Helane Becker: And then if I could just squish in one more. I don’t know and I don’t even know if you would see this, but I think Alaska Air, and you do some flying for them, has seen some book away since the middle of two month. And I’m just wondering if you would see any of that in your, in the flying you do for them or if it’s kind of been business as usual?
Chip Childs: Yeah. Helane, this is Chip. In all honesty for us, it’s business as usual. In fact, certainly given some of the things that have been going on in the industry, we’ve been asked to fly more and that type of stuff. So it’s not had a major impact relative to what our flying is, in fact, I think demand is strong and I think when demand gets a little stronger sometimes you don’t even notice it where we are today. So that’s kind of the situation with that.
Operator: Your next question comes from the line of Catherine O’Brien with Goldman Sachs.
Catherine O’Brien: Maybe one more on Contour and the CRJs in general. With these aircraft going to Contour, can you just remind us of how many of your CRJ’s are currently not on contract? I know there’s some moving pieces. I just wanted to get a sense of what’s not on Contour now? What’s about to come off? And what are the options for those to be rehomed, selling of this new Contour Avenue?
Wade Steel: So on the CRJ200 side, we own about 150 CRJ200s. And between prorate and contract, there’s probably about around 50 to 60 of those that are not under current contracts. But as we said, right now, there’s no debt. There’s very little book value. And we are monetizing those assets as we talked about through SkyWest Charter, selling, leasing, and so that’s kind of the scope of it. Our 700s and our 900s, the vast majority of those are all under contract and have very high demand for those.
Operator: Our next question is a follow-up from the line of Savi Syth with Raymond James.
Savi Syth: I just wanted to follow-up on your response to Duane’s question. That was super helpful to give the color there. I was curious. So how many captains are you able to create kind of in any given year in your kind of net captains, I suppose, in your kind of main operation and then just how much incremental is maybe SkyWest Charter helping you build as well?
Chip Childs: So, it’s a complicated question and we probably have a little bit of conservatism in our answer to that and basically today a lot of our projections I will say they get better all the time as we watch what’s happening. We’ve seen that change and I want to add some context. As we build back captains and we’re back building back the operation. We’re building it in a way that we don’t think that this problem goes away just this at this moment over the next couple. So we fundamentally think that over the next decade or so, we need to build a model that’s resilient relative to captains and first officers both. So as we build that back, we’re doing it the right way. Back to your number, how many do you think that you can produce?
I’d back up and just say, we have positive captain production today, but it’s still going to take, at the rate we’re going today, several years to get back to the 2019 levels. Now, the most important part that we probably would tag on to that is we’re working very diligently with partners in creative ways in which we can produce captains faster than what we producing today. That’s the Contour investment. That’s the pilot program investment with United. Fundamentally and strategically, we are going to look to attract pilots that want to be either have a career position here at SkyWest or a career position at are for partners, but not career positions anywhere else. So we’re going to continue to be far more surgical in the future than what we have been in the past about identifying those that contribute to our culture and our partners’ culture.
So, I think, like I said, we’re producing positive the last couple of months, which is the first time we’ve been doing it in the last two and a half years. And it depends on a lot of levels of attrition. It could be captain attrition, it could even be First Officer attrition right before they become captains, which honestly, Savi, we really don’t have a great grip on what those are going to be. The models are a little bit all over the place. We can get super optimistic and we can be super conservative. We’re just not ready to get into that level of detail now outside just to summarize. We have positive production today. It’s going to take a long time, but we’re really focused on ways in which we can aggressively move this forward, not just for shareholders, but look, our people want this as well.
We want high utilization for our employees, which obviously translates to the bottom line, but most importantly it creates a lifestyle where captains are going to want to stay as well. So it’s a cultural event as well that we’re deeply focused on.
Operator: Our next question is a follow-up from Catherine O’Brien with Goldman Sachs.
Catherine O’Brien: I had a follow-up for you, Wade, when you were talking about just like sparked my interest. On Contour, are you going to be leasing the aircraft or selling them outright?
Wade Steel: No, that’s a great question. So, the model that we currently have right now, we are selling the airframes to them and we are leasing them the engines. And so that’s how we’ve currently structured that with them.
Catherine O’Brien: And then, can you just remind us what the trigger is for you to flip from deferring incremental revenue is starting to recognize that deferred revenue balance? I know you’ve given us the guidance for next year. I think in the past, you’ve noticed tied to getting back block hours closer to 2019. Not sure if the contract changes earlier this year changed anything about where we should think about hitting that threshold and just in the context of, like, if that block hour target for 2024 moves around potentially higher, how could that impact the recognition?
Rob Simmons: So the deferred revenue model does depend on sort of our projection or forecast for future production in future block hours. But it’s hard to imagine a scenario right now that we sort of flip back the other direction. I think that starting in 2024 as we’ve indicated that we’ll start to recognize sort of small amounts quarterly and we would expect that to continue for many years.
Catherine O’Brien: Yes. I was just more wondering if maybe there was further upside to that recognition if the block hours moved higher, if pilot attrition was better.
Rob Simmons: We’ll keep you posted on that.
