SRTA - NASDAQ

Good morning, ladies and gentlemen, and welcome to the Blade Air Mobility Fiscal Second Quarter 2022 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference call over to Mr. Ravi Jani, Vice President of Investor Relations. You may begin.

Thanks and good morning. Thank you for standing by, and welcome to the Blade Air Mobility conference call and webcast for the quarter ended June 30, 2023. We appreciate everyone joining us today. Before we get started, I would like to remind you of the company’s forward-looking statement and Safe Harbor language. Statements made on this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual future results may differ materially from those expressed or implied by the forward-looking statements. We refer you to our SEC filings, including our annual report on Form 10-K filed with the SEC, for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are made only as of the date of this call. As stated in our SEC filings, Blade disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. During today’s call, we will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance. A reconciliation of the most directly comparable consolidated GAAP financial measures to those non-GAAP financial measures is provided in our earnings press release and investor presentation. Our press release, investor presentation and our Form 10-Q are available on the Investor Relations section of our website at ir.blade.com. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Hosting today's call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade; and Will Heyburn, Chief Financial Officer. I will now turn the call over to Rob Wiesenthal. Rob?

Thank you, Ravi. Good morning, everyone. This morning we reported record second quarter results with revenue in the June, 2023 quarter increasing 71% to $61 million versus $35.6 million in the comparable 2022 period. We saw a very strong growth across both our Passenger and Medical segments, a testament to the resilience of our diversified business model and the enduring value we provide to our customers. I am pleased that this is now our eighth consecutive quarter with results ahead of our internal forecasts on all key metrics. Flight profit increased 103% to $10.4 million in the June, 2023 quarter versus $5.1 million in the comparable 2022 period representing a roughly three percentage point increase in our flight margin to 17% versus 14.3% in the comparable 2022 period. Adjusted EBITDA improved by $1.7 million to negative $4.4 million in Q2 2023 versus a negative $6.1 million in the comparable 2022 period and demonstrates continued progress on our path to profitability. As a percentage of revenue adjusted EBITDA margin improved by 10 percentage points to negative 7% in the June, 2023 quarter versus negative 17% in the comparable 2022 period. This was driven by a significant increase in flight profit that outpaced growth both on our adjusted corporate expense and revenue as evidenced by the quarter’s results. We remain on track with our commitment to deliver a meaningful improvement in full year adjusted EBITDA in 2023 versus 2022, and we also expect further year-over-year adjusted EBITDA improvement in the second half of 2023. Turning to some highlights from the quarter. In our MediMobility Organ Transport business, we delivered another record quarter with 99% organic growth driven by hospital wins, continued expansion with existing hospitals and strong end market growth. We remain very bullish on the outlook for MediMobility, particularly as advances in organ preservation and perfusion technology continue to increase the size of our addressable market, both in terms of the number of organs being transplanted as well as the distance organs can travel in order to get from the organ donor to the transplant recipient. We believe this is a megatrend that is in the early innings and could support multiple years of above trend market growth, which is consistent with what we are seeing both in public data and amongst our own customers. To give a recent example, during the quarter we were proud to provide air transport and logistics services to our partners at Mass General Hospital and Paragonix Technologies, a leader in organ preservation technology. This supported a record-breaking transplant case, in which a donor heart traveled over 2,506 nautical miles from Juneau, Alaska, to Boston, Massachusetts. This mission set the record for the longest distance a donor heart has ever traveled to a recipient. With more than 20 aircraft 100% dedicated to Blade with 24 hours 7 day a week coverage and many more available through our asset-light platform, we believe we have built the most reliable and cost-effective national network for organ transportation in the United States, helping to deliver thousands of organs every year. Moving on to our Passenger business, Short Distance delivered another quarter of significant growth with revenue up 75% driven by our acquisitions in Europe and growth across our short distance route network. And our Blade Airport service, which provides passengers with the ability to book individual seats on five-minute flights between Manhattan and New York area airports, revenue grew by approximately 65% compared to the same period last year, making it the fastest growing product in our passenger