Good day, and thank you for standing by. Welcome to Atlas Air Worldwide Holdings, Inc. Q1 2022 Results Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the call over to your speaker today, Atlas Air. Please go ahead. Thank you, operator, and good morning, everyone. I'm Ed McGarvey, Treasurer for Atlas Air Worldwide. Welcome to our first quarter 2022 results conference call. Today's call will be hosted by John Dietrich, our Chief Executive Officer, and Spencer Schwartz, our Chief Financial Officer. Today's call is complemented by a slide presentation that can be viewed at atlasairworldwide.com under Presentations in the Investor Information section. As indicated on slide two, we'd like to remind you that our discussion about the company's performance today includes some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events and expectations, and they involve risks and uncertainties. Our actual results or actions may differ materially from those projected in any forward-looking statements. For information about risk factors related to our business, please refer to our 2021 Form 10-K as amended or supplemented by our subsequently filed SEC reports. Any references to non-GAAP measures are meant to provide meaningful insights and are reconciled with GAAP in today's press release and in the appendix that is attached to today's slides. During our question-and-answer period today, we'd like to ask participants to limit themselves to one principal question and one follow-up question so that we can accommodate as many participants as possible. After we've gone through the queue, we'll be happy to answer any additional questions as time permits. At this point, I'd like to draw your attention to slide three and turn the call over to John Dietrich. Thanks, Ed, and thank you all for joining our first quarter earnings call. I'd like to start by acknowledging the unfortunate and horrific humanitarian crisis in Ukraine. Our thoughts are with the people of Ukraine and with all those helping during these difficult times. At Atlas, we've been doing our part by providing critical airlift to many organizations moving relief supplies into the region. As the leading provider of airlift to the U.S. military, we've been supporting the U.S. government's significant supply efforts. We're very grateful that Atlas is able to participate in these important relief missions. I'd also like to thank the entire Atlas team for their ongoing commitment to delivering these outstanding results. As we've been able to demonstrate, Atlas has a resilient and proven business that's consistently delivered very positive results even through the most challenging of times. We continue to show the value of air freight as a critical component of the global supply chain. Our aircraft and services provide the flexibility, reliability, and speed that enables our customers to succeed even through the ever-changing logistical landscape. Air freight will continue to be vital going forward, particularly as pandemic and related challenges remain, passenger capacity is slow to return, and manufacturing in Asia ramps back up. As we've been discussing with you in recent quarters, we're seeing a sustaining shift in customer demand for long-term dedicated airlift, which is driving more need for Atlas' assets and services. We're expanding and diversifying our customer base and increasing the amount of flying that we perform under long-term contracts with attractive rates and guaranteed levels of flying. In fact, during the first quarter, our customers continued to enter or enhance long-term agreements with Atlas for dedicated freighter capacity. It's important to reiterate that the overwhelming majority of our fleet is now committed under these long-term contracts, which puts us in a strong position for the years ahead. This all bodes well for Atlas and our future. On the financial front, we've significantly strengthened our balance sheet and have dramatically improved our net leverage ratio. We have a healthy cash balance and the financial flexibility to act quickly on attractive opportunities to deploy capital, including investing in our business and returning capital to shareholders. As we've previously noted, we're investing in our world-class fleet, excuse me, by adding four new 747-8s and four new 777s to meet customer demand. All four of our new dash eights have been placed under long-term agreements, and we expect the first will be delivered later this month. We also have very strong interest for the new triple sevens, and we look forward to sharing details on those placements in future calls. As we've shared before, we're also purchasing five of our existing Seven Four Seven four hundred freighters at the end of their leases throughout this year, the first of which we acquired in March. Now turning to our outstanding first quarter results on slide four. I'm pleased to report that we've achieved new first quarter records for both revenue and adjusted earnings. This is despite the ongoing operational challenges that were caused by the pandemic. Our strong results reflected higher yields, including the impact of numerous new and extended long-term contracts. This was partially offset by higher pilot costs driven by our new collective bargaining agreement. Spencer will provide more details on our Q1 results in a moment. Now moving on to our outlook on slide five. As I mentioned earlier, we expect market conditions and customer demand to remain favorable. Global air freight volumes are exceeding pre-pandemic levels. Capacity continues to be constrained as there are a limited number of new freighters entering the market while older, less