Earnings call transcript: Global Crossing Airlines sees strong Q4 2024 revenue growth

Global Crossing Airlines reported an 11% increase in revenue for the fourth quarter of 2024, reaching $59.9 million. The company also showed significant improvements in its financial health, reducing its net loss to $600,000 from $2.6 million the previous year. Despite a recent 4.67% weekly decline, InvestingPro data shows the stock has delivered impressive returns of 56.92% year-to-date and 41.67% over the past year. According to InvestingPro’s Fair Value analysis, the stock currently appears undervalued.

Key Takeaways

• Revenue increased by 11% year-over-year to $59.9 million.
• ACMI revenue tripled to $35 million, while charter revenue dropped.
• Net loss improved significantly, narrowing to $600,000.
• Expanded fleet to 19 aircraft, with plans for further growth.
• Market demand remains strong, particularly in the passenger charter segment.

Company Performance

Global Crossing Airlines demonstrated robust growth in Q4 2024, driven by a tripling of ACMI revenue to $35 million. Despite a decline in charter revenue to $21 million from $40 million the previous year, the company managed to improve its net loss position significantly. InvestingPro analysis reveals a strong revenue growth of 56.98% in the last twelve months, though the company faces challenges with a gross profit margin of 16.57%. The airline’s strategic focus on expanding its fleet and securing high-profile contracts has positioned it as a competitive player in the aviation industry. For deeper insights into Global Crossing’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $59.9 million, up 11% year-over-year.
• Net Loss: $600,000, improved from $2.6 million in the previous year.
• EBITDA: $5.1 million, compared to a $400,000 loss last year.
• Cash and Restricted Cash: $14 million, up from $7.8 million in Q3.

Outlook & Guidance

The airline anticipates continued growth, with a projected fleet expansion of over 20% in the latter half of 2025. The summer schedules are fully booked, and the company plans to add 5 to 15 aircraft over the next two to three years. Global Crossing Airlines is focusing on higher-margin ACMI contracts, which are expected to remain a core business driver.

Executive Commentary

Ryan Gosco, CFO, stated, "We are well positioned to deliver another record year results in 2025." Executive Chairman Chris Generals emphasized the company’s commitment to cost reductions and highlighted the ongoing commercial interest in their business model.

Risks and Challenges

• Supply Chain Issues: Ongoing shortages in the aviation sector could impact operations.
• Market Saturation: Increased competition may affect pricing power.
• Macroeconomic Pressures: Economic downturns could reduce demand for charter services.

Global Crossing Airlines continues to navigate a dynamic market environment, leveraging its strategic initiatives to drive growth and enhance its competitive position. InvestingPro maintains a FAIR overall financial health rating for the company, with particularly strong scores in growth (3.32) and relative value (3.42). Investors seeking detailed analysis of Global Crossing’s market position and future potential can access additional ProTips and comprehensive metrics through InvestingPro’s advanced analytics platform.

Full transcript - Jet Contractors (JET) Q4 2024:

Conference Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today’s conference call to discuss Global Crossing Airlines Financial Results for the Fourth Quarter and Full Year of 2024. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. Joining us on the call today are Chris Generals, Chief Executive Officer of Global Crossing Airlines and the company’s President and CFO, Ryan Gosco.

Please be advised that the conference call will contain statements that are considered forward looking statements under the Private Securities Litigation Reform Act of 1995. The forward looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward looking statements. These forward looking statements are also subject to other risks and uncertainties that are described from time to time in the company’s filings with the SEC. Do not place undue reliance on any forward looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to publicly update or revise any forward looking statements.

Please refer to the company’s earnings press release for important risks and assumptions associated with such forward looking statements. The company’s presentation also includes certain non GAAP financial measures, including adjusted net income or loss. EBITDA or EBITDAR has supplemented measures of performance of the business. All non GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the SEC rules. You will find reconciliation tables and other important information in the press release and on Form eight ks furnished to the SEC yesterday, which are currently available on the company’s EDGAR page on the SEC’s website and will be available to the company’s Investor Relations section of its website within approximately twenty four hours after this call has ended.

