safety and service. The competitive landscape continues to change, and SkyWest, Inc.'s disciplined strategic decisions are advancing our market share through continued fleet acquisitions and flying agreements without taking on unnecessary complicated risk. We remain focused on our long-term strategy, with smart investments in our people and pleased we redeploy and utilization and execute on our growth pathways. We have spent several years strengthening our balance sheet and fleet flexibility in reinvesting our future growth. We remain very confident that the steps we've taken have us exceptionally positioned despite the macroeconomic uncertainty. Overall, our well-positioned fleet operation and our strong partnerships and demand remain optimistic about the year ahead. We continue to play the long game and to invest in our fleet in the future and to ensure we are in the best possible situation to respond to market demand. Rob will now take us through the financial data.

Thanks, Chip. Today, we reported a first-quarter GAAP net income of $101 million or $2.42 earnings per share. Q1 pretax income was $121 million. Our weighted average share count for Q1 was 41.6 million, and our effective tax rate was 17%. Our Q1 EPS included $0.24 per share in discrete income tax deductions which are not expected to recur the rest of the year. At a normalized tax rate of 25%, Q1's EPS would have been $2.18 per share. First, let's talk about revenue. Total Q1 revenue of $948 million is up slightly from $944 million in Q4 2024 and up 18% from $804 million in Q1 2024. Q1 revenue breaks down with contract revenue at $785 million flat from Q4 2024 and up 16% from Q1 2024. Pro rate and charter revenue was $131 million in Q1, up 3% from Q4 2024, and up 29% from Q1 2024. Leasing and other revenue was $32 million in Q1, up 3% from Q4 2024, and up 28% from Q1 2024. These Q1 GAAP results include the effect of recognizing $13 million of previously deferred revenue this quarter, down from the $20 million recognized in Q4 2024. As of the end of Q1, we have $39 million of cumulative deferred revenue that will be recognized in future periods. We anticipate recognizing approximately $10 to $20 million of previously deferred revenue per quarter over the remainder of 2025, subject to production levels. Let me move to the balance sheet. We ended the quarter with cash of $751 million, down from $802 million last quarter and $821 million at Q1 2024. The decrease in cash during the quarter included the accretive of one, repaying $114 million in debt, two, buying back 141,000 shares of SkyWest, Inc. stock in Q1 for $14 million. With the volatility in the equity markets in Q1, we opportunistically repurchased three times the shares that we bought in the fourth quarter. As of March 31, we had $34 million remaining under our current share repurchase authorization. And three, investing $73 million in CapEx, including the purchase of four CRJ 550 aircraft, spare engines, and other fixed assets. We ended Q1 with debt of $2.6 billion, down from $2.7 billion as of December 31, 2024. Cash flow is an important component of our shareholder value creation calculus. We generated approximately $500 million in free cash flow in 2024 and deployed it primarily to delever and derisk the balance sheet to the benefit of our partners, our employees, and our shareholders. We generated over $140 million in free cash flow in 2025. Our strong balance sheet and well-grounded liquidity are powerful tools as we pursue a variety of growth opportunities, including acquiring and financing 16 additional E175s by the end of 2026, repaying an expected over $400 million in debt in 2025, and continuing to execute opportunistically on our share repurchase program. As we remain focused on improving our return on invested capital, we'd like to highlight the following. Both our debt net of cash and leverage ratios continue at favorable levels at their lowest points in over a decade. We continue to anticipate that our total 2025 capital expenditures funding our growth initiatives will be approximately $575 to $600 million, including the purchase of eight new E175s and aircraft engines supporting our CRJ 550 opportunity. Total CapEx in 2024 was $311 million. Consistent with our policy and practice, we're not giving any specific EPS guidance at this time. But let me give you a little additional color on 2025. As Wade will discuss in a minute, we now anticipate our 2025 block hours to be up approximately 12% to 13% over 2024. The improved outlook in our 2025 block hours is driven primarily by improving fleet utilization and availability and ongoing strong demand for our production. We now expect our 2025 GAAP EPS could be in the low to mid $9 per share area, including the discrete income tax benefit in Q1, if we are successful in executing on the opportunities in front of us. We continue to expect to deliver solid operating leverage with 12% to 13% year-over-year production growth translating into an 18% to 19% increase in earnings per share in 2025. For modeling purposes, we still expect our 2025 depreciation expense will be slightly down from 2024, and our maintenance expense in 2025 should still be a little over $200 million per quarter. We also anticipate our effective tax rate will be approximately 26% for the remaining three quarters of 2025. We are optimistic about our growth possibilities going into 2025 and 2026, including the three focus areas. One, growth in underserved communities driven partially by the deployment of over 30 additional CRJ 550 aircraft. Second, improved aircraft utilization and availability on our ERJ and CRJ fleets. And third, placing 16 new E175s into service in 2025 and 2026. We believe that our strong balance sheet, operating leverage, free cash flow, and liquidity, and the actions we will be taking to deploy our capital against a variety of accretive opportunities, will position us well to drive total shareholder returns. Wade?

