Global Crossing Airlines Group Inc. (JET) Earnings Call Transcript & Summary

All right. We're going to get underway here. I'm Grant Howard, President of The Howard Group, and good afternoon, and welcome. This is the sixth management update from Global Crossing Airlines. And on that note, I don't know of any other company that's able to provide monthly updates with significant and concrete developments and that really is the spirit of what is happening in the advancement as we move towards certification, which is expected next February. So only 2 to 3 months away. And there'll be more details discussed in regards to certification and many other things on this call. At the head of the table is Ed Wegel, who is the CEO. And on the right side of the screen, CFO, Ryan Goepel. And Ed, I see you have a guest as well. Perhaps you'd introduce him, and then you can kick off the presentation. Thank you.

Sure. Thank you, Grant, and good afternoon or good morning to everyone on the call. As Grant mentioned, this is our investor update #6 since we closed the merger with Canada Jetlines. And this continues our promise for full transparency of our activities as we work towards our certification and getting our aircraft into the air in revenue operations. Grant mentioned another individual with me at the table, it's Mark Salvador, our Chief Marketing Officer. Some of you have seen his bio in some of our materials. Mark came to us from a 6-year stint with Carnival Corporation, where he oversaw the brand development for all 6 of their major cruise lines and brands and has a lot of experience also in setting up air charter programs with the cruise lines and hotels and casinos and branding. And corporate development are his major areas of expertise. So we're very happy and pleased to have him on board with us. And he'll be available to answer any questions as we get into the Q&A later. And we had a very busy and a very productive November, and we reached all of our objectives and then some for the month. And so before I get into the specifics, let me just give you some of the general highlights to give you a sense of our momentum and our progress. So we completed the painting of our first A321 at Magnetic MRO. Many of you have seen the pictures of the airplane on our website and on the Internet. A great-looking airplane, the flagship of our fleet. And that airplane has already been contracted for daily flights to Havana and for a major South American airline that wants to increase its flights from Miami. That airplane is fully booked and will be operational in revenue service the day after we receive our certificate. Our first A320 was removed from storage. Now being prepared for painting and checks to be returned to service with us. We leased the aircraft from Dubai Aerospace Enterprises. One of the preeminent leasing companies in the world with over 400 airplanes. We're very honored to be partnered with them, leasing this aircraft, and we see additional aircraft that we can acquire from them in the future. We continued the deployment of all of our major software systems. These systems control our operations, in-flight dispatch, preplanning in other areas. And it's critical for us as we reduce our costs and seek to completely digitize this airline. We expanded our senior team with new senior station management teams that will open up our stations in Miami and Atlantic City, and one additional station for our proving runs for flag carrier status and as well to help on the marketing side by providing cost quotes and operations at all of the stations that we will operate from. We've lined up our next -- A320s for delivery next summer, and we have our first A321 freighter delivery now scheduled. We have about USD 50 million -- or looks like we lost the -- CAD 60 million of charter contracts for the first 12 months post certification, and we have almost an equal amount of that in negotiation. And we continue to add to our pipeline of deals, potential deals and prospects every day. First cadre of captains have been recruited, have their start dates for training later in December. Our first cadre of senior experienced flight attendants have also been recruited, and they will start their training just after New Year's, all on track for us, as Grant mentioned, to be certified sometime mid to late February of 2021. Now let me get into some specifics of what we've accomplished over the last month. Next slide, please. Next slide. As I mentioned, we have made significant progress on our fleet plan and on our FAA certification. On the certification side, as you know, was in one of our press releases this past month, we moved officially into Phase 3. There are 5 phases, again to remind everyone, Phase 5 is essentially an administrative phase where we complete some paperwork with the FAA. Phase 3 and Phase 4 are the what we call the design and execution phase, where we show that the manual set that we have created, and which the FAA has accepted, actually works in operating the airline. So we will do tabletops, exercises of scenarios with the FAA in Phase 3, complete the training of all of our flight attendants and cockpit crew, our captains. And then move into Phase 4, which is when we conduct our proving runs. So it will go pretty fast and pretty furious from this point on. We will add a lot of people to the staff: captains, flight attendants, maintenance staff as we get ready to actually operate the aircraft and exercises with the FAA. Our stations in Miami and Atlantic City are being set up. Contracts are all in place for the handling and the maintenance to be done there. On the aircraft side, we have -- our first 5 aircraft have now been identified, 2 are now under lease and 3 more are under LOI or close to LOI. So we feel very good about our progress in this area, having -- taking advantage of the disruption in the aviation world with the pandemic, which resulted in the much reduced lease costs and deposit requirements for aircraft. We've moved quickly to nail down our aircraft and make sure that, as we go forward, we have reduced costs over the next 3 to 5 years. Aircraft #1 was the picture you saw in the beginning, that's our 321. MSN 2480, it's completely painted. We're doing some touchups on the interior and some final checks at the MRO, the FAA conformity and the end registration process so that we can bring it into the U.S., has started, all is on track. And the lease is now ready for execution. We're just doing a few minor legal cleanups along with the end registration. And we'll be signing that lease probably later this week. Aircraft #2 is our A320, as I mentioned. We signed that lease on November 30 with Dubai Aerospace Enterprises, again, a major leasing company that wants to do business with us, and we want to do more business with them in the future. That plane has been in storage since April. It's been removed from storage now. And we started the work on the delivery checks and getting it prepared for paint. Estimated time for completion of all of those activities is approximately 30 days. And that airplane will be delivered to Miami, along with the first aircraft, sometime in mid-January. And we're timing that to maximize the commercial and marketing aspects of that with a ceremony here at MIA with proper COVID restrictions in place. But we will have the ceremony and a flyby of the 2 airplanes in formation over Miami during that ceremony. Aircraft #3 and 4 have been identified. These are aircraft coming out of Alaska Airlines, originally operated by Virgin America. Excellent aircraft with Gogo WiFi and full Internet IFE capabilities. They'll be delivered in time for us to take advantage of summer 2021 traffic both here and in Europe by moving one of those airplanes to Europe to fly for our strategic partner SmartLynx. Aircraft #5 is our A321 freighter to lease with Vallair, part of the 10 aircraft -- package of aircraft that we are leasing from them. MSN 827, it's now in conversion -- in the conversion process, which takes about 5 months, and it will be delivered to us approximately in July of this year. We're hoping to get it in June. But just to make sure, we're scheduled for July. So that's what we've achieved in terms of the certification of -- with the FAA and as well with our aircraft fleet plan in November of this year. Next slide, please. Again, this aircraft, our A321 is now under lease. It's the flagship of our fleet and will provide us