Now I will turn the call over to the company’s Executive Chairman, Chris Germerz. Chris, please go ahead.

Chris Generals, Executive Chairman, Global Crossing Airlines: Thank you, operator. Good morning, everyone. Obviously, after a setback in Q3, a much better quarter, effective what you’re seeing here compounding returns of our focus on execution, professionalizing of operations, improving service quality and a whole slew of commercial wins coming from an entire spectrum of charter customers. So we are pleased with what we printed in Q4 and I think we are well positioned for future growth, especially as the demand for our charter services is growing given the fact that we far surpassed the service quality or industry benchmark for service quality for a charter airline. And I think we are going to dominate that niche of high quality, on time performance and incredible customer service.

And then we continue to see a growing demand for overall charter services and our platform is the right one. And I think our business model is continuing to prove itself through the cycle. Throughout the quarter, we scaled up our ACMI operations, which has always been continued because this is high quality flying. We expanded our fleet, optimized our fleet utilization and all of those contributed to a meaningfully improved financial results. We continue to top tier all functions and the leadership team across the business as we are professionalizing operations, like I said, and we’re expanding our relationships with commercial customers and government customers across the spectrum.

Before I turn over to Ryan, I do want to reaffirm our continued commitment to the path to sustain profitability. We do think that this year is the year that we will shine. We have built the business model. We’ve reinforced our platform and the strength of our commercial business is giving us or fueling us with confidence in our ability to deliver on our budgets. With us, I will now hand over to our President and CFO, Ryan Gopal, to elaborate on Global X fourth quarter operational financial highlights.

Ryan?

Ryan Gosco, President and CFO, Global Crossing Airlines: Great. Thank you, Chris, and good morning, everyone. As Chris mentioned, the fourth quarter concluded a remarkable year for Global X. We achieved the high end of our Q4 and fiscal year twenty twenty four guidance for revenue, EBITDA, EBITDAR and block hours loan. These accomplishments highlight the effectiveness of our management team, our focus on operational efficiency and the execution of our strategic plan.

Our strong revenue performance was driven by the scaling of our ACMI business, which grew more than 3x to $36,000,000 in revenue compared to the year ago quarter. The growth in ACMI was primarily driven by an increase in our fleet, continued strong customer demand and further growth of our government business. As we’ve mentioned before, we’ve strategically allocated aircraft from our charter segment to ACMI to take advantage of its higher margin profile. As a result, charter revenue decreased to $22,000,000 now accounting for only 36% of total revenue compared to 75% in the same quarter last year. On the other hand, ACMI increased to 60% of total revenue compared to 22% in Q4 of twenty twenty three, reflecting the major shift in our business model from charter to ACMI.

During the quarter, we flew seven thousand seven hundred and forty five block hours, including sub service between ACMI and charter, a 26% increase compared to the year ago period, demonstrating our ability to secure new contracts and optimize fleet utilization. In Q4, we increased block hours flown for ACMI by more than 2x to 5,758 compared to Q4 of twenty twenty three. For Charter, weekly fourteen seventy seven block hours compared to 3,395 in the year ago quarter, in line with our strategic shift. On the cargo side, we surpassed 1,600 block hours flown in Q4, marking our strongest quarter of cargo in Global X history. While challenges continue to persist in the cargo market, their impact is lessened significantly compared to last year and we believe we have stabilized the business moving forward.

Our average utilization per aircraft available increased 12% to four seventy three block hours compared to the year ago quarter. We continue to see accelerating demand in the past year market driven by college sports teams, corporate groups, U. S. Government and other organizations seeking flexible travel solutions, along with the ongoing supply shortage and reduced direct competition. This demand is fueling our strong growth in the passenger segment, underscoring its importance within our overall strategy.

