Hello, welcome to the SkyWest, Inc. first quarter 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal to our conference specialist by pressing the star key followed by zero. After today's presentation, there will be opportunity to ask questions. To ask questions, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn over the conference to Rob Simmons, Chief Financial Officer. Mr. Simmons, please go ahead. Thanks, everyone, for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest's Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer, Wade Steel, Chief Commercial Officer, and Eric Woodward, Chief Accounting Officer. I'd like to start today by asking Eric to read the safe harbor. I will turn the time over to Russell for some comments. Following Russell, I will take us through the financial results. Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our sell-side analysts. Eric? Today's discussion contains forward-looking statements that represent our current beliefs, expectations, and assumptions regarding future events, and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statement. Actual results will likely vary and may vary materially from those anticipated, estimated, or projected for a number of reasons. Some of the factors that may cause such differences are included in our 2020 Form 10-K and other reports and filings with the Securities and Exchange Commission. Now I'll turn the call over to Chip. Thank you, Rob and Eric. Good afternoon, everyone, and thank you for joining us on the call today. One year ago at this time, we were only beginning to feel the massive impact of COVID-19 around the world and across our industry. We've learned much over this past year, and we continue to make good progress on our strategy to emerge from this crisis a better, stronger company. I want to thank our outstanding team of professionals for their continued teamwork, flexibility, and dedication in order to deliver an exceptional product in any situation. We made some good headway toward recovery in the first quarter, and while there's still ground to cover, we're seeing strong demand improvement. We are working across all areas of the operation to ensure we're quick and responsive to what our partners need from us to lead the recovery. Under previously announced agreements, we took delivery of one new CRJ900 for Delta and placed nine used CRJ700s into our American system. We still have 16 more aircraft to transition into our American network this year, and we're making maintenance investments with those aircraft as we bring them out of storage and get them ready for profitable operations. As I just mentioned, we are seeing significant demand for all of our products. These maintenance investments are a critical part of our long-term strategy to build reliability into our fleet, as well as preparing for what we expect will be a busy summer ahead. Wade will talk more about our maintenance programs and associated costs in a minute. During the quarter, we also began hiring mechanics, flight attendants, and just recently accepting pilot applications once again. We continue to advance our commitment to diversity through important partnerships with organizations across the industry to ensure we continue attracting the best professionals to join our team. In addition to receiving a Glassdoor Employees' Choice Award for the second year in a row, as previously announced, we're also named to Forbes America's Best Employers 2021 list during the first quarter, once again, as the only regional airline on the list. We're always working to set SkyWest apart as a leader in the industry and as an exceptional employer. I'm incredibly proud of our outstanding team of professionals for their network that helps us continue to advance. Thank you. As vaccinations across the U.S. increase, it's clear people are anxious to resume a sense of normalcy, including travel. We're seeing more leisure travelers on board all aircraft, and there is some reason for optimism in terms of demand, especially for SkyWest's fleet and product. We believe our ability to deliver a solid product is more important than ever as we work with our partners to support the return to travel. Our operational performance for the quarter improved year-over-year with a 99.97% completion adjusted for weather and nearly 81% of our flights departing on time. Our teams worked hard through severe weather events impacting our operations across Texas and Colorado, and I want to thank them for their teamwork and diligence through these challenges. During the first quarter report, we reported net income of $36 million, driven by a slight improvement in production over Q4 and the extension of the Payroll Support Program. Revenue was $535 million, down from the fourth quarter, mainly due to prorate seasonality and temporary PSP2 related partner concessions. These concessions are temporary ways we can support our partners through the current challenges. In terms of liquidity, we had $836 million cash at quarter end, and while we have until the end of May to decide further participation, we do not expect to draw additional funds under the CARES Act secured loan facility. Rob will discuss more about this in a minute. Over