Global Crossing Airlines Group Inc.
Q1 2022 Earnings Call Transcript

Published: 17 May 2022

[Grant Howard:]

Good afternoon. Good morning, depending on where you are. Welcome to this Management Update Webinar for Global Crossing Airlines. I'm Grant Howard. I'm joined today, Ed Wegel, CEO and Ryan Goepel, who is the Chief Financial Officer. There's a lot of information on the stack, good information, solid, the growth has been exceptional, contrary to what the stock may be doing in a psychotic market, the company is performing, in fact, firing on all cylinders. And I'm not going to steal any thunder. So, with that, Ed and Ryan, I'm going to turn it over to you.

[Ed Wegel:]

Great. Thanks Grant and good morning, good afternoon, everyone. Thanks for being with us on this quarterly update, our second full quarter of operations revenue, service, we're very happy to be here and very glad to be able to present to you some of the highlights of this quarter. And highlights of this quarter, we'll do a comparison of this quarter versus Q4 of 2022. We'll look at some objectives that we have for the second quarter, we'll do a rundown of some of the major contracts that we have signed and updated forecast numbers. We're going to talk a little bit about the A321 freighter which we will introduce into revenue service by the fourth quarter of this year, which is a very important growth element in our story and talk a little bit about the unit economics of both the A320 passenger aircraft, as well as the 321 freighter. So, with the Q1 behind us now, again, this, we had a very good first quarter, despite the negative effects of Omicron, which as you remember, affected everyone late December, January, and into the mid part of February. So, we were not immune to that. We had a number of pilots and flight crew, and even office staff who were affected by that personally. And as well, a number of our clients had to either cancel, defer or delay, some of their trips, because of Omicron. Despite that, our revenue was a little over $16 million for the quarter, which was a good jump over the fourth quarter of 2021. We're now projecting $90 plus million in revenue for the full year 2022 and total contracts and otherwise that we now have in place exceed $200 million and that breaks down over the next three years as follows. So, $70 million in signed contracts now for 2022. So, it's a short jump to get us to over $90 plus million for the full year. For 2023, we have $76 million in signed contracts already and for 2024, we've already booked $52 million in revenue contracts. So, we've got a good base -- a good foundation of revenue for the company as we move forward. We'll talk about some of those contracts in a moment, but the vast majority of those are reps recession proof. And as we look at the possibility of a recession later this year in the U.S. and Canada, maybe all of the Americas, this bodes well for us because we are largely shielded from that economic reality. Our operating hours per quarter will increase 300% in the fourth quarter this year versus the quarter that just ended. So, we're going to have tremendous growth over the balance of this year, which comes from additional passenger aircraft, as well as the introduction of the first freighter aircraft and we'll get into this in a moment, but we'll have three freighter aircraft on the certificate by the end of this year. So, we're forecasting our profitability in Q3. Q2, we're still investing heavily in pilot recruitment, pilot training, IT systems, all of the things that we need to lay further foundation for our growth to take on additional aircraft and to take on the A321 freighters. So, with that, I'll turn it to Ryan to go through the quarter versus Q4 of last year.

[A - Ryan Goepel:]

And as Ed stated Q4, we saw $11 million in revenue which we grew to $16 million, which is a pretty large increase. One of the benefits you'll notice as we had aircraft is we don't necessarily add one for one in all other costs. So, for example, salaries and wages did not increase the proportion of revenue and as we add more aircraft, we'll see that see that continue. Aircraft fuel is largely impacted by how many contracts we do that are either ACI contract. We flew a lot of March schools in March and so that included fuel and those cost again, that's all cost plus basis. So, that's a pass through cost that we mark up, so we don't take any fuel risks there. Maintenance expense was up as we basically on boarded six aircraft pretty quickly at the end of 2021 and there's some upgrades that need to be put in place. And that wasn't necessarily -- that was a big increase over Q4. When we look at the travel and insurance, those are just a rent, that's just a reflection of adding aircraft. So, we're excited about the cost structure, we are continuing to invest in people, we're continue to invest in systems as Ed alluded to, in order for us to feed the growth that we're projecting through the rest of the year.

