1Perfect. Hopefully that gave people a flavor of, of Blade, their product suite. You know, Rob, maybe just start, for those who might be kind of watching and are new to the story, give some background on the company got started, kind of with the original mission, and then kind of where it has evolved to today.
Sure. We started the company in 2014, to build the entire ecosystem that was required for air- urban air mobility, without the air- without actually owning aircraft, operating them, or maintaining them, and there are really three pillars to that. There's a technology stack that goes from consumer to cockpit. So it's everything from the consumer-facing app to operator dashboards, and that, how we communicate with our, our helicopter operators. Then even in cockpit, where we compute weight and balance, and allow turns of helicopters to happen real- to happen really quickly. Also, the, the, the consumer-facing app obviously is a great way to aggregate customers and improve utilization, as opposed to the way it was done, years before Blade, where you really only had a charter product. The second, piece is, exclusive terminal infrastructure.
Not only do you need places to land, but you need places where you can aggregate people. You know, if you think about BLADE Airport, where we fly between Manhattan and the New York area airports, we're running flights constantly to Newark, to JFK. They can overlap every five minutes, you need to aggregate passengers, you know, assess luggage, bring them out to the tarmac safely, so you can get that kind of volume. This infrastructure that we now have 16 lounges across the world is extremely important to the business. Finally, it just, you know, we have a very strong brand, and we have routes that are focused on regions that are scalable and that are profitable using conventional aircraft.
The idea was always to build this, this entire ecosystem from the technology, the infrastructure, the brand, aggregate a lot of consumers, flyers, that is. Do it in all the places in the world where this product is really needed, where it saves time, it's reliable, and has a great experience. Prepare ourselves for electric vertical aircraft. By doing this an asset-light model, what we're able to do is to run a profitable business today, having all the pieces ready, so when electric vertical aircraft is here, it's just an asset swap. You know, you look at a comparison to the early days of Netflix when they sent you DVDs in bags, it might have been not the most efficient way of doing it, but they knew streaming was happening, and that was gonna widely increase distribution.
What, kind of what, what, what streaming was to Netflix, EVA, electric vertical aircraft, is to Blade. It unlocks a tremendous amount of value to us because they're quiet and they'll allow for more places for us to land. We are better positioned than anybody, as the largest operating urban air mobility company, in the world, to take advantage of that revolution. Today, we're not only dealing with the kind of precious cargo of humans, but we're also doing the precious cargo of organ transplants. We're the largest air transporter of human organs in the United States. It's now over 50%, of our business, flying all over the United States, working with almost every major hospital. We're, you know, saving hospitals, time and money, and improving patient outcomes.
On the passenger side, just to give you a little bit more detail, our distances are typically 10 to 100 miles, in areas where, you know, as we like to say, that are either geographically, you know, contested or highly congested, and that's, you know, Southern Europe, Northeastern United States, and Western Canada.
Great. I mean, look, when we think about you guys, we basically think about, this is the Uber model, this is the booking engine, this is the matching engine. You've attacked, basically equipment that historically has been underutilized, i.e., sitting around, you know, either an owner who has it and was not using it at full capacity, and maybe they were chartering it out, but still wasn't being fully used. The ability to sell by the seat, and so by improving utilization, you could effectively bring a margin, and by selling by the seat, you can add a little bit of margin, but it's still more cost-effective. Look, I think most folks are super familiar, you know, again, with your Hamptons business, but really, you know, the breakthrough product ultimately should be the airport business.
you know, COVID, unfortunately, you know, kind of threw you a curveball and kind of slowed that business down, but, you know, maybe... You, you reported results this morning. I, I think we're at your record, airport flyers. I think you talked about the West Side to, the West Side, I think it's to JFK, JFK or Newark, but the West Side route now being profitable. You know, what, what really is the impediment for that, for the airport business to be 2, 3, 4x bigger than it is today?
k there's an impediment. I mean, we have, you know, no competition, or competition is ground, is Uber. We're now, you know, flights are as low as $195 or $95 with an Airport Pass. If you purchase one for, you know, basically $795, you fly unlimited for as little as $95. You know, we grew 65% in the second quarter, driven by volume and pricing versus last year. That's tremendous growth for something like this. And yeah, now we've had a full quarter of profitability on the West Side to JFK, and we're definitely, you know, we're in growth mode. Newark has got to get there, East Side to JFK's got to get there
What we've also do to accelerate that path to profitability, so the reason why it's in sight is, you know, our we've had average prices now as high as $300, and that's not that's not bringing prices up necessarily. That's different fare classes. That, you know, for people who are more cost-conscious, they can have a non-flexible fare. We have fares that you can get refunds. We have add-ons like excess luggage. We attach cars, so you can get to your destination quicker, and it's waiting for you, and it's staged.
