Great. So, we'll get started. John and Valérie, thanks for being here. Today, I'm having a discussion with John Di Bert, who's the new CFO of Air Canada. Relatively new. Yep. We'll talk a little bit about John's background in a moment, and Valérie Durand, who's the head of IR and chief sustainability. I'll call you officer. I think it's... These days, anything to do with sustainability is a key part of the organization. Yeah. Happy to have you back here again. Thank you for having us, Misty. And good to have you here, John. Thank you. Well- Maybe just a lot of the investors here today have been immersed in airlines south of the border. I'm originally from Canada, so I have some appreciation, but maybe you can talk a little bit about, you know, Air Canada, and then we'll get into some of the structural differences between the U.S. and Canada as far as airlines go. Sure. Well, thanks for that, and it's great to see all of you. So, yeah, I mean, Air Canada is, is Canada's, flagship carrier. We're the, the only, full-scale network, carrier in Canada. We, we operate a fleet of about 240 aircraft, fly, you know, international routes, have critical partnerships with the likes of, United and, Lufthansa, as well as, Emirates, among others. And, essentially, we're, we're growing very fast, coming out of the pandemic, like many other airlines. We can talk a little bit about the structural differences for U.S. and Canada, if you like, as well. Yeah. Yeah, please. I think what themes we've heard this week so far are kind of the trajectory of domestic, international coming back, but obviously, when Air Canada has such a presence in, in Canada and there's fewer airlines, you know, what's... Maybe outline the, some of the key differences. So it starts with geography for and kind of population density. So about 40 million Canadians or whatever it is, 4,000-mile-wide country, and most Canadians live about 100 miles off the border, so it's more thinly populated. We Canadians come in from regions. Typically, we operate Canada through whatever it is, a half a dozen or so major hub airports. And that really defines how we're organized at Air Canada. So we have a very strong regional network that carries passengers into our major hubs. We bring those Canadians out to the world. But we also have the ability, we have some geographic kind of, I'd say, competitive advantage, where our routes are the fastest routes across the Atlantic or the Pacific. So it also allows us to carry foreign passengers, so sixth freedom passengers, either from Europe or the US, and it makes us a very viable option for a transatlantic, transpacific traffic for non-Canadians as well. Yep. Maybe just a couple of observations. You're not new to aerospace with, Yeah ... having CFO of Bombardier and Pratt & Whitney Canada. What are... In your early innings here, what are some of the things that, you know, you— How do you manage risk or just see the business differently? It's a great question, and frankly, I mean, as many of you would know, I mean, these are kind of like sibling industries, right? They're tied at the hip in every way possible. If I had to kind of just pick a couple of distinctions, one is that in both cases, capital allocation and long-term planning are critical. On the aerospace and defense side, you're dealing with development, product technology, and you're taking a lot of development risk, and you have to plan that product strategy well in advance, and then getting it to market and commercializing it is the real crux of the core competency. With respect to airlines, you're still making very big capital decisions, and you're still thinking way into the future when you're thinking about the network and the fleet plan. So you're still deploying large dollars of capital, but it's a different kind of a, a mechanism, right? It's about understanding those markets and building off your, your network and the assets that support it. And so, so you're paying attention to, I would say, different things on a day-to-day basis. From a capital allocation point of view, both have to be a core competency in either one of those industries. And I would say that, you know, how I think about that is that, you need to be able to balance the growth and, manage risk, and they are both subject to the same cycle in different ways. Being able to have a strong balance sheet and being able to make the right choices when it comes to growth and capital allocation are critical in both industries. Yep. Maybe just, you know, on the strong balance sheet, that was a, you know, key part of every airline's recovery from COVID. Now people are more focused on how is the network performing, you know, the operating leverage of the business is coming back. What are the trends you're seeing in a maybe just kind of domestic, international, corporate? It feels like Canada was, you know, kind of a year behind the U.S. at one point. Now that's starting to converge a little bit, but, you know, early