Welcome to the fourth quarter 2020 Air Transport Services Group Incorporated earnings conference call. My name is Hilda, and I will be your operator for today. At this time, all participants are in a listen-only mode, and later we will conduct a question and answer session. During the question and answer session, if you have a question, please press star and then one using your touchtone phone. Please note that this conference is being recorded. I will now turn the call over to Mr. Joe Payne, Chief Legal Officer of ATSG. Mr. Payne, you may begin. Good morning, welcome everyone to our fourth quarter 2020 earnings conference call. We issued our earnings release yesterday after the market closed. It's on our website, atsginc.com. Let me begin by advising you that during the course of this call, we will make projections and other forward-looking statements that involve risks and uncertainties. Our actual results and other future events may differ materially from those that we describe here. These forward-looking statements are based on information, plans, and estimates as of the date of this call. Air Transport Services Group undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions, factors, new information, or other changes. These factors include, but are not limited to, the following, which relate to the current COVID-19 pandemic and related economic downturn. The pandemic may continue for a longer period, or its effects on commercial and military passenger flying may be more substantial than we currently expect. It may also affect our workforce and staffing capability, our ability to access airports and maintenance facilities, our customers' creditworthiness, and the continuing ability of our vendors and third-party service providers to maintain customary service levels. Other factors could also impact the market demand for our assets and services. These include our airline's ability to maintain on-time service and control costs, the cost and timing with respect to which we are able to purchase and modify aircraft to a cargo configuration. Fluctuations in ATSG's traded share price and in interest rates, which may result in mark-to-market changes on certain financial instruments. The number and timing and scheduled routes of our aircraft deployments to customers. Our ability to remain in compliance with key agreements with customers, lenders, and government agencies. Changes in general economic and/or industry-specific conditions and other factors as contained from time to time in our filings with the SEC, including the Form 10-K we will file next week. We will also refer to non-GAAP financial measures from continuing operations, including adjusted earnings, adjusted earnings per share, adjusted pre-tax earnings, and adjusted EBITDA. Management believes these metrics are useful to investors in assessing ATSG's financial position and results. These non-GAAP measures are not meant to be a substitute for our GAAP financials, and we advise you to refer to the reconciliations to GAAP measures, which are included in our earnings release and on our website. Now I'll turn the call over to Rich Corrado, President and CEO, for his opening comments. Thanks, Joe. Welcome everyone. I want to begin by again thanking our employees for the outstanding service they provided this past year to our customers under all kinds of adverse conditions. We continue to invest more on safety and productivity measures to improve performance across all of our businesses. This is ATSG's culture in action. We'll keep improving and innovating to improve service long after the pandemic ends. Additionally, all three of our airlines have flown vaccines and other COVID-related supplies in support of our customers. For all of 2020, we exceeded our Adjusted EBITDA goal with revenue and growth from all of our principal businesses. The pandemic continues to affect our results overall and our passenger flying in particular. Demand for our Boeing 767 freighters, both leasing and flying, remains very strong, and not just for those coming out of conversion every month. We are redeploying returned freighters to new customers at a faster pace than before. I have great confidence in our results for 2021 and beyond based on the strongest order book in our history for our 767 freighters and support from customers who choose us to fly for them. I'm also tempered by the knowledge that the end of the pandemic has proven hard to predict, including the willingness of the flying public to return to the air in pre-pandemic numbers. I'll have more to say about our outlook shortly. Quint Turner, our CFO, is standing by to recap our 2020 results. Quint? Thanks, Rich, welcome to everyone on the call this morning. As Rich said, we beat our $490 million target for 2020 Adjusted EBITDA by a healthy margin. On a consolidated basis, fourth quarter revenues were down a bit from $403 million- $399 million. The principal factor was lower block hours for passenger flying at Omni from a year ago and ATI's Combi fly. Our fourth quarter GAAP earnings of $2.3 million or $0.04 per share basic was substantially better than our loss of $41 million or $0.70 per share a year ago. The quarterly non-cash loss from revaluing our liability for the Amazon warrants was $38 million. Roughly half of what it was a year earlier. We also booked $12 million in fourth quarter benefits from our 2020 CARES Act grants. Finally, we had a $4.5 million positive swing in our retiree benefit adjustment and a smaller loss from our joint venture than the prior year. Interest expense was down for both the quarter and year. We had lower rates on our credit facility balances and lower debt levels overall than in 2019. Depreciation and amortization expense increased $5 million for the quarter and $20.5 million for the year from more aircraft in service. Those and other items are excluded from our Adjusted EBITDA, which