efficient aircraft will need to be retired. Passenger belly capacity, particularly out of Asia, remains slow to return. As it does, we expect passenger networks will look different than prior to the pandemic and will favor more leisure and point-to-point flying. This will result in more need for dedicated freighters in major cargo trade lanes. The continuation of congestion at ocean ports and other related supply chain disruptions are also continuing to favor air freight. Importantly, a new customer base, including more manufacturers and freight forwarders, are now turning to dedicated freighters due to the resiliency of air freight networks compared to the vulnerability of passenger networks. In addition to our excellent first quarter results, we expect strong performance in the second quarter and for the full year. In the second quarter, we anticipate revenue to exceed $1.1 billion from flying more than 85,000 block hours. In addition, we expect Adjusted EBITDA of approximately $215 million and adjusted net income to grow by a high single-digit percentage compared with our adjusted net income of $88.8 million in the first quarter of this year. Our full-year earnings outlook reflects the significant portion of our business under high-yielding long-term contracts, as well as strong yields in the ad hoc charter market. As a result, we expect to fly more than 350,000 block hours in 2022, with revenue of approximately $4.6 billion and Adjusted EBITDA of about $1 billion. In addition, we anticipate adjusted net income in the second half of 2022 to improve approximately 60% compared with that of the first half of this year. This includes a projected full-year adjusted tax rate of approximately 23%. We expect aircraft maintenance expense in 2022 to be similar to that of 2021, and we anticipate depreciation and amortization to be around $300 million. Our core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $135 million-$145 million, mainly for parts and components for our fleet. This outlook also includes the higher pilot costs from our new collective bargaining agreement, including additional pay for pilots flying in locations still significantly impacted by COVID. Before I turn the call over to Spencer, I'd like to discuss the update we shared in our press release this morning regarding our share repurchase program. As announced in February, we established a $200 million share repurchase program. We began by entering into a $100 million accelerated share repurchase program, which was recently completed. In total, we've now repurchased approximately 1.2 million shares through this month. Returning the capital to shareholders continues to be a top priority. I'd like to now pass the call over to Spencer, and after his remarks, I'll have some additional comments, and then we'll be happy to take your questions. Spencer? Thank you, John, and hello, everyone. Our outstanding first quarter results are highlighted on slide six. On an adjusted basis, EBITDA was $202.8 million, and adjusted net income was $88.8 million. On a reported basis, net income was $81.5 million. Our adjusted earnings included an effective income tax rate of 22.3%. Moving to the top of slide seven, revenue rose to $1 billion in the quarter. Higher airline operations segment revenue was primarily driven by an increase in the average rate per block hour, which was mainly due to higher yields net of fuel, including the impact of the new and enhanced long-term agreements, as well as higher fuel costs. Slightly lower volumes during the period reflected a reduction in less profitable smaller gauge CMI flying, as well as operational disruptions caused by Omicron and the lockdowns in China. Higher revenue in our dry leasing segment was primarily due to the expected $5 million of revenue received from a maintenance payment related to the scheduled return of an aircraft, which we subsequently sold in January. Looking now at the bottom of the slide, segment contribution was $202.7 million in the first quarter. Higher airline operations contribution was primarily driven by higher yields net of fuel. These improvements were partially offset by the increased pilot costs related to our new collective bargaining agreement and higher premium pay for pilots operating in certain areas significantly impacted by COVID-19. In dry leasing, segment contribution benefited from the maintenance payment I noted a moment ago, as well as lower interest expense following the scheduled repayment of debt. Now turning to slide 8. Our net leverage ratio ended the quarter at 1.5 times, which is consistent with year-end 2021. We ended the first quarter of 2022 with cash, including cash equivalents and restricted cash, totaling $740.9 million. Our cash position at March 31st reflected cash used for investing and financing activities, partially offset by cash provided by operating activities. Net cash used for investing activities was primarily for payments for flight equipment and modifications, including $115 million for pre-delivery payments for our new aircraft, as well as core capital expenditures and spare engines. Net cash used for financing activities primarily reflected debt payments and the payment for our share repurchases. As we've said before, we apply a disciplined approach to financing. Given the current rising interest rate environment, it's important to highlight that all of our debt is at a fixed rate with a very low weighted average coupon rate, which is now at 2.83%. The majority is secured by our aircraft assets, which have a value in excess of the related debt. We are committed to maintaining our strong balance sheet, which allows us to