excellent operational reliability as well as economics with an extremely favorable lease that we have put in place with the lessor. This aircraft has already been contracted completely for flights to Havana from Miami under the U.S. government program and as well with a major South American airline that wants to increase its presence in the U.S. market and increase its number of flights from Miami. We'll be in a position to announce that deal, hopefully within the next week to 10 days. Next slide, please. This is our first A320. You see it here in its full glory in storage, completely wrapped. It's in the process of being unwrapped and being prepared for us. It was previously operated by Frontier Airlines in the U.S., which gives us a significant advantage in that this airplane has already conformed to FAA standards, to U.S. aviation standards. And so we essentially need to do some checks, have the aircraft painted, and it will, again, be delivered to us by mid-January in a joint ceremony with our A321. Painting of this airplane is scheduled for December 20 at IAC, a major aircraft painting company in Amarillo, Texas. Again, we'll have the time-lapse camera on it, so everyone can follow it. And hopefully, at the end of that process, it will look like the artist rendering at the bottom of the page. But we think it's a great livery, and this will be a great airplane for us. It's in excellent shape and it has started to be contracted for, and we pretty much have this airplane contracted out for a number of clients in the U.S. as well as into the Caribbean and Latin America. Next slide, please. So our certification schedule, next steps, as I mentioned and referred to a few moments ago. We continue to move efficiently through the certification gates with the FAA. And as I said, we have 3 phases to go. The next 2 are Phase 3 and 4, where we train our crews and we show the FAA, we can operate the airline with the manuals that they have accepted. And that we can operate the aircraft in actual flight operations under a number of scenarios that they have us fly under. Phase 5, which is, again, just an administrative phase for the FAA to complete its paperwork, is done right after the proving runs. But we intend to move fairly quickly through Phase 3 and Phase 4. All of the major events in those phases have been scheduled with the FAA. The first part of which is the pilot training, which will start mid-December. Flight attendant training will start right after New Year's. Pilots essentially go into about 50 days of training with us before they are qualified to fly our aircraft. Flight attendants go through about a 3-week training course. So we're able to start them a little later in the process. The proving runs, which are 50 hours of flights that we conduct from Miami to various points in the U.S., including Atlantic City, which will be one of our scheduled station operations, will start in mid-February and run for about 10 days. Next slide, please. To fund our progress through the certification, we have designed -- as we have mentioned several times in the past, designed our equity draws from GEM combined with the exercise of warrants to fund as we go. So we have just-in-time funding to ensure efficiency in our cap table and how we raise and use the cash that is generated. The sources for the amount that we raised in November, which was about USD 337,000. SmartLynx, our strategic partner, exercised -- they've started to exercise their warrants that they received from the June financing. As you know, SmartLynx invested $500,000 of the $1.5 million that we raised in June, and they received a number of warrants, 2 million warrants. They're starting to exercise those along with some options. Total proceeds to us of 150,000 insiders of exercise warrants for an additional 200,000 shares, USD 400,000. And we did a sale with GEM of 138,000 shares to generate USD 87,000. The uses of the amount that we raised in November, aircraft deposits for both the A320 and the A321 of about $300,000. That money is actually restricted cash on our balance sheet. But they are deposits with the lessor as part of our lease arrangement with them. And as well, we funded our software implementation with NavBlue, Mint, Aerodata and some other software systems and expensed $60,000 in that process. Again, that's a critical path for us to fully digitize the airline and will make us extremely efficient and allow us to maintain our operations. Next slide, please. We continue to project a cost advantage over our competitors as a result of the disruption that was caused by the pandemic and the resulting lowering of lease rates, deposit requirements, the ability to acquire assets, including our software systems, our hardware systems and other assets at a discount to what we would have paid before the pandemic disrupted everyone's life starting in March. We still see and project a minimum of a 40% lower operating cost than our competitors as a result of our being able to structure and sign our leases and acquire our assets at a very, very favorable position with regards to the sellers -- or lessors of those assets. So we feel very good about where we are in terms of our cost advantage as we finish up the certification and get ready for our revenue service operations. We are positioned, we believe, to be the low-cost leader in the charter and ACMI market as well as creating and producing and providing a superior product with the aircraft that we're able to acquire in this environment. Next slide, please. Our schedule for the delivery of our first 10 aircraft has been designed to maximize the advantage of both the cost advantage that we have and the availability of aircraft. We're now scheduled, as you know, for January to take delivery here in Miami of the first A320 and 321, our MSNs 2695 and 2480. We're projecting May and June to take 2 A320s from Alaska coming out of Alaska Airlines. In July, we will take our first A321 freighter. And we are looking to acquire an aircraft for September, October and December, and then 2 in the first quarter of 2022. We're already in negotiations for those 5 aircraft at the tail end of this process. We're actually tracking about 300 A320s and A321s, active discussions every day with lessors and owners of these aircraft. And we're able to actually improve our position every day with looking at additional aircraft and negotiating lessors against each other to get the best possible deal for us. So our contracted lease rates for aircraft, we have capped at about 50% below where they would have been pre COVID. And we're very disciplined and structured in that many of our aircraft -- our first 2 aircraft are contracted on a per hour basis. So that if we don't use those aircraft during a particular month, we don't pay for them. So in fact, in January and February, before we start the proving runs, we actually don't make any lease payments on those airplanes. That's a significant advantage to us. Then as we get into revenue service, we will pay by the hour as we ramp up our services. And so we will have a significant cost advantage there as well. All of our other key vendors, we've been able to negotiate significant discounts be it software, hardware systems, office furniture. Whatever it is that we need, we're getting at prices that are at least 50% to 60% lower than they would have been pre COVID. And each of these aircraft, as Ryan Goepel, our CFO, has mentioned in the past, will generate operating income to us of about USD 150,000 per month. Next slide, please. In what we hope to soon be a post-COVID world, we continue to look ways to reduce our costs, reduce our risk and increase our projected operating margins. As we have discussed in the past with all of you in other investor calls, there is a distinct difference between a scheduled service and a charter-only airline. We're charter only at this point. Every flown charter flight is profitable. No money-losing flights because we won't fly them unless they make money. Flights are sold on a whole aircraft basis, and we take no seat risk -- we do not take the risk of selling seats individually. We put our aircraft out for charter. We are paid before that aircraft leaves. And we know exactly how much money we have made from each of those charters even before the aircraft has left on the charter service. All of our -- most of the major cost items, fuel taxes and landing fees, pass through to the customer, and