SkyWest, Inc. (SKYW) Q2 2015 Earnings Report, Transcript and Summary

Good afternoon. And welcome to the SkyWest Incorporated Second Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Chip Childs, President of SkyWest Incorporated. Please go ahead.

Thank you, Alison, and good afternoon. We're pleased to have everybody here on the call this afternoon to discuss the results of our second quarter of this year. Before we get started, let me introduce some of the key players we have on our team, as well as an outline of what we will go over during the call. Present here today beside myself is Rob Simmons, our new Chief Financial Officer, we have Wade Steel, our Chief Commercial Officer with us, we also have Eric Woodward, our Chief Accounting Officer here, along with other various staff members to assist with any of your questions. The call will go as follows; we’ll start out with having Eric take care some housekeeping with the forward-looking statement disclosure. Rob will give us the financial results and some commentary related to that. Wade will give us a brief update on our fleet and our commercial initiatives and updates, and then I will provide some key updates on our strategy and progress. Afterwards we will open it up for some questions. So let’s go ahead and proceed in that order, starting with you Eric.

Thank you, Chip. We will be making statements on today’s call which are considered forward-looking. Such statements are based on our current beliefs, expectations and assumptions regarding future events and are subject to risks and uncertainties. All forward-looking statements expressed in today’s call are based on information available to us at this time. We assume no obligation to update any forward-looking statement. 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 2014 Form 10-K and other reports and filings with the Securities and Exchange Commission. Rob?

Today we reported net income $31.5 million or $0.61 per diluted share for the second quarter of 2015. Our operating income of $70 million for the quarter is the best quarter performance since 2008. The improvement in our financial results and earnings momentum was generated from our operating leverage in three areas, one, the change in our aircraft mix under our fleet transition plan, two, the use of our capital strength to add accretive new aircraft to our system, and three, the improvement in our operating performance and related operating efficiencies. With respect to changes in our fleet mix, I want to give you additional color on the net change in our operating fleet year-over-year. At June 30, 2014, we had 752 aircrafts scheduled for service. Over the last 12 months we have removed 134 aircraft or 18% of our June 2014 operating fleet. These aircrafts were operating under unprofitable or less profitable agreements. Over the same period we added 58 aircraft to our fleet, including 30 E175, which have been nicely accretive to our earnings. Although, we have a net decrease to our fleet size and block hour production from June 2014, the accretive aircraft additions combined with the removal of less profitable aircraft were significant drivers to our improved profitability. We have included a summary of our block hour production by aircraft type at the end of the press release that illustrates the fleet production changes and we anticipate continuing to provide similar production information in our monthly traffic releases. Wade will speak more to the fleet in a moment. The strength of our balance sheet, disciplined capital deployment, improving fleet mix and strong operating performance are the levers that have contributed to our significant turnaround from 2014 and provide the catalyst to position us well going forward with our major partners. We believe these actions give us a competitive advantage in the market and allow us to continue to access attractive aircraft financing rates, our solid operating performance builds on our strong relationships with major airline partners and also generates additional economics from contract performance incentives and operating efficiencies. In terms of year-over-year changes to our revenue and operating expenses, the theme for the second quarter is relatively consistent with the first quarter. As outlined in the release, the anticipated revenue decreased from a reduced fleet size and scheduled production was partially offset by incremental revenue from our E175 aircraft accretive 50 seat aircraft additions, contract rate improvements under various existing agreements from renewals, improved flight completion rates and higher contract performance incentives earned. Compared to last year, we’ve removed some of our negative no and low margin revenue and partially replace it with more profitable flying, two levers contributing to our profit momentum. Combined our revenues decreased by $28 million from the second quarter of 2014. Over the same period the reduced fleet size and related lower production combined with operating efficiencies from improved performance and various cost initiatives resulted in a decrease in operating and other expenses of $86 million from the second quarter of 2014. Lower fuel cost in our pro rate business was a benefit of about $9 million or 10% of the year-over-year decrease in expenses. So decreasing revenues of $28 million combined with lower expenses of $86 million net to our year-over-year improvement of $58 million in pre-tax income. Our 10-Q expected to be filed in early August will include our operating segment information. But let me give you a little preview. We're very pleased to report that ExpressJet had pre-tax loss of just $3 million during the quarter, compared to a $36 million loss in the second quarter of 2014. ExpressJet contributed $33 million of the consolidated $58 million improvement in pre-tax income, compared to Q2 2014. With respect to our cash and liquidity position, we ended the quarter with $505 million in cash and marketable securities. The primary items impacting our cash during the quarter include, of course, our pre-tax income of $52 million. We also used $36 million toward ownership for the nine E175 delivered during the quarter and we used $18.7 million to repurchase 1.2 million of our shares. For the second half of 2015, we are forecasting to use $18 million in the third quarter and about $11 million in the fourth quarter as ownership towards seven E175 aircraft purchases. We anticipate our other capital expenditures will range between $20 million and $25 million in Q3 and then be slightly lower into Q4. Lastly, we’re scheduled to present at a conference hosted by Cowen & Company in Boston and conference is hosted by Deutsche Bank and Imperial Capital in New York. All three of which are scheduled for this September. We appreciate the portfolio managers that we have spoken with over the phone this quarter and those that met with us in New York and Baltimore as we look to continue to tell the SkyWest story to a broader investor base. We look forward to meeting with those of you interested in following our story more closely. Wade?

