So those values have held up well. That $1.4 billion is a combination of excess collateral that we’ve put into our bank facility as well as aircraft, we have not put in the facility at all because we have a coverage ratio. As far as debt levels and leverage levels, according to our bank agreement, we were a little under 3.2x at the end of the quarter. And as Joe talked about at the onset, and I think I mentioned in some of the earlier remarks, the CapEx spend is way down this year, and we’re targeting some free cash flow generation. So we anticipate a very stable sort of in that range of leverage. And then as EBITDA begins to move ahead next year, we look to see some delevering.
Frank Galanti: Great. Thank you very much.
Operator: Thank you. [Operator Instructions] Our next question comes from Christopher Stathoulopoulos with SIG. You may proceed.
Christopher Stathoulopoulos: Good morning, everyone. Thanks for taking my questions. So Joe, quickly, it’s been a while since we’ve gone through, or talked about Amazon in any real detail here. And could you walk us through, there’s a lot of moving parts here as we think about the composition of the fleet, the order book, the options, the accelerated ABX deal, who approached who kind of the economics, CAM versus ACMI flying here. So could you kind of walk us through this new segment, this new deal here specifically? So I heard 50 by year-end. There’s an option for 10, so that could put you at 60. Is this entirely 300s now? Are we done with the 200s? Are the economics of the deal contemplate the pull forward with the ABX piece?
And then the duration, and looking at your K yesterday, you have made the duration of the existing yields – excuse me, leases was staggered through. And just wondering now if there’s a sort of uniform sort of endpoint for that or they continue to kind of stagger off through end of decade and beyond? Thanks.
Mike Berger: Yes. Hi, Chris, it’s Mike. I’ll take you through this a little bit. So as you heard, the initial will be 10 incremental aircraft that will fly, that we’ve designated now to ABX. We’ll get those through – into service by the end of this year. There’s another potential for 10 incremental aircraft that Amazon will potentially award at a future date. Within that, we also have the potential to have lease extensions as part of the 10 incremental aircraft that will potentially come at a future date. So that’s how the agreement is structured. 10 initially, 10 potential, with the option to also include lease extension as it relates to the incremental warrants in the future.
Christopher Stathoulopoulos: On the mix of ABX versus ATI in terms of how many aircraft within each of that? And then also, as we think about utilization levels as sort of similar to what we’ve seen sort of and similar routes, I think most of us are familiar with what that looks like, but any detail so far as the composition of flying and also the mix within ABX and ATI? Thank you.
Mike Berger: The initial 10 will be ABX. We will determine if we’re successful with the additional 10, we’ll make that decision at a later date. The composition of the flying, not only in terms of the domestic piece, where they’ll go as well as the block hours will be really very similar to what we have today. We have a minimum of 200 block hours per tail.
Joe Hete: Per month.
Mike Berger: Per month. Excuse me, yes, per month.
Christopher Stathoulopoulos: Okay. And these are just small 300…
Mike Berger: Yes. That’s right. Correct.
Christopher Stathoulopoulos: Okay. Okay. Got it. And then as a follow-up, Quint, could you just remind us of the power by cycle economics, the number of engines in that fleet and anything else we should consider? Thank you.
Quint Turner: Sure. Well, Chris, when we talked about power by cycle in relationship to the changes in CAM versus prior periods has generally been in the context of the 767-200 aircraft. And that is the only fleet type that we offer customers access to a pool of engines that we maintain, those being the GE-powered CF6-80A engines. And they pay CAM on a per cycle basis. As they operate aircraft they lease, 767-200s they lease, they would OCAM, a cycle charge and that would hit revenue. Any overhauls of the engines that we do in that pool to maintain it is capitalized and is depreciated. So you can see that when usage, utilization drops or we take or retire or remove from service 767-200s, as we’ve been doing with that fleet now for the last few years, there’s a significant impact on EBITDA and, in particular, because the expense is mostly in depreciation, which wasn’t there to begin with.
So the revenue comes straight out. And we’ve seen some lower monthly utilization of the aircraft that remain in service, and we’ve talked about the removals, I think, a dozen or so in the last 12 months. And those are just aircraft that have reached sort of that 20 – right around that 20 years post conversion part of their life and their airframe cycle age is such that it’s beginning to make sense to remove those from service. The aircraft are still performing well, but it’s just – as we’ve said, eventually, that fleet, some of it is going to sunset. There are some aircraft, I think, at the end of this year that we’ll still have in service roughly 14 or so freighters. And the majority of those are a ways away from a cycle standpoint where we would look to remove them from service.