was $122 million for the fourth quarter, down $2 million, and $497 million for the year, up $45 million. Adjusted EPS for the fourth quarter was $0.38 versus $0.56 a year ago. Our fourth quarter adjusted share count increased 10% year-over-year related to an increase in our stock price. Our 2020 capital expenditures totaled $510 million. That included purchases of nine Boeing 767-300 passenger aircraft for freighter conversion, plus ongoing mod costs. The total was more than we anticipated last November, but necessary to respond to strong demand for our 767 freighters that has pushed our backlog well into 2022. One factor was Amazon's request to front-load its 2021 freighter deliveries. Five of the 11 767-300s we will lease them this year will enter service in the first quarter and seven in the first half. Today, we project that we will spend slightly less in 2021 than last year. Rich will cover our 2021 CapEx plan in a moment. On a segment basis, CAM, our leasing business, led the way for both the quarter and year. CAM's pre-tax earnings increased 21% for the quarter and 13% for the year. Its externally leased fleet grew by four 767s during the fourth quarter and by 11% for the year. Eight of CAM's 767s were in conversion at year-end, down from nine at the end of September versus eight a year ago. It purchased two 767 freighters and nine passenger 767s for conversion last year, or 11 overall, seven of which are for 2021 delivery. It expects to buy 13 more 767s in 2021 for freighter conversion. Pre-tax earnings for our ACMI Services segment, which includes our two cargo and one passenger airlines, were down $4 million for the fourth quarter, but more than doubled to $67 million for the year. Our express package network flying for e-commerce customers increased sharply for the quarter and year, but passenger flying dropped significantly. Fourth quarter block hours were up 1% overall, but Omni's hours were down 23% and our Combi block hours fell 41%. Combi flying will likely remain down at least through the first half. We mentioned in our earnings release that Omni Air has been awarded another $37 million in grant funds this year from funding in the federal government's PSP2 program set aside to help passenger airlines coping with the pandemic. Those funds require and enable us to keep Omni's entire workforce on board through March. That is on top of the $75 million in total grant funds we were awarded last year to help us retain our Combi flight crews at ATI and Omni's passenger aircraft crews. Please keep in mind that our practice is to exclude those grant funds from our adjusted results while continuing to absorb the salary and benefits for the employees we might otherwise have furloughed. To the extent we carry costs to maintain staffing levels in 2021 due to this and other federal support we may seek, our Adjusted EBITDA and earnings would be reduced. We also said in our release that the December ratification of a new amendment to the collective bargaining agreement with our ABX Air pilots will add $7 million-$8 million to our wage and benefit costs in 2021. This amendment became effective January 1st and will add to an already difficult first quarter comparison to last year when pandemic effects were not fully realized. ABX Air has always had a great on-time performance record. We believe that the six-year amendment will cause both potential pilot recruits and customers to look with greater confidence toward ABX Air as a long-term provider of ACMI and CMI support. Revenues from our other businesses grouped as other activities grew 8% and 6% respectively for the quarter and year, largely on growing fuel sales to Amazon, but they had pre-tax losses for the quarter and year. We incurred startup costs at two postal facilities that our logistics group has opened recently, and higher margin heavy maintenance work for external customers remained down as many of the passenger aircraft we support remained parked. With that summary of our financial and operating results for the quarter and the year, I'll turn it back to Rich for some comments on our outlook. Rich? Thanks, Quint. A year ago, in the early stages of the pandemic, we took note of the risks it posed, but advised you that our business model was resilient enough to adjust, and we would achieve good results for the year. That was true in those early days of 2020 and remains true now in early 2021, as we look ahead toward what we hope will be a year of recovery for the economy and the transportation sector as a whole. Despite continuing uncertainty, we expect our business model to provide another year of revenue and Adjusted EBITDA growth in 2021. When the pandemic took hold last year, we had to dial back our expectations. We were fortunate last spring and summer to pick up several short-term passenger charter assignments to offset the loss of commercial passenger charter demand resulting from the pandemic. As fall arrived, the vacation and other commercial charter companies we typically serve were facing their own pandemic effects, which impacted our fourth quarter and will continue at a minimum through the first half of this year. In the meantime, our businesses are performing at projected levels this year. We are on track with our aggressive freighter deployment schedule, and our customer service remains strong through the winter months. We have good people. We are attracting more of them, and we are giving them even more and better tools to work more effectively. The continuous improvement processes we have discussed before include new software and other systems that monitor more components of our aircraft in real time. We use that data to compare and predict performance and focus our preventative maintenance. Driving out costs from our parts and maintenance operations has been one of my foremost goals at ATSG, and we are on course in 2021 to start