Global Crossing Airlines Group Inc. (JET) Earnings Call Transcript

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Global Crossing Airlines financial results for the second quarter of 2026. As a reminder, this conference is being recorded. Joining us on the call today are the company's Chief Executive Chairman, Chris Jamroz; President and CFO, Ryan Goepel; Senior Vice President, Corporate Controller, Wendy Shapiro; and Investor Relations Adviser, Aaron D'Souza. Please be advised that this conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements. For important risks and assumptions associated with such forward-looking statements, please refer to the company's earnings press release for the second quarter of 2026 and the company's annual report on Form 10-K for the year ended December 31, 2025. The company's presentation also includes certain non-GAAP financial measures, including EBITDA and EBITDAR as supplemental measures of performance of the business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the SEC rules. You will find reconciliation tables and other important information in the earnings press release for the second quarter of 2026, which is currently available on the company Investor Relations section of its website. And now I'll turn the call over to the company's Executive Chairman, Chris Jamroz. Chris, please go ahead, sir.

Thank you, operator, and good morning, everyone. GlobalX delivered resilient second quarter that demonstrated the underlying efficiency and scalability of the platform we have built. Despite an unusually concentrated period of maintenance events that constrained aircraft availability, we maintained year-over-year revenue growth, generated the second highest quarterly EBITDA in our history and increased the productivity of the aircraft that we were in service. Achieving these results with fewer net available aircraft speaks directly to the strength of our operating model and the progress we have made in building a more capable and efficient charter operation. More broadly, the quarter reinforced an important point about evolution of GlobalX. Over the last past several years, we have been disciplined in developing the operating infrastructure, customer relationships and internal capabilities required to support a significant business. We are now seeing the benefits of that work. The platform is generating great revenue and earnings productivity from each of our aircraft, and we believe that creates meaningful operating leverage as fleet availability improves and additional aircraft enter service. The maintenance work completed during the quarter was necessary substantial with timing driven largely by calendar and aircraft usage requirements. While that activity affected near-term availability and financial performance, it was not reflective of underlying demand or the earnings potential of the business. The vast majority of our scheduled maintenance program is now behind us, and we view this work as an investment in long-term health and earnings capacity of the fleet as we scale. [indiscernible] expansion with discipline by deploying capital into assets that improve reliability, support high utilization and strengthen the long-term profitability of the platform. We believe the increased availability of aircraft in the market gives us an opportunity to modernize the fleet on attractive terms while building the scale necessary to serve a growing base of customers. Looking ahead, demand across our core passenger market remains strong. During Q2, we operated more than 40 flights in support of a major international soccer tournament, and we continue to see substantial demand from sports customers. The demand is there. Our focus is on having the available aircraft, people and operating infrastructure in place to capture reliably and profitably. We remain committed to becoming the largest and most reliable narrow-body charter airline in North America. The investments we are making today are designed to strengthen the durability of our earnings, expand the capacity of the platform and create sustainable long-term value for our shareholders. With that, I will hand the call over to our President and CFO, Ryan Goepel, to discuss our second quarter operational highlights in greater detail. Ryan?