Thanks Rob. With respect to key changes in our fleet over the past year at June 30, 2014, we had 752 aircraft operating scheduled service. Over the past 12 months, we removed 66 ERJ145 from United’s contract, 23 CRJ200 from various contracts and 45 EMB120 turboprops. This totals 134 aircraft removals or 18% of our June 2014 operating fleet. All removed aircraft were operating under unprofitable or less profitable agreements. Over the same 12-month period, we added 30 E175 aircraft under our United and Alaska agreements, 16 ERJ145s under our American agreement and 12 CRJ200s under our Delta agreements. This totals 58 additions, or 9% of our June 2015 operating fleet of 676 aircraft. All additions have been accretive to our earnings. During the last six month of 2015, we anticipate to remove 23 ERJ145s from our United contracts and 16 CRJ200 from various other contracts. As of June 30, 2015, we have taken delivery of 35 of the 40 E175 aircraft from our United contract, we anticipate delivery of the remaining five aircrafts during the third quarter of 2015. Additionally, on June 15, we announced that SkyWest airlines will place eight additional E175 aircraft into service with Alaska Airlines for a total of 15 E175s to fly under that partnership. As of June 30, 2015, SkyWest has taken delivery of -- has taken delivery of 13 -- of three of the 15 aircrafts and is scheduled to take delivery of the remaining 12 between Q4 2015 and Q4 2016. We remain focused on execution of our fleet optimization plan through 2016. Turn it back to Chip.

Thanks Wade and Rob. So the second quarter demonstrated obviously some positive momentum and it’s worth noting that this is the most profitable quarter for SkyWest, Inc. since 2008. The strategies that we began executing 15 months ago is showing meaningful improvement and we’re very pleased with the result. However, that said we remained focused on continued execution of our fleet optimization plan and continued discipline in our commitments with our partners. Key part to this quarter’s profitability is a result of continued operational performance delivering improved operating incentive and continued execution of our fleet optimization plan. Within each airline’s operations, we’re focused on delivering strong, predictable operating performance and reliability. Our ability to deliver strong product to our partners is a key part of our competitive position but we remain focused on reliability and delivering on our commitments to our partners. SkyWest and ExpressJet continue to produce strong operational performance and with ExpressJet producing 99.8% adjusted completion and improving D08 points quarter-over-quarter, ExpressJet has been the top performing United Express partner in terms of completion for several months with SkyWest just behind them this quarter. Both carriers are also top two with Delta Connection portfolio. The benefits of producing a strong product to realize financially through performance incentives, contract revenues on completed flights and added value to our partners. During the quarter, we continued executing the aforementioned fleet optimization plan resulting in a smaller fleet and improved aircraft mix. For the quarter, we made them profitable aircraft. This resulted in a better fleet mix and improved profitability on fewer block hours. SkyWest Airlines completed its transition to an all jet fleet in May. As noted last quarter, the overall cost savings and associated improvements from a simple fleet will realize in this second quarter. SkyWest Airlines successfully launched E175 flight for Alaska Airlines in the quarter as well, most specifically in July. Overall fleet flexibility and disciplined approach to our commitments are key to our ongoing strategy moving forward and we continue to executing on that strategy in the second quarter. We believe a large part of our ability to deliver reliable products remains an attracting and retaining the industry’s very best professionals. And that’s something we continue making progress on in the second quarter. In terms of factoring these improvements into our financial model, we will continue our practice of not providing specific EPS guidance at this point. However, we anticipate the second half of 2015 should reflect moderate improvement from the second half of 2014, excluding the 2014 special item. In terms of preliminary view of 2016, we anticipate 2016 should reflect moderate improvement from 2015. And as we have disclosed in recent quarters, we continue to work through our fleet transition. We could potentially have some noise later in 2015 or 2016 with respect to potential aircraft-related cash or non-cash special charges. To summarize, we built momentum on our strategic plans during the second quarter and we’re optimistic about the positive direction. We remained very focused on fleet flexibility and discipline, strong operating performance and ensuring we remain positioned to deliver the best what our major airline partners request of us. Our strong performance and progress in our business during the quarter is because of more than 20,000 aviation professionals across both of our operations. There is not a better group of people in the industry and we are very proud of what they continue to accomplish. With that, we will turn the time back to the operator for some additional questions.