Thank you, Rob. Last year, we announced a new multiyear flying agreement for a total of 40 CRJ 550s with United, including 11 aircraft that we committed to purchase from United. As of March 31, we had purchased all 11 aircraft. In April, United exercised its option to add 10 additional CRJ 550s to this agreement, bringing the total to 50. Of those 50 CRJ 550s, 39 will be modified from our existing CRJ 700 fleet. We were operating 12 CRJ 550s as of March 31 and expect to operate 30 by the end of this year, with the last 20 entering service during 2026. I want to point out that this agreement represents net growth aircraft along with the additional new E175s arriving by the end of 2026. We are excited about our continued strong partnership with United. Also last year, we reached an extension of a multiyear flying agreement with American that would allow for SkyWest, Inc. to operate a total of 74 CRJ 700s under revenue agreements. This new agreement will allow for these aircraft to fly for American through most of this decade. You'll recall that we successfully launched our first Delta CRJ 550 last July, and we anticipate transitioning 15 CRJ 550s to our Delta fleet by midyear. During Q1, we signed an extension with Delta on 16 CRJ 700s and 900s. This new Delta extension and United CRJ 550 agreements along with our CRJ 700 agreement with American bring the number of unassigned dual-class CRJ 700s and 900s down to low single digits. We expect these few aircraft will be assigned to one of our major partners soon. We have 16 new E175s currently on order, 15 for United and one for Alaska. We anticipate delivery of eight this year and eight in 2026. We do expect to see delivery delays from Embraer this year, and we now anticipate that the majority of our 2025 deliveries will be in the second half of the year. At the end of 2026, our E175 fleet total will be 278, continuing to enhance SkyWest, Inc.'s position as the largest Embraer operator in the world. Let me review our production. Q1 completed block hours were slightly up compared to Q4 2024. Based on our current Q2 schedules from our major partners, we anticipate a 5% increase in Q2 as compared to Q1. For the full year, we anticipate a 12% to 13% increase in 2025 compared to 2024, approaching our 2019 levels. We expect block hour seasonality to return to the model as utilization improves during the strong summer months. We still have approximately 25 parked dual-class CRJ aircraft that will be returned to service. The majority of these aircraft are currently under flying agreements and will be operating in 2025 and 2026. As we shared last quarter, we continue experiencing challenges in our third-party MRO network, including labor and parts challenges. We expect maintenance expense to average slightly over $200 million per quarter during 2025 as we bring aircraft out of long-term storage and service the current fleet as production continues to increase. As you would expect, the maintenance expense will happen before the aircraft goes back into service. Our partners remain very engaged in supporting our efforts to restore. We also reached an agreement with another regional carrier to purchase 29 used CRJ 900 airframes for $28 million. We expect to utilize many of these airframes for parts to mitigate any supply chain challenges we may face over the next few years. We do anticipate operating six of these aircraft in the future. As of March 31, we had closed on three of these aircraft. As far as our prorate business, demand remains extremely strong with great community support. We are seeing opportunities to return SkyWest, Inc. service to several communities as we restore CRJ production. We will continue to work with the communities we serve on the best way to expand our service as we increase our prorate business. We'll see more seasonality reintroduced into our model. As typical with all airlines, Q2 and Q3 are strong revenue quarters, and Q1 and Q4 are softer. We feel good about our ongoing efforts to reduce risk and enhance fleet and financing flexibility and remain committed to continue our work with each of our major partners to provide strong solutions to the continued demand for our products.

Okay, operator. We're now ready for Q&A.

Thank you. At this time, we will now begin the Q&A session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Thank you. Your first question comes from the line of Catherine O'Brien with Goldman Sachs. Please go ahead.

Good afternoon, everyone. Thanks so much for the time. So I believe it's next year that the first of your E175s come to the end of their initial contract, and the associated debt is paid off. When will you start having conversations about extending those contracts? Are there any early indications that bolster your confidence those aircraft will stay in place with their respective airline partners?

Yeah, Kathy. This is Wade. Yeah. We constantly have communications with all of our major partners about fleet, fleet renewal, continuing to fly the aircraft. The aircraft are great airplanes. They've been very well maintained. We believe they're doing a very nice job with our major partners, and so we are optimistic that we'll continue to fly those for the major partners that they're flying for today.