reports seem to be that domestic's holding up. But, you know- Yeah ... to your point, the networks structurally, north and south are a little different. What are you seeing in the tea leaves so far? I think, you know, first, first of all, as you said, you know, the first half of 2023 actually grew much faster than we had expected, and we upped our, our guidance, early in the year, once we started seeing that strength really develop. Second half of the year is kind of, what we would have expected, is strong growth. We're gonna see about, I'd say, 21%, ASM growth year-over-year. When you look at kind of just to the segments you broke out, domestic market is performing as we would have expected it. So we, we've have a, a well-developed, long-standing, network and, in Canada, and we, we continue to service that. I think, you know, there is some entrance of of competition there, but overall, I think we've we actually, you know, we're the only one that can provide that full network asset, access globally. We have an amazing loyalty program. Some, you know, over 7 million members participate to that. It's the premier loyalty program in the country. So from a domestic point of view, performing, I think, as we would have expected. Transatlantic has been fantastic, same thing with the Transpacific. We deployed some capacity. We had some Chinese capacity that we were flying 35 times a week pre-pandemic. We fly about 4 times a week now, given geopolitical and Russia overflight restrictions, but we redeployed that capacity. We're seeing huge strength in places like routes to Japan, and that's also servicing China. They fly onward with ANA. We're seeing great strength in Singapore. So we've been able to redeploy that capacity and those markets are growing very fast, rapidly, and we've had a very good leisure season as well. So just generally speaking, sun destination travel has been strong. We came into the middle half of the year and had a pretty good look out for the second half, and I think we still feel just generally overall good about how 2023 is developing. We narrowed our range on earnings a little bit when we had our Q2 call, and I think that just came from good visibility. Looking out, you know, our advanced book for ticket sales, about 5.7 billion. For us, that's a high watermark. Yeah. That gives us a good, you know, look into the future about what's coming in terms of traffic and passenger loads. Biggest challenge operationally, you know, kind of getting up that curve. It's been true for most airlines. Ecosystem as a whole is a challenge from the airline itself, but also all of our partners and airport and so on. So that's kind of, you know, where the heavy lifting and the work is being done. And maybe just to close on that, and I'll turn it back to you. We sit now at somewhere between 88% and 90% of our 2019 capacity, so still some growing back into capacity for us ahead here. Yeah, and maybe just a couple of things on that. So you mentioned China. There's some, you know, meaningful reasons why capacity or at least frequency is down. Do you see that as a near to medium-term upside? You know, how do you plan for that in terms of the business plan? I think, you know, the comment I'd say is that we actually are thinking about this with some flexibility. So thinking about having the right capacity, if that should return to some normal environment, I don't think that's an immediate event, but let's just say over, as you said, the medium term. But if it weren't to happen, then having the flexibility of having some of these strong routes available to us. And one thing I'll mention here maybe is that, you know, Canada, about 40 million people, we have about 500,000 immigrants per year coming into the country, and that's kind of been the case and will be the case for a while longer. It's one of what I'll call, you know, outside of the macroeconomic backdrop, one of our growth factors is this high immigration, typically from places like China, India, Middle East, and Africa. That's the lion's share of the immigration. So it gives us some flexibility to deploy some capacity to those routes where there is higher traffic, and it will continue to grow due to those 500,000 immigrants per year, and visiting family, friends, relatives going back home, and even conducting business from that immigration has grown. So yep. Yeah, and if I can add on that, I think one of the recent examples that I can point to with respect to redeploying our capacity, because the beauty of our business is that our factories are mobile. Mm-hmm. We can move them to wherever it makes sense for us. And thinking about China, what we've done is we've pivoted to India, which is also high demographic, strong ties to Canada, both on the VFR side and on the business side. And if you think about our partnership with Emirates that we've entered into recently, that also allows us to extend into those secondary airports in India that we don't directly fly to. So