seeing results from those investments and our procurement optimization efforts. While the pandemic has hurt demand for the passenger routes that we fly, the bigger story is that our cargo airlines are very competitive sources for flexible, on-time performance in the networks that they serve. They are the number one providers of domestic outsourced airlift for their principal customers and are growing as a group. We expect them to continue to grow in 2021 under expanded Amazon flight schedules and steady demand from the Department of Defense and DHL. As Quint noted, their Adjusted EBITDA contributions will reflect, among other things, the impact of our ABX Air labor agreement and crew costs that would have been lower except for our federal support. The pandemic is clearly stimulating demand for mid-size cargo aircraft, our core assets. Not only are we placing record numbers of our own newly converted freighters into service, including the five we have leased to UPS over the last 18 months, but we are also re-leasing the 767s we get back faster than ever before. Many are going to new international customers like MasAir in Mexico, Astral Aviation of Kenya, and Raya Airways in Malaysia. We're confident that we'll be able to deploy more of our 767s outside the U.S. in this and future years. Our latest venture is a way to leverage CAM's conversion and leasing expertise for other airlines that want to build their own cargo fleets. In January, we agreed to buy two 767 passenger jets from Air Canada, convert them to freighters, and lease them back into Air Canada's own cargo operations. We think we can find more such opportunities as other airlines assess the long-term passenger versus cargo potential of their fleets. In addition to the 11 767s we are scheduled to lease to Amazon this year, you have likely read that they are purchasing and converting some 767s on their own. We're not surprised at this development, as Amazon has been investing heavily to expand its air network in anticipation of the opening of its new U.S. hub at the Greater Cincinnati Airport this fall. We anticipate that Amazon, like other large network operators, may source freighter capacity from both acquisition and leasing in the future, and we anticipate CAM will remain an excellent source for any leasing capacity they may require. ATSG's business model is uniquely structured to support our customers in a variety of ways, including through our airlines' vast operating experience in an expedited air cargo network. We are proud of the level of service our airlines offer their customers. As I mentioned earlier, we invest in continuous improvement. Customers such as Amazon and DHL certainly notice our focus on service, and we anticipate that they may ask us to operate aircraft they own or lease from other sources. We believe that by the end of this year, we'll be operating at least 46 aircraft in Amazon's network under our CMI agreement, compared with 33 at the end of 2020. You may recall that we began flying the first five of those aircraft for Amazon more than five years ago and completed our first dry lease and CMI agreement with them in March of 2016. Today, we have commitments for at least 15 767-300 leases in 2021, including 11 767-300s we will lease to Amazon this year. We are negotiating with customers for nine 767-300 leases in 2022, and we have indications of interest from several customers, some in new global markets, for multiple leases of 767 freighters, beginning as far out as 2025. We are sourcing more fee stock, making conversion slot commitments, and setting prices and terms that meet our rate of return requirements. We will spend more for CapEx and hire more flight crews in 2021 than we had expected, but that spending will build our leasing and airline cash flow projections well into the next decade. The Airbus A321 freighter conversion design we developed with our joint venture partner, Precision, is in the final stages of FAA review, and we're hoping for approval in March. Owners of A321 aircraft have already approached us about conversions, and we intend that our PEMCO conversion subsidiary can begin by mid-year. Our 2021 CapEx budget of about $500 million does not include any money for purchases of our own Airbus A321 feedstock, but we do expect to be in the market before the end of the year. We exceeded both our initial projection and our November update for 2020 Adjusted EBITDA through a combination of great service, more first-half charter opportunities, and strong e-commerce demand. This year's Adjusted EBITDA target is at least $525 million. We're taking a wait-and-see approach to positive indicators about the economy and fewer pandemic limitations as the year progresses, particularly in the second half. We are taking note as well of potential competition from scheduled passenger carriers seeking charter opportunities for their idle aircraft. Our current outlook factors in continued pandemic effects on our commercial passenger and Combi flying. Our plan projects 57% of our Adjusted EBITDA to be realized in the second half. If we see early signs of progress, particularly in our commercial passenger and aircraft maintenance businesses, we may be able to give you a better assessment when we meet again in May. That concludes our prepared remarks. Quint and I, along with Mike Berger, our Chief Commercial Officer, are ready to answer your questions. May we please have the first question, operator? Thank you. The 1st question comes from David Ross from Stifel. Please go ahead. Yes. Thank you, and good morning, Rich and team. Morning, David. Wanted to talk 1st, I guess, about the Airbus A321 freighter. I guess there's an article that DHL is already putting some into service overseas. How do you expect to be able to compete with the others that are maybe already doing the conversions, and what's the appetite look like from the customers