portfolio. This growth was fueled by a 40% increase in seats flown in the second quarter of 2023 versus the comparable prior year period combined with double digit improvement in average revenue per seat. A notable highlight is that over half our unique airport passengers this quarter were first time Blade flyers highlighting the strength and efficiency of our marketing and customer acquisition efforts. Furthermore, during this past quarter are longest running Blade airport route connecting the west side of Manhattan and JFK was profitable for the first time, giving us confidence that the investments we're making in the service and schedule continue to pay off while building our loyal urban air mobility flyer base. With respect to recent trends in Blade Airport, we are very encouraged by the continued strong passenger growth and pricing trends we have seen thus far in the third quarter. Our customers see the value in this product as evidenced by our continued growth and average revenue per seat, which has been above $300 in recent weeks as more of our flyers choose from upgraded options and fair classes, which we continue to optimize within our on-demand based pricing model. Meanwhile, our partnership with JetBlue continues to gain traction. Nearly one year after launch we are pleased to see the benefits in full force. In recent weeks, we have consistently seen JetBlue drive more than a 100 flyers to Blade Airport per week. This success highlights the importance of building strong relationships with corporate and air travel partners to enhance product awareness, and we look forward to bringing on many more corporate partners in the coming quarters. Moving to Blade Europe during the second quarter, we introduced thousands of European and international passengers to the Blade brand and welcome them to our new terminals in Monaco, Nice and Cannes. From a market standpoint, we did notice that travel patterns in our specific regions normalize relative to record levels experienced last year. Additionally, our integration of the three acquired European businesses is moving slower than we had planned, which combined with lower fleet availability due to aircraft maintenance delays has added to our integration and operating costs in the region. We'll discuss the financials in more detail, but we remain committed to the long term opportunity to grow our business in Europe. In the short term, we are adapting to this market environment by focusing on what we can control, dynamically adjusting our pricing model and coordinating our integration work to enjoy the cost efficiencies that we're a key tenant of our acquisition with the goal of delivering sustained profitability in the region. Moreover, we are encouraged by the positive feedback and reception from European passengers who have experienced a Blade brand. Their response reinforces our dedication to providing exceptional service for every Blade passenger worldwide. Now, on the topic of electric vertical aircraft or EVA or what is also known as eVTOL, it has been an eventful few months for the industry with perhaps the most notable development being the release of the FAA’s Advanced Air Mobility or AAM implementation plan in July, which provides for the gradual introduction of EVA into our aerospace with the goal of reaching scale operations in one or more cities by 2028. We believe this timeline is both credible and achievable, and most importantly, believe this approach is perfectly aligned with Blade's strategy focused on establishing focused exclusive passenger terminals at existing heliports and airports in the most active air mobility corridors operating around the world today. Today we have 16 exclusive passenger terminals around the world that service existing rotorcraft today as well as EVA in the future. We believe this presence creates a significant competitive mode for Blade and even once EVA is certified in the future, as new EVA infrastructure will take considerable time for local and regulatory approvals and frankly on a timeline the market has not yet considered. So that ends our recently announced agreement in May to operate and revitalize the Newport Helistop in Jersey City, New Jersey, gives access to one of the largest and most successful mixed use communities on the Hudson River waterfront. As part of the agreement, we launched a pilot program for charter flights and are analyzing the viability of the first ever scheduled by-the-seat service between this New Jersey Helistop and New York area airports and heliports. Meanwhile, on the international front we were excited to announce a significant extension of our partnership with EVA Air Mobility as unveiled at the 54th International Paris Air Show in June. We are taking the first steps to transform air transportation in Europe, starting with France. Our collaboration with EVA aims to integrate their state-of-the-art electric vertical aircraft into Blade's expansive European route network subject to the necessary regulatory approvals and certifications. This aligns with the EVA as a testament to Blade's commitment to being equipment agnostic. By working together with our industry partners, we intend to usher in a new era of safe, quiet and sustainable air travel, enhancing connectivity and mobility in all of our major regions. With that, I'll turn the call over to Will.

