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

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Global Crossing Airlines financial results for the third quarter of 2025. [Operator Instructions] As a reminder, this conference call is being recorded. Joining us on the call today are the company's Executive Chairman, Chris Jamroz; President and CFO, Ryan Goepel; and SVP, Corporate Controller, Wendy Shapiro. Please be advised that this conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements. For important risks and assumptions associated with such forward-looking statements, please refer to the company's earnings press release for the third quarter of 2025 and the company's annual report on Form 10-K for the year ended December 31, 2024. The company's presentation also includes certain non-GAAP financial measures, including EBITDA and EBITDAR as supplemental measures of performance of the business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You will find reconciliation tables and other important information in the earnings press release for the third quarter of 2025, which is currently available on the company's Investor Relations section of its website. And now I will turn the call over to the company's Executive Chairman, Chris Jamroz. Chris, please go ahead.

Thank you, operator, and good morning, everyone. GlobalX delivered another period of strong growth and significant year-over-year improvements with revenue up 11%, EBITDAR up 25% and EBITDA improving by nearly $5 million. We achieved some of the highest aircraft utilization rates since our inception, driven by increased demand across the full spectrum of charter and ACMI customers. I'm proud of our team's relentless work to achieve these results and strengthen the foundation of our business for the long term. While we are proud of the progress we've made, the results fell short of our own expectations. We had the opportunity to achieve net income profitability but fell short due to the rapid pace of growth that tested our maintenance and operations functions, leading to logistics disruptions and AOG events. We saw more unplanned AOG events than anticipated. And over the past 60 days, we have taken targeted, decisive and concerted steps to address those events and reduce our operating costs. We are a commercial organization and going forward, we intend to obtain a high standard of operating performance, and we must be ready to credibly perform to that standard. A record of revenue generation will never relieve us of the responsibility to remain operationally sound and a vibrant airline. Over the past 18 months, we've moved from the start-up phase to scaling up our full-service charter airline with a sharp focus on efficiency, reliability and sustainable profitability. Over the past quarter, we undertook a comprehensive overhaul of our executive and senior management teams, coupled with the reorganization of operations and maintenance. These steps were essential to meet the increasing demand of operational complexity of a business growing as quickly as GlobalX and to ensure we're structurally equipped for the opportunities ahead. I'm confident the steps we've taken this quarter will enable us to capitalize on that growth and achieve profitability and continue to grow positive cash flow generation. As we look to 2026, our priorities are clear: operate with discipline as we're scaling up and deliver profitable results across our entire platform. It's exceptionally noteworthy that we are also becoming the airline of choice for college sports teams, professional franchises, concert artists and leisure travels across 3 continents. We have also become a carrier of choice to Europe's largest travel and tourism company. The continued influx of marquee clients from across the aviation spectrum validates the strength of our business platform. The robust demand not only confirms we've built the right model, but is propelling the next phase of GlobalX growth and revenue acceleration. We are becoming the gold standard in the charter airline sector, and our success has not gone unnoticed. Many in the industry are taking note of what we're building, and yes, it makes some of our competitors uncomfortable. I want to reaffirm our steadfast commitment to executing with precision and accountability. With these guiding principles, we remain on track to achieve our long-term vision of becoming the largest and the most reliable narrow-body charter airline in North America. With that, I will now hand it over to our President and CFO, Ryan Goepel, to elaborate on GlobalX third quarter operational highlights. Ryan?