deploy capital for attractive investment opportunities, navigate unexpected events, and return capital to shareholders. Now I'd like to turn it back to John. Thank you, Spencer. Moving to slide nine. As I mentioned, we're off to an excellent start in 2022, and we have a strong outlook for the remainder of the year. Equally important to the results we delivered is how we delivered them. At Atlas, one of our core values is corporate responsibility. Next week, we're issuing our third environmental, social, and governance report. Our ESG initiatives capture our commitments to our people, communities, and the planet, and also how we're advancing our ESG strategy and goals. We invite you to read more about these initiatives in our ESG report, which will be available in the corporate responsibility section of our website next week. With that, operator, may we have our first question, please? Your first question is from Bob Labick of CJS Securities. Your line is open. Good morning. Congratulations on continued strong performance. Thank you, Bob. Good morning. Thank you, Bob. Hi. Yeah, I just wanted to start with a kind of broad question. You've obviously made some, you know, major fleet changes over the last, I don't know, year or two, and coming as well. You've reduced some of the lower margin, smaller gauge planes. You've added new planes or are in the process of that, buying leases, et cetera. Once the 777s come in, are there more expected changes? Or how do you feel about the current fleet mix, you know, with what you've announced with the 777s coming in? That's question one. What is the earnings power of this new, newly positioned fleet look like or compared to the pre-COVID fleet, even if, you know, spot prices do eventually, you know, kind of come back down? Sure. Thanks, Bob. I'll start and then maybe turn it over to Spencer for the latter part of your questions on the earnings power. You know, look, we're very happy with the composition of our fleet. You're right, we did consciously phase out of some of our less productive and less profitable assets from the older equipment we were flying earlier. We feel good about all the fleet types we currently operate, starting with the 737, 800, which is a great fleet and has exciting opportunities for new hire pilots, and that can continue to graduate up through the 767, 777, and 74, in a variety of different asset types. It really provides an exciting proposition for pilots who wanna see the world or choose to do more domestic flying. We feel we've got the bases covered in terms of our composition, you know, with a focus on our wide-body international capabilities. Going forward, one of the things we've said in the past is, we will look at other fleet types or enhancing our existing fleets. The 777 is a great airplane. It is going to be an airplane of the future, which is why we acquired more of them. We're really excited about taking the last 4 747s that'll ever be produced. That's happening throughout this year. In fact, excited to take on one in May, at the end of May. There are other new products coming to market that we're looking at closely as well. You know, Airbus has announced the A350F, the A330 conversion. We're looking at all of those. For the right opportunities, you know, there's nothing we can't fly, I guess, is what I would say. You know, I'll summarize and say we're happy with our fleet composition and open to other fleet types as well. On the earnings power question, I'll turn it over to Spencer. Thank you, John. Bob, I'll just add a couple of quick things. You know, one is that, as you know, you know, we performed a review of all of our aircraft. We specifically were looking at some of the older aircraft, and we decided to exit the operations of the aging 737-400s and 767-200s. That strategy really ensures that our resources are put to the most profitable use. So I wanted to point that out. The other thing is that our aircraft are modern, efficient aircraft that customers want. We really don't have aircraft that, you know, we think will be retired anytime soon. The other thing I would comment on, you were talking about the sort of profitability or earnings power. You know, we don't really provide profitability by fleet type, but certainly, you know, we expect the four new dash eights will contribute to our second half earnings this year at a similar level as the existing dash eights, perhaps even more so because they come with the benefit of a maintenance honeymoon. The triple sevens, you know, they won't really contribute materially this year because the one is coming towards the end of the year. That will generate similar earnings as our dash eights in 2023 and beyond. Those two fleet types, you know, really generate very strong levels of earnings. I think your question was about earnings power. You can see, you know, we provided full year outlook today. Our earnings power is multiples of where it was pre-pandemic. Got it. Great. Now, thanks for all that color. Just for my follow-up question, I guess, can you give us an update on the financing environment out there? I mean, you mentioned obviously all your debt is fixed at, you know, 2.8%, which is super attractive. You obviously have more planes coming on. Maybe a sense of the cash commitments, the PDPs you have to put out, and then just ultimately, you know, how, when you finance these planes, what are your thoughts on the current market environment for the financing? Sure, Bob. Yeah, great questions. We have paid all of the pre-delivery payments for the 747-8s. We completed those last year. This year, during the first quarter, we made $115 million of pre-delivery payments. That