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

Well, I think we're going to get underway here as participants are still coming and loading. So welcome, everybody to this management webinar update from Global Crossing Airlines. I'm Grant Howard, and we have Ed Wegel, who's the CEO of GlobalX; and Ryan Goepel, CFO. And I just want to say, gentleman to you and your team, the results that were released this morning are spectacular and encourage me to go buy more stock personally and we're getting some positive response in the market. So with that, Ed and Ryan, I'm going to turn it over to you.

Thanks, Grant. Good afternoon and good morning, everyone. Grant, we really appreciate this microphone and this platform to be able to discuss our 2021 results and our review of first quarter of 2022, and some trends that we see in our airline for the balance of 2022. We are extremely bullish on our growth prospects and our overall prospects for 2022. We'll get into that when Ryan talks us through some of our results and the growth that we project for this year, but again, we are very bullish. Let's go through the first slide. 2021, a successful launch. That launch has set the stage for the growth that we are seeing in 2022. Some of you may have seen, we were featured in Airliner World magazine, really great article. We can send anyone the link to it or you can Google it. Great article with some great pictures and it's a good background on our airline and what we're achieving. So encourage everyone to take a look at that. We're very proud of that, and we're getting more and more press and media inquiries to do interviews with our senior management, big pictures of our airplanes. So we're getting attention, and that's all for the good. So, we think we know that this is a highly attractive investment opportunity. Quarter 4 revenue for 2021 was $11.2 million, first quarter of 2022, 3 months of -- the first quarter will exceed 2021 revenue. We'll have revenue in quarter 1 of about $14.3 million. So that's a nice bump. We expect revenue to exceed $90 million in 2022. That's a conservative number based on what we're seeing, but we want to underpromise and overdeliver. Half of that has already been secured today under long-term contracts, and we're confident in the balance of that, based on what we're seeing in the market, based on the reaction of our current clients and potential future clients, to our service, to our aircraft, to our people and to our performance. We have $161 million in long-term contracts and LOI secured with deposits signed in Q1 for 2022 and beyond. That's a very big number. Year-end cash at the end of 2021 was $8 million. Aircraft deposits on top of that about $2.6 million. Forecast profitability in Q3, we will have a very solid robust Q2. We'll seek to uplift the NASDAQ later in 2022. As you know, our S1 was deemed effective by the U.S. SEC in February. That's a good base document for us to potentially modify and amend later this year, so that we could do a real public offering in the latter half of this year. Our current market cap, unfortunately, $53 million. We believe that is in a very attractive price point for investors to get into the stock. Let's talk about our current status, bring you up to speed on the number of aircraft and what we've got going. So currently, 5 A320s, one A321 on the certificate, total of 6 airplanes. We are adding over April, May and early June, 3 more airplanes, an A319, an A320 and an A321. The A319 will go into government contract work, and it's fully booked 150 hours a month. The A320 will be as a sister ship to our 2 ex-Alaska A320s with full WiFi capabilities. We are converting that to a 68 seat first-class -- all first-class seat configuration, and that airplane is being solidly booked for the balance of the year. Many, many clients in the U.S. charter market need an airplane like that, and there is a scarcity of that product. And we're taking an A321 on extremely favorable terms. This airplane will eventually be converted to cargo in about 2 years, and the lease rates on that for us until then extremely favorable to us. That airplane, the A321, very popular amongst our clients. Our current A321, we've just -- we'll talk about this in a moment, but we've just signed a deal for that airplane to be converted to cargo in mid-2020 -- mid-2023. So that will be added to our list of cargo aircraft. On the cargo side, as we've talked before, we moved quickly to tie up a number of A321 freighter aircraft knowing that this would be the best-in-class narrow-body freighter in the cargo market. Since we started the process of acquiring these aircraft under firm lease or firm LOIs with deposits, Lufthansa has committed to the airplane and said, in fact, that it is the best-in-class narrow-body freighter in the market, and they are trying to get as many of them as they can, as fast as they can. Japan Airlines have said the same thing. And we are seeing more and more interest in our freighters. We'll talk about leases or contracts that have been signed in a moment. But on top of the 18, we now have another 5 A321 freighters in various stages of LOI negotiations. So we expect to have as many as 23 A321 freighters under firm agreements for delivery over the next 27 months, so it will be a very quick delivery schedule for this airplane. And we are extremely confident that we will place all of these airplanes very quickly in this booming cargo market. Our team itself now consists of 63 pilots, including 20 in training, who will finish their training over the course of April. And we've got 2 more classes starting in April for a total of another 15 pilots. We've got 120 flight attendants. We're opening bases for flight attendance in Texas. We're adding to our flight attendant [indiscernible] in Atlantic City and in Las Vegas, because of the demand that we're seeing out of the Northeast and out of the West. And in fact, we have all 3 bases now operating Miami, Atlantic City and Las Vegas, and we are starting to assign and open up those bases for pilots to be assigned to those bases. So they've become fully operational with full flight crews. And eventually, as we add more aircraft, we'll have aircraft permanently stationed in those cities to allow for us to access the charter markets on the West Coast of the U.S. as well as the Northeast. I'll turn it to Ryan to run us through our revenue and operating numbers.