Thank you, Chris, and good morning, everyone. This quarter illustrated both the strength of our business model and the growing operational challenges that accompanied rapid scaling. While aircraft utilization reached record levels, we lost approximately 500 block hours to unscheduled maintenance across the fleet, a direct hit to revenue, crew productivity and margins. Those lost hours and the resulting incremental maintenance expense are the primary reasons we missed the opportunity to report positive net income this quarter. As Chris mentioned, in Q3, we experienced more AOG events than we anticipated. Over the past 60 days, we have overhauled leadership across operations and maintenance, redesigned processes, strengthened controls and invested significantly in preventative maintenance. We reduced more than $5 million in annualized office and operating costs, primarily through headcount reductions and tighter SG&A discipline. We expect a more normalized SG&A run rate beginning in December, our traditionally busiest and most profitable month, and we anticipate all aircraft to be fully operational heading into that period. Despite these temporary challenges, our charter operations continue to perform exceptionally well as we generated double-digit revenue growth and record block hours flown, underscoring the underlying strength and resilience of our growth strategy. Our revenue growth was fueled by our ACMI business, which increased 44% year-over-year to $53.2 million and represented 92% of total revenue compared to 70% in the year ago quarter. ACMI block hours increased 45% year-over-year to 9,527, reflecting our focus on expanding long-term agreements with key customers and government agencies. As we stated before, we continue to shift aircraft capacity from charter to ACMI to take advantage of its higher margin profile and more predictable flying. As a result, charter revenue declined to $2.3 million in Q3 2025 from $15 million in the prior year quarter and now accounts for just 4% of total revenue compared to 29% a year ago. This shift in contract mix continues to strengthen our profitability profile through higher margin contribution and contract stability. During the quarter, we flew a record 9,901 block hours, including subservice between ACMI and charter, a 23% year-over-year increase, reflecting strong demand across our narrow-body charter operations. In Q3, we increased block hours flown for ACMI by 45% to 9,527 compared to Q3 of 2024. For charter, we flew 178 block hours compared to 1,254 in the year ago period, again, resulting from our intentional shift from charter to ACMI. Our average utilization per aircraft available increased 26% year-over-year to 618 block hours. As we mentioned before, ACMI typically generates lower revenue per block hour than charter, but offers a more predictable and favorable margin profile since the customer assumes fuel demand and pricing risk. As our contract mix continues to shift towards ACMI, we expect to improve utilization and generate stronger operating margins and greater consistency in our financial performance over time. Turning to cargo operations. Market conditions remain challenging through the quarter as the broader North American freight market continues to experience excess capacity and softer demand. Despite this, we maintained steady flying with our fleet of 4 A321 freighters, which continue to deliver attractive unit economics to our cargo clientele through improved fuel efficiency and lower operating costs. Although visibility in the cargo market remains limited, our efficient and flexible operating models enabled us to sustain activity, maintain key customer relationships and remain well positioned for recovery when the demand strengthens. Passenger demand remains exceptionally strong, supported by limited aircraft supply, reduced direct competition and growing reliance on air charter by colleges and other institutional customers. These favorable market dynamics continue to drive increased demand for our services, particularly within the niche charter markets where aircraft availability remains constrained. To capture this growth, we are prioritizing passenger aircraft deliveries, allocating additional sales and operational resources to strengthen long-term customer relationships and expanding into new markets as opportunities arise. Passenger charter operations remains the primary economic engine for GlobalX. As part of our long-term growth strategy, we continue to improve operational efficiencies and optimize aircraft utilization to strengthen financial performance. Our strong average revenue per block hour underscores success of this focus. As stated earlier, for ACMI, we generated an average of $5,586 per block hour, consistent with the prior year. For charter, average revenue per block hour was $12,978 per hour compared to $11,951 per hour in the year ago quarter, consistent with historical trends. During the third quarter, we made meaningful progress advancing several key initiatives that strengthened our fleet, customer base and financial flexibility. We took delivery of our first of 4 previously announced A319s and the first purchased A320 airframe, which is expected to be in revenue service for the last month of the year. We expect to take delivery of the next 3 aircraft over the next 3 months, expanding our capacity to capitalize on the growing demand for our charter services. We also signed a strategic ACMI agreement with Sunrise Airways to provide 2 dedicated A320 aircraft starting in November, reinforcing our position as a leading ACMI provider and expanding our presence into key international markets. We value the trust Sunrise Airways has placed in us and look forward to growing this relationship through continued collaboration and shared success. Looking ahead, booking across all charter customer segments were at record levels, materially ahead of last year, and momentum continues to accelerate. We made meaningful progress in building a more efficient, reliable organization and entering year-end with improved reliability and a stronger foundation for profitability. Looking to 2026, we plan to build on that momentum, continuing disciplined growth, focused on profitable expansion and deploying additional aircraft to meet rising demand across our core charter markets. Now I'll turn the call over to SVP, Corporate Controller, Wendy Shapiro, who will discuss our financial results in more detail.

Thank you, Ryan, and good morning, everyone. Please note that all financial results discussed today are for the 3-month period ended September 30, 2025, and variance commentary is on a year-over-year basis unless stated otherwise. Revenue in the third quarter increased 11% to $58 million compared to $52.4 million. The increase was primarily driven by continued growth in ACMI operations. ACMI revenue increased 44% to $53.2 million compared to $36.8 million. Charter revenue in Q3 was $2.3 million compared to $15 million. Total operating expenses increased 4% to $57 million compared to $55 million, driven primarily by higher maintenance and personnel costs associated with the ongoing expansion of the GlobalX fleet. Net loss improved to $2 million compared to $4.9 million. Loss per share also improved to negative $0.03 per basic share and diluted share compared to negative $0.08 per basic and diluted share in the year ago period. EBITDA improved nearly $5 million to $4.3 million compared to a loss of $600,000. EBITDAR increased 22% to $18.9 million compared to $15.4 million. Cash flow provided by operations improved to $600,000 compared to cash used by operations of $1 million in the year ago period. The improvement primarily reflects stronger operating performance and efficiency gains across the business. Turning to our liquidity. We ended the third quarter with approximately $7.2 million in cash and restricted cash compared to $14 million at December 31, 2024. Now I will turn the call back over to Ryan for closing remarks.

