Good afternoon, and welcome to the SkyWest Incorporated First Quarter 2020 Earnings Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Rob Simmons, Chief Financial Officer. Please go ahead.

Thanks, everyone, for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest’s Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer; Wade Steel, Chief Commercial Officer; Eric Woodward, Chief Accounting Officer; and Mike Thompson, SkyWest Airlines’ Chief Operating Officer. I would like to start today by asking Eric to read the Safe Harbor. Then I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results, then Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our sell-side analysts. Eric?

Today’s discussion contains forward-looking statements that represent our current beliefs, expectations and assumptions regarding future events and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statement. Actual results will likely vary and may vary materially from those anticipated, estimated or projected for a number of reasons. Some of the factors that may cause such differences are included in our 2019 Form 10-K and other reports and filings with the Securities and Exchange Commission. And now, I’ll turn the call over to Chip.

Thank you, Rob and Eric. Good afternoon, everyone, and thank you for joining us on the call today. The first quarter of 2020 has been unlike anything we’ve experienced in SkyWest’s history. The speed and breadth of the coronavirus health and economic crisis could not have been anticipated, and our hearts go out to those who have lost loved ones to this disease. Our response has been focused on three critical areas, as we work to navigate within this unprecedented environment and take care of our airline, our people and our customers. First, the personal health and well-being of our people and passengers is our top priority; second, we’re focused on maintaining the cash and liquidity necessary to work through this crisis; and third, ensuring we’re flexible and well-positioned for recovery once the virus is contained. In early March, we mobilized very quickly to work with each of our partners to enhance cleaning and disinfecting measures onboard aircraft, reduce customer touch points and onboard service and implement CDC-recommended social distancing practices where possible. We expect many of these changes will remain in place indefinitely, and we appreciate the rapid response in partnership with our people as we work to implement these updates swiftly and thoroughly. Our people have demonstrated remarkable teamwork and support for each other and our customers throughout this event and I’m humbled to be a part of this incredible team. Our leadership is working constantly to address these challenges, support our people and protect our company, and I want to thank them for their continued dedication and commitment. Our SkyWest professionals are simply the best in this industry, and I’m proud of the outstanding work that they’re doing to help maintain vital air service in these challenging times. The Payroll Support Program funding, as part of the CARES Act, is a critical acknowledgment of the important work our people are doing every day. We certainly appreciate Congress and the administration for passing this legislation to support our people. In April, we received $219 million of the $438 million total we are expected to receive over the next several months, which includes $101 million in the form of a 10-year unsecured term loan. This relief, combined with our work in the marketplace and aggressive cost management, will help with our cash position as we work to navigate this crisis and ensure we’re positioned for recovery. Rob will talk more about our liquidity in a minute. To provide some perspective on the dramatic demand change, we would have expected to fly about 2,500 daily departures this time of the year. Today, that number is between 800 and 900 departures each day. In some ways, that significant reduction can be more difficult to manage with a fleet of over 500 aircraft and fewer opportunities to get crew and aircraft in position. Though we are hopeful this will not be the case indefinitely, we expect to see similar departure counts throughout May and June and are prepared to respond as necessary if the climate continues to deteriorate. We’re working closely and collaboratively with each of our partners to provide flexibility and options for their needs. As Wade will share, we’re working with each of our partners to provide creative solutions and support, including temporarily waiving contract minimum provisions, temporary rate reduction, and passing through the benefit of certain aircraft ownership payment deferrals, which we have negotiated with our primary credit providers. As we’ve discussed many times over the past several years, we remain focused on ensuring we’re the best positioned to meet our partners’ needs. Across our operation, we’ve also worked closely with our people to take steps to manage costs in this environment. This includes providing offerings for voluntary time off, early retirement opportunities, and other reduced and flexible work schedules where possible. We deferred some of the heavy maintenance that was previously planned as we work with our partners to align fleet deployment with new schedules. We’ve reduced our pro rate footprint of flying while complying with the requirements under the CARES Act. We’ve also suspended training and initiated a hiring freeze on all positions until further notice. As of today, nearly 5,000 employees have elected to take voluntary time off for one to six months. This is an important cost measure that also helps us better navigate the significantly reduced schedules we’re currently operating. Following health, safety, and liquidity, we’re focused on positioning for recovery. Given the current environment and sharp reduction in travel, we expect it will be quite some time before demand fully returns. It is likely we’ll need to streamline and resize our airline in the near term to ensure our long-term viability and success. There’s a real possibility we’ll be a smaller airline by year-end. Undoubtedly, the next several months will be turbulent. We are taking every possible step to ensure our foundation remains strong and we are best positioned for recovery when the time comes. We remain disciplined and flexible in our approach with our fleet and our partners. As demand returns, we are confident our fleet will continue to fill a critical role in the return to travel. The core values at SkyWest have seen us through many challenges, and as most of you are aware, we’ve spent the last several years focused on eliminating fleet tail risk, operating risk, and contract risk. The focus on reducing our overall risk has helped to shore up our solid foundation for long-term sustainability. We are focused on navigating this crisis aggressively and deliberately to take care of our people and our customers as we preserve our liquidity and plan for recovery. The environment just weeks ago was dramatically different than today. But our fundamental principles of agility, strength, and discipline, as well as our objective to continue to meet our partners’ needs remain unchanged. We have a track record of adapting quicker than anyone to our partners’ needs and we’re very focused on maintaining that capability. We will continue to work together with our people and our partners to ensure we emerge as a better, stronger business. I want to thank again our people, as well as the administration and our business partners, who are aiding in our long-term stability. I’m proud of our airline and our teams and the great work they are doing to support each other and our long-term success. Rob will now take us through some of the financial data.