Thank you, Rob. I'll walk through a few highlights from our business segments in the second quarter. We'll start with medical where revenue increased 99% to $34.4 million in the second quarter of 2023 versus $17.2 million in the comparable 2022 period. Notably, revenue increased 29% sequentially in the second quarter of 2023 versus the first quarter of 2023. Given our acquisition of Trinity Air Medical was completed in September of 2021; all of the growth this quarter and for the full year 2023 is organic. Approximately half of this quarter's growth was driven by the addition of new customers with the remainder driven by growth with existing clients, as well as strong overall market growth. To serve this growing demand, we've continued to add to our dedicated aircraft network with minimal increases in fixed cost and continued high ROI given our asset-light model. This has resulted in flight profit and EBITDA growth significantly outpacing revenue growth as evidenced by this quarter in which medical flight profit increased by $3.1 million or 118% to $5.7 million in the current quarter versus $2.6 million in Q2 2022. Medical segment adjusted EBITDA was $3 million in the current quarter, an increase of $1.9 million or 172% versus $1.1 million in the comparable 2022 period. This remarkable performance reflects revenue growth, improved pricing and the strong operational leverage of our cost base. With respect to the forward outlook in Medical, it's worth noting that our revenue increase this quarter was higher than the approximate 20% sequential growth we previously anticipated. A portion of the incremental growth for our expectations was attributable to revenue from one specific transplant center that we are supporting on a temporary basis, which we do not expect to continue. As a result, we expect Q3 2023 medical revenue to be similar to second quarter levels, which equates to high-double-digit year-over-year growth followed by a return to single-digit sequential growth in the fourth quarter. Turning to our passenger business; in Short Distance revenues were up 75% to $19.2 million in the second quarter of 2023 versus $11 million in the comparable 2022 period. Growth was driven by our acquisition of Blade Europe, which closed on September 1, 2022, significant volume and pricing growth in our Blade Airport's business and strong growth across our U.S. Short Distance portfolio. On a pro forma basis, Short Distance revenue increased 5% versus the prior year second quarter, including results from acquisitions in both periods and adjusting for currency translation. A few highlights from specific Short Distance products, our Northeast leisure markets continue to see pricing elasticity benefiting from higher passenger volume, utilization and margins. In our New York Airport business, we saw another quarter of significant passenger and revenue per seat growth. Airport by-the-seat revenue in the second quarter of 2023 increased approximately 65% versus the comparable 2022 period driven by strong volume and double-digit pricing growth. Blade Airport is our fastest growing passenger product line, and we continue to expect this product to be a meaningful driver of top and bottom line growth in the future. With respect to Europe, as Rob mentioned in his remarks, performance was lower than expected this quarter. We saw a slight decline in industry-wide helicopter activity across our key European destinations, partially driven by new landing volume restrictions in St. Tropez. In addition, our integration of the three separate entities we acquired is moving more slowly than anticipated. Integration issues coupled with lower fleet availability due to maintenance delays have led to lower volumes and lower than expected flight profit margins as we have not yet fully optimized use of the fleet for maximum potential. Amidst this backdrop, we expect improvement in the performance of the business as we fortify our integration efforts to garner economies of scale. Blade Europe was a strategic acquisition and Southern Europe is one of the top three consumer helicopter markets in the world. We fully expect it to be a long-term revenue and profitability driver for our passenger business. Passenger segment flight profit increased by $2.2 million or 87% to $4.6 million in the second quarter of 2023 from $2.5 million in the same period of 2022; the increase was attributable primarily to the acquisition of Blade Europe, which closed in September 2022. Increased volumes and average seat pricing for our New York Airport transfer service increased volumes of Northeast helicopter charters and growth in our Northeast commuter products. Passenger segment adjusted EBITDA with negative $2.1 million in the second quarter of 2023 versus negative $1.1 million in the prior year period. The increased loss versus the prior year primarily reflects our startup results in Blade Europe and the establishment of a performance-based short-term incentive plan, partially offset by an improvement in profitability across our U.S. Short Distance portfolio. On the corporate expenses front, our cost efficiency program is showing meaningful results as adjusted unallocated corporate expenses and software development, which relates to the overall Blade Shared Services platform decreased 12% in Q2 2023 versus the prior year period despite our significant growth. This performance reflects significant cost savings measures taken across the business partially offset by the establishment of a short-term incentive plan for our corporate employees, and a further effort to accelerate our transition to overall corporate profitability. Let's turn now to a few highlights from our consolidated results. We're very pleased with our flight profits this quarter, which increased 103% to $10.4 million in Q2 2023 versus $5.1 million in the prior year period. Well ahead of our already strong top line growth. We saw this growth despite the ongoing ramp of Blade Airport, which continued to operate below breakeven in the quarter as we are rapidly growing the business. Absent the Blade Airport ramp up, we estimate that flight margin would've been approximately 100 basis points higher in the second quarter of 2023, which is an improvement from a 150 basis point to 200 basis point drag in the comparable prior year period. Looking ahead to the third quarter of 2023, we expect to see a sequential improvement in flight profit and flight margin relative to the second quarter. Let's turn now to corporate expenses which includes software development, general and administrative and selling and marketing expenses. When adjusting for non-cash and non-recurring items our adjusted corporate expenses totaled $14.8 million in the second quarter of 2023, an increase of approximately 32% versus the second quarter of 2022. This was largely driven by the completion of our European acquisitions, and it compares favorably to a total revenue increase of 71% and a flight profit improvement of a 103% resulting in adjusted corporate expenses as a percentage of revenues declining to 24% of revenue in the second quarter of 2023 versus 32% in the prior year period. The sequential results are even more impressive with adjusted corporate expenses this quarter approximately flat with Q1 2023, despite 35% sequential growth in revenue and 45% sequential growth in flight profit from Q1 2023 to Q2 2023. We are pleased to see that Blade's underlying operational platform is creating economic leverage, and we continue to look for opportunities to optimize our cost structure to drive further operating expense leverage. As we look to the third quarter of 2023, we expect total adjusted corporate expenses to increase by a high-single-digit percentage relative to the $14.8 million expense in the second quarter of 2023. This is driven primarily by typical seasonal headcount and marketing spend, while it will continue to improve as a percentage of revenues. Adjusted EBITDA in the second quarter of 2023 was a loss of $4.4 million, representing a $1.7 million improvement versus a loss of $6.1 million in the comparable prior year period. Notably adjusted EBITDA as a percentage of revenue improved to negative 7% in the second quarter of 2023 from negative 17% in the comparable prior year period. This outcome was a result of the strong revenue and flight profit growth, which significantly outpaced growth and adjusted corporate expense. We expect the continued growth and cost efficiencies will lead to further year-over-year improvement in adjusted EBITDA in the second half of the year. With respect to our balance sheet, we continue to have zero debt and approximately $170 million in cash and short-term securities as at the end of the second quarter of 2023. With that, I'll turn it back over to Rob for a few closing remarks.