To ensure sustainable growth, we consistently assess our operations to optimize our pricing strategies and maximize revenue generation. This commitment is reflected in our rising revenue per block hour highlighting the effectiveness of our strategic approach. For ACMI, we generated an average of $6,191 per block hour, an increase of 47% to the prior year quarter. For Charter, average revenue per block hour stayed relatively flat at $11,868 compared to $11,896 in Q4 of twenty twenty three. On a sequential basis, we generated a 10% increase in revenue per block hour for ACMI.

The increase in ACMI revenue per block hour is primarily driven by contract negotiations at secured hire rates. By capitalizing on strong market conditions and rising demand, we expect to continue driving sustained profitability across our passenger fleet. Subsequent to quarter end, we took delivery of one additional A321 passenger aircraft, expanding our fleet to a total of 19 aircraft. We expect further increases of our fleet in the second half of twenty twenty five by more than 20%. Integrating aircraft into our fleet is complex, multi step process requiring regulatory certifications and approvals as well as maintenance checks.

Additionally, the aircraft market remains highly competitive with supply constraints driven by increased global demand. Our disciplined approach ensures that we lease new aircraft at the best possible rates while maintaining operational efficiency, positioning for sustained growth and expected profitability in quarters ahead. As part of our long term strategy, we’re beginning to acquire and take ownership of airframes while leasing engines. Airframes have a lifespan of thirty to forty years, making them durable and valuable asset, providing long term value and greater control over maintenance and modifications. Whereas engines, given their high production costs, maintenance and market demand, are significantly more expensive to acquire and maintain, making it more cost effective to lease.

This strategic shift allows us to optimize our capital deployment and maintain a strong balance sheet with operational flexibility. To further this initiative, we signed a letter of intent to acquire our first airframe with expected delivery in the second quarter. This marks a key milestone in our fleet expansion plan ensuring we are well positioned to meet the increasing demand and enhance long term profitability. During the quarter, we strengthened our relationship with both new and existing customers by deepening collaboration and tailoring our service to better meet their needs. As part of our ongoing strategy, we’re always looking to convert contracts into multiyear partnerships, ensuring sustained growth and stability for our business, while delivering long term value to our clients.

To start, we finalized a contract for this year’s college basketball finals tournament, providing four dedicated aircraft for a minimum of $5,000,000 in revenue. Additionally, we flew 12 college basketball teams during the regular season, reflecting our strong reputation in the collegiate sports sector and our team’s ability to meet unique demands of high profile athletic programs. To support this, we customized three aircraft into VIP configurations for the JanuaryFebruary enhancing the onboard experience for the teams and their staff. With a total of three VIP configured aircraft in our fleet, we continue to offer tailored high comfort travel solutions for sports teams and other premium clients, further solidifying our position in this specialized market. We’ve also secured VIP charter contract to support a world renowned band’s North American tour beginning in April of twenty twenty five.

This partnership further exemplifies our ability to deliver premium flexible travel solutions tailored to high profile clients with complex logistical needs. In our cargo business, we signed a six month contract ACMI contract with DHL. This is our first contract with this major operator, further diversifying our cargo portfolio while delivering consistent revenue. We also renewed a six month cargo contract with a Caribbean cargo company guaranteeing a total of two hundred hours per month across two cargo aircraft. This renewal underscores the continued demand for a reliable cargo operations and reinforces our commitment to serving key logistical partners.

Turning to international operations, we also expanded our partnership with TUI Airways to include a third dedicated aircraft for the summer of twenty twenty five, guaranteeing a minimum of $5,000,000 of additional revenue. Additionally, we have secured a seven month ACMI contract with a South American tour operator guaranteeing over eighteen hundred block hours. These international wins reflect our growing presence abroad and our ability to meet increasing travel demand. Now turn to the financial results. Please note that all financial results discussed today are for the three month period ended 12/31/2024, while variance commentary is on a year over year basis unless stated otherwise.