you're talking to over the next couple of years? It's a good question, Dave. The Airbus A321, we're hoping to have the STC approval by the end of March. There's only one other conversion house that's delivering aircraft right now, and that's EFW, and I think they have a couple of aircraft out there. One of which was produced for a lessor called Vallair, and Vallair is leasing that aircraft to SmartLynx Airlines, which is the operator that's flying for DHL. Our first aircraft that's in conversion right now, that's our prototype model, is actually a Vallair aircraft as well, and slated to go to SmartLynx Airlines. We believe that that'll enter that same profile network. In that article, I believe they indicated that SmartLynx Airlines was lined up for a couple more aircraft this year. We welcome the competition as it relates to DHL and SmartLynx Airlines looking at both aircraft. We believe our design is superior. We worked with Precision, and as an operator, we focused on looking at this aircraft as the way an operator would want to view it. There are some differences in our design that would make the aircraft more operator-friendly, both on the sortation and container loading, and also in the way the crews would utilize the aircraft, both in jump seating and being able to have their luggage on the upper deck. We welcome that opportunity. We're hoping to start the production line mid-year this year. We're also getting PEMCO, our conversion subsidiary that's part of our Airborne Maintenance & Engineering Services that's located in Tampa, in the conversion business mid-year as well, and start a line going to deliver more aircraft. Yeah. I would just add, Rich, that DHL has indicated they do plan to compare the airplanes as you mentioned. Okay. Then just a follow-up on that as we think about the opportunity over the next several years, because the idea is that there's a lot of 757s being retired that need to be replaced. If you think about ATSG's revenue stream from the A321 conversions, are you expecting most of the business to come through the traditional ACMI route or the A plus CMI in CAM and the other segment, or is there going to be a bigger revenue stream coming out of PEMCO and the conversions? Then how do you think about that on the A321 opportunity? Yeah. Initially, beginning this year, in 2021, we'll be taking advantage of the joint venture's STC, so that we'll be participating in the kind of the kit and the conversion piece of this. On the touch labor side, as I said, PEMCO will also be participating, so they'll be converting the aircraft directly. Those two segments will go into play this year. We'll be in the market this year, call it the second half of the year. We're looking for feedstock now, but we'll be looking to make some transactions towards the second half of the year into 2022 to start building a leasing portfolio at CAM. The prognosis of whether we would fly the aircraft or not depends on our large customers and whether they want us to fly it. As we have in the past, we generally don't do a lot of spec work and throw aircraft onto our certificates t o try to leverage new charter business. It's not a big, robust piece of what we do. We're going to move in that direction. One of our existing customers, DHL, does fly a lot of 757s, as does UPS and FedEx. There are a number of airlines around the world, in Europe and in Asia, that fly 757s as well. On the operating and leasing side, there should be robust demand. The other interesting thing, and you see this in most situations with new conversions, is leasing companies that have passenger aircraft portfolios that are coming off lease generally look to whether they can get a third lease on an airplane, passenger-wise, and if not, then they may look to convert that aircraft and create a new revenue stream and a new life, frankly, on the aircraft. We've already got a lot of interest from leasing companies that have portfolios. Obviously, with the pandemic and the utility, if you will, of new leases and putting those passenger aircraft back into service is more challenged right now. We're seeing an uptick, certainly, of interest on the STC and conversion side from leasing companies looking to get in as well. It's a unique stream that we're watching closely. Excellent. Thank you. Thank you. Our next question comes from Jack Atkins from Stephens. Great. Good morning. Thanks, guys. I guess maybe just to go back to the outlook for 2021, Rich, or Quint, maybe if you want to take this as well, just curious, you're absorbing a fair amount of costs related to the passenger charter and the Combi flying that, I guess, the hope is that'll come back at some point once the world normalizes. Is there a way to think about the headwind that that's maybe serving to profitability in 2021? Just help us think about that, because the idea would be one day that would return back closer to normal and you'd be able to absorb that overhead, and that would go from being a headwind to more of a tailwind. Yeah. Jack, this is Quint. As you noted, if we have a headwind going into this year, it's related strictly to the pandemic. Yeah The passenger operations. We talked a lot in earlier quarters about our successful efforts to really mitigate some of that through taking the opportunity to do some charters. Some of those charters were also driven by pandemic requirements, PPE and repatriating citizens and so forth. We saw more, and I think we told you guys when we talked in November or October, we expected to see more of that in the fourth quarter because we didn't foresee as many of those opportunities. That's kind of what we're looking at as we head into at least the first half of this year. Our view is that we're going to continue to see those pandemic effects. The primary places you see them, obviously, is in Omni's commercial operations in particular, and also in the combi