[Ed Wegel:]

Some of the expenses that we highlight here, as Ryan said, relate to the three aircraft that we brought on in December of last year. There are certain maintenance expenses involved in bringing those aircraft on, we've expensed them fully in this quarter, we believe some of those will be recaptured from the lessors and some of the other maintenance providers of those aircraft. We also had -- professional fees were up because we got our S-1 finalized and made hey effective at the U.S. SEC. We had a number of charges related to that all of which we took this quarter and expense them so that we don't have any overhang going forward. And as we are building our systems, we are required under the FAA to build and develop our human infrastructure in terms of our maintenance capabilities, our dispatch, our scheduling, and our other systems, with the people and the systems that we need before we take the airplanes on. So, we incur those expenses, the training expenses, the salary expenses before additional aircraft are brought onto the certificate. So, that's an important thing to note is that we have to have the all of the pieces and elements in place before the FAA and DoT will allow us to bring additional aircraft on. We have done all of that hard work. We have spent the money, we have spent a lot of money on people and systems that allow us to effectively double our fleet from now until the end of this year. As we look at some of the key contracts that we have signed over the past three to four months, a couple of things of note. So, we've got over $200 million in contracts for 2022 and beyond, so, 2022, 2023, and 2024. And we are still building on those every day, we signed contracts almost every day. We've got LOIs that are contingent on us, getting airplanes in such as some of our freighters, but we're very secure in those LOIs, we've got deposits -- cash deposits up from the clients for those contracts. Key contracts include our -- the U.S. government, we will do just shy of 5,000 hours by the government this year, 2022. And we've already looked and have booked over 9,000 hours so far for 2023 and 9,000 in 2024. U.S. government is recession proof and that business will continue to grow for us. Our contract to fly from Miami into Havana and from Tampa to Havana has been renewed. This represents a little over 1,700 hours in 2022 and as you may have seen yesterday, the Biden administration opened up all the Cuba province cities now for air service again. So, we're projecting that we will fly to four cities on top of Havana relatively soon and on a full year basis, those additional flights represent about 780 hours per year. Our collegiate fan and incentive travel business continues to grow. We're signing up more and more brokers. We're providing dedicated aircraft to the NCAA and others, providing dedicated aircraft to brokers who specialize in certain conferences and certain Championship Series. For instance, we're putting two airplanes into the NCAA College World Series that starts later this month and because of our performance in March Madness, which was the college basketball championship, where we had two aircraft this year, we have now been asked to provide six dedicated aircraft to that championship next March. So, we're building a reputation, on-time, reliable, clean, great aircraft, clean systems, great crews. And so as a result, we're seeing repeat business and that business is actually growing in terms of the volume. We're also flying later this month and into June for a major U.S. airline, LCC. We're going to do 171 hours for them in what we call sub-service. So, we'll fly certain routes for them. They are growing rapidly, they need additional capacity on some of their routes. So, we're opening up a route for them. This is really one of the one of the reasons that we built this airline the way we did as a U.S. 121 scheduled flight carrier so that we're able to perform missions just like this. And so we mimic that other airline with their onboard service, but with our crews, our aircraft and they came to us because again, our reputation already established for our on-time and our clean aircraft, our great crews and we think this business will continue to expand for us with other airlines in the U.S. We've also signed with a major European tour operator for the summer. We're moving two airplanes to Amsterdam in the end of June. We'll fly 400 hours per month per aircraft in both July and August. And this is the start of a major program with this tour operator that should go on for the next 10 or 20 years, however, long these programs will be in existence, but we've got a great relationship with them. We've got everything in place to move those airplanes over -- what is a relatively quieter time for us here in the U.S. in the summertime, we're able to get almost double utilization out of two aircraft in July and August. On the cargo side, we're making great progress now as we get closer to having the first two airplanes on our certificate. We've got LOIs and actually signed the agreement now with a major Latin American airline to provide them one airplane, minimum of 200 hours a month at a great ACMI rate, we'll be announcing with this airline this deal within the next few days. They're putting out their entire fleet plan. This is part of it, we'll do a separate announcement as well a GlobalX for this contract. We also have a major logistics operator in the Caribbean, that has signed for a number of hours, not fully a dedicated aircraft, but we have other pieces of contracts that will put in place to fill in for this airplane. We -- as we look out over the -- our delivery schedule, which we'll get into in a moment of the A321 freighters. We now foresee that the first five aircraft are essentially fully placed or fully booked going forward due to the demand that we're seeing for this particular aircraft type, the 321 freighter. So, we feel very, very good, very, very confident about our cargo business now going forward. You want to take us through this?

