Transat A.T. Inc. (TRZ), a leading integrated international tourism company specializing in holiday travel, reported its first-quarter financial results with a notable 17.7% increase in revenue to $785 million, compared to the same period last year. Despite the rise in revenue, driven by sustained demand for leisure travel, the company faced profitability challenges, resulting in a negative adjusted EBITDA of $8.6 million and a net loss of $61 million. Transat's strategic initiatives continue, including a new collective agreement with flight attendants, a partnership with CF Montréal, and a commercial joint venture with Porter. The company's cash position remains robust, with over $1 billion in customer deposits, although it expects adjusted EBITDA margins for fiscal 2024 to be at the lower end of the projected range.
Key Takeaways
- Revenue increased by 17.7% year-over-year to $785 million.
- Negative adjusted EBITDA of $8.6 million and a net loss of $61 million were reported.
- New collective agreement with flight attendants achieved, enhancing stability.
- Partnership with CF Montréal soccer team to boost brand recognition.
- Revised fiscal 2024 capacity increase to 13% due to industry challenges.
- Strong cash position with over $1 billion in customer deposits.
- Adjusted EBITDA margin for fiscal 2024 expected to be 7.5% to 9%, at the lower end.
Company Outlook
- Transat is focused on executing its strategic plan, including balance sheet restructuring and revenue management improvements.
- The partnership with Porter is expected to connect domestic and transborder networks to European destinations.
- Capacity growth for Q2 is projected at 14%, with a 13% increase for the full year.
Bearish Highlights
- Issues with Pratt & Whitney GTF engines and industry challenges impacted profitability.
- Flight attendants' strike speculation affected Q1 and Q2 bookings.
- Consolidating competitive landscape in the Canadian airline market.
Bullish Highlights
- Sustained demand for leisure travel underpins revenue growth.
- The collective agreement with flight attendants removes uncertainty.
- Cash and cash equivalents and trust increased to $453 million at the end of Q1 2024.
Misses
- The company reduced capacity and canceled routes due to aircraft leasing market challenges.
- Summer yields are expected to be healthy but not as strong as last year.
Q&A Highlights
- Pilot hiring and retention are progressing well, with a new agreement in place until April 2025.
- The company has revised its CapEx plan, focusing on maintenance, IT projects, and internalizing services at the Montréal Airport.
- Despite increased competition and pressure on yields, the partnership with Porter shows promise.
Transat's first-quarter results reflect a mixed performance in a challenging industry environment. While revenue growth indicates a strong demand for leisure travel, profitability has been affected by various factors, including engine issues and market pressures. The company is taking strategic steps to address these challenges and capitalize on opportunities, such as the partnership with Porter and the internalization of services at the Montréal Airport. With a solid cash position and a clear strategic direction, Transat is working towards improving its financial outcomes in the coming fiscal year. The market will be looking forward to the company's next earnings call on June 6th for further updates on its second-quarter performance.
Full transcript - None (TRZBF) Q1 2024:
Operator: [Foreign Language] Good morning, ladies and gentlemen. Welcome to the Transat Conference Call. This call is being recorded. I would now like to turn the meeting over to Ms. Andréan Gagné, Senior Director.
Andréan Gagné: Thank you, Sylvie. [Foreign Language] Hello, everyone. And thank you for attending our earnings call for the first quarter ended January 31, 2024. I’m here this morning with Annick Guérard, President and CEO; and Jean-François Pruneau, our new Chief Financial Officer, who joined Transat early January, and who is pleased to be presenting to you for the first time this morning. Annick will provide an overview of the quarter and share comments on the current operational situation and commercial plans for the future. Jean-François will ask to cover our financial results in more detail. We will then take questions from financial analysts. Questions from journalists will be handled offline after this call. The conference call will be held in English, but questions may be asked in French or English. As usual, our investors’ presentation has been updated and is posted on our website in the Investors’ section. Jean-François may refer to it as he presents the results. Our comments and discussion today may contain forward-looking information about Transat’s outlook, objectives and strategies that are based on assumptions and subject to risk and uncertainty. Forward-looking statements represent Transat’s expectations as at March 14, 2024, and accordingly are subject to change after such date. Our actual results could differ materially from any stated expectations. Please refer to our forward-looking statement in Transat’s first quarter news release available on transat.com and SEDAR+. With that, let me turn the call over to Annick for opening remarks.
