Good morning, ladies and gentlemen, and welcome to the Chorus Aviation Inc fourth quarter 2021 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 17th, 2022. I would now like to turn the conference over to Nathalie Megann, Vice President, Investor Relations. Please go ahead.
Thank you, operator. Hello, and thank you for joining us today for our fourth quarter and year-end 2021 conference call and audio webcast. With me today from Chorus are Joe Randell, President and Chief Executive Officer, and Gary Osborne, Chief Financial Officer. We'll start by giving a brief overview of the results and then go on to the questions from the analyst community. Because some of the discussion in this call may be forward-looking, I direct your attention to the caution regarding forward-looking statements and information which are subject to various risks, uncertainties, and assumptions that are included or referenced in our management's discussion and analysis of the results and operations of Chorus Aviation Inc. for the three months and year ended December 31, 2021, the outlook section and other sections of our MD&A where such statements appear.
In addition, some of the following discussion involves certain non-GAAP financial measures, including references to EBITDA, adjusted EBITDA, adjusted EBT, and adjusted net income. Please refer to our MD&A for a discussion relating to the use of such non-GAAP measures. I'll now turn the call over to Joe Randell.
Thank you, Nathalie Megann, and good morning, everyone. 2021 was a very productive year, and I'm pleased with our accomplishments, especially considering the prolonged pandemic. We started the year by revising our capacity purchase agreement, or CPA, with Air Canada that enhanced Jazz's position as the exclusive Air Canada Express operator of 70-78-seat regional capacity until the end of 2025, and we added 25 Embraer 175s to the covered fleet. We are now the sole provider of Air Canada Express services, and the relationship has never been stronger. A reminder, our CPA with Air Canada continues to 2035. We strategically managed our liquidity through successful capital raises and reduced our net debt by approximately CAD 240 million to recharge our financial flexibility. We continue to generate positive cash flow and have the resources required to focus on profitable growth.
While airlines around the world are still challenged to return to pre-COVID profitability, our fourth quarter yielded positive returns of CAD 0.06 in net earnings per basic share, or CAD 0.12 on an adjusted basis. Our employees have shown tremendous resilience throughout this crisis and have provided safe and high-quality services to our customers. I'm deeply grateful for their perseverance and dedication. Voyageur had a record year in 2021, having secured new contracts that expanded cargo operations with Purolator and developed new relationships with blue-chip customers like Transport Canada, the Canadian Armed Forces, and General Dynamics Mission Systems –Canada. The team is executing very well, and the momentum they gained in the year will continue to positively impact earnings throughout 2022 and beyond. Last month, Voyageur entered into an agreement with Sabena technics to provide on-site service support of Dash 8-400 aircraft through Voyageur's EXCL program.
This agreement extends our parts provisioning business into Europe, a key target market, and we're very pleased to welcome Sabena to our roster of high-quality customers. I also extend my congratulations to the team at Jazz for being recognized again this year for being named one of the best places to work in 2022 by Glassdoor Employees' Choice Award. This is an award that is based solely on the input of employees who elect to provide anonymous feedback about their job, work environment, and employer. Given the challenges and stress many of our employees have endured over the last two years, this is an incredible testament to the positive and can-do attitude of our people. The accolades don't stop there. Jazz was also recognized in January as one of Canada's top employers for young people for the 10th consecutive year. Congratulations to the team.
The Chorus Aviation Capital team has done well in a very challenging environment to support our customers and in remarketing all 13 aircraft repossessed in 2020. Quarter-over-quarter, we saw improvements in the overall utilization of our lease fleet and collected 83% of lease revenue recognized in the fourth quarter, up from 77% from the previous quarter. We view this as a positive sign that air travel demand is rebounding, particularly in the domestic markets where most of the lessees operate. Restrictions are gradually being lifted worldwide as more people become vaccinated and cases of COVID decline. The easing of travel and border measures announced earlier this week by the federal government is a positive step for our industry. However, more needs to be done. Thank you for listening, and now I'll turn the call over to Gary.
Thank you, Joe, and good morning. Here's how the fourth quarter of this year compares to the fourth quarter of 2020. We generated adjusted EBITDA of CAD 90.5 million, an increase of CAD 8.5 million over the prior year. Adjusted net income was CAD 21.5 million in this quarter, an increase of CAD 13.8 million to CAD 0.12 per basic share. The RAL segment's adjusted EBITDA increased by CAD 5.9 million due to additional aircraft earning lease revenue and a CAD 3.6 million lower expected credit loss provision, partially offset by lower lease revenue related to negotiated lease amendments and decreased earnings due to a lower U.S. exchange rate. The RAS segment's adjusted EBITDA increased by CAD 2.6 million. The fourth quarter results were impacted by an increase in other revenue due to an increase in third-party MRO activities, parts sales, and contract flying.