Today, we reported first quarter net income of $30 million, or $0.59 per diluted share. Our diluted share count for Q1 was 50.6 million shares, and our effective tax rate in Q1 was 23.3%. Let me start today with the balance sheet. We ended the quarter with cash of $578 million, up from $520 million last quarter. Our CapEx during the first quarter was $77 million, including $55 million in spare engines and $22 million for other roadables and used aircraft. At this point, our expectation is to pull back our CapEx for the year from $636 million last year to $300 million to $400 million this year, including the acquisition of six new E175s by the end of the year. We ended the quarter with debt of $2.9 billion, down from $3 billion as of year-end. Let’s talk about liquidity. Our March 31 cash position was $578 million in addition to availability of $65 million on our revolving line of credit. During April, we received $219 million in payroll support funding under the CARES Act. Another $219 million will come in three additional payments this summer. As you will recall, $101 million of the $438 million in PSP funding is in the form of a 10-year term loan, with a 1% interest rate for the first five years with the remainder in a grant. At quarter end, we had unencumbered assets of over $1 billion, primarily in engines and aircraft. This unpledged collateral gives us additional liquidity alternatives, which we will evaluate, including $497 million in senior secured term financing under the loan program of the CARES Act. We have formally applied for this loan program through the U.S. Treasury, but we have until September 30, 2020, to decide on our participation level, if any. Based on ending March cash of $575 million and including the initial PSP funding of $219 million received in April, we ended the month of April with strong liquidity and a still undrawn revolver. Our current cash modeling over the next eight months indicates that without any additional debt draws other than the ordinary term debt to finance the six E175s expected to be delivered this year, we should end 2020 approximately $100 million lower in cash than where we stood at the end of April. This number assumes the full $101 million in PSP notes is outstanding at year-end, along with $34 million in payroll tax deferrals payable in 2021 and 2022. So cash burn through the rest of the year is the net $100 million reduction in cash from May to December, $101 million in the outstanding PSP notes, and $34 million in payroll tax deferrals, totaling $235 million in total estimated cash burn over the remainder of the year. The math for the remaining eight months of the year, May through December, indicates a $30 million burn per month on average, or $1 million burn per day. Our current modeling, subject to many uncertainties and with modest recovery in flying and incremental cost rationalizations assumed by year-end, indicates that cash burn improves in 2021. This demand disruption event shines a spotlight on the importance of how we have been derisking our business model over the last five years. While no one in our industry is immune to the economic effects of the COVID crisis, we appear to be reasonably positioned to weather the storm. If the economic effects turn out to be worse and the recovery is slower than we currently expect, we have additional liquidity tools we can call on, including our revolver, our $497 million allocation of secured CARES Act loans, and other secured loan alternatives accessed by putting our $1 billion in unpledged collateral to work. In addition to our core liquidity position, you can quickly identify three things that are nice to have during this time of uncertainty that give us more flexibility than others in our space. Number one, 35% of our fleet has no financing remaining on it. This number goes to 45% when you include partner-owned aircraft that we operate. Number two, we have $1 billion in unencumbered assets in the form of engines and aircraft. This gives us the optionality for incremental liquidity in the form of secured borrowing, if needed. And number three, minimal tail risk of around $100 million, the dollar delta between financing term and contract term. Our next pocket of tail risk is now out to 2023 and is zero on the delta 200s expiring later this year. Let me address specifically the COVID impact on our Q1 results. Our $39 million in pre-tax income is roughly $45 million lower than what we would have hoped to generate in Q1. $25 million of that is primarily from lower pro rate revenue in March as demand evaporated, $15 million is from accelerated depreciation on upcoming contract expirations that are not expected to be renewed and $5 million is from the adoption of the new credit loss standard in Q1 and other items. Especially in times of great uncertainty like this and consistent with our policy and practice, we are not in a position to give any formal or informal EPS guidance at this time. It goes without saying that this COVID event has been a setback to our plans. But I would highlight that the $337 million grant component of the PSP to be received over the course of the summer is expected to be recorded as income ratably in Q2 and Q3. We will obviously give additional color on our outlook as appropriate down the road. Wade will now give some details on fleet initiatives, fleet movements, and other commercial opportunities.