[Ryan Goepel:]

Sure, current status of aircraft, we have obviously the six aircraft on board, our first A320, which -- our next A320, which is adding to a four, we'll show pictures, it's in paint and should be delivered here at the end of the month. Our first 319, which will be delivered in June. These were hoped to be here earlier in the year, they've been going through significant maintenance checks and they've been delayed on that side, but we're excited to get them on board. Our next 321 will be coming in July and the next 319, we hope to have here in August. But then when you look at the cargo aircraft, we have 13 on from lease -- either from leases or LOIs, with deposits, and seven additional lessor commitments. We'll walk through that on a later slide. The first aircraft to be delivered in August to allow us to complete our certification, which is on track and Ed will detail that process. Second aircraft, first week of September and both are going revenue service by October 1st. When you look at our team, I think one of the key elements is getting pilots through our training program. We currently have 30 in training, we're starting classes every two weeks. That pilot group is growing and that's given us the capacity to go do the work that we need to do over the next nine months. But looking at bases, Miami, Atlantic City, Las Vegas are operating and we're opening a San Antonio office for flight attendants and maintenance to support our government work down there. So, all elements are growing, we're still adding the planes, we're adding the people and the systems and this is kind of where the investment is. And if you look at the next slide, it's real, 284, it's been painted. This is the next one to join, it's in our original delivery. We're excited. This is another aircraft that we're getting from Alaska, so our three sisterships all sequential serial numbers, which is great for us from a maintenance and record standpoint. And the two we have now have been performing admirably throughout. Looking in Q2, you want me to--?

[Ed Wegel:]

Yes.

[Ryan Goepel:]

Looking in Q2, our objectives, we're targeting $90 million in revenue. EBITDAR positive. Now, EBITDAR is a metric that is used in aviation and basically its earnings before interest taxes, depreciation and rent. It's commonly used with air analyzing airlines because it allows apple-to-apples comparison by removing a rental cost. The reason this is important is allows you to compare companies with similar operations who choose to acquire their assets differently whether they buy the asset, or they lease the asset, EBITDAR is a metric allows you to compare the two. We're looking to take delivery as you said earlier over next 319 and 320. We'll get to additional passenger aircraft LOIs signed support the government contracts. We'll announce multiple cargo contracts and we are bidding all the Fall football season work. We look to finalize those contracts, there's been a lot of competition and we're trying to see what we can do to optimize the schedule and our utilization of our aircraft for the season. I think now I'll turn over to Ed, who will walk through cargo.

[Ed Wegel:]