Annick Guérard: Good morning, everyone. Thank you for joining us for our fiscal 2024 first quarter conference call. Transat’s financial results reflect sustained demand for leisure travel and a solid increase in traffic as revenues grew 17.7% year-over-year to $785 million. However, industry-wide structural challenges, including costs related to Pratt & Whitney GTF engines, applied downward pressure on profitability. As a result, adjusted EBITDA was negative $8.6 million in the quarter, while net loss totaled $61 million. Let me remind you that, historically, the first quarter has been seasonally weak for Transat. Jean-François will provide you with more details in a few minutes. Before turning to operating metrics, I want to highlight one important recent development. Last month, we announced a new collective agreement with our flight attendants, effective until October 2027, providing long-term stability in our relationship. You may recall that the union was vocal about our negotiations and the possibility of a strike. The media exposure clearly affected bookings and yields over the last three months, a period that typically experiences robust reservation activity. Given the uncertainty, customers were cautious about booking for the holiday season, as well as for the winter season. The effects witnessed in the first quarter carried into the second quarter. The agreement reached three weeks ago removed the uncertainty. Our flight attendants play a key role with our customers. Their passion has allowed us to build the solid reputation we have today. They’re at the forefront, dedicated and committed. By offering them better working conditions, we firmly believe we’re making a sustainable investment in Transat’s future. During the quarter, we’ve also continued to improve our operations, reporting significant progress in on-time performance. Our performance improved for each month of the quarter. December was especially remarkable with a 15% year-over-year improvement despite a marked increase in the volume of activity. Another good news on the commercial front is our recently announced partnership with CF Montréal. We signed a multi-year agreement with the Montréal-based soccer team to become an official partner. This will enhance Air Transat’s brand recognition not only across different cultural communities but also towards families, which have been a key target audience for Transat for years. Over the years, Air Transat has always been more than an airline. It’s an ambassador for our city and a bridge between cultures, much like CF Montréal. Turning to operating metrics, traffic increased 20% from the first quarter of 2023, while overall capacity increased 25% during the same period. Industry-wide capacity increase to some destinations led to pressure on yields. A significant increase in capacity and growing uncertainty about the negotiation process with our flight attendants resulted in a 3% decline in yield, while a load factor lost 3.5 points compared to last year’s first quarter, ending at 80.2%. Lower yield is also a reflection of consumers’ price-sensitive behavior in the current economic context, a behavior we’ve been observing over the past few months. In response to the strike threat in the last quarter, we have deployed additional promotional activities. These efforts have shown solid year-over-year improvements in the number of passengers, transactions and revenues. Despite load factor and yield trends for summer 2024, tracking in line with the same period last year, we don’t foresee the same uplift exhibited last summer. After an exceptional summer last year, airfares now seem to normalize for 2024. This said, several programs continue to show strong performance and we are pleased with early results of additions to our flight programs, such as our routes to Marrakech and Lima, and the annualization of several destinations, including Lyon and Marseille. They are all presenting results above expectations with solid load factors, excellent yields and good booking velocity. Moving to our forecasted capacity increase for fiscal 2024, we revised our growth plan mainly due to structural issues affecting the industry. First, the aircraft leasing market has been under significant pressure. Due to the operating challenges caused by the Pratt & Whitney engine situation, as well as the problems affecting the Boeing (NYSE:BA) 737 MAX 9, a great number of carriers are looking for aircraft. These issues, combined with an already stressed supply chain, are putting important pressures on the availability and the cost of aircraft leasing. We currently have four aircraft grounded due to the Pratt & Whitney situation, a number that is expected to increase to five or six by the end of the current fiscal year. Consequently, in light of expected grounded A321LR aircraft, we have recently secured three A330 aircraft leases to support network needs for upcoming years. As planned, we expect to have four new A321LR delivered to our permanent fleet over the next month. In the context, we have cautiously reduced our fiscal 2024 planned capacity increase, which we now expect to be 13%, compared to 19% previously. In closing, although Transat experienced a more challenging start to fiscal 2024 than expected, we remain committed to executing our strategic plan. The agreement with flight attendants not only eliminates uncertainty for our customers, but also enables us to dive back into the execution of our priorities, which include; restructuring of our balance sheet; implementing our commercial JV with Porter with the first phase being deployed this summer; pursuing the deployment of our internal optimization program to increase the efficiency of our operations; deploying solutions to significantly improve revenue management, including generating more ancillary revenue per passenger. At the core of our strategic plan is the commitment to providing customers with an outstanding travel experience and cultivating a positive working environment for employees. We believe we are making the appropriate adjustments to reflect a demand environment that remains firm. This is highlighted by our solid cash position and the record customer deposits for future travel in excess of $1 billion at the end of the first quarter. Nevertheless, we remain prudent about our performance for the entire fiscal. A continuous monitoring of the Pratt & Whitney GTF engine situation, an adaptive contingency plan, and a satisfying settlement with Pratt & Whitney will be key to the rest of the year. This concludes my remarks. Jean-François will now review our financial results.