Revenue in the fourth quarter increased 11% to $59,900,000 compared to $53,900,000 in the year ago period, driven primarily by higher block hour flown and aircraft fleet expansion, as well as increased revenue per block hour for ACMI. ECMI revenue increased approximately 3x to $35,000,000 compared to $11,000,000 Charter revenue in Q4 was $21,000,000 compared to $40,000,000 Total operating expenses were $56,600,000 compared to $55,200,000 driven primarily by higher aircraft rent, maintenance and personnel expenses tied to the continued expansion of global fleet. Part of our ongoing cost optimization efforts we negotiated a 35% reduction in insurance rates resulted in an expected $2,000,000 savings in 2025. Net loss improved to $600,000 compared to $2,600,000 Loss per share also improved to $0.01 per share basic and diluted share compared to $0.04 per basic and diluted share. Net income was impacted by a one time $1,300,000 charge related to the guarantee for a lease return conditions provided to a lessor in 2021 to support the launch of Canada Jetline.

This lease was returned to lessor following Canada Jetline’s bankruptcy. Adjusted net income increased to $1,200,000 compared to adjusted net loss of $1,800,000 in the year ago period. EBITDA increased to $5,100,000 compared to $400,000 loss. EBITDAR increased to $19,300,000 compared to $11,400,000 This is primarily driven by increased revenue fleet expansion, higher average rates per block hour flown for a past year ACMI. Turning to our liquidity, we ended the fourth quarter with cash and restricted cash of approximately $14,000,000 compared to $7,800,000 in 09/30/2024, and $17,700,000 in December ’30 ’1, ’20 ’20 ’3.

We are pleased with our Q4 and our full year 2024 performance, which highlights our strong foundation and growing momentum as a leading narrow body ACMI charter airline. Looking ahead, our summer schedules are at least fully booked and when combined with our expanding fleet are focused on securing higher margin ACMI contracts and a commitment to operational excellence, we are well positioned to deliver another record year results in 2025. This concludes our prepared remarks. I’d now like to open the call for Q and A. Operator, back to you.

Conference Operator: Thank you. We will now be beginning our question and answer session. I would like to hand the call over to Sean Mansouri. Please go ahead, sir.

Sean Mansouri, Investor Relations: Thank you, Chris and Ryan, and thank you everyone for participating in the conference call. As we gather in the queue for live questions, we first like to address a few of the questions that have come in via email over the past couple of weeks and even since reporting yesterday. So kicking things off here, Chris, Ryan, can you provide more insight into Global X’s continued growth in the passenger market? Is this rate of growth sustainable?

Ryan Gosco, President and CFO, Global Crossing Airlines: I’ll take this one. The short answer is yes. We see substantial demand in the passenger market that far exceeds our current capacity. This is reflected in our near tripling of ACMI revenue in Q4. Our growth was driven by ability to grow and effectively deploy our fleet in addition to market factors such as ongoing supply shortage, reduced direct competition and increasing demand from various organizations seeking travel solutions.

High demand has allowed us to focus on longer term contracts with minimum monthly commitments, which allows us to maximize the number of hours each aircraft can operate on a monthly basis. We refer to this as utilization, which our ability to maximize is critical to achieving sustained profitability. Nowhere is this more critical than our work with U. S. Government, our partnership with Red Air operating daily flights to Curacao and our Europe with key customer for the key summer months as part of our arrangement with TUI.

Looking ahead, we expect passenger ACMI to remain core driver of our business. We anticipate further growth in 2025 supported by additional aircraft deliveries in the back half of the year, as well as our ongoing efforts to expand partnerships in North America and Europe.

Sean Mansouri, Investor Relations: Thank you. And can you elaborate on your fleet expansion strategy and the recent shift to begin acquiring airframes?