we sell them additional services in catering and in other areas as part of the entire package. We are projecting and planning to run with 40% less overhead per plane compared to comparable airlines like us. We've outsourced our line maintenance to Spirit. Spirit is a world-class, low-cost airline, have been extremely helpful to us with best practices. And they will be maintaining our aircraft through the proving runs and into the early phases of our revenue operations. This gives us a distinct advantage in terms of reliability, learning from Spirit and as well lowered staffing costs. We formed a JV with a ground handling company, Global Aviation Services in Canada. We have started to plan our operations here at Miami International, Atlantic City Airport and elsewhere where they have ground handling operations already. And other airports where we know, in the future, we will have significant operations, such as Orlando, Tampa, some Caribbean destinations and perhaps even into Latin America. We're integrating the latest travel technology. We want to eliminate all manual processes within the airline. And our goal is a full digitization of the airline to drive lower unit costs throughout our operation. Our aircraft insurance costs, we have been on roadshows, virtual roadshows with some 30 to 40 aviation insurers, insurers who specialize in the aviation airline industry. We've had a number of those. The feedback has been tremendously positive. We use Marsh Aviation, which is the largest aircraft insurance broker in the world. And we have now gotten some -- the feedback from Marsh that about 80% of our insurance has been placed at about 33% lower than what we had budgeted. And the feedback we're getting from the insurance companies through Marsh is that this as a result of their view of GlobalX, our management team and its experience, our safety management systems that have been implemented here and our plan of operation. So we had originally projected somewhere over $60,000 per month per aircraft for all of the insurance that's associated with flying that aircraft. We now project we'll be at about $40,000 per month per aircraft which is a significant cost reduction for us and a result of the great work that this team has done here in creating this platform with all of the safety management systems that need to be in place and the people that we put in place and the key positions in the company. And this should all result in us to be able to generate above-average operating margins per aircraft, which we'll see as soon as we start operating in March. Next slide, please. An additional risk mitigation strategy that we have developed is our cargo initiative. We've talked a number of times about this, but just to review some of the basics. We've made great progress in developing our dedicated freighter cargo operations. As you know, we've signed an LOI with Vallair for 10 A321 freighters. We signed that mid-October. First delivery, again, is scheduled for July of 2021. We also signed a deal with ST Engineering, which is the largest maintenance provider to airlines in the world, based in Singapore. They have a joint venture with Airbus to convert A321s to freighter. And we have signed for 5 conversion slots which are very, very valuable to us starting in late 2021. We're working on what we call A321 feedstock for that conversion. So when we combine these 2, we'll have 15 A321 freighters that we should have online and operating by the end of 2023. Our manuals for the -- to be able to operate A321 freighters have been prepared. And we will submit those to the FAA for certification once our 121 flag certification with our A320 is completed in late February. We've already identified revenue opportunities for the first aircraft, and we're in the LOI process with 1 dedicated 321 with a South American logistics company, a very, very major freight forwarder and logistics company that wants to start with 1 airplane and probably will go to 2 or 3 airplanes with us. And we also are in the LOI process for a dedicated freighter for one of the major world-class airlines in South America. We are extremely confident that having the ability to put 10 to 15 cargo aircraft, A321, into the market will make us a strategic player in cargo, and we will attract a number of opportunities. And in fact, we're in discussions with DHL, Amazon and some other major logistics company for a larger -- a long-term contract with them. It's important for us to be into cargo to diversify our revenue streams along with passenger. And the fact that our pilots can fly both airplane types, 321 freighter or the 320, 321 passenger and we've got the infrastructure in place to support these operations, make this a win-win for us in all aspects. Next slide, please. Our sales pipeline is robust, and we're very, very excited about what we're seeing in the market. We have from post certification for 12 months after in what we call contracted and highly likely to be contracted. We have USD 52 million of revenue. That breaks out into South America, Cuba, major hotel and casino groups and our first cargo aircraft. We have another 15 million active prospects, and that number increases daily. And we continue to work to move prospects from the third column over to the second column and then to the first column. We are broadening our reach. We have just expanded our sales team now. We've got a very experienced sales executive who came from one of the leading charter companies, Miami Air. She's now on board. And we are continuing to expand the pipeline and the number of contacts and contracts that we start to put out there to generate our revenue. So we feel very, very good about this. All of these contracts are obviously subject to our certification and final DOT approvals. But we are a long way down the road of making sure that we have the sales in both contracted and in our pipeline to support our airplane delivery schedule. And as we get -- next slide, please. As we get closer to FAA certification and revenue launch, we will increase our presence through a number of media channels. Just recently retained Zapwater Communications as our PR, public relations and social media agency of record. They are working with us initially for the arrival ceremony of our aircraft in Miami. Zapwater.com. is their website, if you'd like to take a look. They're one of the lead travel-related agencies. David Zapata, who leads Zapwater, I've known him for many years. He grew up in a family that worked at Pan Am. He understands our business. He loves our business. And he wants to be very much a part of what we are doing. Zapwater has over 64 current clients including some major airlines, Finnair, Icelandair and a lot of the type of clients that we go after, including ski resorts, Caribbean tourism boards, hotel groups and so forth. So it's a very good marriage between Zapwater and us, and we're already starting to implement strategies with them to get our name, and our mission and our message out there. So around the 5 pillars that we've developed, our core brand, our investment story, our lead generation for passenger and cargo, highlighting our leadership. And we will be doing spotlights on each of the senior people in this company because, in each case, their stories are somewhat unique and somewhat representative of the American experience, and we're going to highlight that as we move forward and, of course, our progress to certification, which, as Grant mentioned, we're getting closer and closer. We're 2 to 3 months away from being able to actually operate our aircraft. So next slide. So in summary, let me just go over the key points. Our FAA certification is on track and under budget. Our first 5 aircraft have been identified and are being contracted for. We have diversified our revenue streams with both passenger and/or cargo charters. We are efficiently raising equity as we need it from GEM and from the exercise of warrants. And our senior team continues to grow with outstanding and experienced executives who can manage our growth and costs and maximize our revenue as we move forward. So that's our presentation for the month of November. Again, we're very pleased with our progress. We think we're well on the way to certification, and we've got the platform well-established now to do what we need to do as we move forward. And so Grant, I'll turn it back to you, and we're prepared to answer any questions.