Between the, the add-ons and the fare classes, as I said, the average seat price has gone up dramatically, and what that does is it lowers the number of seats you need to get to break even for utilization on a six-person helicopter, which is about, you know, 2.5 passengers. That's at a relatively low price point. I think it's, you know, there. I don't think there's any kind of issue with the product. It's, it's seamless. We have staff on the ground on both sides. In fact, two important things to note: it's more reliable than it's ever been, because now when you book, you actually put your pickup address in it, and if for whatever reason, your flight's canceled for inclement weather, there is a car at your pickup address.
We're gonna get people to basically think about, "When I, when I book Blade, I'm gonna get there the fastest possible way. It's gonna be by helicopter most of the time. If for whatever reason, there's weather, it's gonna be by car. That happens about 2.5 hours before your flight, so I'm gonna be there on time, no matter what." Additionally, in terms of customer acquisition, we are now, you know, three years ago, before COVID, we actually were competing with Uber. They were trying to do a helicopter service. It didn't necessarily work out. They didn't have the infrastructure. They pulled out. Today, we're actually marketing on the Uber app.
When you get into the Uber app, and you're going to JFK or Newark, it actually allows you to divert your, your car ride, to a Blade lounge and immediately take off to the airport if you're late, and we're seeing tons of diversions every week.
When did that start?
That started about, about one month ago.
Oh, I haven't seen that yet.
And so, you know, it's-
Maybe I've been lucky enough to not have to travel too much for business.
Well, if you're coming-
Look, just to that point.
Yeah
I don't think that's widely publicized, which goes to my point. You know, talk about what, where you are now with customer awareness for the airport and how ultimately you boost that, and, and how important are things like the airport, like the airline partnerships?
Yeah, so we l ook, we have a multi-pronged approach. You know, we have advertising on, obviously, digital. We have, you know, we have localized, very highly-targeted television advertising that I know you know, know about on, on certain networks. We're advertising in, in, in Ubers right now, basically straight on the app, highly targeted to people who come from hotels, from hotels. We're marketing directly to concierges. Concierges have their own portal where they can book flights for their customers, and then, as you mentioned, the airline partnerships. JetBlue, we're on the JetBlue app. If you're Mosaic Plus, you get free flights up to four free flights a year.
If you're TrueBlue, you get certain discounts, you literally see it right now in your JetBlue app if you opened it up. Now, I can tell you today, we're up to 20% JetBlue flyers coming through their loyalty program. I'm hoping to see more partnerships both here and abroad, because the more we can kind of combine these offerings, we get you at the moment of truth. When you're thinking about booking your flight, you're already taking care of your helicopter transfer. That's a, for some people, a much better usage case about how they think about the product versus the way other people think about it, where it's just like, "You know what? I don't want to drive on a fly. Get me to the airport." Luckily, our schedule's robust enough.
When you're going to the airport, we're doing it six days a week, 12 hours a day, so, you know, we can get you there when you wanna go or back.
In the quarter, your sales and marketing actually declined a point. Year-over-year was 4% of revenue versus five last year. Even with, again, you know, this increased awareness, you, you seem to be doing it cost-effectively. Let me ask you this: I mean, obviously, there's a big focus, you know, to get to, you know, to improving the profitability, you know, the loss ratio improved, you know, basically more than a factor of 2x year-over-year. As you get closer to profitability, will you be more willing to lean into, into marketing?
I think so. I think that we're doing... You know, look, it's, it really is about, we look at the lifetime value of a customer, obviously. They're flying multiple times. A lot of our marketing is now going to, because we have enough of an installed base, getting you to fly again. It is much cheaper for us to pay for marketing to get you to fly again than to acquire a new flyer, but we're doing both. You know, we're still, our new flyers are, are growing rapidly, more rapidly than our, our old flyers to a certain extent because of that massive growth. I think you'll see, you know, us lean into the airline partnerships, the hotel concierges, B2B, office buildings, where we have the entire office building getting this as a perk, corporate deals, things like that.