An increase in capitalization of major maintenance overhauls on owned aircraft, CAD 2.8 million, and an increase in aircraft leasing revenue under the CPA, offset by a decrease in fixed margin of CAD 2.4 million in accordance with the CPA and an increase in general administrative expenses attributable to increased operations. Adjusted net income of CAD 21.5 million for the quarter, an increase of CAD 13.8 million due to an CAD 8.5 million increase in adjusted EBITDA, as previously described. A decrease of CAD 5 million, primarily due to a decrease of unrealized and realized foreign exchange losses.
A decrease in depreciation expense of CAD 3.5 million, and an increase of CAD 1.7 million related to gains on property and equipment and asset-backed commercial paper, offset by a CAD 3.8 million increase in adjusted income tax expense and an increase in net interest costs of CAD 1.1 million. Net income increased CAD 1 million over the prior period, primarily due to the previously noted increase in adjusted net income of CAD 13.8 million, a decrease in impairment provisions of CAD 27 million, offset by a decrease in net unrealized foreign exchange gains, primarily on long-term debt of CAD 35.4 million, and a decrease in income tax recoveries on adjusted items of CAD 3.2 million. Now turning to liquidity.
As of December 31, 2021, Chorus's liquidity was CAD 188.5 million, including cash of CAD 123.6 million and CAD 64.9 million of available room on its operating credit facility. Liquidity decreased from the third quarter of 2021 by CAD 69.6 million, primarily due to the redemption of CAD 85 million principal amount of the 6% debentures, which was partially offset by a reduction in restricted cash. During the quarter, Chorus generated cash flow from operations of CAD 48.9 million. Other key liquidity changes during the quarter include items that increase cash flows are as follows: An increase in security deposits and maintenance reserves of CAD 20.1 million, a decrease in restricted cash of CAD 14.9 million.
Items that decrease cash flows are as follows: Scheduled debt repayments of CAD 50.2 million, repayment of the prior facility of CAD 30 million, capital expenditures of CAD 18.4 million, and an increase in working capital of CAD 17.4 million, driven by an increase in receivable from Air Canada, offset by accounts payable. As of December 31, 2021, the controllable cost guardrail receivable was CAD 44.9 million. The amount was paid in Q1 in accordance with the 2021 CPA amendment. As of December 31, 2021, CAC's gross lease receivable was CAD 84 million. The gross receivable may increase to approximately CAD 90 million by the end of 2022 due to rent relief arrangements and potential delays in payment.
Leverage decreased year over year due to an overall reduction in net debt of approximately CAD 240 million, partially offset by lower adjusted EBITDA of CAD 18 million. Adjusted net debt to adjusted EBITDA ratio went from 5.8 at the end of 2020 to 5.4 at the end of December 31, 2021. Before opening the call to questions from the analyst community, I would like to acknowledge the continued outstanding efforts of our team during 2021 in a challenging and evolving operating environment. That concludes my commentary. Thank you for listening. Operator, you can open the call to questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch tone phone. You'll hear a three-tone round acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Konark Gupta with Scotia Capital. Please go ahead.
Thanks, good morning, everyone. My first question is on your ability to rewrite any leasing contracts, you know, perhaps annually or in the short term as interest rates increase and the market conditions improve. Can you speak about the kind of the terms or the pricing terms you can renegotiate or re-talk with clients?
Hi, it's Gary here. On the aircraft leases, they're generally locked in once you sign the lease. As you can note in our disclosure, about 98% of our debt is fixed overall. It's all locked and works together. Once you've signed a lease though, it is locked in for the term essentially. We do expect in an increased interest rate environment that lease rates will rise accordingly. Generally speaking, there's certainly a correlation between lease rates and interest rates.
Makes sense. Thank you. You talked about gross lease receivables increasing again this year as relief measures kind of still continue. I'm just wondering if you can provide any visibility as to when do you think that lease receivable will peak. Will that be the end of this year? What's your visibility for when do you expect that receivable to be collected, in what time frame?