So, this is our -- the concept design for our 321 freighter. As we said, the first two aircraft will be delivered first, mid-August, the second, near the end of August. We have our teams up at both conversion facilities, working with the conversion vendor to get these aircraft converted cargo, both are outstanding OEM contractors, one is Precision and the second one is ST Engineering, which is the largest maintenance -- aircraft maintenance engineering MRO in the world. And so we've been up to Lake City, Florida for the -- for one aircraft and the second aircraft at San Antonio, you may have seen some of the pictures of our cutting the door ceremony in San Antonio. And in a few weeks, we'll have a ceremony in Lake City, Florida, for the placement of the cargo door into our second aircraft. 321 versus the competition, we've gone through this a bit, it's on our website. But this this airplane is the next shiny thing in the aviation business. We've seen Lufthansa and Japan Airlines committing a wholesale to this aircraft after we committed to the aircraft, so we feel very good about that. It competes very well against the 757 and beats the pants off the 737-800. In both cases, more volume and less fuel burn in both of those aircraft. 14 pallet positions gives us a tremendous airplane and as we have met with potential clients and walk them through the economics, they have gotten very, very excited about the ability for us to operate this aircraft for them. So, we're talking to some major package carriers here in the U.S., I think we'll have a contract here in the next few months. As I said, the major Latin airline, which we will announce in a few days is actually asked for as many as four of these airplanes from us to operate for them. And we're talking to other major Latin carriers, all of them very, very interested in this airplane. And as I said, we are confident that the first five of our 321 freighters have been placed with minimum monthly hourly guarantees that make this a very, very profitable aircraft and operation for us. This is just a comparison of the A321 versus the 757 and 737, you see that we effectively get 14% more containers than the 757 and I believe it's about 55%, more than the 737-800. So, this airplane is just absolutely the best-in-class narrowbody freighter that's out there. We'll talk in a moment, but we have 13 under firm lease, or LOIs with deposits and commitments for seven more from lessors. So, there are finding the feedstock for us to convert these airplanes, they've committed to us that they will find the airplanes, convert them and put them into our fleet. This is our delivery schedule. Two airplanes again, August, late August, early September for the first two, December for the third. We're working to get to more in the first half of 2023. We're working to move both of those to January, February, working with the conversion shops to do that. And then we have a very good schedule deliveries after that July, September, October, and then on through January. We'll fill in some of that as some more lines open up for the conversion, but this is a great delivery schedule for us. It allows us to absorb the airplanes, get the crews in place, get the contracts in place for us to do this. So, when we are operating 20 A321 freighters, we will be we will be extremely broad for them. Here's pictures of the first aircraft manufacturer serial number 1199 and 1438, both in progress. Doors have been cut. And these are on track to be delivered to us in late August. So, again, we feel very good about the two OEMs conversion shops that we're working with, they are best-in-class. They do this better than just about anybody on the planet. So, one of them is an Airbus affiliate that works with ST Engineering. The second is Precision, which works with ATSG is one of the premier air cargo carriers as well as conversion shops in the world. So, we've got two great names behind us, that will be providing us. Between the two of them, all 20 of our A321 freighters. So, we're in good partnership, we're in good hands with these two conversion shops. So, -- you talk--

[Ryan Goepel:]

Sure. I think one of the things we've been trying to get across is the story and how to understand the story and what's the potential of the story. I know we've been a little bit vague on this, we figured we'd be pretty direct on today's call. When we look at modeling how we want to -- what we believe each passenger aircraft and each cargo aircraft can contribute to the company, these are kind of the targets that we work with and we're comfortable that this is what we'll hit over a 12-month period with each individual aircraft. So, if you're looking at a passenger aircraft, we expect to be $1.5 million and $2.2 million gross profit before overhead per passenger and $4.2 million to $5.5 million gross profit per overhead -- before overhead per cargo. These are impacted by basically utilization rates and obviously, charter rates. But those are the targets we were looking to get and we're starting to see. Obviously, you have to have an overhead to pay for this. By and large that's in place, we think we have enough of an overhead in place for the first 20 aircraft. We are staffed for 24/7 operation, which allows our operation center and our maintenance facilities or maintenance support to work around the clock which is a big step up which we worked through in the first quarter. So, we think with this fleet plan, I think we try to make the math as pretty straightforward as possible is where we see the opportunity being. I think with that I'll turn over to our favorite slide.

[Ed Wegel:]

So, this with all the great news, we went from -- we got certified in the middle of pandemic, sent airplanes to Afghanistan, got several more aircraft on the certificate, got up to six aircraft in January. Now, working very quickly and closely to get to a breakeven and then into positive EBITDAR and fourth quarter profitability. We have tied up 20 of the most valuable aircraft in the world today, which is the A321 freighter. We will have 10 passenger aircraft by the end of this year, most of them signed up in contracts that are mostly recession proof. So, despite what happens in the economy, these aircraft will be flying and will be flying under good contracts, because they are with clients who have to fly no matter what the economic conditions are. So, in the face of all of that, this is what our management team faces is a share price that has effectively been cut in about 70% over this time period. I can tell you that we are working very hard to get the story out. We have tried in many ways with our firms and others to get his story out is the fact that we are on the OTC and institutional investors by and large cannot invest in us yet. It's holding us back. We are a bit frustrated, we put this out on our website, we put it out through all of the social media and we continue to get comments that nobody knows that we're putting this information out. So, we will continue to work in a positive manner to get our story out. We're working with a number of social media sites, we're working with the media companies and others to put this story out. The efforts of Howard Group have been phenomenal in getting the story out, but we do get a lot of criticism over our share price. You have a management team that is performing. You have a management team that has provided all the things that we have said that we would do and then some and I think that we've got some tremendous foundational elements in place now to build this airline to the 50 aircraft fleet that we project by the end of 2025. Just want to leave you with the comments again that we are doing everything we can to get this story out. We have been through probably four or five IR firms in Canada and the U.S., PR agencies, social media, and so forth. And we will continue to do that until we can finally break through and people understand the power of this company and the strength of our story. So, with that Grant, I'll turn it over to you. We'll take any questions that that are appropriate.