Thank you. [Operator Instructions] And our first question comes from Savi Syth from Raymond James. Please go ahead.

Hey good afternoon. Thanks for the level of details that you are sharing on the monthly reports and it’s really appreciated. Just on the -- just when thinking of the second half ’15. Historically, third quarter has been stronger than the second quarter. Is there any reasons to believe that that won’t be the case now, is something different about the business model that might change perhaps?

Savi, thanks for your question and I would say that there is no reason to believe that wouldn’t be modestly consistent with what it’s been past now.

Got it. And just on the -- you've heard many competitors are having issues with pilot rates sourcing. Just wondering how much of an improvements you are seeing today as a result of maybe your partners needing to turn to you to get extra sliding and maybe what’s potential opportunity going forward there?

That’s a very good question. Let me kind of redirect the question to a little bit of more what our strategy is. I mean, I think that from the dynamics and the fluidity of the markets that we see today, there is always ongoing dialog with our partners all the time. We are focused on making sure that we are executing our fleet flexibility strategies and we remain very disciplined in those commitments. At the same time, it all goes back to our strategy. Also, we are making sure that we are tracking the industry’s best and delivering exceptional performance so that we can become a strong airline partner. But I think that the name of the game today relative to the circumstances we see in the marketplace today is maintaining strong discipline and making sure that we can deliver what we are committing to.

Got it. And if I may just ask one quick question on the per rate side. So what was the, kind of the benefit to the per rate side from maybe fuel savings? I’m guessing not all of the fuel numbers flowing through your income statement. Some of that’s pass through I would assume.

I will let Wade kind of comment on that so.

Yeah. So as far as -- thanks for the questions, Savy. So, first of all, with the benefit, Rob in his prepared remarks talked about a $9 million benefit in the per rate fuel area. A couple other things with per rate, we actually have decreased our capacity slightly during the quarter. But we still see some benefit from it.

All right. Great. I missed that. Thank you very much.

Thank you.

Our next question comes from Michael Lindenberg from Deutsche Bank. Please go ahead.

Hello, everyone. This is actually Richa Talwar filling in for Mike. Good afternoon. So, first, I wanted to ask about margin and profitability differences as we move out of sort of the less profitable aircraft you alluded to and into more accretive ones and gain more experience at some of the new models here you’ve introduced. And along those lines is there a target margin or earnings figure long-term? We are just trying to get a sense of steady state of earnings for Skywest underlying? Thanks.

Yeah. I think that from the detail perspective, it’s the first part of your question. I think we are going to kind of leave the detail out of our answer. But to give you some guidance there, I certainly believe that we could -- our objective is try to get to a 10% operating margin. We think as we continue to execute on our strategies that that could be something that’s going to take some time. But we are going to be very disciplined in how we do that. We are about 8.8 today. Yet at the same time, we want to go back and make sure that there is not just what the target is. We want to be very disciplined and make sure that we are managing partner relationships and providing the operating value to them in that process. But if you have to target something, we’d focus on that 10% operating margin.

Any color on the differential between the profitability of the new aircraft and then the less efficient aircraft?

