Delta Air Lines Inc (DAL) — Q3 2020 Earnings Call Transcript

Thanks, Cassidy. Good morning, everyone and thanks for joining us for our September quarter earnings call. Joining us from Atlanta today are our CEO, Ed Bastian; our President, Glen Hauenstein; and our CFO, Paul Jacobson. Our entire leadership team is available for the Q&A session. Ed will open the call with an overview of Delta’s performance and strategy, Glenn will provide an update on the revenue environment and Paul will discuss cost liquidity in our balance sheet. We will then go to our Q&A and ask you to limit yourself to one question and a brief follow-up so we can get to as many analysts as possible. Today’s discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in Delta’s SEC filings. We will also discuss non-GAAP financial measures and all results exclude special items unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. And with that, I will turn the call over to Ed.

Well, thanks, Jill. Good morning, everyone. I appreciate you joining us today. This morning, we reported a $2.6 billion adjusted pre-tax loss on a 79% decline in revenues for the September quarter. We ended the quarter with over $21 billion in liquidity, having brought our cash burn down to $18 million per day in the month of September. And while we still have a long road ahead of us when we look through the large toll that the pandemic has taken, we are showing progressive improvement across the business, performing well on factors within our control and ensuring the company is well positioned as demand starts to return. There are signs that customers are becoming increasingly confident in returning to air travel, with TSA counts growing each week. However, we are still operating at a fraction of our normal capacity and expect that our December quarter revenues will be 30% to 35% of what we saw a year ago. To put that improvement in context, our revenues bottomed out in the second quarter at only 10% of prior year levels. In the third quarter, we were at 21% of prior year levels and we expect them to be roughly one-third in the fourth quarter. While we are experiencing steady improvement, we still have a long way to go. To see a meaningful step up in demand from here, we will need business travel to further improve, local quarantines to end, and international restrictions to lift. That will only come with widespread advances by the medical community and offices reopening, which many expect will start to happen in the first half of next year. As we all know, the path to revenue recovery is dependent on demand returning at scale. Until then, our focus is on doing a great job at what we can control, taking great care of our people and our customers, protecting our liquidity and managing our cost performance. For our customers, we continue to emphasize safety and health with the Delta Care Standard, our multi-layered approach that includes intense cleaning protocols, blocking middle seats, and requiring masks onboard our planes. According to IATA, with over 1 billion air travelers worldwide in 2020, there have only been 44 documented cases of suspected COVID transmission onboard an aircraft, and virtually all of them were in the early months of the pandemic before masks and revised safety protocols came into existence. We carry over 1 million people a week at Delta and have had no documented transmission onboard any of our aircraft. The Delta Care Standard works, and it’s keeping our customers and our employees safe. As a result, customers are increasingly becoming comfortable returning to air travel. Our customer-focused approach is producing record net promoter scores, which reached 75 in September, going up a staggering 22 points over the prior year levels. This is a testament to the Delta people who have continued to shine throughout this historic crisis. By restoring customers’ confidence in travel and investing in their long-term loyalty and trust, we are creating a path to sustainable revenue growth in the future; however, we do believe it could still take 2 years or more until we achieve a normalized revenue environment. Until then, we will be smaller in the short term, but also more agile and more efficient. Today, we are already 20% smaller than we were at the start of this year, having reduced our fleet, our headcount and our overhead. These were difficult, but essential decisions that positioned Delta to emerge as a more resilient airline. We have resized our ground and flight attendant workforces by 20%. I am grateful to all those employees for the sacrifices made, from those taking early retirement decisions to the 40,000 staff who took unpaid voluntary leaves throughout the pandemic, thus reducing our labor costs for non-pilot groups by more than 40% over the past 6 months. This was the driving factor that allowed us to avoid furloughs and protect those jobs. We are still working with ALPA and hopefully, we can achieve that same result with our pilots, but if not, we will be furloughing roughly 1,700 pilots on the 1st of November. We have reduced our fleet by retiring more than 200 aircraft this year and accelerated our fleet simplification to retire nearly 30% of our fleet or 400 aircraft by 2025, along with our revised Airbus order book. This cuts years off the timeline to achieving a higher engaged fleet with lower seat costs and a better customer experience. By making these structural changes to our cost base in this constrained environment, we will have significant cost and margin tailwinds ahead of us as higher yielding business travel returns and our costs begin to ease. We are seeing early signs of our cost efficiency steps paying off as our fourth quarter all-in CASM is projected to be roughly flat despite a 40% reduction in capacity year-over-year. These are incredible results and create nice momentum heading into 2021. The challenges of this year have reinforced our belief in the importance of an investment-grade balance sheet, and our top financial priority will be to regain that as soon as possible. The first step in that process is getting back to breakeven cash flow. We had initially hoped to be there by the end of this year, but as the virus has had greater impact on our business than expected, that goal has shifted a few months. We expect to average a daily cash burn rate of $10 million per day in December with good visibility to positive cash flow by the spring. Once we achieve that milestone, we will have a heightened focus on paying down debt. In perspective, we are positioning Delta to accelerate into a post-COVID recovery. Do we know exactly when that recovery will happen or what it will look like? No. But by taking out complexity, simplifying our cost structure, improving our products and service levels now, and maintaining strong employee morale in the face of this challenging time, we know that we will be even more customer-focused with a stronger brand and a solid financial foundation. With that, we will be well-positioned to adapt and to win. Now, I will turn the call over to Glenn.

