The freight market is soft today as a result of a very soft consumer market for goods. Consumers stopped spending really starting at the beginning of this year. So, you’re seeing a much lesser demand for consumer products, which are moved typically by air freight. And other means, but a lot of air freight moves that demand is down. And as a result, the demand for these freighter aircraft today is down. However, just like freight is the first to suffer as consumer demand suffers. as consumer demand returns, freight is the first to recover. So, we expect as whether we go into any type of soft economic environment. And I don’t even use the word recession or soft landing, because I don’t know what it will be. If it will be, freight will be the first to come out.
So, the later availability of these aircrafts could dovetail well into demand, which we expect to improve as we get into 2024. But it’s only a guess to know when we will see a dramatic improvement in cargo demand. I certainly don’t see it this year.
Bert Subin: Got it. Okay. Just a clarification and then I’ll pass it over. But as we think about the guidance you put out there, you’ve already sold one of the 757s. So, you’re assuming the other two that are under contract, plus three that go on to lease and then the balance is USM stepping up on feedstock acquisition.
Nicolas Finazzo: USM stepping up, continued growth on our MRO operations, both on airport and off airport component. Component MRO is growing at a very fast pace. On airport, MRO has stayed strong almost at capacity. We’ll be adding more capacity with our Millington facility in January. Now, that’s 24. But we’re looking to find ways to continue to add additional labor to our on-airport MROs in both goodyear and Roswell to increase the throughput out of those facilities. So, we see USM picking up. We see on-airport MRO staying strong and growing. We see our component MRO business saying, growing at a very fast clip. We see our landing gear MRO. We could be getting into an issue with the amount of demand we’re seeing on the landing gear MRO side that we’ll have to figure out how do we accommodate the demand.
how do we gear up our capacity to accommodate the demand? Now, we have used third-party MROs to do landing gear work and we’ll continue to do that if we can’t do it. But we’re very excited about our ability to grow our landing gear MRO, not to mention AerAware, which we expect to get certified and we expect to start seeing sales. So, whether we get those this year or not, we didn’t put any AerAware sales in our revised forecast or guidance for 2023, yet that is still possible. but it wouldn’t be of a scale that would make a material difference.
Bert Subin: Thank you.
Nicolas Finazzo: You’re welcome.
Operator: Our next question comes from Pete Osterland with Truist Securities. Please go ahead.
Pete Osterland: Hey, Nick, Martin. I’m on for Mike Ciarmoli this evening. Thanks for taking our question.
Nicolas Finazzo: Hey, Pete.
Pete Osterland: Hey. First, just had a couple on the USM markets. How much did your sales of USM grow year-over-year in the second quarter? And are there any particular areas or products, where you saw relative strength for those sales?
Nicolas Finazzo: I’m going to let Martin answer that. So, he’s digging out his paper. So, he doesn’t have to remember it.
Martin Garmendia: Yes. Growth in USM for the quarter was up 12% overall. And that’s kind of consistent with year-to-date. So, it’s running around 10%. And again, that’s without the benefit of the feedstock that’s currently being repaired that we’ve had a bit of delay in. So, we expect that growth to be stronger in the second half of the year.