is about nearly two-thirds of the amount that we need to pay, and we have about a third left that we'll pay over the course of the remainder of the year. We're in a great position with our balance sheet and our cash. We'll be able to pay those in cash, so we feel terrific about that. We have the financing already arranged and mandated for the 747-8s. When we take delivery of the dash eights and put the financing in place, it'll actually be cash flow positive, which is great. The margins and swap rates and all of that has been negotiated, and we feel really good about the financing that we have in place for those. Some of the financing on the triple sevens, because they're coming later, is set, and some of that is still to be done, but we feel great about where we are with regard to all of that. Okay, super. Thanks so much. Thank you. Your next question is from Chris Stathoulopoulos of SIG. Your line is open. Morning, everyone. Thanks for taking my question. You know, capacity on the transatlantic route for passenger wide bodies is coming back online. I think UAL is restarting a lot of flights here. Could you remind us of your mix of regional flying and what you're seeing with respect to the supply dynamic on key lanes such as transatlantic and Asia-Pacific? Part B, what are you seeing with respect to rates for charter flying, but also, for ACMI rates on the 767s and 747s? Thanks. Okay. There's a lot there to unpack, Chris. Let's see. With regard to passenger flying and capacity coming back, I think as John pointed out earlier, you know, not all passenger flying is the same. What we're seeing is that the transpacific passenger flying will be the last flying to come back. We don't think that will be at pre-pandemic levels for quite some time. Even when that flying does return, it's probably not going to look the same as what it looked like prior to the pandemic. There's more leisure and point-to-point flying, and the passenger belly capacity is not as reliable as it once was. What we're seeing is that our customers are really focusing on dedicated freighters, the flexibility, the reliability, and the security that it provides. We're seeing more and more freight forwarders and manufacturers, direct shippers, you know, coming to us. I think that was part of your question, and then I think you were asking about yields. I'll pivot to that next. Right. Rates. If that's all right. There's some, you know, concern out there that rates are starting to go the other way on charter, but also on some of the ACMI flying in the market. Sure. Let's see. For the first quarter, ad hoc, you know, yields held up extremely well. They were well above the first quarter of the prior year. As an example, ex-Asia, flying from Asia to the US, including fuel, first quarter of this year was on average $9.65. Last year was $5.68, but that includes fuel. If you take fuel out, looking at the first quarter of this year, it was $8.07 excluding fuel, versus the first quarter of last year was $4.83 excluding fuel. You can see just how strong of a quarter that was. Now, for the second quarter of this year, we think that yields are going to be sort of roughly in line with where they were last year. Last year, what happened was rates were lower in the beginning of the year, and then they really took off. We think the rates in the second quarter of this year are looking more similar to where they were in the second quarter of last year. Then overall. You know, we expect spot yields to remain well above where they were, their sort of pre-pandemic levels, driven by the shift in consumer demand patterns and continued lack of available capacity. Okay. Chris, you mentioned, I think, transatlantic flying, and that's not really. Yeah ... a big space for us. We don't really focus too much on that space that, you know, it can be handled by smaller gauge aircraft and passenger belly space, and we really focus more on the longer haul flying for the most part. If I could. Okay. But maybe- Yeah Maybe clarify that a little bit, and I know these numbers, particularly as the summer travel comes up, but they're still well below pre-pandemic levels. Just some data that we have through IATA is even on the transatlantic, it's still 42% of what it was pre-pandemic and 10% on the transpacific. It's a long way to go still. I know there's a lot of excitement as there should be for, you know, international travel opening up, but there's still a long way to go. Okay. Nothing that you're seeing is giving you concern that this supply dynamic is starting to unravel, if you will, for cargo operators? No. In fact, I think with what's happened in Ukraine, it's been an additional draw on capacity, for the increased flying and some of the relief missions I talked about, which keeps, in addition to other factors, you know, demand out there for the available capacity that's remaining, especially for U.S. carriers. Okay. Just follow up. JetBlue CEO, I think, said a week or two ago that he believes pay rates for pilots among the majors will gradually start to converge. I know you just inked a new deal here with your pilots, but as several of the large U.S. airline pilots have deals open now, are you concerned that pilot rates are gonna go up across the board here? If so, as you think about the next class of pilots at Atlas for the next 5-10 years, you know, what is the value proposition for flying at Atlas? Is it the location of crew bases, opportunities to advance? What else? Thanks. Sure. Thanks, Chris. First of all, let me just say I'm just pleased with where we are now from a pilot labor standpoint compared to where we've been. We're delighted to be able