I don’t know if there is necessarily the type of aircraft more than it is the type of circumstances and things that we are flying the fleet under. We are not going to get into the detail on this call as to exactly what those metrics are. I think that you can take your model and look at how the fleet has adjusted and probably make some good assumptions as to how those movements and those variables unit take place. I will also let, Rob give some commentary on this as well.

Thanks, Russell. I think if you look at it, as we talked about, it’s about our mix shift. So if you look at the planes that we took out, those were either unprofitable, marginally profitable planes and so there is kind of two leverage points is you take those planes and unprofitable or marginally profitable plane out and replace it with something that’s much more reasonable in terms of margin, in terms of what it represents for a return on capital for us, you start to see a nice leverage points emerging from that mix.

Okay. That was helpful. Thank you. And then somewhat related to Savi’s question on the labor front. One of your competitors has announced labor issues as a key reason for not being able to maintain their schedules this year. Just wondering if that’s a concern of ours with your own labor situation and if you think your competitors issues sets up opportunities for you this year and potentially next year?

Again, I will probably answer as the last -- same as I did with the previous question. I think that there is always been and this is something we’ve seen for a while. There is always a fluid market out there that we work with, with our major partners and there is a lot of things going on. I think that everything that we do relative to with our major partners, when it comes to the people that we have for resources to execute our commitments is to exercise great discipline and making sure that we do not get into a position where we are not applying our resources appropriately. We have strong relationships with all of our people today. We continue to have great ongoing dialog, centered around our overall focus with all of our entities to create long-term sustainable business models because I think everybody benefits from that. And from that perspective, we just need to continue to work hard to deliver what our partners want and be disciplined in that effort.

All right. If I could just squeeze in more, you mentioned incentive payments, are you willing to share how much incentive payments you’ve got in the June quarter?

I don’t think we are prepared to kind of disclose that level of detail on the call. Apologize for that. But I think if you can kind of take a look back, historically at some of the models and some of the things that we’ve done in the past then you might be able to figure a little about that up. But we prefer to not disclose it on this call.

Okay. That’s fair. Thank you.

Our next question comes from Helane Becker from Cowen and Company. Please go ahead.

Thanks, Operator. Hi, guys. Thank you for the time and I will echo my colleagues and say thanks for the detail. It’s really terrific. Anyway you can provide us that similar details for 2016 or first half of ’16 at least?

Wow, Helane, my goodness. We are ready to disclose it out and you guys want more, that’s a great question actually. I don’t think we are prepared to certainly give this level of detail. But, Rob, maybe you’ve got some thoughts on what we could do in the future as to.

Sure, Helane. I mean, look, I think that at this point, the only thing that we’re prepared to say is what we said already on the call and that was that as we right now look out at the 2016 landscape, we see that there is a nice opportunity for us to have a moderate year-over-year improvement. As we look at the second half of '15, we think there is a nice opportunity to have a moderate improvement over the second half of 2014. So obviously, as we kind of dial these things in and you see more news out of us, we will talk more about this in future quarters. But right now, that’s the level of kind of confidence we have and detail that we are prepared to give.

Okay. That’s fair. And can I ask the question maybe slightly differently. You guys are kind of self, I guess, funding if you will your any pilot attrition, right. You’ve got rid of over a 100 aircraft. You’re putting some of your pilots to training. I mean, could you just maybe say why salaries declined year-over-year given the shift in mix to bigger aircraft. I would have thought obviously wrongly that your guy sort of gotten increases for flying bigger equipment now.

I mean, yes, I am not sure what you’re looking at, Helane, but I think that the salary line probably went down year-over-year primarily just due to reduction of fleet. I think if you look at the release and some of Wade’s comments about this reduction in fleet, you can see that all of the costs are down relatively strong, but it’s mostly due to our fleet optimization plan and some of the discipline we are trying to exercise in removal of unprofitable fleet. So yes, hopefully that will help you kind of reconcile a little bit about what that does.

Okay. Did you say what pilot attrition is right now?

This is relative to pilot attrition. I think we are going to keep those rates to ourselves, but I will tell you something relative to what we’re seeing. We have not in 2015 been surprised at what our predictions have been or what our pilot attrition has been. We have some very strong recruitment programs that both entities hiring is keeping pace with what our flying commitments are. And we’re maintaining strong discipline with our commitments and making sure that, I mean we feel very comfortable in the position that we are in throughout the rest of '15. And we continue to work on our fleet plans through '16. And we keep all those things in mind when we look at what we can commit to. And most importantly, the type of fleet flexibility we have to be able to respond to any different assumptions that will happen with pilot attrition, but we have not been surprised. We are exercising discipline and we are keeping up with our staffing.

