Okay, folks, let's get going again. Mark Streeter. Good morning. Thanks, everyone, for joining us. Rolling along here. You know, pleased to have with us, the Air Canada team. We have John Di Bert, Executive Vice President and Chief Financial Officer, Valerie Durand from Investor Relations as well. Many of you may know, John, who's, don't know if you were at this conference before. I mean, certainly we had you down in, you know, Miami, years past at our high yield conference, when John was CFO of Bombardier. He's also spent time at Pratt Canada, and, very happy to have Air Canada back here again, and for John to give us the update. I know you're going to go through some slides. Jamie and I have some questions, and then we'll open it up for Q&A from the audience.
So, John, over to you.
Okay, fantastic. Good morning, everybody. So, yeah, maybe what I'll do is I'll just take 10 minutes to just flip through some updates on the airline, and for those of you that had a chance to be on the earnings call, would have covered some of this as well. So this typical disclosure. Okay, so I think you know what I'll start here was just, we've come through the pandemic and, you know, now I can say 2023 is put it fully behind us. So 2023 was a record year for Air Canada. Air Canada is the global carrier in Canada. We fly to over almost 200 destinations, about 1,000 flights a day, carry about 45 million people annually.
In 2023, we delivered almost 100 billion ASMs. Really, for us, that was the full kind of bring back of the airline to full recovery. I'll touch on in a second. Canada took a little longer to come back to pre-pandemic levels. We still are a little bit off at this point. We finished 2023, still a bit down, but revenue is almost $ 22 billion, $ 4 billion of EBITDA, which was also record performance for us. CASM, just about $ 0.135, a couple of points higher than it was prior year. If you look at that, cash flow from operations, a very, very strong number, better than the EBITDA number.
So you can look at that conversion, 1-to-1 or better. Again, very good for our balance sheet, and I'll touch on that a little, in a couple of slides. And then finally, a free cash flow. So delivered $ 2 billion of total free cash, which we put to good use, much of which was used to take down debt, some of the debt that was accumulated over the pandemic. Maybe looking here at the fleet. Maybe before I get into the fleet. So we stand today at the end of 2023, at about 88% of the capacity we had pre-pandemic, and that was about 112 billion ASMs. So finished at 99 and change last year.
During the pandemic, we actually cleaned up a lot of our fleet, so we got rid of a lot of 767 older aircraft, wide bodies. We've put some into the freighter business as well as terminated leases. We had some older 319s, some 320s that we also exited, and then some part of that regional fleet, the Embraers, we also came out of. So in total, I think 79 aircraft that we removed from the total fleet, and then we started to rebuild that fleet. So you see now A220s coming into the fleet. It's a great machine. We have about 33 today. We'll have another 27 added to the fleet. You can see that over the next couple of years.
We also are going to be bringing in A321 XLRs. Those should have come in probably, you know, this year, last year. Some of that's been pushed out through some of the challenges on the supply chain ramp-up so we've seen at Airbus. But those 321s will come in in 2025 and most of 2026. And we also just recently made an order for 787-10s. That'll absorb some of the 767 volume. It'll also give us some optionality with an older 330 fleet that's coming of age later in the decade. So all that to say that, when we look forward, and I'll make some comments here very briefly, we've built the fleet, I mean, fully modernized, first of all.
Second of all, it's really driving towards the growth trajectories for the airline. Air Canada has strong potential on the Sixth Freedom traffic, so U.S. traffic flowing through Canada, then internationally, transpacific and transatlantic. A220 is our great tool for that. 321 XLRs. Montreal is actually the shortest route, transatlantic, and I think is a number 3 or number 4 transatlantic hub on the continent. So that's pretty staggering given the size of the city relative to some other major hubs. And, we're going to be adding 321 XLRs, which actually have great range and can take you from Montreal deep into Europe with a single aisle. So highly economic, highly efficient, with high load factors. And then the 787-10s, and that really plays towards, the strong immigration trends that are, present in Canada. About 40 million Canadians.
We add about 500,000 new entrants per year, and many of those from Southeast Asia, India, China, North Africa, the Middle East, and therefore, that 787 component of the fleet will absorb a lot of that growth traffic, as well as give us optionality on 330 replacements. So when you look the CapEx over the next three years, about $ 11 billion, and then we'll look at the second half of the or the back end of the decade and get ready for 2030 and see what's needed there. I would tell you that the airline has tremendous assets and really a lot of weapons to compete with. I talked quickly about the global hubs.