flying that we do. The opportunities to mitigate that, while they may come about, there may be some of those are not as clearly visible as they were heading into the pandemic. I think Rich mentioned that the first half, we're expecting about 43% of our EBITDA in the first half and 57% in the second, and that reflects our view that we'll see recovery in some of those opportunities as we move forward, and we also get more scale as we put additional CAM leases in place moving through the second half of the year. Some of the opportunities we had early on in 2020 for those charters tended to be pretty profitable opportunities. As is often the case with charters that need to be done in a compressed timeframe, you typically are able to realize a little better margin on some of those. That, again, presents a little bit of a headwind going into the coming year. In terms of where we invest our capital for aircraft, as Rich said, on the cargo side, we've not really seen any more robust environment for demand than we're seeing right now. We're achieving the returns we're getting there, and of course, that was also a big part of our story last year. No, absolutely. All that makes sense, Quint, and thanks for that additional sort of color there. Rich, when you sort of think about where the business is today, you've got, I think, just an unprecedented level of visibility into customer demand. I think there's a concern in the market that air freight has been a beneficiary from the pandemic to some degree. I guess what your customers are telling you with their desire to lease planes in 2022, and then you've got visibility, you said, through 2025 for multiple aircraft, what is that telling you about the stickiness of what's happening in the business right now and the rise of e-commerce penetration, not just in the United States, but more globally? Well, Jack, I think even before the pandemic, e-commerce was dominating growth in air cargo. If you look at air cargo i n general, you've got two broad segments. You have general air cargo, which is your intercontinental large aircraft moves that ebb and flow with global trade. You saw in 2019, the market dip by 3%, and you saw the impact that that had on large charter operators that have large aircraft, and they had a very rough and rocky year. 2019 was a record year for us, 2020 was an even better year because we're finely tuned towards express, and that's being powered by e-commerce. That's the other segment, is this express and network operator. That's over 50% of the global fleet of aircraft is with the integrators. That's where we play. If you look at e-commerce now, it's growing significantly. It's up, depending on which analyst you look at, is up 30%-40% in the U.S., depending on which month you look at in 2020. Obviously, that was powered by the pandemic, but it's brought a whole host of new consumers that would not have otherwise used e-commerce that are now using e-commerce and are predicted to stay and continue to use that even when the pandemic is finally over. That stickiness, in your words, is predicted to stay. What's great for us, and we've talked about this a lot, is other than our passenger operations, on the cargo side, we're not a big charter operator. We don't have a lot of assets hanging around waiting for charters. They're all utilized generally on CMI for customers. What's great about what's happening with our business model is this spike in cargo is leading to long-term dry leases. Long after this pandemic's over, we'll still be getting very strong cash flow from these aircraft that are leased and will be leased all over the world, both into the large integrated cargo networks and into networks in other parts of the globe. I don't know, Mike, if you have more. I'll just add a little bit, and then, Jack, I appreciate you bringing up some of the growth opportunities that have happened on e-commerce. As Rich said, it really stands up for what our model is all about, right? We saw great support and great growth pre-pandemic, and certainly through the pandemic. We're going to see it coming out of it. The statistical side of e-commerce, you've gone from 14% e-commerce, in terms of U.S. retail sales in 2018, all the way to well over 21% now. What we're excited about is that from a global standpoint, retail e-commerce sales across the globe are really starting to propel in places that we're starting to grow into. For Latin America, for example, over 36% growth in e-commerce, and we talked about we're putting airplanes down in that part of the world, into places like Africa where they're just under 20%. We see great e-commerce growth across the globe, and as we penetrate new markets, that's what makes us really excited. As Rich talked about, it's not only our dry lease piece of it's where they're going to and who our customers are serving, and that plays right into where the growth engine is, and that's e-commerce and m-commerce across the board. Okay. That makes sense. Just given the level of demand that you're seeing for your assets right now, is that giving you incremental positive opportunities to maybe price more aggressively on some of these leases? That's question 1. Question 2, are you seeing opportunities to maybe extend the term of these leases? I think the Amazon leases are 10 years, at least the most recent leases. What about some of these other customers? Are they multi-year leases? Could you maybe help us think about that? Curious on pricing, and then lease terms as well. Yeah. Our leases are normally, Jack, 5- 7+ years or so. We have seen a tick up for our monthly leases. You're absolutely right about that. The demand has allowed us not only to stabilize prices but also take increases. The other thing it's done, it's allowed us to, on our re-leases, we've gone out and been able to, as leases end and we go into new ones with different customers or the same