to have our long-term five-year contract that has provided competitive rates. We did go through an arbitration process, but that's not where it ended. Anytime you're in arbitration, there's a risk that you get some of what you want, but not all of what you want, and that proved true here. It enabled us to continue to work with the union and get agreement on additional provisions, which I'm pleased to say we did cooperatively and reached agreement and now have fully implemented. You're right, there are other contracts that are open, and I expect rates will go up and not down. Our contract provides for escalations that were negotiated, and both sides were aware of, you know, what the market is and what it will likely be, as we reached our pay rates. You have to remember, a pay rate for a pilot is not static. It's not waiting for the next contract. There are built-in raises within the pay scale for years of service. It's not as though a pilot's not going without a raise. That's all factored into the total collective bargaining agreement. With regard to the environment, it's not uncommon that carriers lose pilots, particular carriers in our space and, you know, the regionals when the big guys are hiring. That's not a new phenomenon. It's something we're continuing to focus on. We feel good about the pipeline of pilots, and I'll get to the value proposition in a minute. We feel good about the pipeline, and I wish there was less attrition. We're focused on that and making sure our pilots understand the full value proposition of working for Atlas. For example, flying the biggest and best assets that are out there. If you're a young man or woman pursuing a pilot career, you have the opportunity coming to Atlas to start with a 737 and work your way up through the biggest aircraft in the market, which I talked about in my comments. We also have a number of different types of flying. You can fly scheduled networks, both domestically or internationally. You can truly see the globe with our international breadth. You can fly passengers in our passenger network for the military. We do some cool charter stuff, sports teams and entertainment junkets and so forth. We really have a great niche, and my sense is that the overwhelming majority of our pilots are really happy to be here at Atlas. That's what we're focused on, delivering the quality of life and the career path for them because we know they have choices. That's the way we can compete. We cannot always compete on rate. It's just not our business. We value each and every one of our pilots and there is pressure in the marketplace that pilots do have choices. You talked about the next 5-10 years. I think the next few years are gonna be critical to maintaining our pilot supply. Then I think the pipeline of pilots coming out of the military, but the flight schools. I think it is gonna catch up eventually. I'll just give you an anecdote. Our head of flight ops and myself, we visit flight schools. I went to one recently that a particular university said they were inclined to shut down the flight program back in 2018, and they're glad they didn't because they're busting at the seams now and can't keep up with the number of young men and women interested in pilot careers. That's gonna take some time to get those pilots, you know, fully trained and qualified to fly commercially, which is another area I think as an industry, we're focused on. It's very expensive to become a commercial pilot, and there are some impediments in terms of total hours. Working closely with government, I think industry is looking for ways to make it more efficient and cost-effective for young pilots to get their commercial licenses, you know, maximizing simulator time. I'm expecting the rules, the 1,500-hour rule, for example. Those who follow the industry know what that is. There are ways to get to that 1,500 hours, or alternate means of compliance that are available that we think should be leveraged to increase the pipeline of pilots. Look, we feel great about the company, the direction we're going, the value proposition for our pilots to build their careers here, and that's what we're focused on. Great color, John. Thank you. Sure. Your next question is from Scott Group of Wolfe Research. Your line is open. Good morning. This is Jake on for Scott. Hey, Jake. Hi, Jake. When I look historically, you normally see a pretty significant earnings ramp from 1Q- 2Q, at least on a% basis. Guidance of up high single digits sequentially feels a little more muted than normal. What's driving that? Yeah. Hi, Jake. It's Spencer. A couple things that are going on. In the beginning of the first quarter, I know you're asking about the second. In the beginning of the first quarter, we were impacted by Omicron. We had challenges with you know, our own employees, and we had challenges with airport and other employees. In the second quarter now, well, actually late in the first quarter and then now in the second quarter, we're having issues with the lockdowns in China. Yep. That's certainly having an impact on the second quarter. When we think about the sort of seasonality and our earnings pattern, traditionally, you know, our earnings are higher in the second half of the year than the first half, although that distribution has changed a bit over the past few years. We do have the majority of our capacity committed with customers on a long-term basis, and so that kind of naturally results in a smoother quarterly earnings pattern. We still perform more heavy maintenance in the first half of the year, and we typically still see higher ad hoc rates and higher customer utilization in the fourth quarter