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes. And again, as part of our long term strategy, we are transitioning from a fleet strategy of 100 leased to a fleet ownership model, which we acquire airframes while leasing engine. Eventually, we will evolve to acquiring engines as well, but in the current market that does not make a ton of economic sense for our model. We believe acquiring airframes and leasing engines allows us to achieve our goal of fleet growth, building a stronger balance sheet, while mitigating what we believe are really high lease rates for older aircraft, which is primarily driven by the engine prices.

Sean Mansouri, Investor Relations: Got it. And can you provide an update on the cargo market? What are your expectations for 2025?

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes, we continue to see lingering challenges in the cargo market. I guess with the tariff issue that we see in real time evolving is obviously a level of uncertainty, which is impacting it. But to put in some context, we believe we incurred losses of close to $10,000,000 related to cargo in 2024, primarily in the first three quarters. We believe we have been mitigated a significant amount of that exposure in 2025 with the contracts we have in place, which drives significant year over year improvement. The wild card, of course, being the tariff war, which has created some uncertainty in the space.

While we believe we are operating what we’re operating in 2025 is relatively insulated from this, it is impacting the overall cargo market and how is yet to be determined. And I think that exposure is limited by the four aircraft we have it and no plans to expand that capacity in 2025.

Sean Mansouri, Investor Relations: Got it. Thanks. And can you provide color on your long term growth and profitability initiatives?

Chris Generals, Executive Chairman, Global Crossing Airlines: I’ll take this one. Yes. So as I mentioned in my opening remarks and you just heard from Ryan, the number one is expanding our fleet because that’s how we make money and we’ve proven our ability to convert new capacity into revenue earning activities in record time at satisfactory rate, particularly at the ramp up period. So that definitely will pays off. We as you heard from Ryan, we are shifting our model, which is also part of our improved operating and financial performance to acquiring aircraft as opposed to strictly leasing it, which does have a lot of positive externalities for our business model.

The demand for our services is growing and that’s because there is a niche in the market. Basically, there is a void of high quality charter operators. The market is littered with very poor service quality operators utilizing aircraft nearing its end of life cycle with very low expectations of service quality. There is a void in that we’ve really kind of begin to own of a niche that I fully expect us to dominate a very high quality charter operator and the demand for our services is growing and we’re not just taking share, we’re actually creating new market share through our performance and the reputation we begin to earn by setting sort of the gold standard for the charter operator. And by the way, we know we’re near where we wanted to be, but we are already surpassing the industry benchmarks by the wide margin.

We’re also expanding our commercial operations with respect to our commercial revenue generator and origination of new business from across the spectrum of new clients and that’s obviously contributing to our continued success. And there’s a lot of other initiatives that are very operational focused that helps us improve our utilization of aircraft and we are pleased we are very pleased with that. But number one job for us is to make money and to be profitable. So as I said that twelve months ago when we took the helm of the operation, that remains the absolute priority for us, for Ryan and for the entire team. And we are going unapologetically, it’s driving the focus on cost reductions, professionalizing the operation top tier in the leadership functions and every aspect of the business that we are analyzing.

And we stopped doing things that were grossly irresponsible like growing cargo operations at the peak of the cycle, which could have proven catastrophic that we’ve managed to curtail that. And I strongly believe that this cargo exposure will serve us well because the cargo market is a very cyclical business. And I believe that the trough and the worst of the down cycle is behind us. And we will continue to I don’t think, as Ryan said, it’s going to be a huge contributor in 2029. But I think in years beyond that, I think it will be a marginally or very profitable operation for us to supplement everything else we do.

So at the end of the day, I think we have proven that our business model is the right one. It continues to attract commercial interest from a variety of logos and high quality customers and we are very focused on our path to sustain profitability.

Sean Mansouri, Investor Relations: Thanks, Chris. And probably just time for a few more here. Why doesn’t Global X try their promo zoo, they are flying whether it’s a professional sports team or any of the big name colleges?