customers, that's allowed us also to go out for multiple years, 5+ years, not only on our 300s, but even on our 200s, which has really done a great job and still remains a very reliable plane. Yeah, no doubt about it. The market has certainly allowed us to take our rates up slightly and also allow us to take our lease terms out into multiple years to the future. Okay. That's great to hear. Thanks again for the time, guys, and congratulations on a great 2020. Thank you. Thanks, Jack. Thank you. Our next question comes from Helane Becker from Cowen. Thanks very much, operator. Hi, everybody, and thanks for the time. I just have a couple of questions. When you're out there looking at feedstock, are you seeing a lot of competition for the same aircraft, and is it driving up prices? That's a good question, Helane. It's interesting because there's a lot of talk in the market about because of the pandemic, operators are looking to get out of aircraft, or they're parking aircraft, and they're looking to flip airplanes into cash flow, et cetera. Frankly, we have not seen any spike in demand related to aircraft. The competition we tend to see out there is from the large integrators and operators. We don't see it necessarily from other leasing companies. The other thing is, we did this program with Air Canada that we thought was unique. We were in the process of acquiring two Air Canada jets from a leasing company, and then we got into a conversation with Air Canada directly. One of the things we thought about is, as a result of the pandemic, combination carriers or carriers that were combination carriers, handling both passengers and cargo, or even passenger carriers, were going to rethink what cargo means and cargo revenue means to their overall growth profile. Particularly, as you saw in the pandemic, where a lot of them were customizing, if you will, their passenger jets to operate them as freighters. We got into this deal with Air Canada, where we acquired their two Boeing 767-300s from them. We were going to convert them, and then we were going to lease them back. That was a unique program, and we've talked to a few other operators about the potential to do that too. That is one area where there is kind of some availability, but it's a stickiness availability where we could take advantage of those types of things. On the competition side, some of the things that we see is that some operators that are looking for feedstock only want really young airplanes. Your Chinese operators, as an example, SF Express, they want an aircraft that's 15 years or younger, and we'll take 15 years or older. We don't really butt heads with them when we're bidding on things. We've got our order book full for this year. We've got all the feedstock aircraft we need to deliver, all the airplanes that we're delivering this year. We're working on 2022 right now. We've got slots lined up for 2022, and we've got probably about half of them full with feedstock for 2022. Where we sit right now in the end of February, we're in really good shape for next year. That's what we're planning and looking forward to as we go forward. I don't know, Mike, if you have any. The only thing I would add, Rich, is that there's plenty of feedstock in regards to other engine types, and we're in the midst of evaluating Pratt-powered 767-300s. Traditionally, the majority of our fleet, as you guys know, is GE-powered. We're now taking a hard look at the Pratt-powered engines. Now, we do fly three today in our ABX network today, so we're familiar with it, and it flies just fine from a reliability standpoint. We're not concerned about feedstock, specifically when we think about the broader piece of it in engine types, and we'll go from there. That's very helpful. Thank you. I just have two clarifying questions, if you don't mind. On the Air Canada leases, because they were leased aircraft before, so do you just keep the same monthly lease rate, or do they renegotiate that lease rate with you? The two aircraft that we acquired from them, they were owned. They had some fleet that was owned and some that was leased. These two particular aircraft are owned and those are the ones we bought. Okay. When they pay you every monthly rent rate, how was that negotiated, I guess I'm trying to figure out? It's no different, Helane, than any feedstock plane we would buy and convert and lease at a market rate. We purchased the airplane. We'll convert the airplane, Helane, and the lease won't commence until we redeliver the airplane back to them, and that's when they'll start paying the monthly rent. Okay. That's very helpful. Thank you. Just on the pilot pay increase, is that all in January then? That whole $7 million or $8 million you mentioned, is that all in the first quarter? No, that's an annual impact, Helane. Okay. All right. We should think about it as like whatever, $2 million a quarter kind of thing. Exactly. Perfect. All right. Thanks, guys. Thanks, Helane. Thanks, Helane. Bye. Thank you. The next question comes from Steve O'Hara from Sidoti & Company. Hi. Good morning. Thanks for taking the questions. Morning, Steve. Morning. Just on the CARES Act benefit that you exclude from earnings. Is there a mismatch there in terms of you're kind of carrying extra salaries and things like that? I guess I can understand excluding the benefit, but you're also carrying heavier expenses, too. I mean, is the right way to think about maybe what EBITDA would've been, kind of on an apples-to-apples basis, if you kind of factor in the benefit from CARES, and what that offset in terms of the cost that you're carrying, the extra cost that you were carrying? Thanks, Steve. It's a good question. The benefit is based on the formula that's in the legislation. It tends to be based on a view more of the total payroll. When it comes to impacted positions that might be furloughed due to reductions, that's