Yeah. It's Gary here. Yes, on the receivables, you can see our disclosure on that. We still have some deferral agreements that run into next year a little bit, and that's why you're seeing that guidance. The value, it will come down over time. It will take several years to extinguish. There's no question about that, but we're not giving the longer-term guidance other than this year, and then it will take several years to extinguish the receivables.
Okay. That's all my questions. Thank you.
Thank you. Your next question comes from Matthew Lee with Canaccord. Please go ahead.
Morning, and congrats on the quarter. I'd like to first ask about the options you've got to expand the leasing portfolio. You know, specifically, do you have a preference between acquiring assets, signing individual agreements, or maybe buying a competitor in the space?
Yeah. You know, generally speaking, we've been focused more on new sale and leaseback type of opportunities, but we're certainly not totally focused on that. We look at all opportunities, including, you know, mid-life aircraft, and, in some cases, older assets. As you know, we do have options as they come to end of life with our diversified business, et cetera. You know, we continue to talk with airlines, other leasing companies in terms of sourcing potential opportunities there where they're looking to diversify or to divest a part of their portfolio, et cetera. You know, we have a broad spectrum, and we'll continue to do that.
That's great. Maybe can you unpack the opportunities you're seeing in cargo? You know, obviously, the Purolator contract is a great start. But do you see that becoming a more meaningful part of the business going to 2022 and beyond?
Yeah. We certainly look for that to be a growing part of the business. You know, I think we're very pleased with our relationship with Purolator. It's been going very well. You know, we see that as an exciting opportunity for us. You know, we have converted some of our older Dash 8 passenger aircraft into freighters, and we do have a number of them available to do so. Again, it's related to the demand that we see. You know, we do see it as a growing part of our business and certainly opportunity there. We're making good progress. It's not a huge part of our business, but we'll continue to pursue it as a growth opportunity.
All right. Thanks.
Thank you. Your next question comes from David Ocampo with Cormark Securities. Please go ahead.
Thanks. Good morning, everyone.
Morning.
On your future leasing revenue, kind of assuming no new assets here, should we see growth in the upcoming quarters as repossessed aircraft are redeployed, or is this gonna be offset by the leases that you renegotiated, specifically, Aeromexico comes to mind?
It's Gary here, David. I think you'll see it be, you know, pretty steady, maybe a modest increase. It should be pretty steady. Most of the aircraft are back out now. As you know, they were remarketed during the course of the year, so there's a little bit of a time lag that you will see throughout there. Aeromexico is now emerged from bankruptcy or very close to it, and we should see a small uptick there. Steady to a small uptick.
Okay. You guys noted the bankruptcy of Philippine Airlines then coming out of Chapter 11. Kind of when you look at, you know, your remaining customers, are you aware of any other airlines that may be on the brink or in financial hardship right now?
No. I think the whole environment has improved, frankly, around the world with respect to carriers. You know, we've redone agreements with most of them, and those agreements are sticking. You know, there are still a couple of areas of the world which are struggling a little, but you know, we certainly believe that the worst is behind us. Of course, we've taken some provisions, as you know, in our financials, et cetera, which we think very well cover us in terms of where we are.
Okay. My last one here is for Gary. When I take a look at your leasing business's operating expenses after you strip out those one-time costs, it looks like it only came in at around CAD 2 million in the quarter. That's lower than basically anything that you guys have done over the last, you know, eight or 10 quarters or so. I was just curious if there's any one-time benefits in there, or is this a new number that we should expect going forward?
There's nothing that sticks out. I think, when you look at the quarter, you're starting to see the benefits of getting the aircraft back on lease and whatnot. You know, when you look at the overall results, I think, you know, the quarter's not a bad ticking off spot, particularly with the revenue and whatnot, so.
I guess in the past, Gary, you guys have mentioned that you target like an SG&A percentage of revenue. I forget what the number was. It was 7% or 10%. Is that still the right number going forward?
I think if you look at where the SG&A is year-to-date, it's gonna be higher as a percentage just as we refleet, you know, repositioned our fleet. Then as we grow, you know, we would wanna get below 10%, sure, in the next number of quarters. It's gonna take time to grow into that. The infrastructure's still there. It's just if you go back and look, we've taken some hits on the revenue and we've adjusted now for that. Moving forward as we grow, we'll get back to something more normal.
Okay. That's it for me. Thanks so much.
Thank you. Your next question comes from Tim James with TD Securities. Please go ahead.
Thanks. Good morning, everyone.
Yep.
Quick question on the Air Canada trade receivable. I realize it fluctuates around quarter to quarter. It was up a fair bit more than it was at the end of 2020. Is there a particular reason for that?