Got it. Thanks. Maybe one for Rob. You stepped up share purchases from the fourth quarter as you noted, opportunistic just given stock price movement. Can you walk us through what the guardrails are to pacing purchases? On my math, you could complete your remaining authorization this year and then some and still see leverage down from 2024. What are the metrics you're looking to?

Yeah, Katie. Great question. I think that the way that we look at it is in a broader context of overall capital deployment. And I think that obviously, our favorite use of capital is to grow our business accretively. But we've got many different ways we can grow this business and do that. But when our stock represents a favorable investment, we're pleased that we have the free cash flow and the liquidity to be able to take advantage of those moments, as we have buying back about 22% of our company since the beginning of 2023. So as you noted, we're sort of getting to the end of an authorization, but we'll have conversations about how we want to deploy capital with our board every quarter, and those will continue to be good discussions.

Got it. Maybe if I could just sneak one more in. Can you just give an update on the CRJ 200 fleet? I think last quarter, you had just over 40 of those aircraft not on contract that you're looking to either fly under new CPAs or charter business or maybe even to sell? What's been the progress on that front? Are other than the small handful of dual-class CRJs, are those the only idle aircraft across your fleet? Thanks so much for the time.

Yeah. That's a great question. This is Wade. Last quarter, we did talk about having 40 of those that we do own that have no debt and very little book value associated with those. We do have a lot of those still under contract with a major partner. We do fly those in prorate at SkyWest, Inc. as well. So there is a big chunk of those somewhere in the range of today that are flying at SkyWest Airlines. We also, as we talked about last quarter, deploy those assets in SkyWest Charter as well. And so they are being used within SkyWest Charter very productively. And then we have had success in selling some to selling and leasing the engines to third parties as well. And so the asset is in still good demand from our perspective. We're still using it. We've anticipated using it for several more years. So yeah, the CRJ 200, it's still something that we're still very optimistic about.

Thank you.

Your next question comes from the line of Savi Syth with Raymond James. Please go ahead.

Hey. Good afternoon, everyone. I think, Chip, you mentioned really strong demand. Clearly, taking up block hours here a little bit more supports that. I was curious if your partners have talked to you. I know this is kind of beyond that four-month period that maybe schedules are being set. But have your partners talked to you about their post-summer plans and how that might look?

Well, I know, Savi, this is Chip real quick. I think you have to kind of look a little bit from the starting point with all of that. I mean, still understand, and we've talked about it the last couple of years. We're still striving our way through a pilot shortage, and all honesty, small community strong demand that we have not yet got back to. So I think the dynamics of what our model is and the niche of what our model is is a little different from a domestic perspective. I mean, for your answer, we're always having ongoing conversations about the current climate beyond the next four months or whatever is going to happen with the current macroeconomic situation. Nothing is taking our eye off the long term still because the long term still needs planning as of today. Some of the things that could impact us for the summertime, we still look to have a very strong robust schedule for the summertime, and some of the most that we've had. And so from that perspective, you do see some of the things that we've talked about in previous quarters about deurbanization of the United States, where we fly, the small communities that we still have to get back access to, which we have a lot of opportunities to do that we're working on now. The conversation relative to our business model is I would say, it's still dynamic with our partners, but we're still in a catch-up mode pretty much all of them, some more than others. So overall, for the entire model, it's still pretty strong and solid as of now.

Makes sense. Appreciate that. And then I noticed the SkyWest Charter, you know, it shows nine CRJs in SkyWest Charter. I think last time it was 18. Is that just kind of seasonally something came down there, or what's the kind of the latest view on SkyWest Charter for this year?

Yeah. Savi, this is Wade. That's right. So we had 18 flying at the end of last quarter. And as you know, the demand for SkyWest Charter at the moment, the demand during the winter months is very, very strong. And the demand at SkyWest Airlines is extremely strong in the summertime. And so in order to fulfill all of our demand that we have at an entity level, we felt like we needed to move a few of those back to SkyWest to continue to fulfill all of the demand at SkyWest Airlines. And so long term, we do anticipate those airplanes going back. But for the short term, in order to fulfill all the demand that we have at SkyWest Airlines, we needed to move those over.

And maybe I can ask you, Wade. You did see prorate stepping up from the fourth quarter, which is a little bit unusual. Was that just more charter business? Was that just strength in demand? Or I was curious why that was stepping up?