Thank you, Rob. I’ll provide a fleet status update, as well as an update on our pro rate and leasing businesses. To recap some of our agreements at a high level, we were scheduled to add 51 aircraft to our fleet in 2020 and 12 in 2021. This included 32 aircraft financed by our partners, as well as 26 new aircraft and five used aircraft financed by SkyWest. Taking the current travel environment into account, we still anticipate taking delivery of these aircraft. However, we are working closely with our partners and manufacturers to adjust the timing of these deliveries. To update by partner, we currently have six new E175s on order under our Delta agreement. We still anticipate taking delivery of all six aircraft this year and working through the schedule with Delta and Embraer. We are also scheduled to take six used E175s sourced from another operator into Delta service. We have received all six aircraft, three of which are currently in service. We anticipate the other three aircraft will begin service late this year. We expect that our final CRJ900s scheduled for this quarter will be delayed, and we are working with Delta and Bombardier on delivery timing. You may recall that we have 55 CRJ200s scheduled to expire under our Delta agreement at the end of this year. We are working with Delta on their long-term 50-seat needs. In the event these aircraft are not renewed, we’d return 19 of the aircraft back to Delta. The remaining 36 aircraft are SkyWest owned with no remaining financing obligations and will be fully depreciated by year-end. Under our United partnership, we signed an extension for our 70 CRJ200s in February, with an average extension term of three years. Both parties have early termination rights for a certain number of aircraft starting at the end of 2021. Our previously announced 25 used E175 aircraft will be placed into service ratably over 12 months, beginning in the third quarter of this year. These aircraft are financed by United and will be sourced from another United Express operator. We are working with American to adapt aircraft deliveries and service schedules to the current environment. We had anticipated taking delivery of the first 10 of our 20 new E175s this year and the remaining 10 during the first half of next. However, we do not expect these to arrive this year or in early 2021. We’ll provide updates on the new delivery schedule as it is finalized. And while we originally planned for our 10 previously announced CRJ700s to be placed into American service this year, we now anticipate that timeline will move to early next year. As Chip mentioned, we’re working with all of our major partners on contract flexibility, including temporarily waiving contract minimums, deferring the start of contracts, temporary rate reductions during Q2 and Q3, and passing through the benefit of deferring certain aircraft ownership charges that we have negotiated with our primary creditors. We are working proactively with each partner to provide creative solutions to the current challenges. Let me talk a little bit about our pro rate business. We were working with our major partners to transition several pro rate markets to contracts due to anticipated growth this year, with pro rate reductions scheduled this April. We now anticipate our pro rate block hours to be reduced by approximately 60% during the second quarter, while still providing service in compliance with the provisions of the CARES Act. During the month of March, our pro rate revenue was lower than our expectations by approximately $25 million. We now expect our pro rate revenue will be approximately $100 million less during the second quarter of 2020 compared to 2019. Let me shift gears to our leasing business. We have delivered 16 of 29 CRJ700 aircraft under leases to a third party. The lessee has requested that we pause delivery on the other 13 aircraft. The lessee has extraordinary financial issues, and we are evaluating all of our options under the lease. We have also agreed to purchase seven used CRJ700s from a third party. At quarter-end, we have closed on five of the seven aircraft. We expect to close on the other two during Q3 of this year. These are unprecedented times. We are committed to working with each of our major partners to provide creative solutions and to respond quickly to their needs. We have spent the last several years reducing risk and enhancing fleet and financing flexibility, which will ensure we’re positioned to navigate this challenging environment.