We operate particularly our international network out of Toronto, which is a major global hub, Montreal, transatlantic, and Vancouver, transpacific, and really really well strategically placed and have the ability to carry traffic to those 200 destinations I was mentioning. Great partnerships, United, Lufthansa, Emirates, and the list goes on. Sixth Freedom is a big opportunity for us as well. We sit above the most affluent travel market in the world, 40 million Canadians, 400 million Americans. So even a 1% access to that market represents almost 10% addressable market for us. So every time we can move additional traffic through our hubs, it's very powerful. We have a cargo operation. We've built that up. It's mostly 767 converted aircraft, a couple of new ones as well, leased.
We're up to, I think, seven total operating aircraft at this point in time. We really use that to enable the belly freight from the network. Those are dedicated freighter routes. They take traffic up through, you know, destinations we may not fly with a lot of frequency, South America being a good example, of parts of the U.S., and then bring that traffic into the belly freight across our whole network. Other great tools, but I will stop on one Aeroplan. It's probably the best loyalty program in Canada, bar none, and it's one of the best programs anywhere, in fact.
Out of the 40 million Canadians, about 8 million members in total, that also includes about 1 million Americans that are signed up to the travel program or the Aeroplan card. And it's a great program. It interacts with every part of your life, the typical groceries, fuel, as well as travel, and Starbucks, other examples. We bought that franchise back in 2019. It was independently owned and run. It's now part of our Air Canada franchise. It's 100% owned since 2019, and it's kind of doubled, if not more, in size since that time. So tremendous progress on Aeroplan. I'll stop here for a minute and just talk about our incredible workforce. I mean, we've been voted the best employer in Montreal many years running.
We're always among the best Canadian employers. Great skilled workforce and rebuilding from some of the challenges of the pandemic as well. So that's now built fully back to... We're fully back at pre-pandemic levels and then some in training as well. So, you know, diversified and fantastic group of people that support customers every day. I think it's worth spending a quick minute here on the balance sheet. So I talked about 2023 being a record year, and we've put our balance sheet in great shape. We were just about 1x leverage in 2019 as we entered the pandemic. We're 1.1x leverage at the end of 2023.
So we've come down from, you know, I think it was 5.1 at the end of December 2022, an incredible improvement over the year. But we've deployed most of the free cash flow that we generated over the last 18 months, I would say, to debt reduction. So, that's been very helpful, and it keeps our cost of capital and cost of debt very much in check. Also have an incredible unencumbered asset pool. This does not include the loyalty program, so that would be accretive to whatever is here. But that's $ 6.6 billion worth of fully owned assets that are unencumbered, half of that being aircraft.
We've been also taking some, you know, that debt from the aircraft off over the last 18 months, about $ 1.3 billion worth that we've removed liens on. So adds to the unencumbered asset pool of $ 6.6 billion. So the total there at the end of 2023. And then I would say that, from a liquidity point of view, standing at 10.3, there's a billion-dollar revolver in there, so $ 9 billion plus of cash. And, more than what we need right now, I would say that's, that's the next opportunity for us, is to continue to deploy the cash. We have some opportunities.
We're in the market as we speak right now, and we'll be taking down term loan debt that we have that we'll be able to, one, reprice, squeeze in, which we think will be very beneficial, and we'll take some down, probably deploy about $ 1.5 billion, so about $1 billion or so. And that'll be good as well for interest costs, so use up some of that liquidity. And then we're going to come into a little bit of a CapEx cycle, and then concurrent with that, probably looking at how we continue to have shareholder participation in our growth and in our cash flows. So 2024 guidance, we gave this at the Q4 call, I think, mid-February.
Capacity up 6%-8%, and, you know, that number is a little bit under pressure from just general supply chain OEM challenges. So, we would have probably sized that up a little bit if you would have asked me this question in the fall. I think all things considered, now the 6%-8% is the right place to be, and we feel good about being able to deliver that, and we'll monitor it all year. The CASM will be 2.5%-4.5% higher. We gave some color about that on our Q4 call. And if there's any questions, I can take them here today.