Thank you, Chris, and good morning, everyone. To understand our quarter, you need to follow 4 key things. Firstly, cargo revenue was down $2.9 million year-over-year, which was partially offset by a $1.8 million increase in passenger revenue. Secondly, in Q2 of 2026, we had 22.3 aircraft that we were paying for, but only 15.3 aircraft that were available. Compare that to 2025, where we were paying for 19 aircraft and had 17.1 were available. Thirdly, in Q2 2026, we completed 5 heavy maintenance events and 16 non-heavy maintenance events. In Q2 2025, we had 0 heavy maintenance events and 12 non-heavy maintenance events. The scheduled maintenance directly impacted not only our cash, but also our net available aircraft. Fourthly, due to the lack of a net available aircraft, nonrevenue block hours increased 100% from 142 to 284 hours, adding $1 million in operating costs. Despite all of these negative factors, we generated year-over-year revenue growth, delivered our second highest quarterly EBITDA and increased average utilization per available aircraft by 11%. Our utilization improvement is particularly important because it shows that the aircraft we had in service are being deployed more productively. We generated approximately 523 block hours per available aircraft compared with approximately 471 hours in the prior year quarter. This reflects the progress we have made in scheduling customer allocation and maximizing the revenue-generating capacity of the available fleet. Operationally, we flew 8,010 total block hours despite the unusually concentrated maintenance schedule. Performance improved meaningfully in June as aircraft returned to service. With the vast majority of our scheduled maintenance program now complete and only 2 scheduled 2-year checks remaining in Q3, we expect availability, fleet productivity and operating leverage to improve throughout the second half of the year. The mix of our flying has also continued to support operational stability. ACMI represented 87% of total block hours flying compared to 84% a year ago. This higher ACMI mix provides a more predictable base of contracted flying, supports consistent utilization, gives us greater visibility into aircraft deployment and crew planning. At the same time, pricing across our charter business remains strong. Charter revenue per block hour increased 36% to approximately $18,100, reflecting housing demand, constrained industry capacity and favorable pricing across our core passenger markets. ACMI revenue per block hour was approximately $6,400 compared to $6,600 in the prior year quarter, primarily reflecting the mix of longer duration agreements with higher minimum hour commitments. While these contracts generally carry a lower rate per block hour, they provide important economic benefits through strong utilization, greater revenue visibility and more consistent operating performance over time. We also continue to invest in the operating infrastructure required to support future fleet growth. Pilot headcount increased 10% year-over-year to 165. Growing the fleet without the appropriate pilots, maintenance capabilities, systems and operating controls would not create sustainable value. So we're working to ensure that each part of the organization develops in step with the aircraft growth. Turning to fleet expansion. We placed 2 Airbus A319 aircraft into revenue service during Q2, one in April, one in June, bringing the total number of A319s into service to 3. We also took delivery of 2 Airbus A320 aircraft, 1 in June and 1 in July that are currently undergoing conformity checks and are expected to enter into revenue service in Q3. The current aircraft supply environment has created an attractive opportunity to acquire younger aircraft at competitive pricing. Sub quarter end, we signed an agreement to purchase 3 former Spirit Airbus A320 airframes together with multiyear agreements to lease and related engines. Together with the 2 A320s currently in conformity, these 5 younger aircraft should reduce average age of the fleet by approximately 10%. Over time, we believe these additions should reduce scheduled and unscheduled maintenance requirements, increase aircraft availability and support strong utilization and operating margins. We are focused on adding aircraft that improve the overall quality and earnings capacity of the platform. That means evaluating each opportunity based on acquisition or lease economics, expected maintenance requirements, customer demand and the returns we believe the aircraft can generate once placed into service. Consistent with this approach, we are actively managing the composition of the fleet to maximize long-term value. Given the availability of younger aircraft in the current market, we elected to sell the A320 airframe we acquired last year to redeploy the capital towards newer, more efficient aircraft. In addition, aircraft lease expires later this year, and we expect to return that aircraft rather than renew the lease. This flexibility enables us to replace older aircraft when more reliable assets become available at attractive economics and to improve the quality of the fleet without retaining aircraft that no longer meet our return thresholds. We believe that disciplined fleet management will become an increasingly important driver of reliability, maintenance efficiency and long-term profitability. Turning to customer demand. Our passenger markets remain strong. During the second quarter, we operated more than 40 flights to support of a major international soccer tournament in the United States, Canada and Mexico. We also continue to see substantial demand from collegiate sports with a 100% increase in the number of contracts out for signature versus this time last year. For cargo operations, freight market conditions have not materially improved relative to passenger flying as excess capacity and lower market rates continue to pressure utilization and earnings. Cargo remains a drag on near-term results, and we continue to prioritize passenger flying as a primary economic engine of the business. Looking ahead, we expect to reach 25 total aircraft by year-end and continue to target the addition of approximately 4 to 5 aircraft annually, subject to demand, attractive economics and the operating infrastructure required to support disciplined and profitable growth. With the majority of our scheduled maintenance program behind us, 5 younger aircraft expected to enter into revenue service and substantial demand across our core passenger markets, we believe GlobalX is positioned for strong execution through the balance of the year. We remain focused on improving aircraft availability, fleet reliability and operating leverage while deploying capacity where we see the strongest returns and building a more efficient and durable platform for long-term growth. With that, I'll turn the call over to our SVP, Corporate Controller, Wendy Shapiro, who will discuss our second quarter results in more detail.