We want to get them at all, at all different points. I think the, you know, the other, other thing that was very interesting in terms of our marketing costs, declining, you know, as you know, in our New York leisure routes, a lot of key routes, we have 100% market share. We're so well-known, kind of as the Kleenex of kind of helicopters, so to speak, we actually don't need to market as a lot of our leisure routes. As you, as, as you probably know, we're just known, and so we pulled back on some of that, where it sort of, you know, this awareness really wasn't doing anything for us in some of our mature markets. Now we can move those to places where they can really be helpful, like airport and even in Europe.
Well, let's segue to Europe. I think you talked about, you know, the, the, the Europe acquisition, some of the integration maybe going a little bit slower. Just talk about kind of what's going on there and kind of how you're thinking about it, you know, going forward.
Sure. When I think about Europe, you know, I've always, I've always said, you know, "You'll never see from Blade a map of the world with red dots all over the place with all these places that you're flying." You know, you may hear about, you know, EVA, VTOL companies, you know, looking at flying between downtown Orlando and the airport. That, to us, is not a business. We need highly congested, geographically contested areas like New York, the northern, northeastern United States, specifically New York, Southern Europe, where you have mounds that have been using helicopters for tons of, you know, for 30, 40 years, longer, and then Western Canada, where you don't have a bridge between Vancouver and Victoria. It's either a ferry, a helicopter, or sometimes, depending on the time of day and season, a seaplane.
In Europe, This was one of the three major regions with a preexisting, robust, multimillion-dollar passenger helicopter business, and we went in and we purchased three out of the four competitors in that market. Obviously, it was a cross-border deal, three companies to integrate, a lot of regulatory issues that caused delays in terms of, you know, closing of the deal. We're flying intercountry between Monaco and Nice, which is in France, so Monaco and France. That required another layer of regulation, and I think now, we have a common brand under Blade. They're starting to embrace our technology. Concierges are extremely important there.
We're working hard with the concierge, so they understand Blade, they understand the product and the benefits, I think really what we're dealing with there is more of a delay than anything. It's still, you know, one of the most important leisure destinations in, in, in all of Europe. Helicopters are basically, you know, a glorified taxi to many. When you think about all those coastal towns from Monaco, Nice, Cannes, Saint-Tropez, In winter, we're flying Geneva to Courchevel. I continue to be incredibly excited about the business. It's just taking a little longer to get to where we wanted to be. You know, because the bulk of it is, is charter, there's, there's really, you know, there isn't the kind of utilization risk that maybe you have on fly-the-seat routes.
Also from a brand perspective, as you know, we work with lots of brands here in the United States where people pay to pour certain types of, you know, beverages, to partner with us, to brand helicopters. You know, the amount of opportunity we now have in terms of marketing deals where we get paid for, to get access to our consumers in Europe is really, really dramatic. I feel really good about it. We're, we're glad we did the transaction. Wish it was happening a little faster. We're gonna get there, and I think that, you know, come, it just- we're in the high season right now. You know, I'm optimistic about kind of our August performance. Then, you know, we'll get back on track.
We'll have winter in the Alps, and then we'll be back this summer, and hopefully, this coming summer in 2024, we'll see some solid numbers.
Last question, and then we'll go over to medical for a bit. Passenger growth margin in the quarter was 17%, up from 13%, so a 4-point improvement. Typically, the third quarter is your seasonally highest quarter for passenger growth margin. Just do we think? You know, again, you know, you are expanding routes. You're gonna start to do this New Jersey heliport to the city. You know, again, you wanna keep adding, you know, more scheduled flights on the, around the airport. Do, like, do you think from a, from a full year basis, we're at a point where passenger growth margins can continue now to grow each year on an annual basis?