Thanks Will. In short, we are proud of the work the team did to deliver outstanding second quarter results, and we look forward to building on the significant momentum in the second half of the year. Before turning to Q&A I want to take a moment to discuss an aspect of our [indiscernible] preservation strategy that has been noticed by some third-party financial information firms. It relates to our automatic sell-to-cover mechanism for the vesting of employee restricted stock units, RSUs. The automatic sell-to-cover mechanism is designed to fulfill our obligations to withhold taxes on RSUs awarded to our employees upon vesting. When RSUs vest employees are liable for taxes on the value of the shares received to ensure compliance with tax regulations, we facilitate the automatic sale of a portion of the vested RSUs to cover their tax liabilities. It's crucial to emphasize that these sales are solely for tax purposes with proceeds paid directly to tax authorities and are not indicative of management sentiment towards the company's performance of the stock. In fact, we as an organization have elected to utilize the sell-to-cover method to minimize using our cash to fund tax payments, which we believe is fiscally responsible. Please remember this, if you notice reports of employee's stock sales in the future. As always, we remain laser focused on driving profitable growth, innovation and delivering exceptional performance for our customers and our shareholders. Thank you for all your continued support. With that, I will turn it over to Ravi for questions.

Thanks Rob. Before we open the line to calls from the analyst community, we want to address some of the questions received from shareholders on the Q&A platform that was launched last week. We've received a number of excellent questions, and we'll combine those that address similar themes. Our first question from Andreas is whether the success of Blade and Urban Air Mobility is contingent on government regulation and weather Blade is in active conversations with governments?

Thanks for the question, Andreas. Obviously, aviation is one of the most highly regulated industries in the entire world and so of course government regulation plays a significant role in our industry. In particular, regulators will decide when it's safe for passengers to utilize the new quiet and emission free Electric Vertical Aircraft or EVA. These EVA are being developed by several companies, many of which are partnered with Blade. However, Blade's approach is quite different from the others in the advanced air mobility space in two ways that are very relevant to your question. First, Blade is focused on markets and geographies that work and can grow today using conventional aircraft. We do believe that the introduction of EVA will result in more places to land, which will increase our addressable market, but our business is healthy and growing with conventional aircraft using our numerous exclusive passenger terminals throughout the world. In the meantime, while we wait for governed regulators to finish this work, we continue building our business. Two, our manufacturer agnostic approach means we aren't dependent on government approval of any specific EVA. We'll wait and see which aircraft are most appropriate and reliable for our medical and passenger businesses, and in fact we expect to utilize many different EVA alongside conventional aircraft depending on the mission requirements we have for all our businesses across the globe.