Thank you, Ryan, and good morning, everyone. Please note that all financial results discussed today are for the 3-month period ended June 30, 2026, and variance commentary is on a year-over-year basis unless stated otherwise. Revenue in the quarter increased 1% to $62 million compared to $61.4 million in Q2 2025. As Ryan discussed, the increase was driven by higher utilization per available aircraft and greater charter revenue per block hour. This was partially offset by lower net aircraft availability, which was down 11% year-over-year. ACMI revenue increased slightly to $44.6 million compared to $44.5 million in the prior year quarter. Charter revenue was $14.1 million compared to $15.3 million in Q2 2025. Total operating expenses increased 4% to $60.6 million compared to $58.1 million, primarily attributable to higher depreciation and amortization associated with aircraft deliveries secured through finance leases, the purchase of an A320 aircraft and an increase in rotable parts owned. Net loss attributable to Global X was $1.3 million compared to net income of $0.6 million in Q2 2025. Loss per basic and diluted share was negative $0.02 compared to earnings of $0.01 per basic and diluted share in the prior year period. EBITDAR was $19.3 million compared to $19.8 million in the prior year quarter. EBITDA increased 17% to $6.9 million compared to $5.9 million in Q2 2025, representing our second highest quarterly EBITDA on record. Cash used in operating activities was $1.6 million compared to cash provided by operating activities of $8.8 million in Q2 2025. Turning to our liquidity. We ended the second quarter with approximately $11.9 million in cash and restricted cash compared to $20.5 million as of December 31, 2025. Now I will turn the call back over to Ryan for closing remarks.

Thank you, Wendy. Our second quarter performance demonstrated what the GlobalX platform can produce even when aircraft availability is constrained. We generated our second highest quarterly EBITDA, maintained year-over-year revenue growth and achieved a double-digit improvement in utilization per available aircraft while completing a substantial portion of our scheduled maintenance. We entered the second half with a healthier maintenance position, a younger fleet beginning to come online and robust demand across our passenger markets. Our priority is to convert those advantages into improved consistency, reliability and financial performance. We remain committed to disciplined growth and long-term shareholder value as we pursue our objective of becoming the largest and most reliable narrow-body charter airline in North America. This concludes our prepared remarks. I would like to open the call for Q&A. Aaron, over to you.

Thank you, Chris, Ryan and Wendy, and thank you, everyone, for participating in the conference call. As we gather the queue for live questions, we'd first like to address a few of those questions that have come in via e-mail over the past couple of weeks and following the issuance of our earnings press release yesterday. Our first question is related to maintenance, aircraft availability and operating leverage. You completed an unusually concentrated maintenance program during the second quarter. With only 2 scheduled maintenance checks remaining in Q3, how should investors think about the transition from the Q2 disruption to improved availability and operating leverage during the second half?

I'll take that one. Thank you for the question. The reduced availability in Q2 was primarily driven by the timing and duration of scheduled maintenance, not weaker customer demand. We completed 5 heavy and 16 non-heavy events with several extending beyond their original time lines. Performance improved meaningfully in June as aircraft returned to service with only 2 scheduled checks remaining in Q3, we expect significantly less scheduled disruption through the balance of the year. Importantly, utilization per aircraft increased 11% to approximately 523 hours, demonstrating that the aircraft in service were deployed more productively. As aircraft availability improves, we believe we can spread our existing operation infrastructure across more productive flying, supporting stronger reliability, utilization and operating leverage.

Thanks, Ryan. Our next question is related to fleet modernization and lease expirations. Can you provide an update on the aircraft entering the fleet and explain how the recent additions, potential aircraft sales and upcoming lease expirations fit into the plan to get to 25 aircraft by year-end?