Okay. And then the last question, I have is on promise, is on the margin, are you -- your contracts provide for pretty nice margins, are you worried that the airlines will come back and say we changed our mind, we are paying you too well?

Not certainly when they are making the kind of margins they are making, I mean maybe that’s the best way to put it. At the end of the day, here is the value that we see. Our strategy is still to make sure that we are providing the right type of value that they are willing to pay for. And part of our ongoing conversations with our partners is continuing to be transparent about what their needs are and what we can do on a very proactive basis to provide or what they want us to provide. And it has to come at the right economic model for our shareholders. And we are very transparent about that. And from that perspective, I can tell you that our relationships are strong and the dialogue is very, very positive, as we continue to look at opportunities to further revolve our fleet.

Great. Thank you so much for all that clarity and your help. I appreciate it.

Thank you.

[Operator Instructions] Our next question comes from Duane Pfennigwerth from Evercore ISI. Please go ahead.

Hey, guys. Good afternoon. Thanks.

Hi, Duane.

I wonder if I could come back to the pilot question. Maybe you could just help us, because it’s very relevant right now. Just to execute your business plan, how many typically reuse, how many do you need to hire, what is the rate that you need to sort of get pilots in the door maybe per month to execute your business plan? And I think if you give us that detail, maybe how many you’re freeing up from these aircraft that you’re getting out of that, that might help us sort of understand that variable and get some comfort with it.

Well, I think to be candid, if you go through the release and if you look at the block hours that we have from quarter-to-quarter, I think there is enough data within the release and some of the commentary we’ve had on our fleet flexibility. That like I say when we’re very comfortable throughout the rest of '15, we are going through the process as estimating what that’s going to be in 2016. We sit down with our partners and are transparent with them about what that is in '16. They need to be transparent with us about what they think is going to be higher from us. And the other variable about that is what the fleet is going to be. And to be honest, you can see from the overall ASM or block hour production, the [mall] [ph] is to shrink the fleet in the short term. That puts us in a great position relative to making sure that we can fly within our commitments and deliver to our partners. That takes some discipline relative to that. And you can see by the operating performance within this last quarter that the execution of all those variables should give you some very good comfort that we are on top of as much as we thought it can be the pilot situation and making sure we are delivering on our promises.

Okay. I mean, how practically does that work? So if you turn back in any 145 and you have cruise related to that E145, what’s the process to sort of train them over or move them to a different certificate so that they could fly any 175, or am I thinking about it the wrong way?

Yes. I think what we are doing Duane, I think the thing that we need to clarify is that we’re right now managing this clearly by entity. There is absolutely no fungibility between the entities by design and strategy. But the process that we are going through to evaluate the flying needs of the partners, predicting the hiring model, and predicting what pilots will be available, and predicting if there is more fleet that we want to get out due to low margins or losing money, all of that is being done out of more granular level, some by entity, some by fleet type, and we feel very good with our [mall] [ph] about how that work. So typically today within each of the certificate, we are not going -- we are not crossing over back and forth and asking to retrain the pilot in one or the other with the exception of a couple of things that how they may work out of SkyWest Airlines going from CRJ to ERJ. But from that perspective, it’s actually worked our very, very clean. It’s just so happened that most of our fleet flexibility is coming in the right spot and the model over the last several months. This is not new. I mean, it’s also important, Duane, understand this is not a new challenge for us. We’ve had this challenge for quite sometime now. I understand that it’s kind of come to ahead in certain circumstances, but we’ve been doing this for quite sometime and we’re very comfortable with how our models are going to produce good reliability going forward with pilots.

And Duane, Rob here. Remember that over the next four to six quarters at least, we’re going to continue executing on this plan, with fewer planes, fewer black hours that have much better mix and better profitability, that’s our model kind of through 2016 at least.

Okay. That’s helpful. Just a housekeeping one, can you say what operating cash flow was in the quarter?

Rob?

Yeah. EBITDA for the quarter is in the release. It was $135 million this quarter, up from $77 million a year ago.