peak period. Of course, this year we expect to take delivery of the four 747-8s, one this quarter and three in the second half. That will continue to further improve our second half earnings. I just wanted to point out one other quick thing, which is about the lockdowns in China. The last question was asking about yields, and so I just wanna, you know, point out that right now because of the lockdowns in China, manufacturing is not as strong as it was, and some of the manufacturing has stopped or slowed, and some of the supply chain has stopped or slowed. I think some people are misinterpreting that to mean that there's some sort of a slowdown, but I think it's really a short-term, COVID blip. When China opens back up, there's going to be a tremendous backlog of goods, and there's going to be a lot more goods manufactured, and so there's gonna be tremendous demand for air freight and presumably higher yields as a result. Got it. No, that's all really helpful. And then just a quick question on the salary, wages, and benefits line for this quarter. It was up sequentially despite block hours down quarter- on- quarter. What drove that? Yeah. You're asking on a sequential basis? Yeah. Yeah. I'm asking versus the prior year, just wanna make sure I understand that. Well, versus the prior year, there's the new CBA, right? Correct. On a sequential basis. Yeah. On a sequential basis, we had higher premium pay. We pay our pilots premium pay for operating into areas significantly impacted by COVID-19. The premium pay payments in the first quarter were very high. In fact, if you were going to try to model our salaries, wages, and benefits, I think probably the fourth quarter is more representative than the first quarter, interestingly. Of course, it'll depend on what happens with COVID going forward. Yeah. If I could add to that. Oh. If I could add to that just quickly. The Omicron variant, there was a period of time where some of the restrictions in foreign countries were easing. When Omicron came around, we had countries that had been kind of taken off the red zone list that was eligible for premium pay go back on, and that factored into what Spencer's talking about here. Now some of that's pulling back again. Got it. That's all really helpful. Thanks for the time, guys. Sure. Thanks, Jake. Your next question is from Frank Galanti of Stifel. Your line's open. Great. Thank you very much. Appreciate you taking my questions. I wanted to sort of ask about contract coverage. Historically, you've said, I guess, in the last year or two that it's about 5% of block hours that's tied directly to the ad hoc charter market. Can you just give us an update on where that stands today? I guess more importantly, what is the expectations around that exposure through the rest of this year and into next year? Sure. Hi, Frank, it's Spencer. I guess the first thing I'll say is that during the first quarter, as John noted earlier, we extended or entered into new contracts, about 10 of those at great rates, hours, and maturities. We now have nearly 30 of these long-term charter contracts. Customers are enjoying the dedicated capacity they now have. The majority of them now go through late 2024, early 2025, and some of them go through the end of 2027. We feel great about these. To your specific question, about 60% of our flying is in ACMI. About 24% is long-term charter. About 6% is with the U.S. military. About 6% is South America, and that leaves about 4% for ad hoc spot market flying. Okay. I guess to follow up on that, I guess on all of those contracts that are locked in now, right through late 2024, those rates are what exactly? Are they tied to spot? Are they fixed today? Do they fluctuate seasonally? What does that look like from a, I guess, a revenue and a EBITDA contribution? Sure. In our ACMI business, these are fixed take or pay contracts. We have guaranteed monthly minimums. Customers pay us a guaranteed rate per block hour. In the long-term charter contracts, it's very similar, but instead of on a per block hour basis, it's on a per trip basis. These are guaranteed levels, and they stay consistent throughout. Perfect. That's all I had. Fuel is not an issue. Okay. Fuel is not really an issue there for us. Thank you, Frank. Actually, are those currently above? On the ACMI side, right, those are generally on minimum block-hour levels. I think in the past you said you're about 13%, I guess, low double-digit percentage above minimum levels. Am I remembering that correctly? Is that right? Is that dynamic the same on the charter side? Are you currently operating above contract minimum levels? For ACMI, customers typically fly 5%-10% above, and, you know, we expect them to be well above that, much higher than that, this year. With regard to long-term charters, it's more on a per trip basis, so we're flying the customer's network on a per trip basis. We can at times, you know, work with the customer and try to increase utilization, but we really are trying to operate their network. There's not a tremendous amount of up flexing involved there because we're flying the customer's network. All right. Perfect. Appreciate you taking that third question in there. Thanks very much. Thank you, Frank. Your next question is from Eric Gregg of FTIA. Your line's open. Great results, gentlemen. Just a few questions here. Can you quantify the higher premium pay? Was it along the lines of, you know, $20 million plus in Q1 for the higher COVID going to more COVID hotspots? Yeah. We haven't really quantified it, but I guess I'll sort of quantify it for you. In the first quarter, our salaries, wages, and benefits, if you look at the