[Operator Instructions] We've got a few now but we'll wait for some more to come in. And Ed, while we're just waiting for those to load, I had conversations with 3 different groups this morning, and the theme of every conversation was how much comfort -- and this was addressed to me. Do you have -- that Global Crossing is going to be able to secure its certification because of, obviously, that is a major inflection point for the company. I talked about the experience of the team that's leading the charge for you and the fact that they have done this before. So because of the importance of the matter, and I'm getting this question consistently now, if you could just provide a little more detail as you move towards certification and the experience of the team.

Sure. We are -- I am, our 119 team is 100% confident that we will certify this airline as a 121 flag carrier over the next few months. We've moved into Phase 3, which means that the manual set that we have provided to the FAA has been accepted and approved. Our training programs have been approved by the FAA. And we're now in the execution phase, where we show, with the experience of this team and the 5 119s and the 119 team are the mandated positions, mandated by the FAA, by U.S. regulations to operate the airline. So that's our Director of Operations, our Director of Maintenance, Director of Safety, our Chief Pilot and our Chief Inspector. Those individuals, combined, those 5 individuals have approximately 190, 1-9-0, 190 years of experience. All of them have been through certifications before, some of them with me at Eastern. Some of them in other aspects of the airline business. They all -- and some of them come out of very large airlines like Southwest and Allegiant, where they operated -- at Allegiant, they operated A320s. Some of them have extensive charter experience in a charter environment, which is different than a scheduled environment, our Director of Operations, our Chief Pilot and so forth. But given the level of experience, given our relationship that we have created here with the FAA in terms of their confidence in our ability to operate as evidenced by the fact that they've accepted our manual set and have allowed us to start training. The fact that lessors, like Dubai Aerospace Enterprises and some of the other major leasing companies that we are negotiating with, have reviewed our business plan in-depth and they grill us quite rigorously before they decide to allow us to take one of their $30 million machines. We have passed their grilling tests both on the financial side as well as on the operating side. They bring their own teams in with operating experience who interview all of our senior 119 team on the operation -- flight operations side and maintenance side. So we have been through the grilling a number of times. In each case, we have come up as a winner. And so I have every confidence, 100%, that this airline will be certified as a U.S. flag carrier in the next few months.

Okay, thank you. First question, any update with the Canada Jetlines launch as well as the share structure to current GlobalX shareholders? And will Ryan begin meeting with different companies, programs, influencers to gain new eyes on Global Crossing to gain momentum before launch?

I'll let Ryan take the lead on the question about Canada Jetlines. He's been working with a number of groups up in Canada as we pull together a plan to do that. So Ryan, you...

Yes. So basically, we're working with potential sales companies, putting together the business case. And again, keeping in mind, through the assets we acquired through the Jetlines merger, we're well ahead of the game when it comes to launching. So we're in conversations with various parties. We haven't decided on the share structure or the spin-out or how it's going to work. I think to answer the marketing question, with Mark here, I think bringing Zapwater on was the first step in that process. And so yes, we will be doing most of those things that were described.