Okay. I wasn’t sure of EBITDA was the same as operating cash flow that will show up on your Q, but thanks for clarifying that. Okay. Those are my questions. Thanks.

Hey. Thank you, Duane.

We have a follow-up question from Savi Syth from Raymond James. Please go ahead.

Hi. I just wanted to understand like give you something here on the SkyWest improvement side on a year-over-year basis, is that solely from the growth over there other things that are happening on that segment to that its driving greater profitability-- maybe growth and maybe pro rate?

Savi, I’m sorry. I didn’t hear the first part to your question, could you restate that again.

Sure. Just on the SkyWest segment side the year-over-year improvement, is that just driven by the growth you can get in the E175 and maybe the profitability improvement on the pro rate side or are there other things happening on that entity as well?

No, I think there been some good -- candidly some good discipline cost management on the SkyWest side. It is been the removal of the EMB 120 as well as some modest growth on the 175. It is both the key elements on the SkyWest side.

Got it. And then on the ExpressJet side just looking historically, it seems like they’re getting -- your losses are now closer to what you saw in 2012. Is it fair that we’ve kind of gotten back to the level where maybe we were at 2012? And then going forward just how much is controlled level, you’ve done a lot of good work in improving the operations. And I would think that was the most controllable aspect of it. Is there a lot more that can be done there? And then on the reworking the contract side, just how much can be done in the near term?

Yeah. So I mean, Savi, that’s a great question. So, as far as expectation going forward ExpressJet, not having references to 2012 right at hand, I think what Robert has talked about what they came in at, we are very optimistic about the direction of where they’ve been and where they are. There are a couple of variables out there that we will probably give more of an update in Q3 on what’s going to take ExpressJet from still losing money in 2015 to the next level of making sure they can breakthrough in the black on a long-term basis. But when you talk about what still can be done there, I can’t say enough about the operating performance some of the teams have done out there to be, candidly, the best in the industry. And Alex and the team and everybody’s done a fantastic job of that. The key element of this though is that, I think that we’ve developed a lot of credibility and opportunity with the major carriers over the last 18 months with ExpressJet. And I think they’ve recognized the value in that. And we’ll probably give some more visibility in Q3 relative to these things, but it is a good opportunity to make sure that we do some things with several stakeholders in the company to make sure it’s a long-term sustainable profitable entity. But we’re optimistic about all those things.

Got it. And then, I’m sure you’ve had your peer pressure pilot questions but I just have one more. If you were to win an additional flying with United or American, I know who are both probably looking for additional flying at some point here in the next 12 months. Do you have the pilots to be able to address that any such growth?

I would respond to that, Savi, it depends on the circumstances. I think that we again, we have some fleet flexibility. Any future flying opportunity that we’re looking out for in the short-term is primarily based on existing pilots that we have today and not on the assumption that we need to go and recruit them and bring them in. So if the question is do we have the pilots? We have a lot of pilots today. And our strategy would be to be discipline and use our fleet flexibility to our advantage in any of those opportunities.

Got it. And then last one for me. Just on that 10% margin, how aspirational is that? Like what kind of a scenario, or what needs to be achieved to be able to get to that level on a system basis?

I think when you say what need to be achieved, you can see that we are -- I think we’re seeing improvements that we have to be patient about. I mean, I think, we’ve noted that we’re optimistic about 2016. We’re seeing some modest improvement in 2016. It really is honestly, Savi, a little bit circumstantial about what we see the marketplace moving with and what the partners want and how we can deliver that. So if I were to give you a list of three things of what it would take to get there, they probably wouldn’t be the most accurate. There is no question that the best way to do it is to take our -- what we still have is a portfolio of unprofitable flying and turn it profitable. And then where that let this be in the mathematical equation of that margin, we’re not necessarily focus where that lands as much as we’re making sure we get done is more of the granular thing that we need to get that -- continue to get it moving in the right direction.

All right. Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Childs for any closing remarks.

Okay. Thank you again very much for your interest. We’re very pleased that you’ve taken interest in our company. Again, we’re very positive about the strategy that we started about 15 months ago. And then, we’re extremely appreciative of the good hard work that our 20,000 aviation professionals throughout the company continue to provide to help us to develop this and continue develop this smaller than we think we can develop to be a profitable sustainable entity. And we will talk to you again in another quarter. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.