increase in salaries, wages, and benefits in the first quarter of this year versus the first quarter of last year, about 85% of that increase was related to crew costs. Of that amount, about two-thirds was related to our new joint collective bargaining agreement, and then about one-third of that was related to premium pay. Okay. Okay, that's great. Did you say the second half of the year, you're forecasting net income to be up approximately more than 50% or was it 60%, I didn't hear that correctly, over the first half of 2022? We said that the second half of the year, results would be about 60% of the full year. Oh, 60% of the full year. Okay, great. Yeah. Could you quantify- We've given, you know, we've announced first quarter earnings today, we've provided an outlook for the second quarter, and then we've said the full year, the second half would make up 60% of the full year. Great. That's excellent. In terms of the Sorry, no, I'm sorry. I said that wrong. 60% greater than the first half is what we said. Sorry about that. Okay. Yeah. Thank you for that clarification, Spencer. I was just about to. Yeah, sorry about that. Okay, great. In terms of the impacts from COVID in China specifically right now, are you seeing, you know, with all the pressure and the shutdown in Shanghai, are you seeing flights being diverted to other major metropolitan areas in China, or are you seeing a general reduction that China currently at some point has got to open up? It's both, in my opinion. We have been working hard with our customers to very quickly adjust to those locations that are being restricted or limited. I feel good about our success factor in doing that. It has not resulted in really any material negativity in terms of total block hours. You know, utilizing other locations or some of the surrounding countries, Korea, for example, we've been effectively working with our customers. I'll go back to what Spencer said, though, and that is when that does open up, and it will, we see a lot of pent-up demand, and there's gonna be a tremendous appetite for the speed and reliability that air freight brings to the market. We expect that'll continue for a long period of time. Okay. Finally, on the stock repurchase, it's great to see that ASR done last quarter. How do you expect the pace of the remaining authorization to go? Are you contemplating the potential for adding to that authorization in 2022? Well, as I said in my remarks, you know, share repurchases remain a top priority, and we'll look forward to keeping you all posted. You know, as you can see, we fairly quickly completed the first $100 million on that through the accelerated program, and I look forward to keeping you updated on more details. Great. Thanks a lot. Great results. Thank you. Thank you. We have a follow-up from Chris Stathoulopoulos of SIG. Your line is open. Thanks for taking my question. So I just wanna understand here, the utilization of 9.6 hours in the quarter was below the 10 or so you did for the last three quarters, and I know that there's some seasonality here in 1Q, generally a weaker quarter. How much of that reflects any irregular ops due to COVID or perhaps the conflict in Ukraine? Thanks. Yeah. Thanks, Chris. Less about the conflict in Ukraine. There's an aspect of the Ukraine flying that actually increases block hours to have to go around Russia, Russian airspace versus through it. More of it is associated with what you described, the operational disruptions, particularly with regard to Omicron, that, as you look at global statistics, affected everybody and Atlas was no different. Chris, if I could just add to that. Yes. Yeah. I'm sorry. Overall, airline operations utilization was fairly flat in the first quarter versus the first quarter of last year. Traditionally, the first quarter has lower utilization due to the higher downtime that we have because of scheduled maintenance and lower customer flying around Lunar New Year. Additionally, as we've talked about, this quarter, we experienced, you know, disruptions and cancellations driven by Omicron, especially in the beginning of the quarter. We expect utilization to improve sequentially throughout the year with the fourth quarter being the highest quarter. Okay. Last question on the 2022, this year's block hour guide. Is there a way to give a same-store sales comp here? If we do see a slowing in the U.S. consumer in, say, volumes with Amazon, do you think that a low single-digit comp for 2023 is possible? Thank you. Let's see. With regard to same-store sales, you're saying take away the aircraft that we're no longer flying anymore, I think. Is that your point? On an apples-to-apples basis. Just wanna, you know, get a sense. Yeah. Right? Because you're adding aircraft here, which ultimately drives. Sure. ASKs up. If we were to normalize the fleet year-over-year, what would that volume comp look like? Yeah. I think you'll see that our utilization on a per aircraft basis will increase throughout the year, and then we'll be adding four 747-8s and one 777 this year is our expectation. Really, fairly consistent, slightly better flying on the existing planes and then you know, adding these great new planes will really improve things as well. Okay. Given the order book here that you have or your implied fleet count for this year, the triple sevens, is it possible if we do see a slowing here in the U.S. and perhaps with world trade that you can do a low single digit, you know, volume comp here later cycle or for 2023 possible? Thank you. I don't think we're gonna comment on 2023 today, but I guess I will say we'll be adding the 747-8 this year, one this quarter and three