Jean-François Pruneau: Merci, Annick, [Foreign Language]. Our first quarter topline results show revenue growth of 17.7% year-over-year, driven by a solid increase in traffic. On the other hand, profitability was negatively impacted by rising industry costs, stemming in part from operating challenges related to the Pratt & Whitney GTF engine issue and an unfavorable year-over-year aircraft maintenance calendar. As a result, adjusted EBITDA was in negative territory for the first quarter and obviously below expectations. During the quarter, we also completed the previously announced sale of an investment in a hotel in Mexico with proceeds from the transaction applied to reduce secured facilities by $21 million. Accordingly, we lowered our long-term debt to $665 million at the end of the first quarter. Looking ahead, we aim to defer our April 2025 debt maturities. As you are probably aware, one of my key priorities upon taking over the position of CFO is to execute a successful refinancing plan. Deferring maturities would provide more flexibility in carrying out a plan beneficial to all stakeholders. Additionally, I want to highlight that ongoing discussions with stakeholders are in progress and we will keep you updated as it evolves. Now, let’s drill down to our first quarter results. Revenues reached $785 million, up 17.7% from the first quarter of 2023. The increase reflects sustained demand for leisure travel driven by a 20% increase in traffic expressed in revenue passenger miles. Company-wide capacity grew 25% from the same period last year while yield went down 3.1%. Adjusted EBITDA amounted to negative $8.6 million in the first quarter of 2024, compared to a positive $3.3 million in the first quarter last year. The variation is mainly due to a year-over-year increase in operating expenses related to deployed capacity along with operating challenges related to the Pratt & Whitney GTF engine issue and the leasing of additional aircrafts. In the first quarter, we also face an unfavorable aircraft maintenance calendar compared to last year as a result of lower aircraft utilization during pandemic. These factors were partially offset by lower fuel expenses reflecting a price decline of 18% compared to the same period last year. Net loss, meanwhile, totaled $61 million or $1.58 per diluted share, compared to $57 million or $1.49 per diluted share in the first quarter of 2023. Moving to cash flows and financial position, cash flows from operating activities amounted to $111 million in the first quarter of 2024, compared to $195 million in the first quarter of 2023. The decrease can mainly be attributed to an unfavorable variation in changes of non-cash balances related to operations and to a greater operating loss in the most recent quarter. After accounting for investing activities and repayment of lease liabilities, we generated positive free cash flows in the first quarter at $39 million versus $144 million in the same period last year. In terms of our balance sheet, cash and cash equivalents stood at $453 million at the end of the first quarter of 2024, compared to $436 million at the end of our last financial year. Cash and cash equivalents and trust are otherwise reserved mainly resulting from travel package sales significantly improved year-over-year reaching $612 million versus $524 million at the end of the same period in 2023. I am pleased to point out that total cash exceeded a record $1 billion, which reflects important efforts made to improve our operations and our ability to convert revenues into cash. Following the debt repayment, Transat’s long-term debt and deferred government grants stood at $806 million at the end of the first quarter, compared to $816 million at the end of fiscal 2023. Debt, net of cash and cash equivalents improved amounting to $452 million as of January 31, 2024, down $28 million from $380 million at the end of 2023. Turning to our outlook, considering recent industry-related issues that impacted our cost base, we now expect an adjusted EBITDA margin for fiscal 2024 to be at the lower end of the range of 7.5% to 9% announced last December. This updated outlook assumes a 13% increase in available capacity, which still represents healthy growth year-over-year. Our main assumptions in deriving this forecast include a weak GDP growth in Canada, an exchange rate of C$1.34 per US$1, and an average price per gallon of jet fuel of C$4 even. In closing, this conference call marks my first as CFO of Transat. I look forward to opening a dialogue with sell-side analysts and the investment community at large to ensure that Transat’s path to value creation is well understood. This concludes my prepared comments. We will now open the call for questions from analysts.