But generally speaking, the way I would say it is that we see kind of general inflation, the cost, general cost structure growth being offset by productivity and efficiency within the airline. So as capacity grows, as we get back to normal operations, kind of taking off whatever you would have as an inflation estimate, say 3% or so, and then the upside coming from really some more bespoke items. We have a pilot negotiation, so we'll see some wage movement there. But we have some APPR rules in Canada coming in, so we see some pressure and some of the airport infrastructure costs, as a lot of our Canadian major hubs are going to be going through some expansion and growth programs. We expect to see some cost growth on those.
That really explains the 2.5%-4.5% for 2024. I should finish with that. The earnings guide is $ 3.7-$ 4.2. So if you think about it, this year we finished $ 3.98. So it kind of hits that kind of midpoint as being the year-over-year flattish, but with a downside to $ 3.7 and an upside to $ 4.2, depending on where we come in on capacity and how we do on the cost. I'll end it here, and then I'll turn it over to the team for some questions, and we can dive into anything you'd like. But you know, we're in a really, really great spot.
We've come through 2023, and I would say 2023 was a surprise to the upside on the... We came into the year with a lower guide and then finished strong as we improved throughout the year in terms of capacity load, good yield environment as well, and the ability to really get operations back to almost 100 billion ASMs. We see that continued capacity growth into 2024, and we're bringing on some new aircraft, and we're certainly getting even more synchronized in terms of an entire ecosystem on the airline side in Canada. Our strength really comes through many features, but the hub structure is fantastic. Those three geographic hubs distributed east to west. Fleet investments are well on track and will bring the right kind of capacity.
The brand strength is very high, and our loyalty program is really a, among the best anywhere, and certainly among the very best in Canada. It's fascinating. Aeroplan, actually, I think the number is about 10% of all consumer credit transactions flow through an Aeroplan member, one way or the other. So that's pretty impressive in terms of participation in the Canadian economy from a consumer perspective. Balance sheet looks great, and we have a lot of resiliency with the unencumbered assets, the liquidity, and the low debt. We will continue to execute well. We believe that 2024, 2025, 2026 will all be good years for us to continue to grow capacity and bring those aircraft into service and continue to serve even more international routes and grow the international business.
With that, I think, Mark and Jamie, I'll turn it to you for questions.
All right, will do. Come sit down with us, John?
Yeah. Oh, that's great. Okay. Thank you. Feel better, yeah.
So building on some of the topics that you touched on, I mean, loyalty, premium, international, those are the big themes both for Air Canada and here, you know, in the United States. Of those three buckets, though, I'm curious how each one evolved through COVID. I would assume that from here, international is what should have the most momentum, just owing to Canada's later than U.S. recovery.
Yeah.
Just kind of wondering how those three buckets evolved and what we should look forward to, going forward?
Yeah, great. So maybe I'll try to touch on each one of those questions. So from the capacity point of view, as I mentioned, right? So in simple terms, 2021 was complete wash. In the U.S., in the back of 2021, you start to see domestic travel come back, and 2022 is actually very strong in domestic travel, even though borders were still, in some cases, closed and so on. I think the U.S. has just more options for travelers, whether you want to go from, you know, the Northeast to Florida or Phoenix and, you know, the Rockies, and Canada has less of that. And we also had a lot of restrictions within the provinces as well, so it kind of closed off travel even within Canada.
So it really took us from a flat bottom, almost, for 18 months, and then started the recovery up. So we're about 90% now. During that period, we took the opportunity to actually take out some of the the older aircraft, the less efficient aircraft, and those that wouldn't serve the strategic mission of the future. So 767s came off, Embraers came off, 319s, and some classic 320s. So we're there. We probably get back to full capacity, I'm going to say run rate, end of the year, and then 2025, hopefully, will be the the kind of full restored capacity, which was about 112 billion ASMs back in 2019. So we did 99.5 in 2023. We guided 6-8, so it's almost like a midpoint-
Yes.
With then aircraft coming in, and as that kind of matures, we get more aircraft in 25, and that should see us through. When it comes to international, it's grown very strong. And like, you know, many other global carriers, we've seen a lot of good yield progression in that space. We're building the fleet, obviously, as an international carrier. You can see the 321 is a perfect example of that transatlantic capability. I don't know if I mentioned it here, but you know, Montreal being this kind of transatlantic hub, it really punches much higher than its above its weight. And those 321 XLRs are a great example of that, where you can fly Montreal deep into Europe, you know, Athens, Rome, Barcelona, and what have you.