[Grant Howard:]

Thank you, Ryan. [Operator Instructions] And while we're waiting for those questions to come in, just a couple of comments on the presentation, running the numbers on your gross margin where you're doing $1 million, we talking about gross margin of $1.5 million to $2.2 million annualized for the passengers and $4.2 million to $5.5 million on the cargo. If you annualize Q4, the numbers I'm getting is that your gross margin, of course, that's gross margin would be $27.6 million to $38.5 million and for the Canadians, please remember, all the numbers here are U.S. So, if you look at a $90 million base case, the gross margin going profitable this year. Can you please send me information on any other company on a junior Canadian exchange that went from zero to over CAD100 million in just over a year, and it's throwing out these types of numbers and the track to future growth is as clear as it gets? Again, we got to goofy market and people are selling out of fear and they're not looking at the fundamentals. I keep harping on the stock, I keep buying and I will continue to do so because this is as clear as it gets. So, with that, I will stop ranting and we are getting some questions in now. So, the first one is from Ian McQueen says to date your operating margins are negative, which is no surprise given that you are building the business. In Q1 2022, costs were 129% of revenues with the big contributors being salaries, wages, and benefits of 32% of revenue, fuel pass through 20% contracted ground and aviation services at 18%, aircraft rent at 21% and other costs at 14%. If we look to 2023 plus, where do you expect operating margins to be? And what do you expect run rate costs as a percentage of revenue to be for the categories mentioned above?

[Ryan Goepel:]

Thanks. You want me to do that one? I think one of the tough parts about -- I think the best guidance we can give is what we talked about on a per aircraft basis and then amount of overhead to maintain it. One of four example on aircraft fuel, right? If we do a full contract that cost is included, if we do an ACMI contract, it's not. So, as our mix changes of how much is ACMI versus full contract, that as a percentage of revenue will change. So, we have a projected gross margin or put that out yet. I figured we start with unit economics and then we'll build up to a macro model over the subsequent calls.

[Grant Howard:]

What is your current cash position and the monthly burn rate?

[Ryan Goepel:]

I believe we -- Q1, we ended -- was over $11 million was on the balance sheet and our burn rate is getting -- is shrinking. I think it's below $1 million through the course of -- through the year and then it gets to cashflow positive, Q3, Q4. So, burn rate is becoming something that's not as something we -- it's not a burn anymore. It's going to be accretive.

[Grant Howard:]

Chris Moffat asks why was in 627 park for a few weeks?

[Ryan Goepel:]

That was actually parked, doing a C check. So, every 18 months, aircrafts have to go through -- or two years they have to go through a two-year check. They take between 14 and 18 days. So, 627 was at an MRO facility being overhauled. Right now 626 is there and then 276 will follow straight after. So, we have three aircraft that are going through what we call C checks or two-year checks. So, that's why it was there.

[Grant Howard:]

John Chamberlin [ph] quite serious, do we have a dedicated PIO for the company? I don't know if that's Public Information Officer or what, are there any thoughts on having that in place? My experience the PR firms only responded to [indiscernible]?

[Ed Wegel:]