Thank you, Wendy. Our third quarter results reflect both the strength of our operating model and the actions we've taken to build a stronger, more efficient organization. As we look to 2026, we believe GlobalX is entering the next phase of its evolution with a focused platform, enhanced operational reliability and a stronger foundation to drive profitable growth in 2026. This concludes our prepared remarks. I'd now like to open the call for Q&A. Aaron, over to you.

Thank you, Chris, Ryan and Wendy, and thank you, everyone, for participating in the conference call. As we gather the queue for live questions, we'd first like to address a few of the questions that have come in via e-mail over the past couple of weeks and following the issuance of our earnings press release yesterday. Our first question is related to operational execution. As you look to 2026, how are you strengthening your internal systems and processes to keep pace with future growth?

I'll take that one, and thank you for the question. We've taken -- undertaken several process changes in combination with personnel changes, which we believe will make a significant difference in our ability to execute. On the maintenance side, we invested in our central planning group, increasing its headcount by 4x and subsequently transitioning our daily, weekly and long-term planning to one central group. This allow us to be more proactive across all maintenance activities, better coordinate with our vendors, purchasing department and frontline staff to minimize any disruptions. We have ramped up the number of internal inspections, audits and reviews to identify issues sooner and fix them faster. We've also updated our daily tracking metrics published internally, which we believe are the most effective for tracking, tracing and measuring to ensure the best results. We have engaged several third-party vendors to help us meet the demands of our increased scale and to provide us technology solutions to better utilize the data we've collected and automate the systems we use to manage our ever-growing fleet. The focus on constant improvement is not relenting. We will continue to refine our people and processes to meet the demands of our bigger scale.

Thank you, Ryan. The next question is related to Chris' share purchase. So Chris, you just announced that you're increasing your ownership in GlobalX. What gives you the confidence to make the decision at this point?

Thanks for the question. So I'm crazy of my ownership state because I believe deeply in the platform we've built and the trajectory we are on. Over the last 18 months, we really executed with discipline, expanding our customer base across a very wide spectrum of industries, improving operational efficiency, increasing revenue diversification and growing laterality of our book of business and assembling a management team that I put up against anyone in the business. The momentum at GlobalX is truly undeniable and unstoppable. We're winning new charter customers across every major segment. Our execution is getting sharper every quarter and the organization is more focused than it's ever been. Yet despite that progress, GlobalX remains objectively and in my opinion, the most undervalued airline stock I've ever seen in my career. That disconnect may be illogical to the market today, but it presents a rational opportunity for those of us who understand the fundamentals of the business. For me, quite frankly, it's simple. I have conviction in the platform, confidence in the team, and I'm willing to back that belief with my own capital and both the confidence in the future of the business and frankly, a sound personal financial investment decision.

Thank you, Chris. The next question is related to profitability and cash flow generation. So how are you managing this next phase of growth to ensure it drives stronger profitability and cash flow generation?

I can answer that, too. We're highly selective about where we deploy aircraft, prioritizing routes and charter opportunities that deliver the strongest unit economics and consistent demand profiles. Every new contract is evaluated for margin contribution and cash flow profile, not just top line growth. On the sales front, our team continued to expand ACMI charter relationships with a focus on long-term repeat customers. That strategy is improving aircraft utilization, reducing seasonality and building predictable higher-margin revenue streams. We've implemented best-in-class standard operating procedures and proactive maintenance programs to reduce unplanned downtimes and optimize aircraft availability. Those initiatives are lowering direct operating costs and will be translating into efficiency gains directly into stronger profitability and better and improved cash flow.

Thanks, Ryan. One more related to fleet expansion. What's your approach to expanding the fleet in line with demand forecasts?

I'll take that one as well. We closely track upcoming charter and ACMI opportunities and plan our fleet needs internally to make sure we can cover future demand. If we had the 4 additional aircraft in service today, they'd already be flying. The demand is there. We just need the capacity to meet it. We're adding aircraft where the demand supports it while keeping flexibility in our fleet plan so we can adjust if the market shifts. Each addition is evaluated carefully to make sure it fits our operational needs and long-term profitability goals. As the fleet grows, we're timing lease returns, new aircraft additions to keep utilization high and scaling our cruise maintenance and support system so new aircraft can go straight into a service efficiently.

Thanks, Ryan. It looks like that concludes our pre-submitted questions. I'd now like to pass it over to the operator to open the call up for live Q&A.