The beauty of the A321 XLR is it allows us to move an A330, for example, that might do this seasonally full, but now you have an A321 that's a 220-passenger plus, and that can run a single aisle, very efficient route all year round. That's great for Canadian travelers. It's also great for the Sixth Freedom franchise. It allows an option for cross transatlantic with the A321, very efficient machine. The 787 is another good example of growing the international franchise. So Canada has about 500 million immigrants coming in per year, new entrants, 40 million people. That's a lot of relative size growth, and especially in those regions where it's happening. Since the pandemic, our international growth is about 25% cumulative.
So that's already a step change in and of itself and a lot of runway there left on this. Premium traffic is another great example. Premium cabin is doing very well, premium economy, but also the business class. In both cases, up, you know, I think it's 27% since the pre-pandemic, as if you want to use that as a benchmark, the levels. And so for us, a great way to also leverage Aeroplan, a great way to use that loyalty program, and we see a lot of interaction between premium and cabin usage and the loyalty programs. I guess, I'm not sure if there was any other part of that question that I-
No.
Well, and there was loyalty. If I can add a little bit of color on the Aeroplan, on what was then and what is now?
Yeah.
'Cause I think that's important, and we were talking about it just before the presentation. So we bought back Aeroplan in 2019, just before the pandemic. So it used to be third-party owned, we bought it back, and what we did during the pandemic is we actually used that time to transform the program, and we did very, very deep focus groups, interviews, surveys with our customers to understand the pain points, where the opportunities are. And so we transformed this program, and we launched it in November 2020. So we didn't do a big hoopla about it because it was November 2020, and nothing much was happening. But what you are seeing now is Aeroplan starting to flex its muscle with the new transformed program.
And so if you look back to what has changed over the last five years, John spoke about the increased membership that has almost doubled since the time we bought it back. When we look at redemptions and gross billings, those have also significantly increased since the purchase back in 2019. So that's an important differentiator when you look at the airline now versus what it was in 2019. The fleet is another one of them, Aeroplan's another, the expanded cargo offering is another, and then through that time, we've also continued to implement new technologies. One of the things that we completed during the pandemic was the implementation of the customer management system, which we had started before the pandemic and completed during the pandemic. So now we are operating on a much more modern system.
So when you look at what we are now versus where we were in 2019, you're basically looking at Air Canada 2.0, with a good balance sheet and good strategic assets as we emerge out of the pandemic, and also amplified with what we always had and still have, which is Rouge and Air Canada Vacations and so on.
Excellent.
Yeah.
Then, John, I'm gonna ask you a question that I asked you last week, or maybe it was two weeks ago in Miami, but I think it would be helpful, you know, for this audience. Why doesn't Air Canada have a low-cost competitor thorn in its side? Why don't you have a Ryanair or a Southwest from 10 years ago that gives you competitive grief? What's different about the market?
Yeah. So I'll talk first about the just the landscape relative to Canada versus Europe and the United States, and a little bit about Air Canada and how we also compete. But, I think, you know, first and foremost, 40 million Canadians is not 350 million Europeans or 350 million Americans. Density of population, we're a ribbon across the border with the U.S., so it's a large geography to cover with a more sparsely populated demographic geography. And, we do also have fairly, you know, a lot of region, you know, small cities, towns that are in off of that ribbon in the border.
And so, if you take just the demographics, geography, and you couple that with the fact that the airport infrastructure in Canada is also very different, and I'll bring all these things together in a second, but, airports in Canada are, they are, they're funded, they're self-sufficient. So they are—basically, they, they generate revenues from, airline traffic, and they pay for all of their own operating costs plus expansion costs, and they use their balance sheet to do so. In the U.S., that—those are typically, federally funded through, the tax base. So the result of that is that you do have a higher cost structure for airports, number one.
There aren't secondary cities of great size, enough of them, and there aren't secondary airports in the larger cities, so you can't really construct a low-cost offering the way that you would normally do so in Europe or in the U.S., and therefore, have a very low ticket price to fly a, you know, high-pitch aircraft fully loaded, maybe once a day or twice a day, and continue that route. You just wouldn't be able to fill it, and you wouldn't be able to do so economically. The challenge is that you need to have a regional solution. We do have Jazz, our regional CPA, that brings traffic into our hubs. We're obviously an international carrier, so that makes a difference.
We're able to use some of that domestic traffic for international traffic as well. And so there are niche competitors, WestJet being the other major, I would say, in Canada. So you have Air Canada, you have WestJet, so good competitive landscape. You have some other niche players. We did have a small airline, Lynx, that filed for bankruptcy, I think, a couple of weeks back.