We have -- Ryan and I effectively serve as the Public Information Officers. Our CMO, Mark Salvador primarily is the -- is the primary senior officer overseeing our social media sites, our website, and so forth. So, we maintain a very lean senior management team here. In the face of the fact that we can't -- or we won't be able to move up of the OTC and move up to NASDAQ or the New York Stock Exchange until we raise some additional capital and get profitable. No matter what we do and I will say -- I will underline that, no matter what we do, no matter what we say, no matter what we do in a press release, the negativity about what we say or what we do is prevalent. I guess, because no one in Canada has seen an actual airline like this, as you say, Grant, operate on a junior exchange and actually do what they say that they're going to do. But we put out on LinkedIn, on Twitter, on Facebook, on our webpages through press releases, we put out all of the information that anyone needs to determine whether they want to invest in this company. We are public, which means they can pull all of our public documents off of the free SEC website. So, there is plenty of opportunity and plenty of ways for anyone to access information about us. A PIO, which -- would just merely put out more press releases, we found them to be of limited value, frankly. So, what we have decided to do is that we are going to outperform every other airline like us in the market and eventually someone will notice. And it won't be because of a press release or a Tweet, or a post on LinkedIn, it will be because someone will wake up and say, My Lord, they have 20 of these freighters coming, My Lord, they have 10 passenger aircraft, look at the contracts that they have, someone will eventually wake up and pass the word on this. We've tried everything, nothing works, we will continue in a positive way to do that. But until someone, some people start to wake up and understand what we have here and not just read our press release, but understand what's in the press release, we're not going to get any movement.

[Grant Howard:]

They're certainly NASDAQ, do you still believe you'll be able to uplift by the end of the year? And do we still need a minimum bid of $2?

[Ryan Goepel:]

So, I think we've said our line on NASDAQ or NYSE is always have positive earnings and multiple quarters of revenue growth, have cargo on the cargo active and under contract to generating revenue. I think when you when you see that, it's -- we would hope that the share price would reflect it and we can address it there. So, I think, external factors are external factors. And obviously there's some frustration on how that impacts us. But on the same token, we can control what we do here and what we perform. And I think with that performance, it will take care of itself in the sense of eventually the comps and the comparisons and all will sort itself out. So, we just need to keep delivering the revenue, deliver the $90 plus million, deliver three cargo aircraft by the end of the year, 10 passenger, and $200 million in contracts and more. And we believe the share price will reflect it and make the up-listing pretty simple process.

[Ed Wegel:]

Yes, we have said until we're blue in the face that we are not affected by the oil price or largely not affected by it because our clients pay that. And most of our clients have to fly. So, they will pay that. no matter how many times we say that when oil goes up, our stock price goes down because people panic. So, it's an airline and they're affected by oil prices. Despite the fact that we've said it 73 times, they still don't get it. So, if someone has an idea or suggestion for how we can say that the 74th time and get through to anyone, we would love to have that suggestion.

[Grant Howard:]

[indiscernible] One or two more questions on an up-list. From Chris Moffat, how does GlobalX retain its pilots and staff and keep them from moving to other airlines after training?

[Ed Wegel:]

Well, it's quite simple. We take very good care of them. The pilots that were getting, particularly those in the left seat are coming to us with 10,000 to 12,000 to 15,000 hours of pilot in command time. They're coming out of the Middle East, where they've flown for a number of years. They're coming out of Asia, they're coming out of China, even some coming out of Latin America. They want to live in Miami, they want this kind of lifestyle. They don't -- at their age, they don't want to go to the majors because they'll be in the right seat and they'll be unreserved for the next 10 years. So, they want to come to us. Our wages are comparable. In fact, they're exactly the same as what Allegiant pays. Allegiant has 160 airplanes and we have six, and we pay the same rates as Allegiant does. We take good care of our people. We've got a 401(K). We've got the employee stock purchase plans. We've talked to our people, we take them to lunch, we take them to dinner. We make them feel like they're part of the family here. And we are having a growing number of captains who are bringing some of their former colleagues from overseas to work with us and others. So, we feel very, very good about our pilot group. We've had less attrition on a percentage basis than just about any airline out there that I can -- that I've spoken to. And so we take our people seriously. We take our culture seriously. And we've created a work environment where they want to stay, even though they might make more money at one of the ULCCs or major, they want to be here because of quality of life.

[Grant Howard:]

Chris Moffat again. When are you planning on breaking ground on the proposed Fort Lauderdale hangars/office?

[Ed Wegel:]

We expect to have we expect to have final approval from the Broward County Aviation Department by late June, early July. We've got to do the final design, which is in process now for the building and determine how much office space and perhaps training space we want to put there. And then depending upon how much preparatory work needs to be done in terms of mitigation of the land, we expect right now to break ground sometime in the third quarter of this year. It's fully finance and just barring the final regulatory approvals and the mitigation of any environmental issues, which we think will be minimal, we'll be ready to go and break ground.