Rob, we had a similar question around the government's role in the air mobility infrastructure; any thoughts there?

This is quite timely. As I mentioned earlier, the FAA just released a blueprint for Urban Air Mobility in July, and it outlines a gradual transition to EVA utilizing existing air traffic control systems and infrastructure. This approach truly validates our unique strategy that we've had from day-one, focusing on our exclusive Blade terminals at existing heliports and airports in the most active air mobility corridors operating around the world today. As I previously mentioned, future new EVA infrastructure will take considerable time for local and regulatory approvals, and we do not think many new entrants fully appreciate this fact. Given our combination of our technology platform, brand, customer base and exclusive terminal infrastructure, no company is better positioned to enable the gradual transition of today's air mobility flyers from helicopters to EVA, which is the very blueprint for the industry as set forth by the FAA.

The next question is from Brandon S. Would Blade consider an acquisition or merger with an EVA or drone company to expand into different adjacent avenues? Will, do you want to take that one?

Sure. Thanks for the question. Look, we are economic animals, so we're constantly exploring opportunities that align with our strategic objectives and create value for our shareholders. But as Rob mentioned earlier today, as an independent we believe we have a significant competitive advantage in our manufacturer agnostic approach, and that we're not dependent on any one aircraft design being suitable for all of our needs. Nor are we subject to the risk of a sole OEM experiencing rollout delays. Today, we use a wide variety of rotorcraft and fixed wing aircraft depending on the mission requirements, and we know our customers appreciate our unique ability to provide them with the right aircraft for their specific use case. Additionally, from an acquisition standpoint, our focus remains on profitable businesses that will generate immediate returns for our investors. So we will be cautious about investing in experimental technologies with long or questionable payback periods. Our goal is to ensure that any strategic move we make aligns with our commitment to accelerating the transition to profitability, while delivering sustainable growth and value to our shareholders.

The next question is from William K. What are some short and long-term goals Blade is focused on to achieve profitability and to remain as the dominant force of the industry?

Great question. And I think this quarter really demonstrated the operating leverage of the Blade platform and you see it with flight profit growth exceeding revenue growth, and our total adjusted corporate expenses continuing to shrink as a percentage of revenues. And in fact, if you just look at the platform specific costs, the adjusted unallocated corporate and software development expenses, they actually decreased on a dollar basis year-over-year. Meanwhile, medical was particularly impressive, 172% segment adjusted EBITDA growth year-over-year on just 99% revenue growth, showing off the leverage that we get from the platform. And passenger we still saw continued progress with airport as passenger growth and seat price growth led to our first full quarter flight profit for the route between JFK and the West side of Manhattan. So in short, our goal is to continue doing all of this and drive the rapid revenue growth while maintaining the discipline we've shown around costs, and this is the combination that ultimately is going to bring us to overall corporate profitability.

The final question is from William K. Since Blade is recognized by many as an upper level brands servicing the rich with services like weekend rides to the Hamptons, what is Blade's strategy and marketing efforts on acquiring middle income customers to use Blade for services like flying from Manhattan to JFK?

Thanks for your question, William. If you take a look at our Blade Airport business, specifically flights between Manhattan and JFK or Newark airport, the most powerful method we focus on is the fact that we've broken the Uber Black barrier. Our airport pricing, which starts as $195 routinely beats Uber Black pricing and often UberX as well. And with a purchase of a $795 airport pass flyers can actually fly to or from the airports for as little as $95. We have done a very great job hammering home the point that Blade is non-indiligence. It is simply faster and more – in a more enjoyable way to get to or from the airport with pricing that's competitive with ground transportation. And in fact, we've seen meaningful success by advertising on the Uber App platform at the time when people were booking car rides to the airport. I enjoyed a tremendous conversion of people who would normally take ground transport to Blade, and we continue thinking of innovative ways to get to that consumer and to hammer home that point once again, that this is not a product for the rich. In fact, when we take a look at our data the socio-demographic information that we have shows us that people whether business or leisure travelers from all income classes are starting to enjoy Blade Airport.

Now, we'll open the call for questions from analysts and investors on the call today. Reporters should send inquiries to me directly. Operator, we're now ready for analyst questions.

Thank you. [Operator Instructions] Our first question comes from Jason Helfstein with Oppenheimer. Your line is open.