Operator: Thank you. [Operator Instructions] The first question will be from Konark Gupta at Scotiabank. Please go ahead.
Konark Gupta: Thanks, Operator. Good morning, everyone. So, my first question is on, you talked about a few issues in the quarter from Pratt & Whitney to maintenance timing to flight attendant risk for strike, as well as the industry pressures that we’re seeing. I think of all these issues, things like, the Pratt & Whitney and the labor noise were sort of the transitory issues, for sure. I’m just wondering, what was your expectation heading into the quarter back in mid-December, let’s say, about EBITDA, and, like, how much did you fall short because of these two issues, which I would say transitory?
Jean-François Pruneau: Well, obviously, the situation evolves and the expectation that we had in -- back in December, as I said, EBITDA was below expectations. So obviously, results or impacts for the quarter were worse than expected. That being said, obviously, the guidance is an annual guidance. We don’t provide a quarterly guidance and I can certainly not talk about what was the impact expected in the first quarter specifically.
Annick Guérard: Maybe I can add that when we, back then in December, we had a first tentative agreement that was signed with the flight attendants and we observed a clear decline in our booking at different periods. First, when there was a first right to strike that was voted at the end of November, then we observed solid booking increases following the signing of the two tentative agreements, and afterwards, we saw significant slowdown again following the rejection of the agreement. So overall, a clear correlation of events in our bookings, unfortunately, that honestly we had not anticipated back then in December.
Konark Gupta: Right. No. It makes sense. That’s very helpful.
Annick Guérard: Yeah. If I can add something else.
Konark Gupta: Sure. Sure.
Annick Guérard: The other thing that we might not have anticipated that well, I would say, is how the market, the leasing market, has tightened over the last month. So in order to mitigate the impacts of the Pratt & Whitney engines and the fact that we have aircrafts that are grounded right now and will be grounded, additional aircraft will be grounded over the next month, the aircraft leasing market has tightened for different reasons that we know. The supply chain is becoming very challenging for all the suppliers. So Pratt & Whitney is facing their issues. Boeing 737 MAX is another issue. So a lot of carriers are looking for additional aircraft right now. So the demand is very high and the offer is very limited in the market. So automatically this is putting a pressure on higher prices for leasing.
Konark Gupta: Right. Right. Makes sense. Thanks, Annick, and thanks, Jean-François. If I can just quickly follow up on your full year guidance for capacity. I’m like 13% still is pretty decent capacity growth coming out of the pandemic and all that, but still a decent cut from the 19% you were expecting. So I understand there’s issues from the leasing markets that you mentioned, Annick, but are you only seeing the limited availability of aircraft at this point, which is why you’re cutting capacity guidance or is it that you’re also reducing utilization in some markets?
Annick Guérard: No. We are -- we have reduced capacity. We have canceled routes because of lack of aircraft. So from what we anticipated at the beginning of the year, so we have reduced overall capacity. We have canceled routes on the domestic market. We have canceled routes on the U.S. market as well for the upcoming summer. We really want to be cautious. This is why we have reviewed our capacity, because we have a scenario on the information that we have so far from Pratt & Whitney, we want to be cautious and make sure that we don’t take too much risk for the upcoming year. So that’s why we made those recent changes. And there really -- these changes are really driven by what we’re facing with Pratt & Whitney right now. That being said, we continue to increase aircraft utilization. So this is why we are able, even though we don’t have the same number of aircraft we were expecting or we continue to increase aircraft utilization, which allows us to maintain a decent increase in the market.
Konark Gupta: Great. That’s great color. Thanks so much for the time.
Annick Guérard: You’re welcome.
Operator: Thank you. Next question will be from Benoit Poirier at Desjardins. Please go ahead.
Benoit Poirier: Yes. Thank you very much. Good morning, Annick. Good morning, Jean-François.
Annick Guérard: Good morning.
Benoit Poirier: Yeah. Looking at your topline, revenue was only up 18% year-over-year versus a capacity increase of 25%. Could you maybe quantify what the impact of flight attendance strike speculation in the quarter was and what would be your load factor or yield if these events would not occur?