Yes. Thanks for the question. And I think it's important to recognize managing your fleet age is one of the more critical aspects of maintaining long-term profitability for charter airlines. We placed 2 A319 aircraft into revenue service during Q2, bringing the total number of 319s into service to 3. We also took delivery of 2 A320s, 1 in June, 1 in July, both the youngest aircraft we've ever -- both will be the youngest aircraft in the fleet that are currently undergoing conformity and expected to enter into service in Q3. Subsequent to quarter end, we signed an LOI to purchase 3 former Spirit aircraft airframes and lease the related engines. Together, these 5 younger A320s are expected to reduce the average age of our fleet by 10%. At the same time, we are potentially selling the A320 airframe acquired last year and expect to return 1 aircraft when the lease expires later this year. Other lease expiration decisions will be based on aircraft condition, maintenance requirements, lease economics and customer demand. Our objective is to improve quality, reliability and earnings through the earnings capacity of the fleet while progressing towards the 25 net aircraft year-end target.

Thank you. Next question is related to sports and broader passenger demand. What did the more than 40 soccer-related flights demonstrate the platform? And what perspective can you provide on renewals, repeat customers and the pipeline across sports, government and entertainment flying?

I'll take that one as well. The soccer-related flying demonstrates our ability to execute a significant number of operationally complex flights within a concentrated period. That requires close coordination with -- across aircraft, crews, maintenance and selling. To put in perspective, when the tournament we discussed started, we had nothing contracted within -- and almost everything we did was within a 24- to 48-hour period of execution, of which we did 40 flights in Q2, and we did a significant number of flights in Q3. Our Reliable performance during large events strengthens our customer relationships, demonstrates the capabilities of our platform and positions us to compete for additional business. We did not disclose customer-specific renewals, retention rates, pipeline values or counterparty concentration. However, when you look at the college sports arena at this point last year, when you look at the number of contracts that have been issued, we're at double the rate we were at this point last year. So we remain focused on repeat business opportunities that provide strong pricing, schedule visibility and attractive aircraft returns.

Thanks, Ryan. Next question is related to cargo performance and strategic alternatives. So cargo remains a drag on consolidated results. If sufficiently attractive cargo contracts do not materialize, how are you evaluating alternatives such as parking or returning aircraft, selling or subleasing assets or redeploying engines into the passenger fleet?

Yes. So every quarter, we get talk about cargo. So cargo-related market conditions are still challenging. There's excess capacity and lower rates continue to pressure utilization and earnings as we foresaw 4 to 6 months ago. We have not established a specific deadline of predetermined outcome for the cargo fleet. Each decision is based on contract quality, expected contribution, lease obligations, asset values and the highest return use of the aircraft and engines. Depending on the economics and contractual flexibility, alternatives could be included -- could include operating parking, returning, subleasing, selling assets, redeploying engines, a whole gamut. Nothing really concrete has happened outside of picking up a couple of small customers to increase our rates from Q2 to Q3, but we continue to explore all options. when you think about us as a company, subleasing aircraft isn't a core competency, and it's something we don't want to rush into because if you do that incorrectly, it can be very expensive. So I think what we're doing is we're taking a measured approach. We're trying to minimize the exposure and hopefully, that will improve the results as we go forward.

Understood. Two more questions. Next one is related to ACMI rates. Can you please explain why the ACMI rate dropped compared to the prior year quarter?

Yes. So ACMI revenue was approximately $6,400 in Q2 compared to 6,600 in the prior year quarter. The decline was primarily a function of contract mix, not weaker underlying demand. During the quarter, a greater portion of our ACMI flying came from the longer duration agreements with higher minimum hour requirements. These contracts generally carry a lower rate per block hour and provide stronger utilization, greater revenue visibility and more consistent aircraft deployment. Translated, we make just as much money, if not more money per aircraft per month with the lower rates of the flying more hours. We evaluate all these agreements based on their overall economics rather than that headline hourly rate. In many cases, the benefits of higher guaranteed utilization and better operating visibility outweigh a modestly lower rate per hour.

Thank you. Last question for submitted Q&A is related to financial sustainability and measurable catalysts. How does management define financial sustainability? And what are the most important measurable catalysts investors should monitor over the next 2 quarterly reports?