Just to add a little something on the Canada Jetlines, all right, this is something that we very much will do. We will take those assets that we acquired, which include the name, the operating manuals that Canada Jetlines have prepared for Transport Canada, the name recognition, the web booking site and so forth. And we will look to launch that airline sometime in 2021, along with everything else that we're doing. We will issue shares to the current shareholders or shareholders as of the record date. We're still making sure that, that's tax -- done tax efficiently for both us and for the GlobalX shareholders who receive shares. But we intend to launch that airline and make it an affiliate of GlobalX. As a U.S. airline, of course, we can only own 25%. But we have had a number of groups in Canada approach us about investing in that airline, leading that effort. We're talking to a number of investment banks in Canada who have shelves or access to shelves or even doing a direct listing. So we're looking at a number of different opportunities and ways to do that. But with our ability to source A320s and A321s, our infrastructure here, we think that we are perfectly positioned to help launch that airline on a very cost-efficient basis and make it accretive to all GlobalX shareholders. So that will be an added benefit of being a shareholder with us as we go forward.

Thank you. I see, we have a couple of questions here from Helane Becker. Just for the folks on the line, just so you know, Helane's a very senior analyst with Cowen out in New York which is a well-established and old investment firm. So I'll group her 2 questions together. First is, how large do you anticipate cargo to be in revenue terms, in other words, versus passenger revenue and cargo revenue breakdowns?

First off, hello, Helane. I've known Helane for some 30 years. We worked at Lehman Brothers together back a long, long time ago. And she is one of the best, if not the best airline analyst in the business. And we're very grateful that she listens in on our calls and has kept up with our story because as we increase our presence in the U.S., we're going to move to the OTCQB from the Pink Sheets here in the next few days, hopefully. And then eventually to the NASDAQ. We hope that Cowen will pick up coverage of us as we get large enough for them to make sense for them to do so. We're not quite sure what the breakdown will be. We know that we have the ability to get to 15 A321 freighters over the next 24 to 36 months. We anticipate getting to 20 to 25 A320s and 321s in passenger configuration over that same time period. We think that the opportunity is that large for us. All of that, both on the passenger and the cargo side are on an ACMI basis. So we -- on the cargo side, we're not going to sell our own cargo or try to be a general sales agent. We sell the whole aircraft to freight forwarders and other airlines who have cargo divisions. And the cost of the airplane on, what we call the ACMI basis, aircraft crew, maintenance and insurance, runs roughly the same between the 2 airplane types, both the passenger side and the freighter side. So depending upon number of airplanes in each type of fleet, be it cargo or passenger, the revenues will be proportionate to the number of aircraft in the fleet. But again, we see a clear path to putting 15 A321 freighters on our certificate and taking advantage of the A321's advantage in the narrow-body freighter market when compared to the 737-800 and the older 757s and the older 767s. In fact, we see at least 15 airplanes coming into our fleet. Perhaps more than that, if we can get the feedstock. We see an equal number or more of passenger airplane. So in all things being equal, in fact, we would see a split of 50-50 between passenger and cargo revenue between the 2 fleet types.

Okay. And her second question is, is there an environmental aspect to the Zapwater plans?

Can I get that?

Yes.

Sure. So one of the things that we are building out is a 2-phase approach as to social media and brand tenets. Number one is obviously getting this airline certified, getting this airline certified within the financial structure with which we've committed and getting our airplanes up and making money. Then once we get certification and we have our airplanes operating under our certificate, then we will start to fold in things that are more brand tenet. So what is our commitment to our local communities where we operate? What are our commitments to the environment? What are our commitments to the aviation industry in general? And it's certainly something that is on our -- it's on our radar, but not anything that we've paid full commitments to yet. Our sole and singular focus at this point is getting certified and being profitable.

Next question, and I don't quite understand this, but it says, what is the impact of the split between Canada Jetlines in the U.S. and to the Global Crossing.

Are you going to take that, Ryan?

It might be relating to what we call the domestication of the parent company. So when we merged with Jetlines, the parent company was a Canadian company. In order for us to be certified in the U.S., it needs to be continued to a Delaware company, so -- and fall under DOT rules. So what's going to happen going forward is we are going to move the parent company from Canada to Delaware, so we it can comply with DOT rules. As it relates to ownership where 75% of the voting shares have to be held by U.S. citizens. And we've structured the share in the same way as every other U.S. airline to have a variable voting share for non-U.S. citizens, which is the same way it works with American and Spirit and other public U.S. companies. From the -- from a practical standpoint, we're getting pretty close to that level of U.S. shareholder ownership anyway, so it should really make a difference. Like that, hopefully, that addresses it.

Next one is -- and the answer to this is yes, but do you anticipate having to raise additional capital before generating revenue in March '21?

Yes. I think we've been clear about that from the beginning that we need between $3 million to $4 million to certify, that's for aircraft deposits, preoperating cost for staff, office space, proving flights and so forth. So we will continue to do that as efficiently as possible, raising money through GEM as we need the capital. And we anticipate that with the shares that are available to us to sell to GEM to generate the cash that we have sufficient number of shares to do that. The cost reduction efforts, the lower deposit requirements on aircraft have all been very favorable to us and have resulted in us running a very, very efficient certification. The final certification cost for this airline will be probably 1/3 of what it normally would be. And in some cases, it's even less than that. Some airlines take as long as 2 to 3 years to get certified. We will do it from our merger with Canada Jetlines in June to February in essentially 8 months, which is about as fast as it can be done. So we will continue to raise equity. Some of that goes into deposits, which are on our balance sheet. We have been approached by a number of investment banks to do a secondary offering for us. And we are evaluating those opportunities right now to put a lot of cash on the balance sheet, which will allow us to grow faster and take advantage of the opportunities that are in front of us. But yes, we will continue to raise equity as all airlines do as they grow, and we'll continue to do that. Even as we are certified and add airplanes, we'll continue to raise equity. And hopefully, the stock price will increase. People will understand our story. And that -- as the stock price increases, those equity raises will obviously be less dilutive to all of us.