Yeah, absolutely, and I wanna make clear that, you know, we're, now that we kind of have our sea legs in these key routes, I don't see any type of, you know, real growth in routes. I see growth in penetration of these routes, utilization, number of flights, number of passengers, different price points. May I make it clear, this Newport deal, which is incredible, it's the first heliport opened in the New York City area in 30 years, perhaps, that is gonna charter start out as a charter product, and then we'll integrate it in a way with airport that we're insulated from losing money, because we'll make sure we'll be using it as helicopters are coming from the airport or to the airport and such.
We have no interest in making that, you know, some kind of standalone route with complete exposure. We're highly sensitive to any, adding any kind of routes, because we really wanna enjoy the momentum.
You know, I would think that would be super interesting to Delta, who's trying to access the New Jersey consumer.
Yeah, very interesting to, to a company like Delta, and very interesting to people in New Jersey yeah, who, you know.
Well, you're in New Jersey...
It's very difficult to get to JFK.
that is a pretty aggressive ride.
Yeah.
Again, you know, United, what they've done in Newark, Delta, what they've done in JFK, you know, you could argue that that, that really especially with what Delta's trying to do with the branding of their, you know, premium loyalty program, again, it would, it would seem like it would make a lot of sense.
Then also, I agree, then also Eastern Long Island, we're seeing a lot of business on a weekly, weekly basis, without any marketing, from our new New Jersey location to the East Side of Long Island, because there are a lot of people from New Jersey who go there. Another very kind of contested route, difficult to get there, crossing a bunch of bridges and such. You're 100% right.
Let's talk about medical. Again, I think, you know, again, this, this business, you've really, like, I think, in a way, kind of looked at this because of COVID, because you were thinking about, you know, how do we get more utility out of the platform? You know, you did a very timely and smart acquisition. You know, we're, we're at a point where it's, you know, it's now growing. You know, we're, we're now seeing organic growth. You're gaining market share. I guess, you know, what do you think your share of the medical mobility market is in the U.S., maybe segmented in the areas within medical mobility that you operate in? Because different organs require different solutions. Just how do you think about the growth-...
You know, and constantly increasing profitability in, in that business going forward?
I think, you know, I, I view ourselves right now, it's tough to tough to really understand. There's so much fragmentation in the, in, in the market. I think we're we're in the 20s in terms of percentage market share. You know, and right now we're in a run rate of about over $120 million. It's actually bigger than our passenger business on a, on the revenue side, you know, based on our core Q2, you know, results.
I think that, you know, while typically people view this as the overall market only growing, you know, single-digit numbers, if you take a look at the public data from UNOS, that was about 18% growth, you know, in the last quarter, it's clear that, you know, we're gonna be seeing real double, you know, strong double-digit growth in the overall market. A lot of this is done, is due to perfusion devices, and we've been very active, you know, partnering with hospitals who wanna use these devices. And what a perfusion device does for those who are on the, on the call and may not know, they allow the organ to live out of the body, longer, by keeping them pumping, keeping, you know, blood flowing.
What's interesting about it is that, you know, by doing that, we can fly longer distances and service and, and save more lives and improve more patient outcomes. In fact, we did the very longest route, which was, moving an organ from, you know, moving from Boston to Alaska, actually, the world's longest air transport of a human organ for transplant. You're gonna see this continue to grow, the market. In addition, we have longer distance, smaller distances, and we're agnostic. There are lots of companies making these perfusion devices now, and we hope to service as many of them as, as possible. I think that, you know what? You know, you're right.
We started this during COVID because we weren't able to fly people, but, you know, or, you know, most organ movements were considered critical surgeries, and we were able to do that business. It sort of, you know, you know, necessity is the father of invention, and we were able to leverage our logistics platform, the people we have on the ground that are critical to getting doctors and organs on, on board aircraft, especially with perfusion devices. We also were able to leverage our helicopter business by having pilots that are on 24/7. Now the same helicopter that takes you to the airport is moving an organ and doctors at night, allowing the operator to amortize their fixed costs of insurance, pilots, annual salaries, you know, hangars, which lowered their operating costs and gave us better economics back to us.
It all kind of fits in, you know, pretty well. I think that, you know, we're getting better economics by leveraging the combined buying power of our entire customer base across all our network of operators. Size definitely beget size. The acquisition Trinity has been terrific because now we have basically, you know, the entire multimodality of transportation, from jets to helicopters to lights and sirens, SUVs, which are required to be successful in this business.