Annick Guérard: Well, as I explained earlier, while it’s difficult to define exactly what was the exact impact in numbers, but as I explained earlier, we definitely saw a correlation between all the events that happened throughout -- all the announcements that happened throughout the negotiations in our booking. So, of course, the load factor was affected by that, lower volume. Even though we put a lot of marketing initiatives in the market, just based on what we were receiving in terms of feedback in the call center, the clients were very afraid of booking, especially during Christmas period. They didn’t want to put their vacation in jeopardy, so we even received some cancellations of travel. But, so, that’s it. People didn’t know in terms of uncertainty. They didn’t want to take any chance in booking -- with booking with us.
Benoit Poirier: Okay. And in your presentation, Annick, you mentioned that it also impacted booking in Q2. How comparable it is in terms of a drag in Q2 so far? Is it a little bit less or comparable to the Q1?
Annick Guérard: It is pretty much comparable. The negotiation happened during key months of booking. The month of December, the month of January, January being the highest month of booking for the winter period and the beginning of the summer period as well. So, the whole month of January was affected. This is where we received the second rejection of the -- not the second rejection, but the first rejection of the entente de principe, so the agreement. And we saw a definite impact on our bookings. So, unfortunately, it happened during a peak period of booking.
Benoit Poirier: Okay. Okay. And with respect to the geared turbofan issues, you made a good call out in your press release about the other airline costs, the aircraft frames. We roughly calculated that your adjusted EBITDA would have been positive in the quarter. So, good job on this side. I’m just wondering what kind of impact we could expect for the full year and I suspect this would be included in your revised guidance?
Jean-François Pruneau: Absolutely. It is all included in our full year revised guidance. Yeah.
Benoit Poirier: Okay. And now, if we look at the overall competitive landscape, we’ve seen continued consolidation of the Canadian airline market post-WestJet Sunwing acquisition, the link shutdown, the reduction in capacity expansion plan. I would be curious to get your thoughts about how do you expect pricing to evolve over the coming years in Canada given the market dynamics we see out there?
Annick Guérard: Well, depending on what’s going to happen, what we see right now, of course, is two strong players, WestJet in Western Canada and Air Canada more focused on Eastern Canada. I think that what happened with Lynx is another example of the challenge of the low cost -- ultra-low cost model in Canada, a challenge for -- which is a challenge for multiple factors driven by the population landscape, Canadian airport costs, which are among the highest in the world, the seasonality of the Canadian market as well. We don’t see, with the departure of Lynx, we don’t see a significant impact in the market. They had a small program. They were not yet at scale. We won’t comment on Flair, but I think it’s still challenging for them, but we’ll see what’s going to happen there. However, the cease of Lynx, while backed by strong investors with experience in low cost business model, could decrease significantly the confidence in ULCC model in Canada. In that context, I would say, that’s a strength when we look at the position of players like Transat and Porter, and we see us playing together and collaborating together more and more as an alternative -- solid alternative to AC and WestJet in Canada.
Benoit Poirier: Okay. We’ve seen some reports, Annick, where Canadian airlines are having trouble hiring pilots and pilot salaries, obviously, enough. Can you talk a little bit about how this would compare in terms of hiring pilots versus historic?
Annick Guérard: The hiring of pilots is going well on our side. In terms of retention as well, we had a couple of challenges of retention couple -- just after the pandemic, but right now, we renewed the pilot collective agreement back in April 2022 and our contract is in effect until April 2025. Relationships are going well. If -- pilot attraction and retention remains our priority for sure, so we make sure that our relationship remains healthy, solid, we keep open discussion and day-after-day, we work at increasing or enhancing their overall conditions. So, things have been going well so far for us.
Benoit Poirier: Okay. And maybe just a quick one for Jean-François. Just in terms of CapEx, given your numbers, how should we be thinking about your overall CapEx envelope for the year?
Jean-François Pruneau: Yeah. Obviously, in light of the revised guidance, we have revised our CapEx plan as well, so it’s been revised down obviously. We are -- like it was said in December, we have a few checks and maintenance, a calendar is heavier than it was previously. We have some -- obviously some IT projects related to the digitalization of our processes as also playing into -- having a role in the CapEx program. And obviously, I’m sure you’re aware of the project that we have of internalizing our ground and lane services at the Montréal Airport. Obviously, it goes with some CapEx or some projects to invest in. But I have to confirm that we have revised down our CapEx plan for the year.
Benoit Poirier: Okay. Thank you very much for the time.
Annick Guérard: You’re welcome.
Operator: Thank you. Next question will be from Cameron Doerksen at The National Bank. Please go ahead.