Next one is just to understand, you expect cargo operations to not come before July '21 or even late '21, am I correct?

Yes. We have to get the airplane converted. It's in conversion now. So the earliest that we could get the airplane out of conversion to freighter would be in June. We have to do a number of things with the FAA to place that airplane on our certificate and to be able to operate a cargo-dedicated aircraft. All of which is normal course of business. Our manuals are prepared. But we anticipate being able to fly that dedicated freighter aircraft in revenue service beginning in July or as late as August of this coming year, 2021. That aircraft, as I said, has already been contracted for. We've had a number of parties who have reached out to us to say they want that airplane. So we're already working on the second and third airplane in terms of contracts to fly.

Next is, can you please explain the progress on the uplisting on the U.S. Pink Sheets? Ryan, this may be yours?

Yes. So we filed -- we got FINRA approval about 5 weeks ago. We filed the application with OTC at the beginning of November. They say it's a 4- to 6-week process. We've been -- it's basically with their compliance department. And so we expect to be able to announce in the next, hopefully, week to 10 days that, that process is done. It's just a paperwork exercise at this point.

So we'll be trading on the OTCQB.

Yes. QB, yes, which is -- the advantage for us, obviously, is it's a more robust exchange than the pink. It actually opens us up to significantly more investors who are basically waiting for us to be listed there, so they can -- their mandates allow them to trade on certain exchanges. So we think it will open up the investor pool much broader, which, of course, is great for us, and we think the stock.

Next one. If COVID does not improve in the U.S. by the springtime, summertime and remains in a similar situation as of today, does this have any impact on your contracted and highly probable revenue forecast for calendar year '21?

Well, a couple of things. We -- as we follow the reports, from the CDC and the U.S. government and others with the advent of the vaccines, we think that travel should be relatively normal. It depends on how you define normal, but normal by summer of 2021. Our initial revenue contracts are for flights that are currently being operated now to Havana and as well to Latin America. And we are actually -- the way the contracts are constructed and the type of flying that we are doing, we do not anticipate that those contracts would be delayed as a result of any lingering or even another surge of COVID in the U.S. One of the advantages of the leases that we have structured is that if we do not fly, we do not pay for the aircraft in that month. So we're able to significantly reduce our costs as a result of that, should there be a surge that impacts our initial contracts. But as of now, as we look at the contracts that we have put in place, which are subject to our certification and subject to DOT approvals. But as we look at those contracts, we're confident that we will fly most, if not all of that, even in an increased COVID environment, even while the vaccines are being sent out and everyone's getting vaccinated. So we actually feel good about where we are in terms of the time line. We took some steps to slow down our certification and slow down some of the major cost items through the end of the summer and into the early fall, anticipating that we would have to get through a second pandemic surge before we got to through the end of certification. So we think the decision that we took to slow down a bit, which has extended our certification from our initial projection of late December, early January to late February, was the right decision. It saved us money. It -- we ensured that we could get through any major COVID surge that would slow us down or impede us from putting our airplanes into operation. So being able to operate starting in March of next year in revenue service is actually as good as we could have timed it given the current situation with the pandemic.

Thank you. This one may be from a pilot, I don't know. How many direct entry captains and first officers, would you be hiring in January and February? Does type rated and experienced Airbus A320 captains get priority for employment?

Our first cadre of pilots that will go into training in mid-December to perhaps the third week of December are all A320 current and qualified captains because we'll be adding airplanes fairly quickly, some of those captains will fly in both seats, obviously, until we have enough airplanes where they could fly left seat exclusively. By about the third or fourth class, we'll start bringing on first officer qualified pilots in terms of flight hours and experience. But the first several classes of -- for A320 captains will all be A320 current and qualified captains of the Airbus 320. So we feel pretty good about the pool of candidates that we have, where the experience level in the first class, our cadre is exceptional. They've flown for some of the major carriers in the U.S., including Virgin America, Alaska on their 320s, Spirit and Allegiant and others. They want to live in Florida. They want to fly all that being what the charter airline provides for them. And given what we are doing in terms of providing stock options and restricted stock units to the first cadre of captain to the second cadre and the first cadre of flight attendants, we are giving them an ownership stake in this airline on day 1. And that has really resonated with the people that we have recruited and who have come to us looking to fly for us. So we're very pleased with where we are in that whole process.

This has been addressed, but just to reiterate so people clearly understand. The question is, when is the first plane scheduled to arrive in Miami?

First plane could actually be here in the next 2 weeks if we wanted it. We have pushed off the delivery of that so that we can bring both airplanes here to Miami on the same day. And as well, leaving that airplane at the MRO until early January allows us to continue to do some modifications to the airplane, which are not needed for certification of revenue service, but things that we want to have done. It also allows us to keep the major check open so that when we do take delivery -- formal delivery in January, that's when the clock starts on our major check. So that gains us an extra 6 weeks before our next check would be due. And it reduces the cash cost to us. And actually, the lessor, in this case, suggested that to us as a way to help partner with us to help maximize our success. The A320 is going through its checks and paint, and will be ready sometime early in January. By the time we get through with the delivery -- the acceptance flights and the delivery flights and getting it here to Miami, again, we want to do that on the same day. Right now, that day is scheduled for January 14. But we will have pictures of the A320 being painted. We will have pictures of the A321. It will be taking some test flights and acceptance flights here over the next few weeks. So we'll have air-to-air video of that airplane flying as further proof that, that airplane will be on its way to Miami very soon.

Next question is, will we need to get Canada Jetlines certified separately in Canada with Transport Canada? Or can U.S. certification be carried over to the Canadian market?