that's how we're looking at redeploying capacity to where it makes sense for the geographic region of Canada and the population of Canada, whether it's from a VFR or business point of view. So- Yep. Yeah. Then broader capacity, I heard you say kind of you're getting to almost 90% of what it was, which is different. The U.S. seems to be, you know, from a- Little past that. Yeah, they're... Yeah, they passed that over the last, you know, better part of a year. Yeah, what - how do you think about bringing on capacity, whether it's, you know, that as a watermark or just beyond that, given the current environment? Because it feels like, you know, the green shoots are relatively good. Yeah, I would say so. And I think that, for us, I would say that, you know, over the next 18 months, we'd like to see ourselves back to full 2019 levels with about 100%. And in there, think about probably somewhere 2024 hitting that run rate. That was the 2019 rate, whether it's the full year or not, hard to say today, but- Yep ... and so that's, you know, one of the operational challenges that we're kind of focused on, is making sure that we have the aircraft available. So doing some work on— These are decisions that, you know, have some lead time. So for 2024, really focusing on summer lift, making sure it's available, how we do maintenance and bringing on some internal lift where appropriate. And then as we get into 2025, we do have a book of aircraft still to be delivered. So we have three 321s. I think there's 28 on the order book, and then we have eight 220s, and we have another 27 deliveries. That'll make us a fleet of 60 and a couple of wide-body aircraft on order. Yep. So there's some natural comeback there. Yes. Maybe switching to the cost side of the business, you know, people obviously been focused on labor. I'll ask you a question about pilots in a second, but when it comes to just elements of cost that have changed since the pandemic, the things that you're grappling with the most, you know, or it feels like it's been so dynamic over the- Yeah Last couple of years. Are we, are we starting to normalize? How are you guys, how do you think about costs? I think, you know, that's we're entering a phase where you're gonna start seeing some stabilization. Maybe just to give some parameters here to help frame the discussion a little bit. So, I'll give you some of the headwinds and some of the tailwinds and try to sort of see how we kind of navigate to find the right spot for CASM, for example, there. But, from a headwinds point of view, we are still, as you said, we have some contract negotiations coming up on pilots, so that'll be kind of a lagging escalation as we set a new agreement. We have an agreement. It's been in place for almost 10 years, comes to expiry at the end of September, and that will then initiate a negotiation and then eventually a new agreement. So that'll be some of the increased cost pressure there. Airport infrastructure, we also expect some pressure from just airport infrastructure in Canada. It's typically a high cost infrastructure, and we do see some of those costs coming up over the next year or two. So I would say those are some of the headwinds. There's an introduction of an APPR passenger rights policy that's gonna be kind of enhanced as well in Canada, so that may have some cost pressure as well. When you flip the other side of it, we are roughly, I'd say probably 2,000 plus FTEs higher than we were in 2019, with 90% of the capacity. And part of that was, you know, intended to be able to get up the ramp and be able to deal with some of the lower productivity and just the fast scaleback up of operations. So, the expectation there is that over the next 24 months or so, we grow into some of that productivity. So as we continue that capacity, less variable cost add, so that should be a tailwind. During the pandemic, we shed about 79 aircraft in total. You know, older vintage aircraft, lower economic performance and fuel burn, and we're bringing in A220s, we're bringing in A321s that should be, you know, strong economic efficiency for us. So the fleet also will be a tailwind in that regard. So looking at all of it, back to your point, I think we, you know, we came through a lot of escalation and inflation in the system generally, so food, catering, all those kind of things. That kind of paced, fares have moved up as well, as you well know, so yields have moved up. I think that over time, you can probably conclude that air travel will be more expensive. These are all system-wide costs, right, for everybody, and so fares and travel costs probably stay up a little higher. From our point of view, in terms of managing costs and preserving margins, it's really working those tailwinds to be able to deliver offsets and be able to manage that cost structure. Yep. But it sounds like a lot of the, well, I won't call them new costs, but maybe the headwinds are common to anyone- Correct Who's competing in your