Yeah.
They had nine aircraft in service. They had some orders for more. There was, at that time, I would say, too much capacity coming into the system than the system could bear, particularly domestic or even some transborder. So I would say that just we're not built as a country, as a demographic, as a geography, for the same kind of, ULCC, benefits that you could bring. And as a result, what we do is we provide Rouge as our, our discount to airline leisure. We also offer, on flights, we offer a small percentage of seats at very basic fares that allow people to make a choice, remain within Aero, Air Canada or Aeroplan, but fly a, a basic fare.
And then we obviously leverage things like our regional network, Jazz, and so on and so forth, to keep costs down and to fly passengers through the country.
Excellent. Thank you for that.
Thank you.
John, let me ask you a little bit about what you referred to with the term loan refi and the use of cash to pay down. I think you have a call at 12:15 P.M.
I do.
About an hour, a lender call-
Yeah.
for any of you interested.
Yeah.
We're working on that with you. And, so maybe just talk about the thought process about using that excess cash to pay down some of that debt, what you hope to save and how it all ties into. You showed the chart with the CapEx spike in 2025, right? Or 2026, I think it was, where 'cause your delivery has been pushed back and so forth. So how should we think about the $ence of your leverage that you showed us? 'Cause it's come down tremendously.
Yes.
I mean, from over 5 times to barely over 1 times on a net basis, right? So, maybe just talk about how that's gonna play out over the next couple of years as you head towards that CapEx spike.
Yeah. Fantastic. So I think first and foremost, just on the current activity, Term Loan B is about $2.2 billion. And, probably, you know, we'll get maybe to cut that in half, I think, is what will come out of the next couple of days here or so. So the interest savings on that will be important. We do get a pretty good return on cash on hand these days as well, so there was an offset. So holding that liquidity was not usually punitive on a net-net basis, but certainly taking down the $1 billion of US debts or whatever, is $ 1.5 billion, is gonna be helpful at, you know, whatever the, you know, the rate was +350.
So, you know, that's significant savings, even if some of that's given up on, on the deposits. We'll likely get a pretty good squeeze on the actual rate on the remaining debt, so that's gonna be helpful as well. So, you know, that's a mind towards just making sure that we have sustainable, strong cash flow structurally, and, managing, interest costs and doing that with the liquidity we have. We've been doing that well. We started with aircraft financing that was more expensive, variable cost, financing, last year. We took out a convertible bond that has its implicit cost of equity in there, so that's come off as well, most of it. We had a $750 million outstanding U.S. bond. I think we have $250 million or $270 million left.
274 left, and, you know, that's just holders that want to hang on to it, so we try to take everything else that we could out. This piece of debt that comes out will be helpful as well. And as we look forward, so we're at a place now that admittedly a little bit more liquidity than we need. We're facing some additional CapEx requirements coming up. I think we'll still be able to generate solid cash flows, especially as we look at 2024, and moving into, probably, you know, next year, and then get into a bit of a bubble the year after. So some of that will be, you know, financed. Some of that might end up being some sales leaseback type transactions.
But I think ultimately, when we look at the leverage, you know, we've always maintained a pretty disciplined approach to the balance sheet. We had an objective of 1.5 times leverage when we started the recovery and said, "We need to get back to a 1.5 times." We did that faster.
Mm-hmm.
I'd say that, generally speaking, I'd feel comfortable around that number. So we have some wiggle room here to be able to do some, you know, some capital allocation, decision-making strategically and still maintain very strong leverage ratio and still be able to generate cash flows.
So where it is now, with that CapEx site coming and so forth, it'll float back up towards that 1.5x, but doesn't need to get above that? You think you'd be able to keep it right about there?
Yeah, and I would say, you know, not to the last decimal-
Right.
But, you know, kind of mid one.
Okay.
You know, so plus, minus.
When we think about the delivery $ence at this point, when are the next aircraft that you haven't circled up, you know, primary financing? I know you have backup financing, but, you know, when should we think about when you're next gonna look to do a WETC or capital markets transaction to fund airplanes?
Yeah, it's a good question. So the first set of aircraft coming are the A220s.
Mm-hmm.