Yes. As Ed highlighted on the earlier slide, Q4 revenue was $11.2 million, operating 1,293 block hours. We reported a loss of $4.5 million in Q4. Keeping in mind about $1.8 million of that was cost associated with training, aircraft acquisition, share compensation and S-1 completion. For the full year, revenue was $14.3 million and effectively we did $3.1 million in Q3. So we grew from $3.1 million to $11.2 million. We operated 1,679 block hours over the course of the year. The loss of $19 million includes $12.9 million for costs associated with getting certified, and it also includes in that number, a $2.7 million loss for warrant revaluation. At the end of the year, we had a cash balance of $8 million plus an additional $2.6 million in aircraft deposits, which you'll see on the balance sheet. Going to the outlook. For the outlook, we see a strong trajectory continuing -- the Q3 to Q4 is going to continue. So in Q1, over those 3 months, we will exceed all of 2021 revenue, which was a 5-month period. We believe we're going to average 30% revenue growth every quarter, every quarter for 2022. We expect revenue to exceed $90 million in 2022 with half secured today under long-term contracts, and we believe the addition of the 321F in Q4 will help accelerate this growth and revenue, it's not only sales growth, but revenue growth into 2023 as we onboard more cargo aircrafts. Looking at the contracts, we announced $161 million of long-term contracts and LOIs secured in Q1 for 2022 and beyond. Of this, there is a number we want to highlight, a U.S. government contract for 4,950 hours in 2022 and then 9,360 hours in both 2023 and 9,360 hours in 2024. We renewed our Cuba contract, which we've been flying daily. We're looking to increase that, which represents another 960 hours in 2022 on top of the 800 hours already contracted. The Collegiate Travel & Fan Travel 170 hours, while that might seem like a small number, that was effectively March Madness, it occurred over 10 days. So that's a great example of where some of our repeat business that happens at certain times of the year. As you'll recall in Q4, we did a lot of work for the ball games. We got March Madness, and I think there's other periods throughout the year when college kind of spikes. On the LOI side, we signed a 1,600-hour contract for this summer with a major European tour operator. We signed on the cargo side, an LOI with a major airline operator out of South America, as it relates to 600 minimum hours in 2022 and 2,400-hour minimum in both 2023 and 2024. And we also signed an LOI out the Caribbean cargo logistics operator for 390 hours in 2022. And expect 2,400 hours in both 2023 and 2024. This is just an indication of how serious and how strong the cargo market is and how excited we are to get pushed into -- move into it. And with that, I'll move on to Ed, who'll talk about the fleet growth.

Sure. And to fund that growth, as you know, you've seen from the press release, we did a $6 million debenture offering. You might want to discuss the key points.