Okay. Operator, we’re ready for the Q&A section.

We will now begin the question-and-answer session. The first question comes from Joseph DeNardi with Stifel. Please go ahead.

Hey, good evening, everybody. Robert, can you just talk a little bit about – or Chip, the – maybe the size of the fleet as you see it kind of realistically on the other side of this? And I know there are a lot of moving parts and I’m sure you’re having negotiations. But can you just talk about, just given what’s happened to the mainline fleet of your partners and obviously, less demand for your service, how you see the fleet shaking out? Thank you.

Thanks, Joe. This is Chip. I would certainly say that we’re anticipating a smaller overall fleet. Part of what we also try to evaluate is how much that fleet is going to be flown. Today, we’re flying a fair portion of our fleet. But when you move from 2,500 daily departures down to 700 or 800 departures, you don’t have a ton of utilization relative to that fleet. So overall, look, the conversations are fluid. The entire industry is looking for additional demand data as we emerge out of the traditional lockdowns that we’ve experienced over the last several weeks. And within those data points, we continue to watch what our partners are asking us to do. We’ll also say that we’re in very fluid conversations. But I think it goes without saying that we’ll likely be a fair bit smaller by the end of the year, potentially 10% smaller, and we have a lot more data to pay attention to before we can get any more clarity beyond that at this time.

Okay, that’s helpful. And then, Rob, can you just talk kind of at a high-level, since I’m sure some of it’s sensitive, but how do you ensure that you kind of balance being flexible for your partners without taking on too much of their risk onto your balance sheet?

Yes. Well, let me start and maybe Wade can also chip in here. But I think that as far as our ability to be flexible, we’re proud that we’re in a position to be able to be helpful to our partners. We’ve got relatively strong liquidity right now in addition to other liquidity options that are made possible to us by the fact that we went into this crisis with $1 billion of unpledged collateral that we can deploy if need be down the road. But obviously, we’re trying to be collaborative and helpful to our partners, at the same time, make sure that we’ve got adequate liquidity for ourselves.

Okay. Thank you.

Rob, I really appreciate the color on cash burn and liquidity and walking us through those numbers as well. But can I ask what you are assuming in the cash – that cash burn profile that you provided? Is it that just there’s no change in the current flying, or how are you kind of building that bridge?

Yes. No, like I said, we’re expecting some modest improvement by the end of the year. We’re not trying to dial in a lot of detail over the next eight months. But over the next eight months, we see our burn on average being about $1 million a day, and we’ve got more than adequate liquidity based on that projection to cover where we are. But we’re also grateful that we’ve got other options available to us for liquidity if things turn out to be worse than they appear right now.

And is the – I understand kind of working with partners on entering service on certain things. With the CRJ700s, both at American and GoJet, how do you handle that? Because I’m guessing you have lease payments or debt payments on those. Is that something that’s just part of this cash burn until you figure that out? And I’m just trying to understand kind of what are the potential options there as you work with them.

