Quint Turner: We are — we’re saying ’24 will improve upon ’23’s full year adjusted EBITDA.
Howard Rosencrans : Yes, okay. That was the point I was making. I was just trying to understand what the — obviously, there seems to be a lack of filter of information that’s going on at the company, so…
Operator: And our next question comes from Michael Ciarmoli with Truist Securities.
Michael Ciarmoli: I guess, can we just maybe elaborate a little bit on how Israel is directly impacting Omni? I mean, at Investor Day, I know the focus was on a potential government shutdown. It sounded like all flight activity was booked and locked in for the end of the year. Obviously, the U.S. doesn’t have any direct exposure. But I would think regardless troop rotation, movement would be good for Omni. So what’s exactly happening with Israel?
Quint Turner: Well, and I’ll take a stab at it and let others join in. Michael, this is Quint. Again — and we refer to them as passenger requirements. Obviously, we’re not going to go into a lot of detail on what Omni may be hearing directly from their customer. But just in general, I think the Israeli conflict caused an atypical interruption to what would normally be their busiest period, that being October. And as we remarked earlier, we do not believe that over a longer stretch of time, it will be a negative impact to Omni. Because those passenger operations will occur. It’s just difficult to say whether they will fall inside the fourth quarter or they will extend beyond that. And you’re correct that, in many cases, world events have resulted in additional revenue opportunities for Omni.
But it’s not the norm. And you only have to look back at the Afghanistan withdrawal, the NATO situation near the Ukraine to find some examples. So Omni remains, I believe, kind of a linchpin, if not the linchpin carrier for commercial passenger moves for the DoD. And we fully expect that to continue. Omni has demonstrated that while there’s more volatility, they can also do very well in those situations. So we’re not saying that’s changed. The possibilities are lower now. We’re not saying…
Joe Hete: Yes, you’ve got to understand, military is going to do their contingency planning. And of course, like I said, anything that they do in that regard is not something that’s divulged to the public. But eventually, as Quint noted, troops have to move. Normally, October is a busy month because rotating troops in and out before the holiday season. But when you’ve got a crisis boiling like we have in the Middle East, it’s one of those things where everything kind of has to take on — be put on hold until you can better assess the situation and what the potential ramifications are.
Michael Ciarmoli : Got it. And then just on the — I mean, I get it on cutting CapEx and it’s going to improve cash flow. But this is now multiple cuts to CapEx. And I guess, what’s sort of the direct formula you can give us? Because as we look out now, I mean, the ’25 EBITDA guide has obviously moved. But how much does the lack of growth CapEx spending impact the EBITDA generation that we were originally going to see?
Quint Turner: Well, Michael, I mean, again, there — of course, in addition to the CAM segment, which is where the EBITDA drive is from CapEx spend, there’s the ACMI Services. And we’ve spoken a lot about some of the things, with the Israeli situation. And that is the reason we’re deferring ’24’s CapEx guide to next year. But I think that next year, the aircraft that come out will — as Mike said, 14 or 15 aircraft will still drive significant EBITDA. There will still be some headwind from 767-200s being removed from service at the same time. And he talked about 14 or 15 aircraft, I think 8 of those are Airbus aircraft that come out next year. And I think — so we’re still going to have significant EBITDA contribution from newly converted aircraft that go on lease. But we’re going to hold off on the total EBITDA guide until we’ve had a chance to see how some of these other factors play out. But we are confident that it will exceed ’23’s actual.
Joe Hete: Yes. Just keep in mind, the EBITDA contribution of an asset is basically only a fraction of what the CapEx spend is for that similar asset. So it takes years to get that cash back in terms of leasing the aircraft out. So near term, it will have a minor impact on the EBITDA but a significant impact on the CapEx spend.
Michael Ciarmoli : Okay. And Joe, last one for me, and I hate to go here, but back to Helane’s line of questioning. I mean, we can literally monitor in real-time flight operations. I just — I mean, what were you guys not seeing? I mean, I would think you could see your power by the cycle on a daily basis, your flight operations on a daily basis, the block hours on a daily basis. I mean, it just seems like there was a failure of internal controls here. And I mean, if you’re seeing all these trends in real time, and we’ve been hearing and talking about a macro slowdown for months, I just — it just doesn’t really square to me. I don’t know if you guys — if you just weren’t monitoring that data or weren’t looking at it. But it just — yes, just seemingly, there seems like there was something that should have been jumping out and flashing red, especially on September 27.
Joe Hete: Yes. And in part, you’re correct in that regard in terms of – but it’s not an internal control, it’s more of understanding what the ramifications are of a delay. For example, when Omni had an aircraft that was down for 3 days, an airplane is down for 3 days. But the part that wasn’t connected was the fact that you had to put up 200 or 300 passengers in the middle of nowhere. I think it was in Guam was where the aircraft got waylaid. And it nailed there for 3 days. So it’s the downstream ramifications of it. Everybody knew the airplane mechanical, for example. As far as power-by-the-cycle thing goes, the users of the 200s turn in their hours at the end of the month. We don’t get a daily recap from them that, “I flew 2 hours yesterday and 5 hours the day before.” At the end of the month, you total up what their utilization was.
So you really wouldn’t have visibility into the PBC portion of it until the end of the month. All you’re doing is forecasting what you saw previously.