Yeah. So on the prorate side, the increase year over year is definitely due to the increase of markets that we've added. Now we've had the opportunity to add several new markets year over year. And so, as we said, the small community air service, the demand is extremely strong. A lot of these small communities are looking for good, reliable air service, and so we've been able to fulfill that. And we'll continue to look to do that over the next several years.

Your QOQ is up too, which is unusual, which is what I thought.

Yeah. And that's also just capacity increases.

Makes sense. Seems like strong demand. Alright. Thank you.

Your next question comes from the line of Mike Linenberg with Deutsche Bank. Please go ahead.

Yes. Hey, I just wanted to follow up on the DOT approval process for SkyWest Charter. It seems like it was a few months ago that they came back, and it was a fairly comprehensive endorsement of what you were trying to do. It was a two-week show cause. It seems like that was a few months ago. That usually, you know, you have your two weeks, and then we get a response. Did I miss something? Are we still waiting for a response?

No, Mike. It's Chip. It's a great question. We did get a show cause order, which typically says you're basically, I would suggest, at the one-foot line on the goal line, and you've just got a little bit further to go. You can imagine, in our view, we would have hoped to have gotten the final approval by now. But as you can imagine, things in DC are a little chaotic right now, and so we attribute it to a little bit of that. Now once we get that, once we get the approval, I mean, like we've already talked about with some of the fleet going back and forth with SkyWest, I think that's very good for us to smooth out the seasonality issues that we have with Charter. And again, to get them fully deployed with small community service in certain areas that we want to do this in, you know, it does take a little bit to get them up and going. So look, we've been patient for three years. We still think there is a tremendous value to the SkyWest, Inc. family with this model. And we'll continue to be patient and pursue this. We think it's coming soon.

Okay. And then as we think about the sizing of Charter, as Savi mentioned, it was 18 airplanes, it went to nine. That list of cities who filed on your behalf, in support of Charter, it's a long list. It's a lot of cities that either have no service or lost almost all their service. Like, as we think about sizing and how big that could get, how many airplanes could that be? It would seem like it's a lot more than 18 airplanes.

Yeah. I would say that it could be. You know, we don't get too far ahead of ourselves because we've probably got a little bit of PTSD from three years of trying to get through the process, which is long and hard. No one's ever gone through this. And I think from our perspective, everybody knows the kind of SkyWest, Inc. is. They know we're going to do it right. We're really going to enhance safety throughout the industry. And so you have all those factors coming into this. And, you know, for us to sit down and actually pencil it out, some of those cities will go towards SkyWest Airlines. But some of the more applicable ones will go to SkyWest Charter, then it enables us to do some other things with Charters that, from our perspective, could provide some very good value to the company and to other communities. So we haven't gotten too far ahead of ourselves. We get past the one-foot line over the goal line, and then we'll probably give some more guidance when we get there.

Okay. Fair enough. And if I could just squeeze one more in. I saw on the number of airplanes that you had leased out to third parties, the last I saw was like 40 airplanes. I don't know where that number is today, you know, at the end of March. But as you think about, you know, going forward, is there an opportunity for as those airplanes come off from their leases that it makes sense to put them in the SkyWest, Inc. business with one of your partners, or does it make sense to continue to have a decent, you know, a pretty healthy lease portfolio because of the diversification that it offers you SkyWest, Inc. plus I suspect that the margins are probably pretty good on that business as well. How do you think about that, your lease book?

Yeah. So, Mike, this is Wade. So as far as the number that we have, it's very consistent with what you're saying. It's right at the 40 mark. Of these leases, they do go out for several more years, but the nice part about our lease portfolio is we can operate every one of those airplanes. Right? Whether they're 550s or 900s, we can. And we do evaluate that and look at that. I'll tell you the, and the margins are good in that. They're fine. But the other business that's been very good for us is also the engine lease business. Right? There's very high demand for the engine leasing. And because of some of the assets that we've had, we've had a lot of success in that because of the size and scope and what we're able to bring. And so the demand has been very strong on both engine and aircraft leasing.

Great. Thanks, Wade. Thanks, everyone.

Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please go ahead.

Hey. Thanks. Good afternoon. Just wondering if you're seeing any changes in how your customers are scheduling given this theme of stronger peaks and weaker off-peaks? I assume that regional lift is one of the tools in the toolbox for your customers to get more tactical with their scheduling. Maybe on some level, down gauging to a regional could actually help in these off-peak periods. So basically, the premise of the question is any changes in how you're being asked to fly and how you're being scheduled given this peak versus off-peak dynamic.