Yes, one of the key points of raising cash liquidity is always a concern with any airline. We did not want to raise equity at these prices. We think we're grossly undervalued. And we are able to get investors to agree. We raised $6 million on a term note over 2 years, and it's really meant to be a bridge until we get to an uplist, but it provides us the capital to acquire the aircraft we need to acquire and accretive growth rates we need to achieve and will achieve in 2022.

And as part of that, you may have seen in the press release that the lead investor was Alterna Capital. This is a tremendous firm. They have a number of aircraft. We're talking to them about leasing arrangements. In fact, the A319 is coming from them. They have been very, very supportive of GlobalX. I would like to do more with us, and we're very happy to attract a fund of their nature and of their character, and of their integrity to the airline. And we expect to do more and more with them as time goes on. But as Ryan said, this is effectively a bridge. It gives us the cash that we need to ensure that we can execute and bring aircraft onto the certificate without having to sell equity at these prices and will bridge us to what we hope will be an offering later this year. So we're very, very pleased with that debenture financing. We've got very friendly investors in that. All supportive of us and gives us a good base for us to execute the 2022 plan. So as we look at our risk profile, and our fleet buildout. Our eventual -- our goal is to eventually get to 50-50 split between passenger and cargo revenue. We'll do that by adding aircraft, of course. We're very bullish on the cargo market. We're very bullish on the airlines and other logistics companies that have already approached us about having us fly for them. But as you see here, over the course of 2022 through 2025, we will add both passenger and cargo aircraft with the goal of getting to a 50-50 split between those 2 over the next 3 years. As we've said before in previous webinars, we saw that the airlines that had cargo capability survived and actually grew a bit through the pandemic. The cargo capabilities provided them a good cushion against the loss of passenger revenue. So we saw that. We learned from that, and we early on targeted the A321 freighter as a major focal point for our growth. And we -- that is now starting to bear fruit, which we'll talk about in a moment, but we've already signed contracts for essentially the first 2 aircraft. And we have 3 or 4 parties, who are angling to get the next 2 aircraft. So we're in a very good position with our cargo fleet development. We also wanted to diversify revenue streams. So as we've talked about before, we're signing long-term contracts and currently in the case with the U.S. government and with our tour operator, the largest OFAC tour operator to Cuba. We fly Miami, Havana for them and also Tampa Havana. We are expanding to Houston, Havana and also eventually New York, [ Newark ] to Havana as traffic opens up. They also would like us to fly to the provinces, which are the other cities in Cuba that take commercial aircraft, Camagüey, Holguin, Santa Clara and Santiago and so that will increase another 8 flights per week, when those provinces open up. So Cuba for the long term, it's important for us. We have the best partner who was OFAC approved to fly to Cuba. And we feel very comfortable with our position there. We have performed extremely well for the U.S. government in their contracts at any number of contracts we've flown to. We've flown NASA scientists to Guyana and we've flown other contracts out of Texas. And as you know, we also flew to Afghanistan early on in our development. U.S. government is very, very happy with us. We have been told that we are the best operator for them on certain of their contracts, and they are looking to expand that relationship with us. Short term, but repeat business, and we get repeat business because we perform well. Our crews look good, our aircraft look good. Our aircraft are clean. We operate on time and reliably. And so we are seeing repeat business come to us. As Ryan mentioned, we performed exceedingly well for the NCAA through March Madness. And so we will be getting more and more business from them. And we did some work for football and basketball this year or 2021 into 2022. A lot of those clients are already re-upping with us for the September the December time frame for footfall and then into basketball. And that's 68C A320 will be very, very popular, almost a number of Division 1 basketball teams. We're already starting to sign some of those. Our ad hoc business is important to us. And while those come to us, they're 1 flight, 2 flight situations that are very important for us. Again, we performed very, very well and a number of those that we have performed ad hoc for groups like music travel and other groups around the country, have already come back to us and say that they want to book us again. Again, because of our reliability on top of performance and the way our aircraft look, and the way we operate. So that may become a smaller percentage of our business over time, but it's important, because a lot of that comes sort of at the last minute, and so we are able to drive higher returns, higher margins with our assets in that type of flying. And of course, cargo, major, major initiative for us. It really makes us excited about 2022 and we will get certified with the first aircraft, which will be delivered August 19 of this year. We will then finish up some certification requirements with the FAA once that aircraft arrives, and we have targeted that airplane and a second airplane, which will be delivered 2 or 3 weeks after the first airplane for October 1 start date for the 2 contracts that we have put in place. So all in all, 40% of our revenue is on long-term contracts, and we think that percentage will grow. That gives us a great base of business, a great foundation to cover fixed costs and to be able to budget and model our business. And about 2/3 of our contracts fall into the first 2 buckets. Long term contracts as well as short-term repeat business, business that we know will be there every year, and it's ours to lose. We have to perform on time reliably and be on top of our game, and we will get that -- we will continue to see that business come to us. So 40% long term, 2/3 long-term and repeat. This is a great foundation for us as we move forward. So in summary, again, resilient and diverse model, cargo and passenger. We are still seeing assets being offered to us, A320s, A321s, and even more so A319s at very, very attractive lease rates and terms under the lease. And we think that, that condition in the market will continue for at least the next year. And so we are moving to line up airplanes and make sure that we take advantage of that pricing now. On track for the October launch of our cargo revenue services with the first 2 airplanes, first 2 A321 freighters, and that fleet, we think, will grow to 25 airplanes in cargo by -- certainly by 2025, could be earlier than that. And our major long-term contracts provide a solid revenue foundation for us, which gives us confidence and allows us to then acquire more aircraft that we can put out for ad hoc and other business. So again, we are very bullish on this business. We're very bullish on our growth in 2022. We see strong growth in our passenger business. We are already seeing demand for our A321 freighters, which gives us great confidence as we move through the balance of this year and into next year. So we -- again, we're very bullish. We're a very attractive investment opportunity. We have good investors behind us now with the $6 million debenture financing. We are prepared to do more if we require it. And we are positioned to do a major raise and an uplist for this company later this year. So Grant, with that, I will turn it to you, and we're happy and ready to take any questions.