Yes. Obviously – Savi, this is Wade. As we work with both the lessee and American, we’re taking into mind the financing obligations that we do have. That’s definitely included in Rob’s numbers of $1 million of cash burn. So we’re working with each one of them around those – the issues that we are going to have and we’re finding creative solutions around those, so.

All right. And if I might just ask one last one on the resizing of the fleet. Just how should we think about your flexibility in terms of kind of taking out some of the fixed costs as we go through the year? And how long that might take to kind of match the new environment when you figure out what the new environment is?

Well, Savi, this is Chip. I mean, there are a couple of fixed costs, I think, you’re probably referring to and then we have a unique set of circumstances by fleet. As Rob said in his script, we have a fair amount of unencumbered assets. I think we’ve also disclosed that a lot of that is on our smaller fleet relative to the 200s, same as on a significant portion of our 700s and some 900s, but the large leverage point of debt is on our 175s. So we look at all of these in a unique way and what – we’re working with our partners on how each of those fleets could possibly help in a recovery process. As we’ve mentioned in the script, we’ve also worked with some of the debt holders to gain some opportunities for cash – temporary cash savings and pass those on to our partners. It’s worked out extremely well. But going forward, other fixed costs relative to the company that we have, we’re not immune to anything that you’ve heard from within the industry. We are, no doubt, over the next several months going to take some very difficult decisions relative to some of our overheads and fixed costs and take the opportunity that is absolutely necessary to streamline those levels of things, because there’s – uniquely, there is a different evolution that’s taking place throughout the industry. We have been built on a very, very high level of performance, which still matters, but the investment does not pay the same return on investment that we’ve seen in the past, and we’re going to evolve to different types of things. It’s going to, again, meet the needs of our people as well as our partners. And structurally, at the end of the day, find a way that we evolve to be a leaner and better operator on the other side of this.

I appreciate all those answers. Thank you.

Hey, thank you. I appreciate the commentary about being collaborative, given the recency of the shock. But big picture, what percent of your capacity purchase agreements have guaranteed minimums? And how far are you operating below those minimums? I’m just a little confused. I would think of the pro rate business as being sort of 100% variable cost. So why is there really any cash burn here, given the ratable nature of your business model and what we thought were guarantees?

Yes. Duane, this is Wade. So first of all, we have been very collaborative with our partners. We’re trying to work with them. Around the minimums, the vast majority of our contracts have – our CPAs have contract minimums. As I said in my prepared remarks, we are temporarily waiving those minimums during the second and third quarters. And so we are flying about 60% – we have a reduction of about 60% to 65% of our flying right now. And so that’s why there has been some variability in the revenue.

And then can you give us a sense for what is still getting paid versus what is not getting paid? So, for example, on the aircraft ownership pass-through, if you debt finance a new E175, but it’s not being utilized, are you at least being reimbursed for the aircraft ownership? And how does that factor into your willingness to kind of take more onto the balance sheet?

Yes. So that’s a good question. So in the example that you gave there, as we’ve talked about, as Rob talked in his prepared remarks, we’ve worked with certain creditors on getting a deferral in some of our ownership charges. And so during this period of time, we have deferred certain ownership charges to our major partners based on the deferral that we’ve received from the creditors.

Okay. And then just lastly on payroll support. So you’re getting reimbursed for the labor costs that you’re carrying and those folks are not being utilized. Are you getting any requests from your partners for credit – for the credit you’re receiving?

So, Duane, great question. So we obviously are working with our partners very closely, and we – the CARES money is for payroll, right? And that is very clear, and we are being extremely diligent around using that money for our payroll folks. We are also working with our partners, as I said, during the second and third quarters, giving them rate reductions to help with some of the issues that they’re facing. So we’re being very diligent around the CARES money.

Okay. And then just lastly, for those of you that were – I don’t think there’s any good analogy to past periods here. But if you think about post 9/11 and a decline in short-haul traffic and people more willing to drive for a period of time, how does the regional model fit with that, right? Like do you lose share to drive? On the other hand, I would have thought that it makes a lot of sense to down gauge higher trip cost mainline aircraft to regionals, which would actually be a potential growth catalyst for you on the other side, but maybe that’s hard to achieve in the current scope construct. So just big picture, how you think about this longer-term from a demand driver perspective?