Yeah. Duane, it's Chip. That's a fantastic question. And one I think that is good for us to address for a couple of reasons. One, this has happened so quickly. From the perspective of the summer schedules, our partners have gone out and said, look, there's softening demand domestically. From our perspective, we're still seeing strong schedules. We have tremendous visibility in the yield. That's also always at what our partners are. But to the extent that you could look back at history, typically, economic downturns, even going back to 9/11, going back to the financial crisis as well as COVID, typically, we're kind of the lowest common denominator relative to the aircraft size that we have. So they do strategically and have the ability to deploy this level of aircraft or these levels of aircraft in different ways. The schedules have been published so long, you're just going to have to be stuck with some of the schedules that they've got. But if this thing continues to stay on pace at where it's at today, we probably will see some difference of schedules and how and where they fly us and frequency and that type of stuff. We just don't have that visibility in the schedules that we're working with over the next six months today. So and no conversation about, okay, it's time to do a massive pivot. So from that perspective, nothing yet, but it's good to know typically what happens in economic softening and downturn relative to regional fleets and what we've seen in the past.

That's helpful. And then just as you ratchet your utilization incrementally higher, at least for this year, can you just walk us through how you get there? Does it start with lower observed attrition in your workforce? And then you go back to your customers and commit to that? Or does it start with an ask from one of your mainline customers and then you go back and solve for that?

Yeah. Duane, that's a great question. So it really starts with the demand from our major partners at this point. We have told all of our major partners they can schedule how they want at this point. The staffing at SkyWest, Inc. is very good at this moment, and we're bringing a lot of airplanes out of long-term storage. And so we give them the number of airplanes they can schedule, and they can schedule it how they see fit. And so we are seeing very good utilization for these summer months as Chip said. And, you know, the demand appears to be very strong for our products still.

Okay. Appreciate the thoughts.

Thanks, Duane.

Your next question comes from the line of Tom Fitzgerald with TD Cowen. Please go ahead.

Congrats on the nice quarter. Is there, just given that you changed up some of the contracts during the pilot crisis, is there any risk from the higher variable element of your CPA revenue that we should be thinking about?

No. That's a good question. We've worked with each of our partners on optimizing our contract, as you said, during COVID. All of them still have the fundamentals of minimum utilization, how they schedule us. They have to work with us on our schedules to make sure we are comfortable with them. So the basic fundamentals are still very strong in the contracts.

Okay. That's really helpful. That's great to hear. Most of them have been answered, but I was just curious, just given some of the headlines on the reverse merger between your second biggest independent competitor and one of the smaller regional airlines. I'm just wondering how you and the Board are thinking about consolidation in the regional industry and M&A among your capital allocation toolkit? Thanks again for the time.

Yeah. That's a great question. And from our perspective, the situation that you've discussed has been out there for a while. We've been a part of those conversations at some time or the other. We were able to do some things, even some things that we mentioned today, that give us some opportunities within that situation, but it doesn't take you have to go back in history, probably, ten to twelve years and see when we used to be a scenario where we would like to go out and buy and merge competitors, and that did not end up well for us. In fact, it almost destroyed our company. So we don't have the right culture and environment to do that type of stuff anymore. And we've said that on this call. I mean, we're very much an organic growth-oriented company. Given the dynamics of who we are and what we do and the way we do it, it just doesn't align that we could go out and do any of those acquisitions, and I think we said this on calls in the past. But if the right opportunity is, I think we're very comfortable with what the acquisition between Republic and Mesa is. We think that consolidation in our space is good. We think that as we continue to go forward in the future, there likely will be a bit more one way or the other. But from our perspective, our preference is just to find ways to acquire assets, deliver a fantastic product for our partners, and be strategic with them in ways that nobody else can be. I mean, I think we've been clear with them that we can't do acquisition type of stuff given the DNA that we have. But we are very comfortable doing capital enhancements to derisk any elements of their business that they have. That's the real difference between us as I think that we as we continue to have a future with these four fantastic partners, we want to be more than just a carrier that flies from point A to point B. We want to be a carrier that sits down with them and enhances what their risks are, what their problems are, and find ways to leverage what is a fantastic operation, an amazing culture with the best professionals, as well as the best balance sheet, and creativity and be able to help them in ways that we can in the future. And we are very, very comfortable with that. Given what we have in the marketplace and what we can continue to grow with.

And it seems that we have no further questions. I would now like to turn the conference back over to Mr. Chip Childs for closing remarks.

Yeah. Thanks, John. Appreciate it. We appreciate everybody's interest in the call today. It's a very dynamic world we're living in today. We're comfortable with the investments and the discipline that we've had in the past to make it through this dynamic economic environment, and we're looking forward to not only just protect what we have but be opportunistic in ways to deploy our capital. And so we will update you on that progress again in three months. Thanks again.