Thanks, Ed and good morning, everyone. Since we last spoke in July, we have seen a steady progression in demand. This has resulted in our net cash sales improving from $5 million to $10 million per day at the beginning of the quarter to approximately $25 million to $30 million per day at the end of the quarter. That said, demand strength varied in different regions and segments of our business. Corporate demand has shown signs of modest improvement. While the volume of corporate travel at the end of the quarter was 15% of last year’s levels, corporate volumes are trending upward across all industries, and we expect this to continue into 2021. Apart from the Caribbean and Mexico, international demand remains weak. This is largely due to government-imposed restrictions in key markets. In the U.S., we have seen demand recover to 35% to 40% of pre-pandemic levels, with strengths in leisure markets like Florida, the Mountain West, and the beach destinations. However, cities that are under quarantine requirements like New York and Boston are recovering more slowly and are now just above 20% of pre-pandemic levels. As we approach the holiday travel period, we have been pleased with the recent booking trends for Thanksgiving and Christmas, which show that customers continue to gain confidence in booking further out. Our non-ticket businesses have held up relatively well during the quarter with both loyalty revenue and cargo outperforming passenger revenues. The strength in our loyalty revenue stream is largely due to the spend on the Delta co-brand card. American Express has stated that the spend on our co-branded card has held better than other AmEx cards. We recently launched a card acquisition campaign after putting those efforts on hold and have had an excellent response to this offering. This, combined with spend trends that AmEx has seen, suggests that our customers’ aspirations to travel remain intact. As Ed mentioned, we are focused on making sure Delta is well-positioned for an eventual recovery. We have been accelerating redevelopment projects in our airports and we were excited to open Concourse 8 in Salt Lake City. This was the first new U.S. hub airport to open in 20 years. In New York and Los Angeles, we are taking years out of our construction timelines, getting customers a faster path to a better terminal experience while also lowering our construction costs. I would like to commend our properties and facilities team for the excellent work they have been doing across the network in accelerating all our airport projects. We have made it easier for customers to do business with Delta, eliminating most domestic change fees, extending Medallion and Sky Club benefits, and refunding approximately $2.8 billion back to our customers so far this year. We are also rebuilding the network by leveraging our strength, focusing on connecting customers through our core hubs, and adding capacity to coastal hubs only as demand returns. In the domestic network, 80% of our current capacity is on our core hubs of Atlanta, Detroit, Minneapolis, and Salt Lake City. We are using our most cost-efficient, highest gauge equipment in these hubs as we retire less efficient aircraft. Internationally, a majority of our long-haul capacity is in our joint venture partner hubs, where we can efficiently connect traffic. Similar to the domestic entity, we are moving toward using our most cost-efficient wide-body aircraft in international operations by leveraging the A330s and the A350s, and eliminating the subscale 777 fleets and sun-setting the 767-300 ERs. While the longer network rebuild is underway, we are technically managing the network in the near-term. We are increasing capacity around peak leisure holiday periods like Thanksgiving and Christmas, while reducing it during off-peak periods like Halloween and election week. This approach will result in our December quarter capacity being 40% to 45% lower year-on-year or approximately 60% lower when you factor in our block seats. By doing so, we are aligning capacity with the emerging demand environment and our expectations that December quarter revenue will be down 65% to 70% versus last year. Before I turn the call to Paul, I would like to thank our entire commercial team for all they have done in managing through these extraordinary times. It’s been a difficult 6 months, but we feel like we are very well-positioned for where we stand and where the pandemic is. And with that, I would like to turn the call over to my good friend, Paul.