marketplace? Exactly. So, okay. Yeah. Let's talk about pilots a little bit. You mentioned the agreements coming up. Let's talk about shortages. I think we're used to, in the U.S., hearing about shortages and what airlines are doing to combat that. It's been going on for a few years. How is... How are you guys dealing? What is the, you know, what is the issue in Canada? How are you dealing with it? Again, a different market. So, Air Canada typically has had access to the pilots it needs, right? And, again, not to overstate it, but being the global network carrier in Canada, we offer Canadian pilots a true, full, lifelong career opportunity, right? So we have a regional network, we have a CPA with Jazz. Those pilots have a flow-through agreement, which means when a seat opens up at Air Canada, they're eligible to take that seat. That's an attractive point to come in to a 75-seater and then move in to the mainline. That same pilot then can move from a small narrow body to a larger narrow body, and eventually to a captain seat on a wide body over a career. And that's a really attractive career proposition. I would say other Canadian airlines don't have that full value proposition to an airline pilot, where they can actually go right to a wide-body captain seat through their career. The other airlines typically have a, you know, much more narrow-body content on their fleets. So that's one thing. We've been working with Jazz. The biggest challenge has been on the regional pilots. Mm-hmm. That's been the biggest constraint. During the pandemic, like many other, I guess, jurisdictions, a lot less pilots coming out of schools. The good news about Canada is because you have such a large landscape, there are a lot of, I'll say, entry-level pilots, bush pilots, and a whole bunch of other pools to draw on. So we're kind of working through to bring that back up, and getting that regional pilot supply up is important. But I would say, generally speaking, you know, Air Canada, I think, has fared relatively well. Yep. So, like, that's one of the key nuances between Canada and the U.S. So, you know, because of the geography that we have and the regional network that we have, we actually have a lot of flying schools. And what you're really seeing now is that effect of the pandemic, where those flying schools didn't produce as many pilots as they would have normally, because either the schools were closed or, you know, restricted in terms of attendance. So that's what we're seeing now, that's what our regional partner is seeing now. But that is a little bit of a different scenario than what you have seen south of the border in terms of pilot shortages, so. Yep. I mean, our schedule is built in consideration of the pilots that we have, so. Yeah. It's, it's a-- the pipeline is still, still exists, and there's a lag effect to bring it back up, but- Yep ... but it is. I'm the Canadian who made the mistake of leaving. Most of them, they see the career there. It's a bit insular there, so it's good for Air Canada to have that pipeline. Maybe let's talk, you referenced Aeroplan. Sure. That is, you know, there's a lot of value in that program. There's some history there as it relates to being part of Air Canada, outside of Air Canada. It's as strong as it's ever been. How does it fit into the, to the strategy of the airline? Yeah, it's a, it's a fantastic program. I mean, we're over 7 million members now. We have four major U.S.-- four major cards, including a U.S. card. So we do actually have, you know, a, a relatively important, composition of, of members that are, U.S. or Americans, and they, you know, use Air Canada to fly transatlantic, transpacific. But I'll let you talk a little bit more about the program. Sure. I know that, Yeah ... you love it, so. We're very happy with the program. Yeah. To give a bit of historical context, so Aeroplan, we bought it back in-house in 2019, and then what we did is we transformed the program and relaunched it in November 2020. We didn't make a big hoopla at the time because it was November 2020. But what we did during the pandemic is we took the time to run focus groups, surveys, meet the Aeroplan members, understand the pain points, and really transform the program in a way that makes it appealing to our members. So we had a target of 7 million members by 2024, sometime in 2024. We've already achieved that, we've already exceeded that. So that gives you an indication of the engagement we have with the program. All metrics of the program, whether it be redemptions, gross billings, or membership, are up quarter over quarter. We're very, very pleased with the program, and the strategy with the program is to make it part of the everyday life of the customer. That's why we're entering into partnerships like Uber, Starbucks, Chevron. I mean, I always joke for those of you who are familiar with the LCBO, with it—which is one of our partners, so if you're Canadian, you probably know the LCBO, which is a liquor board of