more predicated on those that are direct involved with loss of flying. It's not as if you can equate the benefit dollar for dollar or anything with the potential furloughs. Okay. I guess I'm just trying to figure out maybe what the negative impact on the quarter was from carrying those extra salaries. Yeah. It depends upon, I guess, the timing and the level of impact to specific operations, comm, and so forth, and we haven't calculated exactly what that might've been. Okay We want to make sure that you understand the relationship between what's in and what's out of our adjusted results and the rest of impacts. Okay. Just maybe on the pandemic headwind that you're considering for 2021. I had a user error here on the call early, is there a way to think about what you're factoring in kind of in the first half of the year? I think you said 57% in the second half. How do you think about what you're factoring in without the pandemic? What's the run rate earnings look like? At least, what are you factoring in for the pandemic in the first half of the year? Yeah. Again, I guess if you look at where the year-over-year changes are and what we've got in there, the biggest impacts we've said are obviously the passenger portions of our operation, which is Omni, and which is also ATI. You're talking about an earnings impact, or are you talking about an EBITDA impact, or what was your question? Either. Yeah. It's tough to, I guess, calculate exactly what is related to that. We haven't. If we were going to put something like that out, I think we probably would've included in the materials we published last night, Steve. We can tell you that the biggest year-over-year drop is at Omni. If you look at the portion of their business, for example, that is commercial passenger driven, it's probably about 20% of their revenue, which is about $100 million a year. You can figure an EBITDA margin on that revenue. You can see what the overall EBITDA margin is. If you look at the Combi flying, its flight hours are down about 40%. You're talking about probably another EBITDA margin on about, call it, $40 million of revenue for the Combi. You've probably got about $140 million of revenue that's impacted at an EBITDA margin. That's about as good a gauge as I could give you because to do a more refined estimate would involve a lot of assumptions. If you apply that to that might be one way to think about the EBITDA impact related to the pandemic. Remember, we're expecting that to improve in the second half. We've made assumptions in our guidance about an improving picture in the second half. The other headwind you have around the commercial Omni business is that just the competitive nature of it with all the available capacity that's in the marketplace as they go for opportunities in the first half, it will come at a lower profitability. Those headwinds will ease as we progress through the balance of the year. Okay. Certainly, the good news is if you look beyond, if you believe the pandemic as we do, we'll see that lessening impact in the second half. You look out very far at all into 2022. Those aren't impactful beyond the pandemic period. In the meantime, other portions of our business, particularly the cargo portion, well, as Mike and Rich just described, is performing extremely well and continuing to make gains, is looking into 2022. Okay. No, that's helpful. Then two last ones. Just if you think about the run rate heading into 2022, it should seem like you should have, I guess, if I take the second half and maybe annualize that and haircut it a little bit for maybe first half is slower typically. It seems like you have a pretty good runway for 2022 EBITDA. Is there a way to think about the run rate heading into 2022? I think I don't think today we necessarily want to give you a 2022 guidance, Steve. Again, assuming that the pandemic impacts clear up, certainly with the onset of at least 15 additional leased aircraft, and you kind of know what those contributions are like on a per unit basis. I think you can sort of make your own assumptions there. We'll say more about it, obviously, as we move through the year and we get more visibility on exactly where the pandemic effects are going and at what rate. I think it's true that if you assume that things are resolved on that issue by the end of the year, 2022 would certainly be accelerated because you wouldn't have these passenger flying impacts that we're talking about. I mean, you get back to the core of it, with the number of airplanes that we're going to put into service in 2021, the number that we're providing in terms of high single digits for 2022, the feedstock, 13 airplanes, all plays to the model that Rich talked about in the beginning of really turnkey solutions, right? The more airplanes we're putting out in the marketplace, specifically to customers that not only are leasing airplanes from us, but we're also doing the maintenance on through our MROs, as well as our logistics company, as well as flying them when our customers need them, really plays to how the model has performed, and will perform even at higher levels with incremental numbers. Okay. Maybe just lastly, on the A321, how long does that take to get on your certificate, in terms of the airlines, how long does it take them to get up to speed? If you were to buy the aircraft tomorrow, when could you start flying it for customers? It generally takes about six to nine months to get an aircraft on certificate with an airline, and usually you need an MSN serial number to do that. That's how long it takes to get it out. That includes training pilots and getting your maintenance, your flight, your operations, your ground, and your cargo handling manuals all straightened out and approved by the FAA. It's kind of what the view would look like. Okay. All right. Thanks very much for the time. Thanks, Steve. Thank you. If you have