Thank you, Glenn. Good morning, everyone and thank you for joining us. This morning, we reported an adjusted pre-tax loss of $2.6 billion on revenue of $2.6 billion. This quarter’s results exclude one-time charges that are due to our response to the COVID-19 pandemic, including $2.2 billion in fleet-related charges, a $3.1 billion charge from the voluntary separation and early retirement packages, and a $1.3 billion benefit from the CARES Act grant funds. Our results this quarter were underpinned by a strong focus on costs as we reduced operating expenses by $5.5 billion or 52%, similar to the decline achieved in the June quarter despite flying 23% more capacity. We also expect our December quarter operating expenses to be approximately 50% lower year-over-year, producing a December quarter consolidated CASM that is flat to down on 40% to 45% lower capacity, a truly remarkable outcome. We have achieved this by resizing the airline by 20%. First, we had approximately 18,000 of our co-workers opt to take either a voluntary separation or early retirement package earlier this summer. Additionally, we still have over 12,000 employees on a voluntary unpaid leave of absence, who will return at various times over the next 12 months. In total, the voluntary exits, voluntary leaves, hour reductions, and other employee initiatives have saved Delta over $1.9 billion in salary costs so far this year. Second, we accelerated our fleet simplification with our intention to retire our CRJ-200 fleet by 2023 and our 717 and 767-300 ER fleets by 2025. We have also reached an agreement with Airbus on the restructuring of our order book. This restructuring reduces our aircraft purchase commitments by more than $2 billion in 2020 and by more than $5 billion through 2022. Our fleet actions will result in the retirement of almost 400 aircraft by 2025, including more than 200 this year alone. This will eliminate four fleet families, reducing complexity and driving meaningful cost savings in areas like maintenance and pilot training, while also producing a far better customer experience. While some of the cost actions we have taken this year are temporary and will come back as we rebuild the business, the changes we have made regarding headcount and fleet are structural. These actions and the eventual easing of our load factor caps will allow us to bring capacity back in a measured way at lower incremental costs providing future margin tailwinds for the business. Our strong cost focus has also allowed the increases we have seen in net sales, which is tickets purchased versus tickets refunded, to flow directly into an improvement in our daily cash burn, which improved from $27 million per day in June to $18 million per day in the month of September. Looking forward, we expect to see a progressive trend in our daily cash burn and currently expect to exit the year with an average daily cash burn of $10 million to $12 million for the December quarter. Turning to the balance sheet, we ended the September quarter with $21.6 billion in liquidity and adjusted net debt of only $17 billion, up $6.5 billion since the end of the December quarter 2019. During the quarter, we raised $9 billion backed by the cash flows and IP of our SkyMiles program. The financing was nearly 6x oversubscribed and priced at a blended rate of 4.75%, an amazing outcome for the largest debt offering ever by an airline. Excellent work and amazing execution by our finance, SkyMiles, and legal teams all working together to get that done. With our cash burn trajectory on track to achieve breakeven by spring and a solid liquidity position, our balance sheet work has already begun. Last week, we repaid the $3 billion outstanding under our 364-day term loan due in March of next year. We also paid down $2.6 billion we had drawn on our revolvers earlier in the year and that capacity remains available in the future. We have now flattened our near-term debt maturities with $2.3 billion of obligations due through the end of 2021. Our actions also freed up more than $3 billion in collateral tied to the term loan. As a result, we now have $9 billion to $10 billion of unencumbered assets, including newer vintage aircraft. We are on track to end the year with more than $16 billion in liquidity and adjusted net debt of approximately $19 billion. In closing, we made significant strides over the last 6 months; however, more hard work is still ahead to ensure that we build the foundation for Delta’s recovery. I am confident that with the Delta spirit and values that our employees exhibit every single day, the airline will pull through and emerge stronger and more resilient. I will turn the call back over to Jill to begin the Q&A.