We have to go through an entirely separate process with the Canadian transport authority. Our leg up is the fact that we have the manuals that the Canada Jetlines had put together, spent a lot of money putting together for the operation. And we have available to us a very, very experienced team, of certification airline experts in Canada who have worked at Air Canada and Westjet and other places. So the process in Canada is actually much different in many ways than it is in the U.S. It doesn't take as long. And it's a bit less costly than it is in the U.S. for a number of reasons. None of which have to do with safety. The safety is not compromised. But it will be an entirely separate process. The experience here in certifying airlines and doing proving runs and so forth will carry over to our counterparts at Canada Jetlines, and we'll be able to provide that experience to them, which will make the process that much easier. But we anticipate that from the time we start until we can receive the certificate is a 90- to 120-day process versus what we normally do here, which for us is about an 8- to 9-month process. Normally, airlines in the U.S. take as long as 1.5 to 2, sometimes 3 years to get certified.

Thank you. Any update on the jurisdictional change of incorporation to Delaware, which goes towards completing the licensing process.

So yes, we had the shareholder vote was today, it was 99% approved. So we just have to make the application to the BC government and the Delaware concurrently. So that should happen in the next few weeks.

But the redomiciling of the airline was approved by shareholders today. And as Ryan said, we should have that process completed over the next few weeks. It's now just administrative.

Next one relates to FAA again, I'll paraphrase a bit here that, in early summer, there was anticipation that you may have certification by Q4. And now we're talking in terms of Q1. So the question was, am I mistaken that you expect a certification to come earlier? It's about a quarter delayed, if I'm correct on that, Ed. And I know that COVID has had somewhat of an impact.

It's about 2 months delayed. So in fact, instead of doing it in 6 months, we'll do it in 8 months. A big part of the reason for that was the fact that as we got into the pandemic, our ability to go out and inspect airplanes, our ability to bring people into Miami for interviews, our ability to talk to all of the constituencies that we needed to talk to and meet with was impacted and we made the conscious decision, as I mentioned before, to slow down the process a bit so that we could get through the fourth quarter which, in the summer, we were being told that there would be a huge second wave of COVID in the U.S. So we made the conscious decision to slow things down so that we would not be in the middle of trying to take delivery of airplanes and get people on board here and train them with the possibility that Florida or other parts of the U.S. would be shut down. So I believe that the decision we made was the right one. It mitigated our risk substantially. And as we look back on it now, it was the absolute right decision to make. We also had -- were impacted by the availability of the FAA as they looked at their own COVID plans and how they could move people to support our certification. That was -- that impacted their ability to do so. And so what we did not want to do was bring airplanes here and pilots here and flight attendants here and maintenance people here and have them be on the payroll for 60 to 90 days while we were in the midst of the second wave of COVID. We've timed this, I think, as perfectly as we could have. And we will come out the other side of this in the midst of a massive vaccination program in the United States, which should raise the level of confidence in travel. It ensures that we did not spend a lot of money by having a lot of people sit around unable to do anything because of the pandemic.

Next one. Well, there are several questions here about the OTCQB listing that has been addressed. So we'll move on. What's the status of the acquisition of the 4 ex-Finnair A321s earmarked for freighter conversion? And could you provide a rough time line for their arrival?

The 4 A321s from Finnair continue. We're going back and forth. We've just completed the inspections with our strategic partner, Vallair. Vallair has borescoped all the engines. We're now working with Finnair on some issues -- some technical issues that need to be addressed with the aircraft, which will probably be addressed in terms of purchase price. But we continue down the path of acquiring those aircraft. They'll be a very good aircraft for us, and we'll turn those over to Vallair. We'll sell them to Vallair and lease them back as part of the conversion program. So we feel good about that. We, in fact, have just contracted for 2 more A321s or at least agreed to terms. These aircraft would be converted. We have identified a major lessor that will buy those airplanes from us, which generates cash for us and will be put into the conversion program. So we've broadened our reach, looking at all available A321s for freighter conversion. We've got a number of leasing companies working with us who want to be part of that program. And so I think that we'll identify and put under contract over the next 6 months or perhaps less the 15 aircraft that we have identified as needed for our cargo operation.

Next one is, is the company going to maintain its TSX listing post-NASDAQ approval?

I think that we would move to the main TSX...

Yes. We would look to move up as part of it. The current plan is to stay to a listed. We do have a pretty big shareholder base in Canada, so it makes a lot of sense to be on both.

And we continue, through the efforts of Howard Group who have done an exceptional job for us in maintaining contact with the current shareholder base as well as talking to potential new shareholders all across Canada as well as Hybrid Financial, which was brought back on board to complement the work of Howard Group. We continue to put ourselves in front of the current Canadian shareholder base as well as potential new Canadian shareholders, and we'll continue to do that. We think the diversification between the U.S. and Canada is good for us. And if and when we launch Canada Jetlines, of course, GlobalX will own a piece of that airline as well as all of the shareholders in GlobalX. And so maintaining that listing, we think, is important for continuity and as well to maintain communication with all of our Canadian shareholders.

This isn't a question, but this is from [ John Haim ], and this is appreciated. It said please extend a word of appreciation of the management team for its transparency and for its efforts to communicate with investors during this critical stage of development. John, thank you for that. It's hard to come by out of buoyance. And they're few and far between. So thanks again. On the scale of 100, how sure are you of getting certified in February?

100.

That's to the point. Next one. And sorry, we've had a number of questions that are about the OTC, so I'm skipping through some. Will pilots be redistributed to other flights during low aircraft usage months?