Thank you, Ed and Ryan. [Operator Instructions] And while we're waiting for more of the questions come in, Ryan, we were chatting a few days ago, and you had an interesting perspective on, I guess, the difference between the U.S. market and the Canadian market, and the fact that you felt that the pickup in travel in the U.S. was probably 6 to 9 months ahead of what we're seeing in Canada, and you related to a story about Miami International Airport, which I thought was rather intriguing.

Yes. Last Friday, it was a start of spring break. If you had attempted to park your car at Miami Airport, because every parking garage was full and people had to Uber home to -- had to drive home in Uber back. And so Miami Airport is beyond 2019 levels. I think if you look at the domestic travel in the U.S., it's at levels higher than pre-COVID. And I think especially with the rules coming off in Canada with the requirement for vaccinations coming before predeparture. You'll start seeing that open up as we saw down here. So while it may feel for the Canadian investors that airlines are still a struggle, I think the perspective from debt from the South is significantly different.

And I can appreciate having just returned from California on March 27. The documentation and rigmarole that was required to get across the border.

It was a deterrent.

It definitely was a deterrent. So let's get into some of the questions. First from Gary Kaiser. Has inflation affected profitability?

Gary. Thank you, Gary. I know Gary has been involved since the very beginning. Our model is a cost-plus model. So insomuch as when you see inflation as it impacted significantly the fuel prices, all our pricing is on a cost plus. So we recover that difference, that's passed through to the customer. So well, inflation is always going to be a matter. Our biggest asset, our aircraft, are at fixed rates. So we have the protection there. And with the cost-plus model, we have the ability to pass on any of those costs to customers, which some of the scheduled carriers won't have or do not have in their pricing. And so its impact on us is less than you would expect.