Ryan Gosco, President and CFO, Global Crossing Airlines: Well, and I think a part of that is, as a charter operator, the expectations of our clients, especially is a certain aspect of privacy. We do fly some of the biggest stars in professional sports and soccer and some of the top like 10 of the top 20 college basketball teams for this season. Their expectation is one of our mantras for the company is provide forgettable flights, which is we expect they expect us to show up on time, have nothing happen during the flight and land on time and have that be a non event and that’s what we get paid for. They don’t expect us to be out there promoting and highlighting who we’re flying and where we’re flying. And so we kind of keep that level of discretion as expected of us and I think is an asset for us and helps drive repeat business, which is why they keep coming back because they don’t necessarily want to read about LinkedIn, who we’re flying and where we’re flying because from their perspective, it’s none of their business.

So, I think from that perspective, it’s an expectation of the industry and it’s an expectation of our clients and we respect it and that’s why they keep coming back. I’d rather have a repeat business than a really cool LinkedIn post.

Sean Mansouri, Investor Relations: Well said. Can you provide additional details on the JV with ATB Aviation? What are the advantages for Global X, both short

Ryan Gosco, President and CFO, Global Crossing Airlines: and long term? Yes. So we announced that earlier this year and effectively what it is, it’s almost like a franchise model where they’re going to use our brand and some of our expertise in exchange for our participation in the entity. They’re providing the funding, they’re providing the people. What the advantage is for us is that it opens up another market that we’re not we don’t have the capability and infrastructure to service.

We think Asia is a pretty big growth market for charter services. But we also know this kind of business is local. You need to be locally present, you need to be locally there. This is different than what we had done in Colombia and Ecuador, whereas in Colombia and Ecuador, we owned it and it was our people and it was our resources and our time. We recognize our time is limited.

This is more of an expansion utilizing what we’ve learned as more of an advisory role, but it opens up a pretty large market, gives us a foothold somewhere to not only deploy our aircraft mainly to deploy our aircraft, but expand our revenue opportunities in a part of the world we just wouldn’t have the capability to do right now.

Sean Mansouri, Investor Relations: Got it. And with about five minutes left here in the call, operator, we’ll pass it back to you for a live Q and A. Thank you.

Conference Operator: Thank you. Our first question is from Brian Foote with Broadway Capital Management. Please proceed. Brian, your line is live. Please check and see if you’re muted.

Brian Foote, Analyst, Broadway Capital Management: Hello, can you hear me?

Conference Operator: Yes. Please go ahead, sir.

Brian Foote, Analyst, Broadway Capital Management: Great. This question is for both of you guys on the maintenance levels of CapEx. Now that you’re making acquisitions of airframes and moving away from the original asset light strategy. Two part question, what should we think of in terms of maintenance CapEx as a percent of revenues or how that looks with the new fleet mix potentially changing? And if we look at last year’s numbers, what level of CapEx was devoted to growth versus just maintaining the current operations?

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes, I can grab that. So last year we sent about $7,000,000 on maintenance CapEx mainly the purchase of rotables. And I think that will kind of grow in proportion with the fleet whether we own the aircraft or we lease the aircraft that’s kind of what ends up that usually that proportion probably won’t change. Last year, we spent about $3,000,000 relating to growing the fleet, which is mainly deposits. I think the advantage of doing the airframe is it won’t be materially different to acquire airframes.

You think of the deposits required, doing it on a finance kind of lease from a lessor or from a third party. And it’s we’re just basically trading a deposit that we would have been paying that we never got back and just kind of went into nothing into a deposit that creates equity for the company. So, I think for 2025, that similar level of around $10,000,000 between maintenance and growth is probably still on track. When you think about cash flow from operations, it was over $8,000,000 for the year, which is positive, which is a big improvement from the prior years and prior quarters. And most of that was in the back half of the year.