Well, let me answer that in a couple of different ways. So one of the major components of our platform is our strategic alliance with SmartLynx, which is a major ACMI charter carrier in Europe. As many of you know, they own about 10% of GlobalX. We've learned a lot of things from them. They have helped us, in fact, with the Finnair acquisition. They've helped us with the inspections of our A321 at Magnetic because of the -- our inability to travel. And so that relationship is very, very important to us. One of the features of that is our ability -- our contractual obligation, in fact, to move airplanes to them in the summer months when they are very, very busy in Europe. And they move airplanes to us and fly them -- fly those airplanes for us in the winter months when the charter business in the U.S. historically picks up. And so we see the ability to move airplanes to them in the summer, and they will move airplanes to us in the winter. As each airline -- our seasons are countercyclical and it works out very, very well. 2021 is a question mark in a lot of ways as we come out of COVID and traffic picks up in Europe and traffic picks up in the U.S. Certainly from 2022 on, we will have this interchange. Right now, we anticipate sending 1 airplane to Europe in the summer if we have it available because our airplanes are very much chartered out. We have sold almost all of the block hours on the first 2 airplanes, and we have 2 more coming. But we are looking at ways to ensure that the low points of the charter seasons in the U.S., which are typically, May, June, July and a part of August, where we get a reduction of 20% to 25%. We'll mitigate that with our SmartLynx alliance. And as well, by putting the airplane on certain routes, such as Savannah and some of the Latin American routes, we reduced a lot of the countercyclicality that we get in this business and fly for airlines here that are very, very busy in the summer. We can augment and supplement the number of seats they have in the market by providing our airplanes to them. And we're already talking to a number of U.S. airlines about that as well as backing up their operation in case they have a mechanical or operational difficulties. And we're talking to a number of Latin American carriers about providing our airplanes to them during the summer peaks when they need more seats in the Latin American to U.S., particularly in Miami, New York, East Coast markets.

Just a couple more here. Are there any more positions which need to be filled for CFR 119?

No. All 5 119 positions have been filled. All of those positions have been -- the people in those positions have been approved by the FAA. They have gone through their formal interview process with the FAA, which is a grueling session where they are grilled on the manuals in their particular area. In fact, I was grilled as well as the accountable executive of the airline. But all 5 119 positions have been filled and accepted by the FAA. They have all passed their formal interview process, as we call it, with the FAA, which allowed us to pass into Phase 3.

I've got a chuckle on this next one. This just came in. And Ed, it's from your wife, Susan. I am a bit biased since I have been married to Ed for 49 years, but please believe me when I tell you that this man has put his heart and soul into this airline. He's done it before, and he can do it again. There you go. You get surprises on this, and you have to be very nice to your wife tonight.

I better stop at a store and get something on the way home.

Yes.

Actually, it's 40 years. We just passed our 40-year anniversary.

But it feels like 49, is that what happened?

No. It only feels like 2 or 3.

And the last one, a little lighter in vein as well. It appears there's a black and white photo of an aircraft at the back of the room behind you. And this person -- this individual was wondering if there's a story behind that.

That's a Pan Am Stratocruiser, the first airplanes that made the transatlantic crossing from New York to Europe. I worked for Pan Am for a while back in the '80s. And flew on Pan Am, my wife and I, to all of our duty stations when I was in the U.S. military. Worked with the former Chairman of Pan Am. So it's got a place in my heart. And we have a couple of pictures of Pan Am aircraft around the room. Pretty soon, we'll have pictures of our GlobalX A320s and 321s. But as a sort of tip of the hat to the past, a lot of what Pan Am did and how they treated customers and opened up new routes around the world is something that we very much want to do and strive to do. And hopefully, that rubs off on some of our people as they come through this room and see the history of this business. I'm very much a student of the history of the aviation and airline business. And Pan Am makes up a very, very huge part of that. And a lot of what they did is what we want to try to recreate here at GlobalX.

And a couple of things just came in, such as how soon will you be flying once certified? And if that proceeds, how many flights per day per week?

Well, it's been -- and as we sign contracts and we schedule airplanes. So Phase 4 concludes with the proving runs and the FAA tells us at some point during those proving runs that we've flown enough, they've seen enough in that we're approved to be a 121 flag carrier. The FAA then goes into about a 2-week process where they have to process all the paperwork. During that time, we are getting our airplanes ready to fly. So Phase 5 is actually a 10-day to 2-week period during which we do nothing but paperwork back and forth with the FAA. We don't have to prove anything or do any more testing or show anything to the FAA. It's literally a matter of them getting all of the paperwork out of Washington, D.C. from FAA headquarters. We will fly -- the day that we receive the certificate, usually a little ceremony, and then we'd be prepared to fly the next day. It will be my task, along with Mark and our operations people, to ensure that we are ready to fly the next day. We'll have to time it so that we can start on Cuba or start with the Latin American flights or on any number of the other contracts that we have signed with some major hotel groups and casino groups around the U.S. to ensure that we can start flying almost immediately upon receiving the certificates. So as we get closer, and we know exactly when we will be through start the proving run flights and then get through that process, and then we add some time on the end of that for Phase 5, we'll be talking to all of our clients in all of the contracts to see how we can start flying as soon as possible once we receive the certificate.

And in closing, there was a gentleman who wrote and said that he very much appreciated the update and all the details. And he's been married longer than you. So with that note, we are going to close. Thank you, gentlemen. I think it was an excellent update, a lot of detail. And I would anticipate this will be the last update prior to Christmas, and we'll start early in the new year. Much more will have transpired by then. I think we'll probably be looking at the arrival of some planes in conjunction with the next update. So to everyone, please stay safe.

Thanks everyone. Thanks everyone...

And it's going to be a unique holiday. Thank you.

Thanks, Grant. Yes.