Got time [indiscernible], and this is directed to Ed. What is the current status of the loaner agreement playing from SmartLynx?

SmartLynx is actually very full in Europe. And so -- we decided that we bring on additional aircraft to meet our needs. We will probably send an aircraft or have an aircraft bought from SmartLynx this winter, and we're talking to them about that. We are sending 2 airplanes to Europe this summer to operate for TUI, which is the largest tour operator. SmartLynx is also providing aircraft to TUI, will probably back up each other's operations as needed in order to fulfill that requirement. But we'll take an airplane from SmartLynx this coming winter based on the demand that we're seeing. And we will probably send airplanes to SmartLynx this time next year as their business picks up again. And they've already announced that they're going to be at 60 airplanes by this summer. So they're doing extremely well. We have a very great relationship with them. They're helping us with all of our aircraft deliveries in terms of inspections and helping us with looking at engines and other components. So very, very strong relationship with SmartLynx. We met with them a few weeks ago with the big aircraft conference, and we're talking about doing more and more things together. So it's a great symbiotic relationship we have with them.

Speaking of Europe from Axle Braun, he's wondering if GlobalX is planning on flying to Europe at some point?

With the current airplanes, the narrow-bodies, it's more difficult. We have had charter requests, and we will be flying charters to Keflavik, Iceland, and believe it or not, to Greenland. We have a number of flights into Greenland for one of the smaller cruise lines. We are working on what's called our North Atlantic operations. Specifications will be certifying that with the FAA later in April, which allows us to fly on certain routes. The [ blue roots ] over to Europe. It's something that we talk about. We get charter requests often to fly to Europe. We're probably not as efficient for some tour operators as getting a wide-body aircraft. But we've been asked by a major studio -- movie studio to fly a couple of flights to London for them. We're looking at that. So we -- it's on our radar. It's not on our immediate list of things that we want to get done. And I would guess that we will eventually start to fly there on some regular basis. If we acquire A330s, which is something we've -- we're looking at for 2023. A330 is a wide-body aircraft, plenty of range, you can fly for 13 hours. Then any point in the U.S. to Europe is available to us. We haven't finished any analysis or presented that to the Board, but it is something that we are looking at and we think it's definitely something in our future to add wide-body aircraft to the [indiscernible].

[indiscernible]. What happens to Jet B shares when you folks uplift the NASDAQ? Additional comment, great job on the successful for our proud shareholder.

So again, the Jet B share exists because you can't have more than 25% of your voting stock be in foreign hands. They -- 75% have to be in U.S. In so much as we -- through all of our investor relations activities and a lot of the buying of shares, we've seen a lot of buying from U.S. investors. So we're getting closer to that number. I think with an uplist depending on how it's structured, we could look at collapsing it as long as we're in compliance with DOT, because we don't want to go in violation of that, that defeats the purpose of creating it.

But in general, we see those Jet B shares going away over some period of time.

Absolutely. Yes absolutely.

A year to 18 months, we think that they're gone. So...

Okay. On the project of NASDAQ from Daniel Bustle, what is the minimum share price to list on NASDAQ? And do you anticipate having to do a share consolidation followed by an IPO for the uplist?

So our mindset with the NASDAQ or NYC, as we seek to do an uplift is to come to the market with 4 quarters of revenue growth, show profit and show cargo aircraft on the certificate. If you were to look at that and you put us against any other value metric of any other operator, our share price today even should be in the $6 to $7 range, which is more than enough for the NASDAQ uplist. So the goal is to get the value in the stock today and deal with the uplist later.

And on that, I would encourage folks to go look at some of the recent research on Cargo Jet and the valuation that Cargo Jet is getting in Canada. And I think the last target price was $2.75 and go look at the multiples and then backtrack a bit on Global as to where it's going. Daniel [ Omar ], I expect fuel costs to be significantly elevated for several years. Can you comment on how this is affecting the business and your expectation going forward?