[Grant Howard:]

Question from anonymous about Flugy, if there are any updates on that idea?

[Ryan Goepel:]

So, Flugy is the platform, the travel platform, we call it's a very direct travel company. We had announced our agreement with Soho House, we've done one trial, we did one event with them, we're working to schedule four or five more. The next steps, the platform has been effectively built out. We're working on putting the resources together to grow the customer base and see what we can do to monetize it. So, we really wanted to get to a proof-of-concept, which we believe we've done, we want to get technology to a platform where it's usable, which we've done, we wanted to do some test flights, which we've done. And now the next part is in Q3, we're looking to expand it to beyond one customer and worked out all their groups and then hopefully get to the point where we're doing 10 to 15 flights a month through Flugy.

[Ed Wegel:]

So, we've got one strategic partner now, as Ryan said, with Soho House, which is a great brand to partner with. We're looking for other strategic partners, we started to talk to some of the OTAs, the online travel agencies, some of the conglomerates that own a number of online travel agencies. And let me say that we were getting some very interesting responses and proposals on working with them along with Flugy. We're primarily -- we are a charter airline, running an OTA or online travel agency which is effectively is not our core business. We do want to maintain a piece of this business. We think that we can monetize a piece of this business and get all the capital we need to grow that particular division of our company into a major player in the online travel space.

[Grant Howard:]

Kenneth C [ph] is asking about the eVTOLs, that's the vertical take vertical takeoff vehicles, the LOI announcement is exciting. The vehicles look incredible, especially the below normal side, but to what degree does CargoX plan to utilize these? Could you provide a little more insight and then he says incredible work from the team so far?

[Ed Wegel:]

Yes, the eVTOL concept is something that we wanted to be involved in early on. There's a number of players out there, designing and building and manufacturing the eVTOL aircraft. We selected Eve because it is a division of Embraer. Embraer is a major aircraft, original equipment manufacturer or OEM. They've got tremendous experience in building airplanes. They don't build airplanes in their garage, they build them in real facilities. They've got real engineers and they've got real money behind them. They've just gone public. Eve has gone public with a $600 million stack and is got a great valuation. We believe that is the right eVTOL application for Miami-Dade and Broward County. We intend to use that aircraft in a number of ways to move passengers from off of our charter flights to Port Miami where they can get on cruise ships or of Miami Airport or Fort Lauderdale Airport to go down into the Keys, the West style of Arata and so forth, that's a perfect application for this big old aircraft. As well we can move our crews back and forth between the airports in South Florida and we're going to be doing more and more flights out of Fort Lauderdale, Palm Beach, even over on the Westcoast of Florida, Sarasota and Fort Myers. So, this aircraft by the time it is fully developed and manufactured and certified in 2026, will have the range with its batteries for us to be able to do that. So -- and we're working now with Miami-Dade County on developing a eVTOL plan. We also have partnered now with [indiscernible], which is a worldwide expert in construction of airports and heliports and the sorts of facilities that are needed for this type aircraft. So, we wanted to get in early, make sure we had an order position for these aircraft. The aircraft won't be delivered for another four years. We serve on the advisory board for Eve. We've been giving them our thoughts on how the aircraft to be used here in Miami-Dade, working with Miami-Dade County government as well. Looking where we can build heliports or V-ports as they're called, all the way down to Key West so that we can provide to our clients who want to fly into South Florida and additional service which is to put some of their best customers on these eVTOL aircraft to get to cruise ships, to get to destination spots in the Keys, to get to their hotels on Brickell or on Miami Beach, or all the way up to Fort Lauderdale. So, it is an absolute extension of the service that we currently provide to our clients, absolute extension of what we do at GlobalX.

[Grant Howard:]

Questions on NASDAQ on the Eve planes which has just been answered and from Axel Braun. Is there a possibility or are you considering participating in conferences such as Wolfe Global Transportation & Industrials Conference this year?

[Ryan Goepel:]

So, we are in conversations about that. I've done two conferences in the last month. So, we are participating in conferences. We are talking to Wolfe and some of the other brokers about participating in that. I think part of that is us getting to the size that we're getting to, we're getting on the radars and so we are going to be active in the conference community.