Ontario. So what you can do now with your Aeroplan card is you can buy your bottle of wine, go to dinner at Friends, Uber home, and have your Starbucks in the morning, and earning points all along the way. So there's nothing more in the everyday life than that, but that's a good example of how we are leveraging the card, and that allows us to really engage with the customer, understand the customer behavior, and then ultimately, that allows you to get into targeted offers and, and different types of marketing strategies. So that's how the program becomes really appealing for us. So, all in all, very, very pleased with the program. It is the leading loyalty program in Canada. And even from a business point of view or from a premium revenue point of view, you know, our premium revenues are doing really well, and Aeroplan is a really good enabler for that, because you're going to redeem your points for travel and, you know... Okay, well, do you want to redeem it a little bit more to move up to premium or move up to business? So that's one of the ways we can move into that sphere with the program. So, very, very good performance there, and I'm sure more to come on that. Yeah. No, I think, a lot more focus on loyalty programs these days, and obviously the, value, you know, real, theoretical, or otherwise, was, you know, thought about a lot during the pandemic- Yeah ... and I think has been validated in large part due to, you know, some of the financings and just kind of the value, value in the overall enterprise. And Canada, you know, you make a good point. Structurally, it just, you know, being a flagship carrier, it's a smaller market, but it's also a smaller marketplace in terms of the airlines that service it. You do get a lot of stickiness- You get a lot of stickiness. ... in terms of subscription, whether that's real or implied, so. You're not diluting it because there's, you know, two or three other major carriers, and you're flying different routes, so you're basically using the Aeroplan program for all of your, network flying, really. So it's. It It also helps domestically when people are collecting and kind of being in the program than to fly leisure or internationally. Yeah. Yeah, and I'll put on my sustainability hat for a second, but we've used it for good as well, like the greater good, I'll say. And, you know, if you go back in the pandemic, when people were not traveling, we actually leveraged a program to keep members engaged, but by getting them to earn status by donating miles to charities that were involved in COVID recovery, or things of that nature. And we have our upcoming hospital transportation campaign coming up in October, which is, we will engage with Aeroplan members and partners to fundraise Aeroplan points. I should say points. I think I said miles, I apologize. We will fundraise points to then fund the travel of sick children who need medical care away from home, a child and a parent, to access that medical care. So if you are a parent, and if you think about what the burden can be, if you live 7, 8, 10, 12 hours away from an airport, from a hospital, from a pediatric hospital, the time you're going to take to drive there, the money it's going to cost you to drive there, and forget it... You know, don't forget about the stress you have about having a sick child. So we look to alleviate that burden on those Canadian families through that program, and we leverage the loyalty program to that effect, so. That's great. Yeah. That's great. Little plug. First week of October- There you go. ... if you're an Aeroplan member. Valérie doesn't sleep. I know that. Maybe just with a few minutes left, let's talk about the balance sheet. You're now the CFO of an operating business- Yeah ... that has inherent with volatility, that has, whose, you know, cycles were punctuated very recently. How do you think about where you are in the balance sheet today? You've had the pandemic, you had, emergency liquidity raising. Yeah. Most of the airlines demonstrated that aviation-related collateral has value. Yeah. But now you're left with a balance sheet, and in a much better environment, that may need to be adjusted. What's the- Yeah ... how are you thinking about it? ... So, you know, back to my opening comments about kind of managing and balancing growth and a strong balance sheet. I think part of the proof is in the pudding, right? We were at near 1x leverage before the pandemic, and we were at 5.1 leverage at the end of 2022. We finished mid-year 2023, so June, the second quarter, at 1.7. We have an objective to be sub or 1.5 or less by the end of 2024. And kind of feels, you know, right now, I'm not going to say any new expectations, but it feels like we're going to get there a little sooner. So, I think, you know, protecting that balance sheet is very important. We over... I guess since we started to, I'll call it, reoperate normally, so kind of, let's say, mid-year last year, we've taken out almost CAD 2 