It's Gary here. The guardrail was pretty significant there in the quarter, as you saw in our disclosure. As you know, it's a CAD 20 million cap, so it grew a fair bit in the quarter, and that's what the bulk of that would be, that you saw. Then, of course, that was paid here in Q1. It reset itself to zero.
Gary, so I understand correctly, the guardrail receivable is included in that disclosure that you have on the total, I guess, total Air Canada trade receivable. Is that right?
I believe so. If you're looking at the financial statements in the back or.
Yeah, just the number. I think it was, I mean, must include more, I believe, than the guardrail receivable. I'm just wondering.
Yes. It should be included there.
That significant change in it from year-end to year-end would be related to the guardrail component of it specifically.
That certainly built up in the end of the quarter. The other thing is there's normal receivables that make their way through there, whatever they may be, so related to the operation. The guardrail is a significant component of it.
My next question, just on the your new aircraft acquisition plans for 2022, and you've indicated kind of CAD 300 million-CAD 400 million. I'm just wondering if you can comment at all on any particular aircraft types that you think look particularly attractive this year, or where there may be opportunities, whether it's by OEM or by, you know, jet versus turboprop, size, any kind of defining characteristics that you see as you look out to the balance of the year.
Right. Well, you know, I think we've been saying all along that we find the larger regional jets to be particularly attractive, and sort of the crossover aircraft, which are the A220s, I think the E2s, in particular. You know, the turboprops are taking a while to pick up the surplus that's in the market, although you may have seen recently that ATR is going to be upping its production and actually moving more into the freighter side as well, which is interesting. You know, and of course, the 75-seat jets are generally still in good demand, especially, you know, in the U.S., et cetera. But of course, those would be primarily used assets, et cetera.
You know, I think what's particularly interesting are the new generation regional jets on the larger side, you know, over 100 seats.
Maybe if I could just follow on to that, just particularly the A220, there's been more activity and demand.
Yeah.
For new aircraft recently. You know, of course, dip their toe in the water there with a few aircraft. Do you think that is something that continues to grow in proportion or have an increasing contribution to lease revenue for Chorus? Or is it a bit of a more competitive market, or is there any dynamic that maybe makes it less attractive?
Well, it's certainly a competitive market. You know, there's no question about it, but I do see it becoming a larger part going forward. You know, you have these mid-range airlines that are operating and looking to move to these new technology, larger regional jets. You know, those would be, in particular, in our target group. You know, when you look at huge buys from large carriers, you know, quite often that's the ground that the larger leasing companies play in. You know, in that, in this particular market, I think we'll be more of a niche player. There are clearly carriers that are moving in that direction that would fit the type of carrier profile that we would target.
You know, as you can see, we have five airplanes with airBaltic there, and airBaltic is, you know, a great example of a niche player that's, you know, been very successful, very supported in its home market, et cetera. You know, and there are other opportunities such as those that we would pursue.
Great. Thank you very much.
Okay. Thanks, Tim.
Thank you. Your next question comes from Walter Spracklin with RBC Capital Markets. Please go ahead.
Yeah, thanks very much. Good morning, everyone, and congratulations on those recognitions. I know in the airline industry, it's a tough one through COVID to get recognized that way, so congratulations. Moving on to the questions, and really I have two, and they're core to kind of our view on your company. The first one is that, you know, as we go through what I hope is the tail end of COVID, you know, we are gonna see a pickup in activity, and it's gonna be first and foremost in the short haul regional friends and family. On your results, the fourth quarter suggested that, but now your guidance on Q1 obviously down due to Omicron.
My sense is, you know, I hope that Omicron is kinda just, you know, a temporary aspect in your financials and that the second quarter and forward, in fact, come back along the lines of what we were seeing last fall. When you look at your booking curve, is that supportive or contradictory to that view, is my question.
Okay, that's a very good question, Walter. You know, our equivalent to a booking curve is the number of block hours we fly, because, you know, we don't have, as you know, Air Canada has the commercial side of the business in terms of load factors and bookings, et cetera. That all translates to us in terms of block hours flown. I do have some numbers that I can share with you that I think clearly demonstrates pretty much what you're talking about. In the fourth quarter last year, when you compare it to pre-pandemic in 2019, we operated about 75% of the block hours we did pre-pandemic. It was definitely up. The fourth quarter was going well, et cetera. Then Omicron struck.