Cameron Doerksen: Yeah. Thanks. Good morning. I just want to follow up on the capacity adjustment that you’ve made. So, if we look at Q1, your ASM is up 25%. I just wonder if you can comment on, I guess, with the new plan, what capacity growth looks like for Q2 and I’d assume we’d see a fairly significant deceleration as we get into the summer period. So, just any comments on the capacity by quarter here over the rest of the year?
Annick Guérard: Yeah, for sure. So, when we’re looking at Q2 right now, we’re looking at an increase of about 14% compared to previous year. So overall for the winter, this would represent an increase of 19%. And when we’re looking at summer, we’re more looking at a 9% increase over last year. So, overall, when we look at 2024, this will reflect an increase in capacity of 13% compared to 2023, compared to 19% that we had planned at the beginning of the year.
Cameron Doerksen: Okay. No. That’s very helpful. And just around, I guess, the early look at the summer yields, I mean, it still sounds like a fairly healthy summer period, but just want to make sure I understand the commentary around the expectation that you don’t see the uplift in yields through the summer that we saw last year. I guess, you’re sort of referring to the fact that, I guess, the yields sort of got progressively stronger as we got down the booking curve last year and that you’re just not seeing the same type of trend. Is that fair to say?
Annick Guérard: Yeah. We still see robust demand for overall leisure travel. So we see the same trend this winter and the upcoming summer. We see that travel definitely remains a priority for consumer. However, overall demand growth is not at the same level as it was last year. We remind ourselves that 2023 was an exceptional year, especially in terms of yield. So it’s still early in the season to comment, but to-date we see bookings and pricing conditions that are largely in line with last year, but we see at the same time all the capacity that has been deployed in the market for this upcoming summer. So we know that there’s going to be pressure on yields, we start to see it and so we don’t foresee, as I said, the same kind of uplift. We see that being applied for both South and Europe, even though we see good momentum for bookings in several destinations, but it’s going to be to the level we saw in 2023.
Cameron Doerksen: Okay. That’s helpful. And just on that, you cited in the price release here some, I guess, greater price competition, particularly in the Toronto market. Is that a comment about the winter or is that a comment about the summer?
Annick Guérard: It’s winter.
Cameron Doerksen: Okay.
Annick Guérard: Winter is specific to some destination. If you look at the capacity -- the market capacity that was deployed in Ontario, it’s specifically winter in Ontario.
Cameron Doerksen: Got it. No. That’s very helpful. That was all for me. Thanks very much.
Annick Guérard: Thank you.
Operator: [Operator Instructions] And your next question will be from Jessica Zhang at CIBC. Please go ahead.
Jessica Zhang: Good morning, Annick. Good morning, Jean-François. Thanks for taking my question. Maybe just circling back on the yield pressure, can you quantify for us if any of the yield pressure in Q1 reflected the promotional activity that you talked about to protect the booking curve during all the labor noise? Do you have a sense of how -- like, how much of, like, that headwind has been?
Annick Guérard: Well, it’s difficult to say. We know that we were expecting higher yields, and as I explained earlier, we saw the yield and the RASM go down over the days, over the weeks as negotiations were progressing. And we explained a little bit earlier as well that there was fierce competition, especially in Ontario. So I cannot very much comment around that, but that’s basically it.
Jessica Zhang: Helpful. And maybe just one more for me, maybe just touch upon, like, do you have any update on how the partnership with Porter is developing?
Annick Guérard: Yeah. The Porter -- the partnership with Porter is going very well. So we announced the joint venture agreement back in November and since then we -- of course, we’re working in a Co-Chair pattern right now. We -- our target is to be unable to open ourselves through the joint venture agreement for this upcoming summer. So as you know, we have strong network complementarity. We have strong synergies. We will be able to have a joint pricing approach and optimizing our network as well and we will be able as well to harmonize the customer service, which is at the heart of the current work that we are doing right now. So it’s coming. The first phase is coming. The first phase being to connect overall domestic and transborder Porter network to our European destinations. And with what we’re seeing in terms of results from the Co-Chair agreements right now, we believe this is going to be extremely promising.
Jessica Zhang: Okay. Perfect. That was all for me. Thank you so much.
Annick Guérard: Thank you.
Operator: Thank you. And at this time, it appears that we have no other questions registered. Please proceed.
Annick Guérard: Thank you, Sylvie. Thank you, everyone. Our next call will be on June 6th for second quarter results. Thank you all and have a great day.
Operator: Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.
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