billion, I think it's CAD 1.9 billion, of debt or convertible debt that we had used to build up to support through the pandemic. So right now, we're focused on. We just announced, I think it was a week ago or so, CAD 600 million of debt reduction from aircraft financing. I just want to tie back to one of the things you said, which is, although we know that, but I think that it was proven in a unique situation that having the capacity of unencumbered assets, aircraft primarily, is a big value when you have a downturn and a retained value. Even though the industry itself was in a lot of hurt, aircraft were a very usable asset for financing. What we're focusing on now is getting ourselves back, you know, to let's call it somewhere around pre-pandemic levels, paying down the debt, that's priority number 1. We're doing it by taking out aircraft financing in tranches. That's going to give us a lot of dry powder, a lot of safety on the balance sheet. We have an amazing loyalty program. It's unencumbered as well. No plan to leverage any of it, but certainly it's nice to have that. As you said, it's been demonstrated to have value, if necessary. And then I would say ultimately, we're focused on continuing to support the fleet growth and therefore, you know, look at acquiring aircraft, you know, with cash when it happens, that we take deliveries. Yep. Any questions for John or Valérie? You didn't really touch on pricing. Can you talk about how you're seeing that sort of play out, both domestically and internationally? Yeah. So yields have been very good. As we see it here, I guess, really, I mean, domestically, there's probably a little bit more dynamic there, but, we, you know, we, we see those yields kind of holding fairly nicely, like I think Wylie said and I had mentioned before. The cost structure across airlines has moved up. I think that the general understanding that that's going to have passed on to, to, to customers. Our load factors are, you know, in the current state, you know, they're approaching 90%, but they've been high all year. We're still at, you know, capacity that's under, the fully recovered level. We still have some growth back into that capacity level, so we continue to see some, you know, favorable conditions for yield. We're also working on the cost side to make sure that we stay tight there, so we're trying to balance those two equations. We have branded fares. We do have different offerings for different parts of the premium cabin. Premium cabin has been very strong. That's helped yields as well, for example. But we do have lower cost options if you wanted to take them and kind of manage, you know, whatever pressure might come. So anything you want? Hey, John. Hey. Two questions, both related to this GTF issue. A, does it apply to you for anything that you have in your fleet? And, B, you know, I think the last order you guys placed last year was all GTF, if I'm not mistaken, with Airbus. Yeah, 321. Yeah. So what's happening with that? 'Cause are you really going to get any of the planes or not? Well, I don't... You know, I think in the end, you know, this is obviously a challenging issue, and I, I'll let, I think Raytheon was here and Pratt kind of comment specifically, but I'll give you, I guess, for us. You know, we have, we have A220s. So, you may- I think your question was, is the direct impact there? At this time, no, nothing's been announced. We're obviously staying close to Pratt and working with them, and when our aircraft come in, they do look at the disk and the powdered metal issue. And, fundamentally, I think that, you know, the bigger challenge is going to be that it's going to put a lot of pressure in the MRO network, and so that might have some impact on us. I think part of when we took down some, some capacity, in Q2 from 23 to 21 was to accommodate for, whatever downtime we see in the schedule. So as, as of this time, we'd say that it's, you know, it's understood within the fleet. But to your point, I mean, I think there's still some way to go here, these early days. The 321s, we obviously are staying close to Airbus and to Pratt, and we'll see how that, evolves. Our expectation is that we still get our aircraft, when, when they're, scheduled. It's, it's moving, right? We'll watch, and we do have, we have taken some steps to make sure we have interim lift available, so we can continue to balance our network plan and have the right capacity available to us without having, you know, long-standing implications. That's the big number in there for compensating airlines. Yeah. If it does come to that, are you basically sort of made whole? Yeah, I'm not going to comment on that here. Yeah. Yeah. Yeah. Yeah, but I mean, I understand the question, and of course, you know, all this will. I think, you know, Pratt stepping up and trying to get in front of all this, and obviously, we're going to work together. Great. Thank you- Thank you. Thank you, guys. Thanks. Thanks so much. All right. Thanks.