It looks as though from what we've actually flown, and we're starting to see some pickup numbers even in March, that the first quarter now we'll be at about 60% of where we were pre-pandemic. So obviously it has fallen and, you know, when we look at our numbers, that was the impact of the pandemic, of the Omicron, I should say. Then, though, when we look at the second quarter of this year, we're looking at actually the hours that we're planning on right now are about 87% of pre-pandemic. So you can see that while there is a drop in the first quarter as a result of Omicron, I think there's reason to believe that now things are going to pick back up, and we're going to get to where we were pre-Omicron and plus.
I think those numbers will give you some indication that, you know, in terms of our outlook, yeah, first quarter, not so great because of these block hours, but definitely recovering. The other thing, you know, to remind people of as well is that we're paid a fixed amount, and it really doesn't matter how many block hours. Of course, while we watch this carefully because it's sort of a bellwether of how the industry is going, it doesn't necessarily manifest itself in our results, you know, which are generally fixed.
Okay. That is excellent information. I think exactly what I was looking for, so thank you for that, Joe. That's perfect. On the second part of our view, and again, I'll kind of frame the question the same way. It's our view that you know, stretched balance sheets among airlines will not allow them to go out and kind of buy up aircraft left, right, and center, and perhaps leasing will be an opportunity they use in perhaps and likely in their early months and quarters and years to ramp up quickly and to be able to ramp up at all, quite frankly, given their stretched balance sheet.
Obviously you gotta get your collections back first, and the trend there is good, you know, what we've seen in the last three quarters. You've highlighted a few wins here. I guess my question is the same thing, is when you look at your sales channel in that segment, are we getting to a point where you can look down the road and say, "Hey, that is true. Airlines are going to be leasing a lot and perhaps and likely more than they did pre-pandemic." And is there any visibility that you have that could confirm or deny that kind of view?
Yeah. I think what you're saying is very true. I think more airlines will do this with their damaged balance sheets, et cetera. A lot of them have been pretty cautious in terms of adding new aircraft or capacity, et cetera. There are some aircraft to absorb in the marketplace that were grounded as a result of the pandemic. I think what we're seeing though is we've seen more or less especially in the regional side, maybe not totally in the narrow body, wide body, but in the regional side, there's been I think a little bit of a shoring up over this last little while on some of the lease rates that we're seeing out there. Some of the reports that we're seeing shows that you know it has in fact bottomed out.
I think we're going to see the increase. You know, this is barring any unforeseen, another variant or a world crisis or something like that. You know, there will be that uptake or uptick. You know, we are getting inbound inquiries from airlines now looking to do, you know, more leasing business, et cetera. So very good signs of recovery in the market.
Okay. That's great information, Joe. I really appreciate your time.
No problem. Thank you.
Thank you. Your next question comes from Cameron Doerksen with National Bank. Please go ahead.
Thanks very much. Good morning. You know, I obviously there's been some press reports out there regarding potential M&A. I appreciate that you're not going to comment specifically on those reports. Maybe a bigger picture question for you, just with regards to, you know, what if you were to pursue the M&A route to grow your portfolio, you know, what potential synergies do you see or strategic advantage would there be for your leasing business to have that greater scale? Maybe just comment on sort of the, you know, more generically on what the potential upside could be to the business if you were to pursue that route.
Yeah. Like we said, you know, we're not going to respond on speculation and that sort of thing. However, you know, I think it makes sense that more scale brings advantages in terms of a larger leasing platform with manufacturers, with financing, larger orders, you know, things of that nature. You know, there's been dislocation in the market for sure, with some of the larger lessors. You know, there's still a lot of assets out there to be picked up, and there's no shortage of rumors and speculation. You know, we're certainly keeping our eye on all these things and looking for opportunities that make sense for Chorus. You know, we'll continue to do that.
Through that, we would bring and look to bring in some of the advantages that could come from, you know, from any possibility. We continue to look at it. No comment at this point because, you know, there's a lot of speculation, but we'll just keep it at that.
Do you think it matters to an airline who they're leasing from? I mean, do they prefer to deal with a bigger lessor versus maybe a smaller player, or does it make any difference to them?
I don't think it makes a lot of difference. Obviously, larger lessors can do bigger deals. In some cases, larger airlines don't want to do a whole bunch of small deals. You know, we have leases with large airlines as well. A lot of it is relationship based. You know, it's who you know in the industry and getting in there and getting in the competitive process. You know, a lot of it is driven by that. You know, our focus has been primarily not on the very, very large carriers, but on the mid to smaller side. We're quite comfortable in that niche.