Hi. Thanks, few questions. First, can airport be accretive overall gross profit next year? Would do you plan to reinvest the upside in route and schedule expansion? And then just broadly, how are you thinking about gross margin next year? Can we assume kind of slow and steady improvement in overall gross margin each year? That's question one. Question two. You did talk about kind of some of the headwinds in Europe. Maybe help us – how are you thinking about how was it tracking for the full year versus what you previously expected, and then just the contingent payment was in G&A. I just wanted you to confirm that? Thanks.

Jason, Will here. Thanks for the questions. On the airport side, the unity economics are really good as you know. We break even at about 2.5 out of six seats sold. So if you got to the average utilization that we have in our mature routes, you would have a overall flight margin, that's the same or better than what we see in some of our other products. Now, it's a two-way product, so that's why we set up the unity economics the way they are a little bit actually lower break even than we see in some of our mature routes. So I think the answer is once we get that utilization where we want it, it should be accretive to gross profit. And I think this quarter showed a lot of progress because the west side to JFK route was actually profitable for the first time. So we're moving in the right direction for the quarter.

Yes, for the quarter. And I think that in particular we talked about it being a 100 basis point drag on overall gross margins, airport as a whole this quarter. So you see the potential to have at least that much improvement if you take the airport drag away. And then there's some other businesses we talk about medical as we onboard new customers that'll contribute to better gross margins over time. It takes a little bit of time for us to move the supply around. So I think you got a lot of tailwinds on the margin side going into next year. And Jason, one quick thing on airport, because there're only a fixed number of time slots in any given day to fly, the fact that with the airport growing at 65% in the quarter versus last year, the fastest growing passenger business we have, you can see that utilization really kind of increasing rapidly.

And then, just in terms of the expectation on Europe, as we talked about integration is going a little slower than we hoped. We think we're making good progress, but it's probably going to be closer to breakeven this year. We don't break it out separately, but versus our expectation that's kind of where we think it's headed for the full year this year.

And the last question was just on the contingent payment?

Yes. The contingent payment is all related to Trinity. That's just kind of our best guess of what we might have to pay the portion related to the first half of the year in this last year of the earn-out. So after the year 2023, there's no more earn-out for Trinity.

And one more thing on Europe, when you take a look at the full year, obviously July and August is a huge part of their business with kind of St. Tropez and then basically a lot of all the resort business. So those numbers are starting to come in and I think we'll have a much better view of it this coming quarter.

Thank you.

[Operator Instructions] Our next question comes from Hillary Cacanando with Deutsche Bank. Your line is open.

Hi, thanks for taking my question. So you recently announced the revitalization of the Newport Helistop. Could you talk about how the pilot program for the charter flights are going and what you're – what you're looking at in order to start the by-the-seat operation and whether or not you're looking at any other new markets for heliports?

Sure. I mean, this was an incredible task because this is the first heliport really open in decades. This is only a couple in the New York area that is – this is only basically a couple football fields away from Manhattan. So it's quite useful for people flying from New Jersey to airports and also to the city. We control it, we operate it and it's a lot of mixed use both commercial and residential, relatively high net and not high income as well for our flyers. But we're being extremely careful starting out with charters. We have a pretty good take up rate right now by a lot of developers, a marketing plan that's going to be going to a lot of the residents in the area and employees. But now that we're seeing profitability on the airport side, we're going to be extremely careful about what – at what time we're going to be introducing any kind of by-the-seat route. And we'll probably be bundled in the sense that they'll be utilizing aircraft that are already coming back from say, Kennedy Airport. And there – we could – we're looking at things like stops and things, anything where we could mitigate any type of impact of any kind of low utilization. So we’re looking for a very low risk approach when it comes to the by-the-seat business if in fact we end up doing it, but we have other heliports we’re looking at relighting and I think the fact that we’ve now been doing this for eight years, we’re just really light years ahead of anybody. And as you read in the AAM report from FAA, the FAA is saying when it comes to EVA existing heliports and airports are going to be where people are landing. And I think the number of exclusive heliports we have, which is 16 worldwide, is a huge competitive moat.

Got it, thank you. And then just in Europe it sounds like there are just different items just driving the activity. Could you talk about like, what are some of the more permanent issues? Like, it sounds like the new landing volume restrictions, that’s probably a little more permanent, but like the fleet availability that sounds like it’s probably more temporary and that might be able to be fixed pretty shortly. Kind of if you could just provide a little more color on like what’s having more of an impact, what’s more temporary and what’s more permanent and what’s being done about it? Thank you.