Let's talk about EVA for a bit. You know, I, I don't think anybody really knows when, when, when we're gonna be flying in them, but what's your best guess? When's your best guess when a consumer is gonna be able to fly in an EVA?
We'll start with that and then talk, tell, talk about why it's important. I think you're gonna start seeing them in 2026. I think they'll be certified around that time, there'll only be a couple, you know what I mean? It'll be a little bit like a showcase. We'll have one probably in New York, others may have one, using manufacturers, it'll be more of a showcase-type thing. I think when you read the paper that came out from the FAA administrator with respect to the timing of 2028, what they were saying was, this is not gonna be, you know, a major service of EVA alone until 2028. By the way, they'll be using existing infrastructure, which has always been our thesis.
If you take a look at a lot of the manufacturers, they're out saying that, you know, they maybe wanna run a service or they wanna build infrastructure. It's gonna take a long time for that infrastructure. We get, you know, a bunch of bites of the apple. We build our business right now, our brand, Blade, globally, you know, flying, you know, hundreds, you know, hundreds of thousands of, of consumers, of flyers, getting them comfortable with vertical transportation, building out our infrastructure, our technology, and we take that time, along with our medical business, to have a profitable business that shareholders can enjoy. Then in 2026, we'll start introducing, hopefully, some of these EVA into our fleet so people can see what they're like. We can figure out what the right missions are for them, the reliability and such.
In 2028, hopefully, we'll have more, but we'll still be using infrastructure that is largely exclusive to Blade. Then you have the great unlock, which is the fact that these EVA are quiet. We'll be able to open more landing zones, and every landing zone that you open exponentially increases your business, and that's kind of the phase after that.
Let, let, let's talk about that. I mean, before COVID, you were doing some routes in L.A., albeit limited, really kind of downtown L.A. and, I guess, Van Nuys and LAX, right? You had that. I, I, I see you were experimenting a little bit with, like, Chicago, albeit, some of the, I think the airport the, the helipad locations weren't exactly close enough to downtown to. Given this, do you think that municipalities will start to say: "Look, we know E.V. is coming. We have to start doing more test runs with helicopters, even though they're noisy and polluting. We, we, we just have to do this, because who wants to be the city left behind when a new technology comes?
Well, there's no question. You know, if you wanna be City 2.0, you have to have an urban air mobility strategy. I think part of the reason why, you know, Eric Adams, the mayor, and Kathy Hochul, the governor, and New York specifically are so protective of the existing heliports, is that they realize that it is a driver of economic value that, you know, that, that companies use them, that individuals use them. It helps make the cities more efficient and reduce friction for a lot of people's travel. And that these are gonna be the first places where EVA are gonna be. Now, I think what's gonna have to happen is, I don't think people will open new landing zones in anticipation of EVA. However, when we start showing them, legislators, communities, "Hey, here it is.
It's quiet on takeoff and landing, it's silent on overflight," which is where the most noise complaints happen. Now it's time to start opening up new landing zones. That's when it's gonna happen. I don't see any opening in anticipation of it. What I will say is that we have been successful, as we have in Newport, in relighting older heliports that have, for whatever reason, have gone unused. They're out there, in Los Angeles, obviously we found one in New Jersey, and elsewhere. They have to have great locations. You mentioned Los Angeles. Los Angeles should be the biggest helicopter market in the world. Unfortunately, there's no place to land, okay? Until that's solved, you're not gonna get there. That's probably gonna be an EVA first market.
Almost think about it like the countries that skipped landline phones and went straight to wireless. Same analogy.
You know, let's talk about balance sheet for a little bit. You guys have nearly $200 million in cash. We can make an argument that, you know, the business should, you know, like, stop burning cash pretty soon, right? Kind of maybe within the next year, next 12 months. You know, what, what do you do with the cash?
Well, I mean, right now, I think the market wants to see cash. They wanna know that you have, you know, if anything, you know, if anything happens with the business or, you know, that you have runway, because obviously the capital markets haven't been friendly to a lot of companies, you know, over the past year or two. I think that there's been yo u know, you've seen what's happened at a market. You know, we've survived numerous people who were, I wouldn't say direct competitors, but competitors on the outside, and we are continue to see snap-on acquisitions that could be very, very interesting, profitable day one. You know, our focus is clearly on growing our existing routes. If we find something that is really snap-on, low-risk, profitable today, we'll do it.