Let me talk about that. So we've seen over the last 20 years, several spikes in fuel price and the price of oil. I remember in 2008, when it got to $120, Goldman Sachs said it was going to $250, and it went to $30. So no one knows where the price of oil is going to go. When you get to a certain point, there's demand destruction and the price comes down. So in my view, having lived with oil prices over the last 40 years, we will see the price of oil come down. It does not affect us, as Ryan said previously, because all of our contracts provide a base fuel price and then a surcharge that equals the difference, if we pay more for the fuel at the time of the charter. Over time, I think people will adjust to the higher price of oil. I think it settles back in the $70 to $80 range where we can operate comfortably and so can the scheduled carriers. As the world settles down again a bit and the Saudis need more money. And maybe there's a Republican administration again in a few years, the price of oil will come down. But again, I remember Goldman Sachs pounding the table in 2008, saying that oil is going to $250, and it went to $30. So the brightest guys in the room got it wrong. Everyone will get it wrong again this time, and it'll do lots of things before it settles down, but when it settles down, it will be much lower than where it is today.

I think Rex Tillerson said it best when he was the CEO of Exxon as them, where do you think the price of oil will be in 3 years. He said somewhere between $1 and $200. And that's about as accurate as I think I can be. So it's a part of the business dynamic. Again, we are inflated largely because we're on a cost-plus or we do not have fuel in our pricing, which is one of the reasons our model, I think, is -- should be so attractive for investors, because that's a huge risk factor that just really doesn't exist for our business. That exists for other scheduled carriers, and I think shows an opportunity on how you can participate in the travel space without taking that risk.

And if you look at airfares in the U.S., which have been -- have risen dramatically as we came out of COVID, and the fact that load factors are exceeding pre-COVID levels when fuel was down in the 50s. And as Ryan said, you can't get a parking space at MIA Airport. People are adjusting to that price. They need to travel, they want to travel and they will pay for it. But having said that, again, the price of oil is going to come down.

And on that point about being cushioned from the rising cost of oil, and when you look at the types of deals you've been able to do to secure aircraft historically and into the future. I'm not sure that the majority of the investing public yet appreciate the risk mitigation that you've built into the business. And the future impact that will have on your margin.

If you were to look at the $161 million of long-term contracts, none of those contracts are impacted by fuel. When you look at all those contracts and those flight hours, none of those flight hours are impacted by how many seats we sell. They purchase the entire aircraft. So if you look at those contracts, most of them, if not all of them, have minimum guarantees for a month of utilization. So if you think about the 3 big risks with an airline, distribution risk, fuel risk and utilization risk, those are all mediated by signing these contracts. So I think one of the things we kind of -- I'd say, when I talk to investors on the phone, at some point, the market is going to believe us, that this business is real and that we're doing it. I don't know if today is the day, but at some point, they will.

You folks for getting there, you're doing a hell of a job. Mike Harris, in the press release indicated that you anticipate being profitable by Q3. Will you be cash flow positive earlier than that?

Thanks, Mike. Mike, again, is another person, who's been with us since the beginning. We -- I think on a quarterly basis, we should be. It will be -- it will depend on how much growth and whether aircraft acquisitions come in. I think on an operational basis, yes. As we make investments in additional aircraft, obviously, that's a use of cash. So the burn is significantly reduced even now going forward.