I'll take this one, if I may. Yes. Thank you. I would like to kind of think about it in more than just the subsequent 2 quarters for us, we have a short-term and a midterm objectives. The short term is effectively to deliver profitable full year financials. But we view the financial sustainability objectives as building an operating platform capable of generating durable earnings and cash flow while supporting routine maintenance and disciplined growth. effectively very strong focus on cash flow positive business. And over the next 2 quarter reports, the first measurable catalyst is completing the 2 remaining scheduled maintenance checks and demonstrating aircraft availability. The improve the concentrated 2 maintenance program is behind us. So effectively, we want to make sure we kind of have a test run of the platform with close to near full capacity utilization available to the operations. Investors should also monitor the timing of aircraft entering revenue service and progress towards our '25 year-end target. Just be mindful that operating a full year with a certain fixed number of aircraft and getting to that fixed number of aircraft, it can be very expensive. So the cash is being utilized as we induct new aircraft into our operation, but just keep an eye on that. And ultimately, investors should look for those operational improvements to translate into more consistent aircraft availability, utilization, EBITDA and most importantly, operating cash flow and liquidity of the business. That's the pathway towards the -- what we consider reliable, profitable and durable business.

Thank you, Chris and Ryan. That concludes our pre-submitted questions. I'd now like to pass it over to the operator to open up the call for live Q&A.

[Operator Instructions] The first question comes from Barry Sine with Litchfield Hills Research.

I wanted to ask a question. I know you guys don't give formal guidance. But if I look at the actions that you've announced, you've taken a huge amount of maintenance and you're getting that done. You're adding to the fleet. That would all indicate to me that you're pretty bullish on demand for the next couple of quarters and the next couple of years. Could you comment on that, please?

Yes. I think when you look at what we've done over the last 3 to 4 years is we've been constantly reinvesting the cash generated into more capacity because the demand is there. I've always stated this passenger market for us is easily a 35 to 40 aircraft market. We're at 17 today on the passenger side. So we have a significant runway of growth. And this is one of the reasons why you don't see us pursuing wide-bodies or other initiatives why we dropped a lot of the other areas because there's so much opportunity in this one, call it a niche, but it's a massive niche, right? And so the maintenance schedule that you saw was really driven by calendar and hours. So what happens is when you look at these aircraft, certain things have to be done by certain dates and certain things has to be done by -- when you've done sown a certain amount of hours. Well, we've been flying a lot more than we probably forecasted. So the downside is you got to put them in maintenance sooner. And it just -- sometimes these things just sort of stack up. Now we saw this coming probably in Q3, Q4 last year, and we made a conscious decision because we knew the demand in Q1 was super strong. Keep in mind, April and May are the 2 weakest months of the year, next to maybe September. Those are the 3 weakest months of the year for demand. And so we purposely -- this is by design, scheduled the maintenance during that period of time because we know demand is lower. But that being said, it was still really strong. We didn't deploy aircraft in Europe this year because of the World Cup. That was a good call. We had a great tournament. As we look forward into college sports, as I said, that's a massive market with the way the competition is working out and playing, there's substantial demand there. The government service is strong and continuing to pick up. We definitely see a doubling of capacity over a period of time. Now what I've learned over 6 years is you can't predict that period of time and how long it takes to onboard aircraft at what price, at what time. But there is this opportunity, as we stated with the bankruptcy at Spirit, there is a significant number of aircraft significantly younger than what we have today on the market at really good rates. And so we would be amiss. We would be almost negligent if we didn't actively pursue those aircraft today because that's something that sets us up not only for a quarter, but sets us up for years.

So just on the fleet availability, for the second quarter, you reported 15.3 net available aircraft, and you gave us a lot of information on additions and subtractions to the fleet. I'm going to try and do the math myself, but can you give us any sense of what net available aircraft will look like in the third quarter and the fourth quarter? And I know there's timing of when aircraft come and go and you've got 2 maintenance checks in the third quarter scheduled. Can you give us any sense what those numbers look like? I know by year-end, you're hoping to get the fleet to 25, but that's not going to be net available aircraft for the fourth quarter of '25, will be something south of that. Can you give us any more concrete numbers?