Brian Foote, Analyst, Broadway Capital Management: And just to follow on that operating cash flow, you did indicate, Ryan, that $10,000,000 was the hit for the cargo business last year and again occurring in the first three quarters. If we march out this year and I know you guys had some commentary about it, but have we gotten to a breakeven position? Is there still cash consumption going on at cargo? Any update there would be really helpful for modeling?

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes. I think when you think about it depends on the quarter, I think Q4 was really strong for us on cargo and that was kind of was good. I think that one of the it demonstrated the power of what cargo can do for us in the right period of time. When you look at our activity levels on the hours flown, we’ve got around three hundred, four hundred hours contracted across the four planes. That’s not quite enough to be profitable, but it will absorb I think on an operating profit basis, it’s a little bit below breakeven, but it absorbs some overhead is where we’re at.

So I think fully burdened, it’s a loss. But on operating profit basis, I think it’s getting closer is the answer.

Brian Foote, Analyst, Broadway Capital Management: So if 2025 were a repeat of 2024, we add back $10,000,000 plus or minus?

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes.

Brian Foote, Analyst, Broadway Capital Management: And then just looking at the we’re almost four years into this adventure of leasing aircraft and now you’ve expanded the opportunity by looking at airframes. Is there a way to quantify that, right? If you were staying in the leasing market versus how many airframes are now available to you that you’ve entered into that new world?

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes. So I think the answer is, is everyone’s like how many planes are you going to add or like how many planes are out there? I said, if I’m willing to pay a premium, I can get as many airframes as I want. The trick is you don’t want to be burdened with an inflated, a top peak lease rate for seven years. I think airframes I think and really 90% of that growth in the lease rates for aircraft is tied to the engine value.

And so while we still might have exposure to that increased lease rate, on an engine you can switch, swap, you can get stub engines, there’s a whole bunch of ways to minimize the cost. So I think from our perspective on the when you start looking at airframes, you’re competing with those who are salvaging it and just doing a teardown. And there’s and it’s really specific. Some airframes, they got to go. They just don’t make sense.

But there’s some airframes because we don’t fly high amount of hours, we don’t do a high amount of cycles, we can get another six, seven years out of that a major airline could not. So it really, I think, opens the door to, look, we’re looking to add five to fifteen aircraft over the next two to three years. Between lease opportunities and airframes, there’s probably 100 opportunities out there. So it really becomes how do we get the best deal, how do we stay disciplined. And really, I think, when you look at the lease rates for engines and then the cost of an airframe, we’re almost looking at the combined lease the combined payment owning the airframe and leasing the engines is the same as it would be to lease the whole thing.

But I get to own the airframe at the end of three years, which gives me something to go to swap out. So I just think it makes a ton of sense to do that for us right now. I don’t think there’s a shortage of aircraft out there. It’s just a matter of how do we make sure we don’t overpay and then be burdened with a massive lease rate on a very, very old aircraft in five years that makes no sense.

Brian Foote, Analyst, Broadway Capital Management: Understood. It’s really helpful as always and I know we’re past the hour, so I appreciate it. I’ll hop back off.

Ryan Gosco, President and CFO, Global Crossing Airlines: Thanks, Brian.

Conference Operator: Our next question is from Vishal Mishra with Bard Associates. Please proceed.

Vishal Mishra, Analyst, Bard Associates: Hi. This is Vishal. So I have a question for Chris, especially about your comment about resilience of the business model, which is, what is it about global crossing, which will make it resilient over the full business cycle, which you alluded to earlier in the call?

Chris Generals, Executive Chairman, Global Crossing Airlines: The key well, it’s a multi faceted answer. So number one is the type of aircraft we operate, which is the most universally utilized with offering a tremendous options in terms of configurations of seats depending on various needs with a very fast timelines. The reputation of us as an operator, which I cannot overstate how important it is because we’re effectively changing the charter market from a perspective of reliable reliability and sort of a wide glove type of experience for the clients, because it used to be you get what you pay for type thing. And we’re obviously experiencing increased valuations of our services, a direct link to that reputation. We have our ability to diversify and operate different route schedules and work with our customers on their very specific needs.