We're doing things like, we talked about disassembling the A320 aircraft, which we acquired with GA Telesis. That aircraft is now being disassembled and the parts are starting to be shipped to us. We're harvesting lots of great parts off of there. We have to do a landing gear swap later this year. That's coming off of that airplane. We're putting a bunch of components on the shelf and a bunch of components and parts that don't fail as often as others that are not as important to us. We're selling those off, reducing the cost of the airframe to us. And so we're reducing the cost of maintenance through activities like that. Our Level 5 FTD training device will be fully operational by mid-May. That will start to help reduce our training costs, because we use much less expensive simulator than the full flight simulator. We're doing lots of things like that to reduce our costs and to ensure that we are as efficient as possible. Now having said that, we're putting a lot of money back into training and development of the infrastructure here at the airline to support additional aircraft. So our Board and our investors have said to us, our major investors have said to us, we understand that you need to invest in this business. That's what we want you to do. Get the revenues up, develop the infrastructure, get the aircraft and additional capital is required, we will make sure that you have that, so that you can build that infrastructure to obtain the growth that you have in 2022, what you're projecting onwards. So we've got a great investor -- a major investor groups backing this. We've got a great Board that understands what we are doing. And we are driving top line growth to gain market share, get airplanes out to work and develop our infrastructure. So that requires cash, but we are investing long term in this business.

And I think when you think of the scale, and I still keep thinking people fail to see kind of the scale, look at some of our competitors, like our other operators such as Sun Country, Atlas, ATSG, Cargo Jet, all operating between more than 30, 40, 50 aircraft, which is what we're targeting. They're all valued in the billions, right? And we're $50 million. So we're building a business for 5 years from now is scalable to that size. And you can't do that with nothing. And I think we've done a pretty good job deploying capital to date. I think if you think about the amount of money we've invested, less than $20 million, and we've created a company that can generate $100 million of revenue in 2022 and beyond is pretty impressive.

The aspect of risk mitigation, you're not carrying a bunch of debt.

No.

[ Cardi McConnell ], will your cargo business be ACMI with fuel costs accepted?

Yes, full ACMI. So we do not take the risk of selling cargo or trying to move it on the ground or get it to the airport. We don't do any of that. We offer the airplane -- the cargo airplane in the same way that we offer our passenger airplanes on ACMI. So a major airline that contracts with us long term for that airplane as we have a major cargo operation. So they've got all of the infrastructure. They sell the cargo, they do all the airway bills. We show up. We open the door. Under our supervision, they load the airplane. We fly it to the destination and they unload it there under our supervision. So that's a great business model for us. And again, there, the fuel surcharges are added to that, so that the client pays whatever it costs us for fuel for that flight.

Gary Kaiser, you made a comment that some commentators expect a recession later in '22. I presume the rest of that would be your reaction or preplanning should there be a recession this year?

So again, if you look at our long-term contracts and who they are with, they are not affected by recessions. They fly whether there's a recession or not. And many of the other clients that we've flied, the NCAA, football, basketball, incentive travel groups for big corporations and others, they will continue to do that flying in the face of a recession. The scheduled carriers will see the load factors may be drop, but we sell whole aircraft to clients, who are recession-proof in the sense that they have to fly. And if they have to fly, we have the aircraft ready for them to fly them where they need to go.

Timberland, have we effectively been able to meet all the demand for hours or are we turning hours down? If we are turning hours down, is it aircraft, crew or both based on that situation?

Couple of reasons. And the answer is yes. There are times when all 6 airplanes are flying as they did during the last 2 weeks of March Madness. We got many requests in for additional flights, we just could not accommodate them, because every airplane was fully occupied. The driver is pilots. We have to have enough pilots to man each aircraft. We do lose some pilots to the majors. We're constantly backfilling those pilots. But as we get more aircraft into the fleet, we get more efficient in the ability to schedule the aircraft. So we have more opportunities where one aircraft may take the clients to where they need to go. And a second aircraft will pick them up 2 or 3 days later to bring them back. Right now, we don't -- we have limited ability to do that, because of a limited fleet size. As we get into 10, 12, 15 passenger aircraft, we have more opportunities to do that and our ability to increase flight hours each month on each aircraft will increase.

[ Jon Hein ] Also asking about cargo flights and he is asking if you can provide a bit more color on the steps that need to be taken and the time line, which you've already addressed for the cargo flights to begin?