Yes. So, Duane, this is Chip. You are looking at this exactly right. There are so many different factors relative to the regional model, particularly when you go back to 9/11 and you go back to the financial crisis about what elements do we see smaller aircraft gaining advantages or being – gaining – having some handicap in some of the recovery process. Look, I still go back to one statistic that air travel is by math, any math you look at is the safest travel and always has been for the past several years or decades. Now even adding the risk of COVID onto that model, I still think that air travel, particularly relative to what we do, is still the safest mode of transportation. So the bigger question is going to be what does the overall recovery process look like? The data and statistics are relatively clear. We’re also deeply engaged in many activities with our partners and other carriers to just try to fix this – the air system that we actually travel in relative to what is the new normal. We know this – that everyone is going to need to be wearing a mask. We know the TSA is going to be wearing a mask. There’s a lot of infrastructure things that we’re working on to get to the number one question that you brought up of bringing back demand. We think that there is some advantages relative to small town flying that we go to a lot. We think there are advantages to having a smaller aircraft with shorter duration of flights and good, strong trip costs compared to what some of the other elements are. So look, Duane, I wish we had more answers about this. But in a nutshell, you’re looking at all the right variables that we’re looking at. We’re having conversations with our partners on all of these variables, and we’re excited and very, very engaged to see some of the opportunities that will emerge as we get more data points as we come out of the lockdown process and what happens relative to demand. So – and again, back to the point, we’re doing things in the industry we’ve never done, as well as we do today. I mean, our aircraft are so amazingly clean. They were clean before, but what we’re doing at turns, overnight, midday, everything and how our people are trained to handle this crisis, the flying public is – once they start are going to get what we believe a tremendous amount of confidence in the product. Given the math that we talked about earlier in the response about how safe it is to fly even with the risk that we have associated with this current crisis.

Yes, thanks. I mean, obviously, there are some practical limitations vis-à-vis scope as they shrink. But I would think that your aircraft would be ideally suited for help them – helping them rediscover where demand actually exists. Thanks for taking the questions, guys.

Hey, good afternoon. Just a couple here, I think. So, Wade, I think if I heard you right, you said that flying would be down 60% to 65% in the June quarter. Presumably, you’re talking about block hours on the CPA business. Is that right?

That’s correct, Michael.

And in September quarter, at this point, are you still planning for down 60% to 65%, or is the schedule maybe it’s even too early?

It’s still really, really early for that. We’re obviously working with our partners. But we do anticipate that the – in all the modeling that we’ve done, we anticipate that it will still be suppressed during that quarter as well.

Okay. So it will be that. Now when we think about the revenues, right, so obviously, there are things that I think Duane covered that they will fully cover, although you are giving some rate reductions here and there. But nonetheless, it’s, call it, 1% off of a full number. So if we think that on the – at least on the contracts line, if the block is down 60% to 65%, the actual revenue received should be down – it should be down, but not down nearly as much. If you sort of incorporate some of the discounting rate reductions and the like that you’re providing that you shouldn’t see as big of a flaw. Is that accurate?

Yes. You understand our model pretty well.

Okay, good. And then just over on the pro rate, and I may have misheard, but it – and it may have been Wade, who indicated that June quarter pro rate should be down 60%, and that’s about $100 million less of revenue than what you generated in your pro rate business in 2019. In the March quarter, how much was pro rate down?

Yes. So for the month of March and the quarter was about $25 million less than what we expected it to be.

Okay. So I got that number on revenue, but do you have just on the percentage?

The percentage of flying? So we… …the block hours were – yes, the block hours were very consistent with the prior periods. We hadn’t – we weren’t – we didn’t have the ability to pull that down…

I see. Okay.

…the market has jumped on us pretty quickly. So the block hours were pretty still high.

Okay. So that makes sense. Then back to just the sort of the deferral and ownership costs, where you’ve reached out to your creditors and asked for relief and, of course, you’re passing that on to your partners. Presumably, I don’t know if it’s a three-month benefit, a six-month cash flow benefit, but ultimately, that will ramp back up. And so the back-half of maybe months nine through 12 or months 12 through 15, we’re going to be looking at much higher ownership charges. You are in a – presumably, your partners are in agreement with you that when they jump up a lot and they will go up above and beyond what they normally are that they will cover 100% amount of that. Is that the understanding?