[Ed Wegel:]

One of the things that we'll be announcing soon to take the thunder away from this release is the senior airline analyst at Cowen & Company who's done a number of broadcasts with us, Helane Becker, who is one of the top ranked airline analysts on Wall Street is going to be joining the Advisory Board of GlobalX here shortly. And we anticipate that she'll join the full Board when she retires fully from Cowen in about the next year. Helane has been a great supporter of ours, has opened a number of doors for us on Wall Street. And now in an official Advisory Board capacity, we believe that she'll be able to help us to get into some of the conferences where we will be punching well above our weight because we're still a small airline and we don't get invited to those kinds of conferences. We believe that she'll open up those doors and we know that we'll be in some of those conferences later this year.

[Grant Howard:]

Some email questions from Mike Roberts. I think all of them had been addressed except for how was the ground handling business progressing?

[Ryan Goepel:]

Yes, so we currently sell-perform here at Miami, Miami-Dade we're getting -- what we want to do is get good at it. We're getting the processes in place, we had a little bit of a slow start, but we've managed to put the right people in place now. They're performing excellent. I think it's a very efficient operation for us. And then eventually will allow -- we'll be able to use the expertise we've gained to piggyback on some of our work around the country. So, we want to get the processes, people, and procedures down to very efficient operations so we have something to pick going forward.

[Ed Wegel:]

So, just to expand on that a bit. So, here at MIA, Miami International Airport, we have our own ground handling operation in place called Ground Team. The result of that is that we've reduced our ground handling costs here at MIA by about a third, while providing much better service because Ground Team obviously is completely under our control. We're now expanding that, so we're going to be adding fueling capability here, we'll fuel our own aircraft here at MIA, which will save us money even as we pencil out all of the costs of that. Plus it gives us greater flexibility in our fueling. We are often the second or third cousin, when it comes to getting fuel because of the big presence of American Airlines and some of the big ULCC that are here at MIA. So, we're getting our own fueling trucks, which will save us money and reduce our reduce our handling times. And as well, we're looking to expand as Ryan said, Ground Team, to the Westcoast of Florida. We're looking at Tampa, where we operate now to Havana and we'll probably expand that operation. So, it makes sense for us to have our own people there. We've invited -- we've been invited to put a ground handling operation in St. Petersburg, Florida, which is a growing airport and we'll probably put it there. But just in the case of the fueling operations at MIA, the airport here has asked us if we could fuel other airlines now, because of a difficult situation for fuelers and the number of fuelers here at MIA. So, we're going to provide for ourselves, and as well, we're going to fuel other airlines and we expect to make money doing that.

[Grant Howard:]

Here's just one more. Certainly there's been a lot of controversy in the U.S. It's a very political issue, the problems at your southern border with immigration. And Mike Roberts, again, is asking if Title 42 comes to an end, is that going to impact your government contracts?

[Ed Wegel:]

No, it won't. Personally, I don't think Title 42 will end if it does. And there's still the number of illegals that come across the border are so large and the people that we transport back are being transported back for reasons other than the fact that they've crossed the border. So, that will not end. And the need for these services -- we have been told by the government will increase from -- they'll almost double the number of aircraft that they need in this program over the next several years. So, we feel pretty confident about that business, it will be run under our Capital Airlines subsidiary. We believe that we provide a very, very efficient service for the government, one that is much needed. But we also do things in that contract, such as moving miners to other parts of the U.S., so that they can re-linkup with their families, which we think is a very, very good thing for us to be doing. So, no, we don't see an impact either positively or negatively. We just believe and understand that from our government contacts that this business will continue to grow, particularly in a recession where the recession impacts all of the Americas.

[Grant Howard:]

With that, gentlemen, I believe that was the last question because nothing else has come in. So, we're going to wrap. Again, congratulations, you're doing a great job. You and the team got a stock that's trading at above current market cap is about half of what you're forecasting is your base case revenues this year. So, we'll let that speak for itself and perhaps the market will have an epiphany and we'll see a reversal on the stock price. Again thank you, Ed. Thank you, Ryan.

[Ed Wegel:]

Thanks Grant. Thanks for the platform. Thanks for allowing us to use it today. Everyone, have a great day.

[Grant Howard:]

Thanks to everyone.