Yes, I'll just run through that again quickly. So we have already submitted to the FAA all of the manuals that are required to be reviewed by them and approved. The final manuals will include the exact specifications of the first 2 cargo aircraft, which the 2 lessors are providing to us. But initially, our manuals have been conditionally approved, pending the receipt of the aircraft. The first aircraft will arrive August 19. We will go through a certification and conformity process with the FAA. We will fly probably 2 or 3 proving run flights with the aircraft, and we can have paying cargo on board those flights. So we can schedule those with one of our clients. And so from the time that we received the aircraft on August 19, we are projecting 6 weeks or so until we can start flying revenue service, which is why we've selected October 1 as the target launch date for revenue service. So all of the pieces are in motion. Both the first 2 aircraft are in conversion right now. On April 14, all attendant -- it's called the door cutting ceremony on the first aircraft, where they cut the door. And that's a sort of formal ritual for aviation geeks to watch that. We'll have that live and we'll have it on YouTube. But the first 2 airplanes are in conversion. They're on track, on target to be delivered to us. The third airplane will be delivered in December and the fourth airplane -- cargo airplane will be delivered in January. So, so far, everything is on track. FAA and our regulators are happy with our progress, and I don't see anything delaying our entry into service unless something happens with the supply chain and the aircraft is delayed slightly coming out of conversion. But so far, the 2 conversion shops have told us that they have all of the equipment, all of the material, all of the parts and components they need to complete the conversion to cargo.

All right. We're going to speak through some of these questions, because the redundant contingency plan and resection. We've addressed timing around cash flow and EPS we've addressed. The move to NASDAQ has also been addressed. I'm not sure if this is a little redundant, the time [ Travis ] is asking, where are we at today with the cargo FAA certification and manuals, et cetera?

Well, I addressed that. We're on track. We've submitted all of the manuals so far that we can submit. All of those have been through initial FAA reviews. We've made some changes to the -- based on their comments and their required revisions. So our manuals are in great shape. We need to wait and balance manuals once the airplanes are weighed. Those will be done about the time that the airplanes get delivered -- and so again, we see ourselves on track for October 1 in service with the first 2 aircraft.

Let's get to another topic for a moment from Silvan [indiscernible] Canada Jetlines, I'm not quite sure what this is in relation to, because I would like to know when we will receive the other actions of Canada Jetlines. I'm wondering if this preferred final Canada transport approval or whether it may be Ryan, you can just provide a little bit of perspective on CJet at this point?

Yes. So CJet has received their control, in fact, which is the first stage of CTA. It is basically summit, there's 2 CTAs and 1 Transport Canada role. So the first step of CTA is the control, in fact, Canadian basically proof of citizenship that's been achieved and that was never achieved in previous iteration. The second part is hitting their financial fitness test, which is demonstrating a balance sheet as required. And then on the Transport Canada side, which is actually flight off, the pilot training has been approved. We actually have 2 pilots certified under Transport Canada. The flight attendant training has been approved, and that training will start in the next couple of weeks. They have to -- unlike in the U.S. where we had to fly 150 hours of proving runs, they're only required to do 2 flights, which is quite nice. So once they get their balance sheet proven, it should be within 30 days, they'll have their operating certificate and they're targeting selling tickets in June and flying in July.

Close off. I think it's a good point here from John Timberlin. Great job, guys, by the way, exclamation mark. Great presentation and plan exclamation mark. Way to execute at all levels exclamation mark. I guess John's happy. Any closing comments?

Again, Grant, thanks for the microphone and the platform. You've been a good supporter of ours. We greatly appreciate that. You've helped us get the message out. We will continue to do that until people start to mention a little more closely to us, but our comparables trade at about USD 50 million per aircraft. So you do the math.

I have. That's why I was buying more stock this morning.

Grant. Thank you very much. Thank you for your support.

Thank you. And to all the participants. Thank you. And there will be a recording of this webinar distributed within the next 24 hours or so. Thank you.

Thanks, everyone. Take care. Have a good day.