Yes, I think there are a couple things to deal with the landing issues, which are really [indiscernible] only in the St. Tropez side. There have been some restrictions placed on landings, however, it’s really more about the ones that are close to the beach and then maybe there are other ones that are 15 minutes away. So it’s really more of a redistribution of where people are landing. And I would say the attractiveness of those – the ones where we do have a lot of capacity are pretty good. You are still beating a couple hours of traffic coming from Nice or Cannes, so we’re not overly concerned with it. And then also we’re identifying new landing zones every day and adding them. So the restrictions are really about the number of flights per landing zone, and we’re increasing the number of landing zones. So it’s not exactly when you see – when you read about where landing zones are there’s some restrictions. It doesn’t impact our ability to acquire new landing zones. In fact may be closer to where people want to go. So they’re only [indiscernible] drive and such. Also, I think it’s important; we talked about the integration being a bit delayed. There were some supply chain issues in terms of the winter schedule of maintenance for these aircraft, and they’re typically maintained after the ski season. That took a lot longer. And as a result in this quarter, we did not have the number of aircraft that would have optimized our economics or the number of flights that we can do for passengers. I’m happy to say those helicopters were back online and we hopefully should enjoy the benefits of it. Again, as I mentioned in the last question, July, August is critical and we’re still – the initial indications for July are good, we got to wait for August and we’ll see how they are. But we’re trying to be as conservative as we can. The integration has taken longer, but again, when you think about the three biggest markets in the world, Southern Europe is next to what we have in New York the most important. And we’re in there, we have top market share, three of the four main major companies. And we’re going to get this right. It’s just taking a little bit longer than we expected on the integration side.

Got it. Thank you. This is really helpful. Thank you very much.

One moment for our next question. Our next question comes from Bill Peterson with JPMorgan. Your line is open.

Yes. Hi, good morning. And thanks for taking the questions. First question on the Short Distance obviously airport really drove the growth. Trying to get a sense for what the growth rate would’ve been, I guess, without the impact of Europe. And then maybe just similarly, you didn’t really talk about Canada, I realize, I believe Canada is kind of seasonally low, but any sort of color you can provide on sort of year-on-year trend or quarterly trends here in the second quarter.

Sure, Bill, thanks for the questions. On Short Distance we don’t break it out that way exactly, but I would say if you took Europe out of both quarters, the growth in Short Distance would have been closer to around 20%. So, we’re really happy with how all the other businesses are growing and obviously airport is a huge part of that. As it relates to Canada, you are right, this is a seasonally low quarter for us. So, we were happy to see kind of some single digit growth in the off season on the top line in Canada. But I think moving forward the initiatives that we’re focused on as we get back into the busier season are really trying to drive more demand using Blade from consumers. If you recall that business is heavily B2B, and so we think there’s a big opportunity both just with the existing transportation products, they have also attacking the tourism angle in Vancouver as well, which is definitely starting to come back with cruise ships coming back in. So that’s a big initiative for us as we head into the bigger, bigger season there.

Yes great. Thanks for that. And then kind of a further question on flight margins for MediMobility in particular. I believe you talked in the past somewhere in the maybe mid high teens range would be the right way to think about it. You basically did 17%. Trying to get a sense on where could the upper bound be? Presumably you have some opportunities with your existing customers to drive that higher, maybe less so for as you’re trying to penetrate with new customers. But how can we think about the trends on that and where’s the upper bound on the flight margins there?

Yes, I think 15% to 20% is the right range to talk about getting towards 20% as we have longer tenure with the customers. And the way we get there is twofold. On the one hand, we can optimize our dedicated aircraft fleet so that aircraft are closer to our customers, it saves them repositioning costs less, but also allows us to generate a higher margin on those flights. So it’s kind of a win-win for everybody and we can optimize the fleet. And then two, as we start to get scale in geographic locations, we’ll do things like bring in our own owned licensed sirens SUVs to do the ground that will allow us to get sometimes closer to 40% or 50% margins on the ground component, which will bring that average up. So given the growth we’ve had, both in terms of new customers, but also just in terms of customers being able to fly more, and the number of organs that are being transplanted in terms of heart, liver, lung, that growth just in the units is in the mid to high teens. If you look at the Q2 UNOS data, we’re really able to weaponize that scale and help our customers save money and help get our margins higher in ways we never could before. So I think everything is moving in the right direction in that business.