Okay. No, great. Maybe just a quick second question. You've got a number of aircraft there that will be available for part out. Just wondering what you're seeing in the part out market. I mean, obviously airlines around the world are starting to fly a little more. I mean, is there some acceleration of demand for part out opportunities here?
Yeah, there has been some acceleration of demand, and we continue to part out aircraft. We're very pleased with that business. You know, we see it as a good part of our business going forward. It really, you know, it really helps when we look at the whole life cycle of the aircraft, which is what we've been talking about for a while. We do have a number of older airplanes sitting there, and we look at each as a part out opportunity. We have done a number, and we'll continue to do it. There's good demand in that area, and we see that recovering as well.
Okay. Perfect. Thanks very much.
Thank you. Your next question comes from Kevin Chiang with CIBC. Please go ahead.
Thanks for taking my question. Just looking at some of, I guess some of the growth spend you're looking at within your leasing business. I guess how much of this is, you know, you looking at, you know, more sustainable recovery in the aviation space, versus, you know, maybe taking advantage from a market that seems to be a little bit more advantageous for you? I look at like Nordic Aviation seems to be facing significant issues. Is there like a market share grab opportunity here that this window's opened and that's driving maybe more aggressive a more aggressive stance for you to take advantage of maybe where your competitors sit today?
Yeah. Well, market share for us is secondary. You know, what we do is we look at each deal in terms of the financial aspects of the deal, the creditworthiness of the customer. Of course, what we've been balancing that all against is our own liquidity as we move through here in our own balance sheet, et cetera. You know, while market share is nice to have, you know, we've seen some large lessors with major market share that have not been successful. You know, we're being very prudent and very careful. That's the best way I can describe it, I think.
Is it, maybe for lack of a better word, a buyer's market for you? You know, for example, like Nordic, you know, I think they wrote down like a third of their asset portfolio. I think they're gonna look to sell planes, which I suspect, you know, they're not in a great negotiating position. You know, so as a buyer of these aircraft, are you finding, you know, that to be more compelling from an economic perspective so that even though lease rates might be a little bit challenged here, you're still getting that ROE that you typically target?
Yeah. Well, you know, whenever there are buying opportunities, you have to look at the asset. You have to look at the deployment of the asset because, you know, if you buy these assets and you don't have a home for them, then it ties up a lot of cash. There are a lot of surplus assets out there right now. So in each case, you also have to look at if they're coming with leases attached, how long the lease is, quality of the carrier again. You know, there are some credits that are out there that have very much struggled and continue to do so. We need to be very, very careful. While they are buy opportunities, what we don't wanna do is take on, you know, some of these opportunities, and then they become problems.
We wanna make sure whenever we act on something like this, that we have a plan.
Maybe just last one from me. You know, when you think of growing the portfolio, and I think of maybe your strategy pre-pandemic, it was you know, trying to be diverse across geographies, across aircraft type, across customers. Obviously that makes sense when you're building a portfolio. I think, to state the obvious, there's gonna be an uneven recovery in the aviation market when you look at region by region. Does that kind of shape how you want your portfolio to be? Like, do you try to limit aircraft that or your exposure to maybe Asia-Pacific, which is expected to lag in the recovery?
You know, is your preference to put more planes into say, North America and Europe, where the recovery might be faster? Just, you know, is
Yeah.
Is there a little bit more thoughtfulness? I won't say thoughtfulness, but is there maybe a little bit more focus on maybe what geographies you want in your portfolio as the overall market recovers?
Yeah. Generally speaking, you know, it's great. Diversification is wonderful, all things being equal, but all things are not necessarily equal in terms of geographies and carriers. You know, we're cautious if something is struggling and, you know, it looks as though it's gonna take some time. Then we'll look at that extra carefully. Of course, if it's a geography or a carrier that is robust and has come back pretty quickly, you know, we'll look at that opportunity more favorably. You know, in the short term, as the world has an uneven recovery and carriers are uneven, you know, we'll tend to go more to where the real, you know, the floor is there and we're comfortable with the investment.
As I said, you know, some of these continue to struggle. Parts of the world are certainly not out of it yet. I don't think the world is, but it's headed in the right direction.
Yeah. That's very helpful for me. Thank you very much for taking my question.
Thank you. Ladies and gentlemen, as a final reminder, should you have any questions, please press star one.
Okay, operator, it seems there are no questions, so we will conclude the call. Thank you everyone for joining us today, and we look forward to speaking with you again soon.
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