in the second half of the year. Next year, we'll have a full year of flying all of those. We'll be adding one 777 this year and three more next year. We will have not quite a full year of flying in 2023, but then a full year of flying in 2024, and those are our most profitable planes. They come with a maintenance honeymoon. They're brand-new, modern, efficient. Customers love them. They carry a high rate. You know, that will be good for volumes as well as earnings. Okay. Organically then given, you know, you're attached to your time zone at DHL. We shouldn't think that if things do slow that, you know, 1%-2% organic volume growth here is not achievable. I realize you're adding planes, and it's not again, like for like. There is some concern here that the sustainability of rates here, but also what block hours can do ex the addition of the seven four seven and triple sevens. Yeah. I think we think that a lot of the concern at the moment is because of the lockdowns in China, and I think perhaps people are misinterpreting the reduced volumes and the reduced buildup at the ocean shipping ports as things are slowing down. But it's just because of these China lockdowns, and as soon as things open up, what we're hearing from all of our customers is that things are going to be incredibly strong. We are not expecting what you said. I'd like to add to that. All right. Again, this is in no way intended to disparage our brothers in the passenger business. As I said in my comments, we think there's been a shift change in terms of the interest in dedicated freighters. Even when some capacity comes back, which anytime capacity comes back, it could potentially put pressure on rates. I think there were a lot of lessons learned as the value of long-term dedicated freighters, the air freight market was resilient through this difficult time, and there is vulnerability on the passenger if a new variant surfaces or commercially if capacity doesn't come back to the same degree or in the same form that it was before. We think that favors both the volume and rate environment for air freight and has created a whole new customer bases of customers that have historically not contracted for dedicated air freight. That demand, that increased demand helps offset some of the concerns, in my opinion, that you're talking about. Okay. Appreciate the color. Thank you. Thank you. Your next question is from Helane Becker of Cowen and Company. Your line is open. Hi. Thanks. This is Tom Fitzgerald. I'm on for Helane Becker today. Thanks for taking the time, and congrats on the great quarter. Just picking up on some of the macro stuff Chris was talking about. You know, I appreciate that, you know, customers are seeing the value of dedicated air freighters, but, you know, there's a lot of debate about, you know, how much of an inventory glut there's going on, you know, outside of semiconductors and chips. You know, just given how much consumers spent on goods in the last couple years and the inflation rates they're experiencing, you know, savings rates have come down a lot. It seems like people are shifting their wallet spend back to services, you know, and it's gonna come at the expense of goods. I'm just kind of curious, just to play devil's advocate, how you're thinking about that. It seems like the macro environment is going to get much more sinister over the next year or so. Well, I think we've described how we're thinking about it, Tom, and I appreciate it, what you said, but I think there are a number of countering positive factors that we're showing. Look, we're keeping our heads down and delivering result after result after result, despite some of these same questions coming up in prior calls. You know, is this going to last forever? We fully expect, and as we've said before, things will moderate. I think for all the reasons we've said, the favorable factors outweigh some of the concerns that both you and Chris have identified. I think you're right for being concerned about that and for asking those questions. Again, our focus on and one of the reasons why, you know, things are starting to settle a little bit and why we elected to go with full year guidance is you know we hadn't done that for a number of quarters because of the lack of clarity and the volatility of the pandemic and some of the supply chain issues. We have some more visibility now, and with as much of our capacity locked up, you know, for years, this is not just a 2022, for years going forward. I think there's validation in the decisions, the choices that very sophisticated purchasers of our services and aircraft capacity, you know, are aligned with what our view of the market is here. That's not to say, you know, we're not concerned about some of the negative forces. We watch that very closely. Based on the visibility and the strength of the market, we felt comfortable giving full year guidance for this particular release, and look forward to keeping you posted and look forward to keeping our head down and continuing to deliver, as we've done up to this point. Got it. That's good. That's great to hear. Thank you. Thank you very much for the color. Thank you. No more questions. Please continue. Okay, great. Well, thank you all. You know, on behalf of all of us at Atlas, Spencer and I want to thank you for your interest in Atlas Air Worldwide. We appreciate the questions and the time you've taken with us today, and we hope you all stay safe, and we'll look forward to catching up with you next time. Thank you for joining. Thank you, operator. You're welcome, sir. This concludes today's conference call. Thank you for participating. You may now disconnect.