Thanks for that color.

One moment for our next question. Our next question comes from Stephen Ju with Credit Suisse. Your line is open.

Okay. Great, thank you. So Rob wondering if you can weigh in on what the updated organ preservation technology opens up in terms of business you probably could not have conducted before, because maybe the donor and recipient matches needed to be local. And if you can also update us on what the typical sales cycle looks like these days with new hospitals. Thanks.

Sure. Let me just kick off and I’ll turn it over to Will to take a portion of that question. There’s no question that the market has increased dramatically for mobility to use perfusion devices and do much longer trips. And that has increased, economics has increased, usage has increased, the viability of organ type of patients that deal with, and if you take a look at the UNOS data this was the 18% growth this quarter, you are going to see, potentially mid double digits for the overall market. We are right now are in the 20% plus range for the market so we have a lot of growth there. The good news is that we’re agnostic so we can do use technology from any company. You probably saw our use of the Paragonix technology, which I know most of our hospitals are extremely comfortable with. And we did the world’s longest organ flight from New York – from Boston to Alaska. So that’s continued and it’s continuing to be a real growth driver. And I also want to mention that because Blade is at heart of logistics company, we started this with a passenger company, the ability for our staff on the ground to facilitate the use of these devices on – or putting these devices into aircraft and make sure the secure and make sure that they travel safely is a unique advantage of Blade. I’ll let Will chime in here.

Yes, look, it’s expanding the market. It’s really incredible. You see it in the UNOS data that we just talked about. To Bill’s question what I would say is you see the significant growth that we have in organs. And right now, I would say around 10% of the organs that are being moved, you are using some kind of perfusion technology to enable that. And it comes from a number of different companies. So we’re really excited because a lot of those organs, as you mentioned, wouldn’t have had the ability to make it to their recipient without the use of that technology. And hospitals are becoming more and more aggressive and this technology is allowing them to do that successfully. So, I think it’s all really good news and I think Blade uniquely has the ability to help hospitals with these slightly more complex missions. And goes to your question on the sales cycle if a hospital has mostly been doing traditional cold transport and they’ve been using a local provider that maybe has a couple of light jets on the certificate, that probably won’t be enough airplane to do these longer trips. So, it actually creates a nice entry point for Blade when a center starts using profusion and maybe their legacy provider of light jets doesn’t have the right capability, doesn’t have the right size aircraft, doesn’t have the range for what they need to do. So I think this actually could short circuit the sales cycle a little bit for us as it creates new needs for transplant centers that they’ve never had before. But it’s still a long sales cycle. We still work with people on a non-contracted basis, we still sometimes help folks out when they are having trouble with their local providers, and then they might go back to them as we talked about we had a little bit of the growth and this quarter was driven by that. So, it’s just all about continuing our great reputation of providing excellent service and always having a plan for those transplant centers. And over time we’ll continue to see what we’ve seen, which is slowly picking up share.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Jon Hickman with Ladenburg. Your line is open.

Hello. Could you talk a little bit more about this temporary customer you had in the MediMobility and why they just are not going to use you going forward?

Yes, happy to, Jon. We have a lot of folks that are not contracted with us that will help out from time to time. Usually it’s not a big number, it just happened to be a big number with one specific customer this quarter. So, most of our businesses with folks that are going to give us essentially a first call for every trip they need to take. But when folks call and they are not somebody we’ve worked with in the past, we’re always willing to help out. And we did that for somebody that had some dedicated aircraft on the ground that they continued using near them.

We have obviously long-term contracts, Jon with all the hospitals. And then if a hospital has their own fleet and then they run into some issues, as Will said, we’ll step in there. But there are a lot of people who like to kind of keep that in-house often.

Okay. Can you update us on the number of contracted hospitals and transplant centers or organ donor?

So, it’s probably not the best metric to focus on and in terms of the growth, the size of the transplant centers can be highly variable. And there is also kind of another dynamic going on where we have some customers that are organ procurement organizations rather than transplant centers. And they might be representing a set of constituent transplant centers that could be four or five different transplant centers underneath that OPO. And we’re starting to see some of those transplant centers go direct instead of organizing transportation through the OPO. So, it’s not – it could be a little bit of a misleading metric to focus on. And so it’s probably better just to take a look at the growth we’ve seen on the revenue side because I don’t think that that metric is going to tell the whole story.

Okay. Thanks.