Thanks, Paul. Cassidy, we are ready for the analyst question period if you could give the instructions on how to get into the queue.

Good morning. Paul, you talked about all-in CASM being in line with 4Q ‘19 despite the lower capacity. Can you talk about what level of ASM you think you need to fly for ex-fuel unit costs to be in line with 2019 levels? Is it 70% of 2019 capacity? Is it 90%, is it 105%, what’s the right way to think about that?

Yes, Joe. We are looking at everything on an all-in cost basis going forward. It’s important to note that we have managed to keep our total operating expenses flat, reductions flat over the last few quarters as we continue to ramp up capacity of the airline. Some of what we have done is temporary and the balance here is making sure that we are bringing costs back at a measured pace with demand returning in our capacity decisions as well. Fuel price is going to be an important part of that. We are flying with capacity down roughly 40% to 50% in the fourth quarter, but we don’t have all of that available for sale even though we are absorbing all the costs of it. As we think going forward, we are positioning the airline to make sure we are all-in CASM at a reasonable level that can be absorbed as we grow capacity, and I think the team has done a good job of that.

Okay. And then Ed, along with the SkyMiles transaction, you provided revenue and profitability disclosures for the loyalty program, which highlighted how profitable and durable that portion of your business is. I am not seeing any of those disclosures being provided today that’s something you alluded to doing at your June Investor Day pre-COVID. So, my question is will you commit to starting in 2021 begin disclosing those same metrics revenue, EBITDA, cash proceeds for the loyalty program on a quarterly basis?

Well, thanks, Joe. Yes, we are continuing to improve our disclosures. I frankly haven’t gotten to the 2021 disclosure list yet. We are trying to get through 2020 first, but as you note, the transaction gives a sense for the importance of the loyalty program not just to our balance sheet but our overall future. It’s a strategic competitive advantage, one of the most important ones we have and we will continue to do a better job of giving our investor base an appreciation for that. But at the same time, we have to be mindful of the other sensitivities around that data.

Thank you.

Hi. Good morning, everybody.

Good morning, Hunter.

Paul, on the fourth quarter CASM ex to flat CASM ex, how much do we need to strip out for third-party refinery sales and what’s been driving that line up so much over the last couple of quarters? And then more broadly, how do we think about the overall ancillary business expense on the P&L into 2021?

Yes, sure. Thanks for that question, Hunter. We had managed a lot of that through exchanges for jet fuel. With jet consumption down, we have had more volatility and just the fear of third-party sales is we are not able to exchange that. So, we are managing through that going forward and we expect that will be a little bit noisy as we continue through our recovery before things normalize in terms of capacity at the airline and our production and normalization at the refinery as well. As third-party expenses go, we see improvement on the horizon in our MRO business we have talked about that before with the opportunities ahead of us with the Pratt and Rolls Royce agreements going forward. There has been some noise around that in the midst of the COVID pandemic but we will continue to see expenses go up as volumes increase, but that should be viewed as a separate independent business from the airline itself.

Okay. And then how many aircraft deliveries do you have now planned in relation to the 383 that you have coming out over that same time horizon?

We have reduced with the deal announced today and the numbers in our fleet tables. We have taken out about 77 aircraft through the end of 2021 and redistributed that over time as we continue to work through the impact of the pandemic.

Thank you, Paul.

Hey, good morning, everyone and thanks for taking my questions. Paul, just a quick clarification, I think you said you want to end the year with about $16 billion in liquidity, but I think you ended 3Q at about $21 billion. Can you just help us bridge that? And then maybe off that last question like how are you thinking about CapEx into 2021, please?

Hey, thanks, Brandon. The impacts here are the cash burn, which we are reducing to $10 million to $12 million a day, which is roughly a $1 billion for the quarter. We also had $3 billion that we paid down the term loan and some of the residual one-time payments to employees who are under the voluntary early retirement separation programs will continue to pay out into the fourth quarter. So, that’s the reconciliation.

Okay. And then, any view on CapEx next year?

I think it’s too soon to tell at this point. We are focused on paying down debt as soon as we get to cash breakeven. You are going to see similar discipline to what you have seen in the past that led to the balance sheet strength that we had pre-COVID, reinforced by this pandemic, and we will manage CapEx accordingly.

Alright. Thank you.