That's what we did with Trinity. We acted very, very quickly in that one. I think that ancillary businesses, you know, we talk about flying precious cargo, both people and, you know, human organs. You may see us in the cargo business, you may see us in what we call next flight out. It's, even though we're so large in organs, kidneys typically don't fly helicopters and the kind of jets we do, they typically go on commercial flights. There's a lot of logistics around that, so you may see us going into that business.
I think there are a lot of ancillary businesses that do fit well with Blade, but they have to fit well, they have to be profitable, and we wanna see low risk when it comes to, you know, integrating them within our core organization.
Just a last question. You know, I, I think as you've kind of gone into certain segments, there may be existing operators who, you know, basically did not wanna partner with you, right? Whether it was simply because they didn't wanna give up economics to you, but I think you've shown that you can be a very good partner, you increase utilization for their hard assets, 'cause many of these companies own their own, either, you know, fixed wing or, or, or, or helicopters. You know, just maybe talk about how you feel like, you know, basically those companies are becoming more receptive to you as a partner.
Yeah. Well, I think it's, you know. We're, we're very lucky, and I think that, you know, what basically happened was, we have operators out there that, you know, they had marketing, they had customer service, they had accounting. We went in and said, "You know what? We're gonna expand your market, because we're gonna take the risk and buy the seat flights. We're gonna tell you where to fly. You're not gonna have to worry about scheduling these flights. You're not gonna worry about marketing, you know, credit card disputes, consumers calling up about, you know, the weather. You know, people to help on the ground. We're gonna handle all that recovery when something goes wrong, such as, you know, maybe a mechanical or bad weather. We reduced their cost structure.
Basically all they're doing now is flying and maintaining. They also can count on us, because we're such a big part of their business, they have visibility into what they're gonna be earning. Sometimes we'll even offer, to the extent we know that, you know, we can beat them by a large margin, you know, app guarantees on hours. Now, operators sometimes finance against us. In other words, you know, we'll get a call from an Airbus who's actually an investor, or Textron, who owns Bell Helicopter, and we'll say, "Hey, this company that's on your platform, is interested in buying a new Bell 407. How many hours do you think you can do on it?" They'll enter into the financing agreement on the back of the kind of hours we'll do.
Great.
I think, I think they're, you know, they're happy with it. I mean, it was not, it was. A lot of these helicopter companies, despite the fact that they may be pretty large businesses, were really started by operators and pilots who really didn't wanna get involved in the customer-facing aspects of the organization. They don't wanna open terminals, they don't wanna deal with people on the phone 24/7, you know, technology for the.
Right. You have a different financing environment, right? Like you, we, people were running these asset-heavy businesses when interest rates were 1%, 2%.
Yeah.
It's a different world when you're running the business when interest rates are what they are now.
Exactly.
Again, why they're more receptive to you, hard to know, whether it's the financing environment, but what you've ultimately shown to them is that you could be a good partner, a great partner.
Right
and, and it becomes a win-win.
Yeah, they break, you know. Listen, we, you know, we, we pay an hourly fee, and they make a margin above their direct operating costs and their overhead. They can acquire new aircraft, you know, over time as well. A lot of them have become exclusive to us, where we're their only their only partner.
Great. We're gonna leave it at that. Rob, thank you very much for the time. If anyone has any questions, feel free to reach out, either to us or. Oh, wait, there was one more question. Hold on.
Sure.
Oh, no, I can answer that. It was about hard assets. Blade does not own any hard assets, so that is why it is an asset-
Yes, we are, we are, we are asset-light.
Mm.
Everybody should, we should know that we have a seven members safety team, you have to pass tremendous on the level of diligence, you have annual, quarterly audits, financial wherewithal tests, insurance requirements, and you have to use our technology and branding. Just because you have a helicopter doesn't mean you can be on a, a Blade.
The answer, and the other part of the question, what's the mode? The mode is the customer base, the experience, and the FBOs.
Yeah, the exclusive infrastructure.
where all the passengers can be aggregated-
Yeah
before taking off on a flight.
No competition can you.
So-
Exactly
thanks, Rob. We'll talk soon.
Thank you. Take care.