any questions, you can press star one. The next question comes from Chris Stathoulopoulos from Susquehanna. Good morning. Thanks for taking my question. Hey, Chris. Quint or Rich, I understand the conservatism around you gave a guide for this year, given the uncertainty with COVID, but assuming the vaccine rollout here continues to move forward, and we're at, let's say, 50% of the U.S. population has at least one shot by mid-July, could you walk us through what your utilization assumptions are for commercial passenger and U.S. military flying in that 525? And of the 15 dry leases this year, how many of those are CMI? And for 2022, I think you said you have nine plans in terms of dry leases, and of those, what do you have locked in for CMI? Thanks. Yes. Rich, you want to take the lease part, and I'll take a shot at the other? Yeah, out of the 15 leases this year, 11 will be, at this point, CMI operations, all for Amazon. Right now on the nine going in next year, there's nothing firm on the CMI. I should also say on the remainder this year, there may be additional CMI for other customers as well. We may have an upside on the CMI, both in 2021 and 2022. Okay. Now, we do- on the utilization assumptions. I don't know, Rich, if you mentioned, but we do anticipate we might have a shot to fly a couple of the Amazon-owned planes. Correct. Yeah. Right. Okay. 13, I think we had assumed about maybe as many as 13 would be added to CMI this year. Right. There may be an upside there as well. On the utilization piece, it's not just U.S. Part of the disruption of service and activity has been, particularly on the Combi side and even with Omni when they're flying for the Military. On the Combi side, let's take that first. It's not that the Military doesn't want to fly, it's that the venues that they're flying into have significant restrictions. Singapore, Bahrain, Ascension Island, where for us to fly in, the pilots would get quarantined for an excessive amount of time. Those types of things. It's a situation where it's not that the customer doesn't want to fly into these venues, it's they're unable to effectively and productively do that. The same goes for some of the Omni flying. Some of the airports they normally would service are not allowing foreign operators to fly through. That's disrupted, on the military side, some of their opportunity going forward. It's not just the vaccine rollout in the U.S. It's the success of the vaccine in other countries, and in the military, for those areas which we fly to. That's what's impacting the kind of the utilization on how we feel we'll roll out of this. We have some commercial customers, such as Vacations Hawaii, that was a regular charter business for many years for Omni, flying between Honolulu and Las Vegas. They're projecting midyear to be back in service. Depending on how the pandemic goes, that may get disrupted. We don't have that in our first half, but we do have some of that revenue in our second half. Is a good example. We're in regular dialogue with that customer about their opportunity. It's just a matter of how the markets are, and how the public is buying into going on, utilizing that vacation type option. Those are the kind of some examples of how we're thinking about getting utilization improved in the second half of the year. Okay. Of the 116 aircraft that you have in your release for this year-end, that's nine additional for next year. Should we think about the fleet around 125, 124-ish for 2022? I think we'll add to the nine, Chris. Go ahead. Are working specifically on. I think that it'll probably we'll add a few aircraft to that. Okay. Then, Quint, cash flow from operations for this year, ex PSP2 and the aircraft impairment? Well, of course, it'll all be in our cash flow statement here that we'll publish on Monday with the K. Hang on here. Are you talking for 2020 or 2021? For 2021. I'm sorry, for last year, 2020. For last year, yeah. Yeah. Cash flow from operations is about, what, $512 million for the full year. That includes about $76 million of CARES proceeds. Okay. All right, then I can just take out the aircraft impairment. Last question, just how should we think about D&A maintenance and interest expense for 2021? Thanks. Interest expense is roughly in terms of cash interest, because we do have some non-cash components. In terms of 2021, you're looking at around just over $50 million, call it $53 million cash interest expense. As far as What was your other question on D&A? Maintenance and D&A. You're talking about CapEx, or you're talking about on the expense side? On the expense. Just for modeling here on the income statement. I'm guessing that there's going to be some maintenance associated as you ready the new 767s. Yeah. I don't know if we want to get into the specific modeling stuff here. Obviously, we can talk about that later, I guess, Chris. I don't have an income statement here in front of me for the 2021 budget that breaks it down that way. Okay. Thanks for the time, everyone. Okay. Thanks. Thank you. We have no further questions at this time. I will turn the call to Mr. Rich Corrado for final remarks. Thank you. I'd like to again thank all the employees at ATSG. All of our companies have been operating at full speed during the pandemic, delivering essential transportation, maintenance, and logistics services to the economy. We've delivered for our customers and for our shareholders. I know I speak for everyone at ATSG when I say we're proud of the results achieved in 2020, and we're confident that we'll do better this year. Our strategy has always been about long-term cash flow, and that's not going to change simply because of a pandemic. We hope to see many of you online via Zoom or other investor conferences this spring, and we thank you for your support of ATSG. Thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating. You may now disconnect.