Yes. So on the topic of the deferral, yes, we’re not – we can’t get into the specifics exactly what it is, but it is an interest and principal-type deferral for a time.

Okay.

Yes, we didn’t give an actual number, Michael. But we did – just to point out that we did end the quarter with $578 million of cash. And then during the month of April, we received, again, the first-half of our PSP funding. So, we clearly ended the end of April in a solid liquidity position and our cash burn numbers are measured from that May 1 through the end of the year, the 300 – $235 million of cash burn over that eight-month period is how you get the math to $1 million a day of burn on average.

Okay. I just – I was curious just the starting point, because we don’t know what the cash burn was for the month of April. But presumably, it was more than $1 million, right? And I’m just….

Yes.

…I’m trying to get to that April 30 number. Okay. But like you said, it was a solid level. And then just my last, and I apologize for all the questions. There was a lot of detail that was covered. Your EAS markets, I know that historically, you’re guaranteed some profit or maybe you have to have a certain volume, you have to meet volume requirements to get whatever that 5% or 10%, maybe it’s a 5% operating margin. I believe you had more EAS flying than any carrier out there, and that’s a big part of your pro rate business. So I was – I’m curious, because I know the EAS pool, what is it, $250 million a year? And I suspect that you were getting a good portion of that, but maybe you’re not. Can you talk about that EAS piece and maybe why it’s not showing up in the pro rate? And why the pro rate is getting hit so badly?

Yes. So the DOT – Michael, this is Wade, again. So the DOT, I don’t know if you saw that they came out recently and gave some relief to the carriers that they could cancel on a – so they could cancel some of the frequencies in their markets and still get some of the subsidy. And so starting May 1, we have been doing that is canceling some of our EAS markets. We still have service there seven days a week. But instead of operating two flights a day, we’re operating one. The numbers that I gave you were passenger revenues that did not include the subsidy numbers.

I see. Okay. So passenger revenues could be down a bit, but some of these markets may still be profitable because of the subsidy. Is that a fair point?

I doubt they’ll be profitable. We’ll obviously look at it. The demand is so small in these markets right now and the DOT has been very helpful in letting us reduce the frequency.

Hey, guys, thanks for the time. Mike asked a bunch of my questions. But just maybe on the leasing business. I mean, I assume that you guys are deferring some of those lease payments at this point. Can you just confirm if that’s the case or not?

So, as I said in my prepared remarks, we’ve had 29 airplanes that we’re supposed to put into service with one of our lessees. We’ve actually paused those deliveries. We’re currently working with the lessee right now on how we handle some of their challenges. They are in serious financial difficulties right now. And I don’t want to talk about specifics as to whether we’re giving deferrals or not at this point. We are working with them very closely.

Okay, fair enough. And then just on the – so you said we have 55 aircraft coming out of lease this year. Just – I think that’s the only thing that’s coming off-lease, or coming off the CPA this year. Is there anything else that could come up potentially in 2020? And then maybe you could update us on 2021. I don’t think there’s much there either, but just curious your thoughts on that. Because, I mean, in the past, like shrinking and you guys refocusing has been hugely beneficial to your overall profitability. So just curious on how your thoughts on those aircraft are coming off?

Yes. So, obviously, I talked about in my prepared remarks, our 55 airplanes that are coming out of contract with Delta. That is all that’s coming out of contract in 2020 and 2021. Obviously, we’re exploring all kinds of alternatives with those airplanes, including working with the current partner to potentially renew, but we have not gotten anything done yet.

Okay.

And then we also have – and I talked about in my remarks, we have 51 airplanes on order, right? And so we obviously have the six Delta airplanes that are still coming this year, and then we have six used airplanes coming for Delta. We also have taken delivery of 25 used E175s in our United fleet, and we’re just working with them on the in-service dates.

Yes. Thank you for your interest, and we will talk to you next quarter.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.