And when you kind of think about flying, celebrity performers in music arena or world’s biggest athletes, sort of brand names versus flying European vacationers and for customers like TUI, you could not see more diverse mix of users and we can switch and adapt and perform and excel very quickly. And that provides us with that being agile and being nimble to adjust to changing market conditions when the demand comes from. And the fact that we’re winning commercial clients from the areas that we’ve previously never even played in. It’s quite encouraging and helping us with that. And effectively having owned aircraft again, we will never be a full owned aircraft because that’s not the point.

The point is to having a mix and that helps us through the cycle because when you effectively lease rates are currently at the peak and they remain at the peak, while we can find a lot more favorable financial terms in the Inertia market and we will respond to the changing financing and leasing conditions accordingly. As Ryan said, the key is don’t get stuck with overvalued assets or a very expensive lease at the peak because you have to live through consequence of that for many years after. And we’ve been very disciplined in that and very creative. So that continues to effectively fuel the robustness of our business model.

Vishal Mishra, Analyst, Bard Associates: Great. Thanks. So just related to

Chris Generals, Executive Chairman, Global Crossing Airlines: that There’s another thing, sorry. The big systemic change, the collegiate sports, the reorganizing conferences that opened up the market previously on top potential for an operator like ours. So it’s a mix of internal initiatives and the way we run the business and also favorable changes in our sort of macro environment.

Vishal Mishra, Analyst, Bard Associates: Great, fantastic. Is there also like, I mean, you’ve spoken about the changing the business model to airframes and as opposed to leasing there. Is there anything like you if you look at the competitors out there, is there anything like cost advantage like low lease per plane or low lease rate per block hour or something, you have like substantially at the lower end of the cost curve. Is there something along those lines about your business?

Chris Generals, Executive Chairman, Global Crossing Airlines: I would let Ryan respond to that.

Ryan Gosco, President and CFO, Global Crossing Airlines: Yes. I think when we look at some of our competitors in the space, again, there’s not a ton. Domestically, I think internationally, I think you lease rate is generally a reflection of the way we balance it is you can get generally the younger the aircraft, the fresher the engine, the higher the lease rate. The question is can you match the cost of that lease to what you can generate in revenue? And what is your ability to push the revenue?

And what’s the value. Now, we don’t necessarily look at our we look at the A in the ACMI when we do our costing and really the higher lease rates would increase the IA, which is what we would need to cover, which becomes a fixed cost. So, I think we in our head and our model know when we start going into our profitability and what the market will bear as far as a rate. And so, we will generally every lessor who has a plane available, the first question that goes, what is your lease expectation rate? And we give them a number and they either call us back or we never hear from them again.

The good news is we’ve been pretty disciplined at what number we say and they’re now starting to call us back, which makes me feel we’ve kind of hit a peak, but it’s still pretty high. And so, we will only kind of look at something like that for an aircraft that’s incredible specific conditions. I can’t tell you how varied an aircraft is, even though there’s 10,000 A320s out there, every they’re all snowflakes. And so you really can’t look at two aircraft the same. And so that’s why it takes so much discipline in doing it.

It’s not like buying a new one where they all look the same. Airbus is producing 75 of these a month. That’s once they get to 10, 18, 20 four years old, they’ve lived a life. And whether they make sense for our model, you can’t just look at them all the same. And I think what we’ve seen is there’s been some operators that have been desperate for capacity or will take capacity at any price with the expectation of fixing it in a year or two.

I think we have probably one of the best cost per hour on the A for the type of aircraft we have in our market, and we’ll continue to have that discipline going forward.

Vishal Mishra, Analyst, Bard Associates: Great. Okay. Thank you.

Conference Operator: Ladies and gentlemen, thank you. This will conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. And thank you for your participation.

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