Hey, good morning, everybody. A couple of questions for Glen. Can you remind us pre-pandemic what the top three or four types of businesses were that make up your corporate demand and maybe what percentage of total revenue they represent?

Sure, banking of course, financial services, manufacturing, and transportation.

And roughly what percentage of total revenue does that account for?

I don’t have that in my head, but I can get back to you on that.

Okay, fair enough. And second, can you discuss the evolution of the booking curve since March? And what do you think needs to happen in the curve to bring Delta closer to cash breakeven? Do you see any permanently structural changes in the curve post-vaccine?

It’s too early to tell what permanent changes there are in the booking curve. What we saw at the beginning of the pandemic was no bookings at all, and cancellations outpacing bookings 100 to 1. As we progress, we have seen net positive bookings in terms of cash flow. Now in the third quarter, we see a very condensed curve but people willing to look further out, good booking momentum for Thanksgiving and Christmas and even into off-peak periods in December and early January. Each month, we see more customers with more confidence booking both close in and further out, which is what we need to rebuild consumer confidence. While we are closer to the end of the pandemic than the beginning, we don’t know how it will evolve from here.

And if I can just squeeze in the third question: what stat are you looking at to determine when to lift the load factor cap?

We haven’t made that decision yet. It will depend on consumer sentiment and confidence in air travel. As Glen mentioned, confidence is improving, and studies are coming out indicating the safety of air travel. We anticipate lifting those caps sometime in the first half of next year, but we haven’t determined a specific date yet.

Thank you, gentlemen. Take care.

Thanks. Good morning. Ed, you’ve said that it’s not about building back to what was but building for the future. Have your teams had substantial conversations with corporate customers to gauge what the makeup and size of business travel may look like once the pandemic fears are behind us, especially now that customers have had a chance to see what videoconferencing technology can and cannot deliver?

Yes, we are in frequent daily conversation with our corporate customers. Today, we have roughly 90% of our primary corporate customers who have travelers flying, even if in small numbers. They are gaining insight into the new travel experiences. Anecdotally, they are giving very strong reviews of safety and the confidence in restoring their travel spend. I believe video technology will have some impact, but it will be a complement to business travel, not a substitute for it. Historical patterns suggest that after every crisis, business travel has returned stronger than expected. While it will be different, I believe it will be robust once again.

Helpful. Is the improvement in cash burn from September to what you expect in the fourth quarter driven solely by revenue, given most of the retirements happened in August, or are there other drivers?

It’s principally revenue.

Thanks for the time. Ed, regarding the potential long-term impairment in corporate demand resulting from ongoing pandemic developments, how will Delta offset that? Is this solely a cost challenge? Alternatively, can the industry consider pricing leisure travel differently?

We are currently 20% smaller, and that gives us a chance to resize the demand set. While it’s an open question its impact on international, we are well-positioned with our health structure. The strength of our service levels and focus on taking care of our customers will be crucial. In the long term, I am confident we can adjust to changes, including changes in pricing and competitive markets.

Thanks. On the 40% capacity reduction in Q4, can you discuss the cadence by month and any early look into Q1?

We don’t have a clear indication at this time.

Okay, but it does imply a bit of pickup into November and December?

Modest, very small improvements.

Yes. Hey, good morning. Two quick ones. Paul, on CapEx for ‘21 and ‘22, you mentioned at least through ‘21 you will take 77 more airplanes on a gross basis. Can you provide a rough forecast for CapEx next year?

It’s premature to provide total numbers for next year. We talked about a $5 billion reduction. All aircraft will come with financing in place. We will have decisions to make in 2021 depending on our balance sheet and the pace of recovery.

Okay.

We need to ensure we can finance those aircraft as needed.

Okay, fair enough. The headline has recently mentioned the Brazilian regulators are going to put the Delta LatAm deal on trial. Can you still proceed and move forward regardless of the ongoing trial?

Good morning, Mike. Our joint venture is under review with the U.S. Department of Transportation. We will need those approvals for the transaction to proceed. We do have code-sharing agreements with them that are ongoing, and we anticipate the Brazilian tribunal will approve the transaction ultimately.

Okay, very good. Thanks for the insight, Peter.

Thanks. You had an open pilot contract before the COVID situation began. Are the negotiations that you are undertaking prior to November 1 including any stage to that contract or is that on hold?