We have some opportunities with EDC, which is the kind of export development agency in Canada that allows for some efficient financing on those aircraft, probably. We'll see what we do. Then, we get into 321s and the 787s, and I think, you know, at that point in time, that, that'll be kind of, I'd say, you know, 26 deliveries, maybe late 2025. So probably we're 12 months away from having to start looking at that market and those opportunities. And I'd say that there's some component to those aircraft that probably we will use WETCs or-
Okay.
or something like that.
Market's dying for WETCs supplies.
I know. I know.
Waiting for someone to come and do something.
Yeah, I heard about all, yeah, in Miami.
Uh.
All people were asking me about.
So, want to-
We'll have some supply for sure.
We have a question from the floor.
Yes.
Mike's right there.
James, have a couple questions for you. First is, can you comment on the Transat pilot wage agreement and what your expectations are for your contract renewal? And secondly, can you discuss any operational issues you have at Pearson right now?
Sure.
I mean, what are all the problems you're dealing with at that airport?
... Okay, fair. So I think, two good questions. One, I think on pilots, you know, I'd say that, there's been a lot of kind of points set on the charts in the last couple of years here, and WestJet was a Canadian competitor that went, to a deal last year. You know, we're gonna, we're gonna obviously, we're sitting at the table negotiating. We're well into that conversation, and, I, I won't make many comments on, on what the ultimate expectations are gonna be, but I think what you should, you know, take some comfort in is that the 2024 guide has reflected our expectation of, of the movement, in pilot wages. So would reflect a full year of the agreement, to the best, you know, estimates that we could, we could come to.
The other thing I'll say is that, you know, we value our pilots, and we fully expect that Air Canada will remain the best, the best pilot career opportunity in Canada, bar none. Starting right from regional right through to captaining a wide body aircraft. And, you know, as you can see, we're adding a 787, so that fleet will continue to grow. So, our view is that we had an... I think it was a 10-year agreement before this one, and we've had good relationships.
We wanna get through the labor conversation over the next couple of quarters here and see what happens, and hopefully, we can exit 2024 with a great new deal, where everybody's a winner, and the airline has opportunities for long-term growth. Pearson, very quickly, I'd say that you know, there's a lot of expansion and growth opportunities for Pearson in the GTAA, and they are making investments. I don't have anything to particularly call out with respect to... I think the challenges for all hubs, including Pearson, particularly, were in 2022 and some parts of 2023. A lot of the ecosystem is restoring itself. I think the passenger experience is improving.
We can always do better on on-time performance. We're working very hard on that, and we have, we've had better numbers every quarter sequentially, and including Q1 this year, so far. And of course, as our experience at Pearson goes, so does Air Canada's experience overall go. So nothing to call out here that I would, you know, hold them out on, but I would say that the big opportunities, and it's embedded a little bit in this airport infrastructure cost growth that we're seeing, is the ability to continue to expand and modernize our major hubs, so Montreal, Toronto, and Vancouver. And it's gonna be money well spent, even if it's a bit of pressure to the P&L. This one right here.
Thanks. I really enjoyed the presentation. You mentioned your attention to dedicated cargo aircraft. You're probably the largest airline in North America-
Yes.
that is a passenger airline that has dedicated cargo aircraft.
Yes.
Is it possible that cargo becomes a very large percentage of your business, like 15%-20%, if you look out to 2030? Because you're kind of uniquely positioned because of the geography and not competing with the FedEx or UPS in the Canadian market-
Right.
with the pure dedicated. Is there a lot of upside there?
I would say that, as a percentage of the airline, probably not. Does it grow in line with the airline? Yes. I maybe a little bit of additional will come. We had 787-10s we bought, and they will offer significant additional freighter capacity in the belly. But yeah, what I would say is that our freighter operation is designed really to bring cargo in from geographies and regions where we don't fly a regularly scheduled flight. And I'll give you examples, you know, flowers from South America. So we'll take flowers from South America through a freighter, up the continent into our network, and then we will fly them out wherever they need to go.
So the strength of the freighter business is really in utilizing the capacity on the belly freight. To say that they would have an outsized expansion of freighter-dedicated operations, I'd say, is not so much as much as it would be in line with the growth of the total airline itself. And it's very lucrative business for us to load those bellies. It's incredibly profitable, and it also allows us to diversify revenues a little bit, which is also important to us.
Valerie and John, we're up against the clock. Thank you very much for making the trip and sharing your perspectives with us.
Thank you both.
Thank you.
Thanks for your time, guys. Thank you.