We are not going to discuss negotiations publicly. Our focus is to try to find a way to eliminate the need to furlough 1,700 junior pilots. We have provided ALPA many options, and I am hopeful we can reach resolution.

I understand that. Just wanted to clarify that the main part of the contract is on hold until we get through this part.

That’s a fair observation.

Can you talk about the airport construction acceleration and how the airport will look going forward?

Our main focus is taking advantage of reduced travel to accelerate progress on our new facilities in LaGuardia, LAX, and Salt Lake City. This is a significant opportunity. We believe testing will be an ingredient in opening up international travel lanes. Regarding thermal scanning, we requested TSA to take this over, but have not yet succeeded in convincing them.

Thank you for your help.

Your questions on landing fees are difficult to predict until we see the balance in travel and potential costs for COVID-related adjustments.

Thanks for the time. Paul, can you detail what maturities look like over the next 24 months? Is there any flexibility in renegotiating?

Yes, David. The biggest maturities we have due are $450 million in December and $600 million in April. We have primarily under $2 billion in obligations due through the end of 2021.

Thank you. Ed, regarding testing, when do you believe international travel may start opening up with testing?

We are advancing discussions for rapid testing. However, the timing is uncertain, influenced heavily by the virus's progress both in the U.S. and internationally.

Thank you very much, guys.

Thanks very much. Can you comment on trends in American Express card spend in the third quarter?

We don’t provide specifics, but trends have been improving. We disclosed that we were down about 20%, which has come back up, and the airline spend has moved from negative to the low 70s in decline.

That’s great. Lastly, for Paul, what is your ballpark for run-rate maintenance CapEx in the next 2 or 3 years?

It’s probably lower than what has been traditionally, around $500 million, due to our smaller size. We will manage CapEx with an eye on cash flow and our goal of paying down debt.

Understood. Thanks, Paul.

Hi, good morning, everyone. Paul, how much unit cost savings will fleet simplification give you versus 2019? Where ideally would you like CASM to be as industry returns to normal?

We haven’t provided specifics on unit costs. However, the simplification will result in billions of dollars in savings as we work towards keeping CASM below pre-COVID levels.

Great. A near-term question on salaries and wages near $2 billion, is that a good baseline going forward?

We don’t anticipate any furloughs for ground and flight attendant employees. What we have done to date is nearing a good run rate going forward.

Okay, great. Thank you.

And Cassidy, we are going to have time for one more question from the analysts.

Hi, thinking ahead, Ed, with the Airbus delivery schedule cleaned up and retirements set through ‘25, is now the right time for opportunistic overtures to Boeing?

We are in constant dialogue with all OEMs about all aircraft. I don’t have anything specific to report, but we are always looking for ways to advance Delta.

Is there a reason for the 2025 target for the 717 and 767 retirements?

No specific reason; it seemed like a convenient interval to assess further changes, considering what we have experienced this year.

Okay, thanks.

This will conclude the analyst portion of the call. I will now turn it over to Tim Mapes, our Chief Marketing and Communications Officer.

In addition to welcoming all the members of the media to the call in the few moments that we have here, Cassidy, if you wouldn’t mind just reiterating the instructions for each of them to enter the queue.

Can you tell us how much of the Brazil GOL loan that was refinanced last month was repaid and how much is outstanding?

We didn’t have a loan to GOL; we had a $300 million guarantee we restructured. We lent them $250 million with amortization payments that are required, and they are current with that loan.

Are you planning to inject any cash into LatAm or Aeromexico?

We have no plans at present; we need to get through our own crisis first.

Can you provide an overview of your discussions in Washington regarding additional aid?

We support the extension of the CARES Act for airline workers and hope a vehicle for that extension can be found soon. We are fortunate not to have furloughed anyone yet, and have managed our costs effectively through voluntary measures.

Thank you.

Cassidy, we need to get Ed and the members of the leadership team to an employee town hall, but we have time for one final question, please.

Can you discuss loyalty program spending trends and how that could contribute to cash flow breakeven in the near future?

The loyalty program and the American Express relationship have been significant advantages through the pandemic. Spending trends have been encouraging. While it’s too early to provide specifics, we feel optimistic about the contributions toward breakeven.

Thank you.

Thank you everyone for your time. We look forward to speaking with you in January.