the past several months, SkyWest has seen strong utilization compared to our competitors. The first quarter is seasonally the weakest for our industry, but in Q1 we did see an increase from the fourth quarter of 2020. While the second and third quarters will still have lower production than 2019 levels, we anticipate the fourth quarter of 2021 will be similar to the fourth quarter of 2019 production levels, pending continued recovery. Ensuring we're a solid partner is critical to our business, and our ongoing agility remains a key component to our recovery strategy. While we are still below 2019 levels, we remain optimistic about the shape of the recovery so far. As demand returns, we're confident our fleet will continue to fill a critical role in the country's return to travel. We are focused on remaining aggressive and deliberate in taking care of our people and our customers as we preserve our liquidity and plan for recovery to ensure we emerge as a better, stronger company. Rob will now take us through the financial data. Today, we reported first quarter net income of $36 million, or $0.71 diluted earnings per share. Q1 pre-tax income was $50 million. Our diluted share count for Q1 was 50.7 million shares, and our effective tax rate in Q1 was 28.2%. First, let's talk about revenue. Total Q1 revenue of $535 million is down 27% from Q1 2020, and is down 9% from last quarter. Although our Q1 block hour production was up 3% sequentially from Q4, as Chip mentioned, the sequential reduction in revenue was primarily driven by PSP2 related temporary partner revenue concessions and prorate seasonality. This breaks down with contract revenue down 27% from Q1 2020, and down 11% from Q4. In both of these comparatives, we have temporary partner revenue concessions in Q1 2021, but not in Q4 2020 or Q1 2020. Prorate revenue is still down 32% year-over-year, and was down 4% from last quarter due to seasonality. As we've previously said, prorate revenue is nicely levered to a demand recovery. Leasing and other revenue is up 14% year-over-year and 18% sequentially. These GAAP results include the effect of a deferral of $21 million of revenue this quarter compared to $111 million during 2020. As of the end of Q1, we have $132 million of cumulative deferred revenue that will be recognized in future periods. As discussed last quarter, the timing and amount of future deferrals and the reversal thereof into revenue depends on the shape and cadence of the recovery of our flying. All deferred revenue will be reversed into revenue by the end of the various contract periods. We may continue to defer some revenue into later 2021, when it could begin to reverse. Let's move to the balance sheet. We ended the quarter with cash of $836 million, up from $826 million last quarter. Our CapEx during the first quarter was $56 million for four used aircraft, spare engines, and other fixed assets. Our expectation for 2021 CapEx is approximately $650 million-$700 million, including the purchase of 18 new E175s later this year under our previously announced contract with American. This compares to $438 million in CapEx in 2020. We ended Q1 with debt of $3.1 billion, down from $3.2 billion as of year end 2020. Let's talk about liquidity. As of March 31st, 2020, our cash position was $836 million, in addition to availability of $665 million undrawn in our CARES Act loan, and approximately $40 million available on our revolving line of credit. We have until later in May 2021 to decide how much in additional draws we will make under the CARES Act secured loan facility, if any. Based on the high cost of warrant coverage of any additional draws on that facility, it is likely that we will not draw any additional amounts and may choose to also repay the $60 million outstanding currently on that facility and let that additional availability go. This would release $1.5 billion of pledged collateral under this government facility. During Q1, $193 million in PSP2 grants was recognized as income in the form of a contra expense laid out clearly as its own line item in our P&L. This is a change from grant income of only $3 million recognized in Q4. Subsequent to quarter end, SkyWest entered into an agreement with the U.S. Treasury for approximately $250 million in funding under the PSP3 program for airlines. $45 million of this amount represents a low interest, no amortization, 10-year loan. $205 million of the $250 million is a payroll grant expected to be recorded as income largely in Q2 and Q3 2021. Under PSP3, SkyWest will issue the U.S. Treasury Department warrants to purchase approximately 78,317 shares of SkyWest common stock at a strike price of $57.47. Subsequent to quarter end, SkyWest received an additional $35 million top-up to PSP2. This top-up breaks down as $10 million in debt and $25 million in grants, with warrants to purchase 25,958 shares of SkyWest common stock at a strike price of $40.41. Last quarter, we estimated that we would burn cash in the first half of 2021 at a rate of about $250,000 per day, or $7 million per month. Based on March ending cash of $836 million, we are running a bit better than our forecast. We expect to be slightly cash positive in the first half of 2021 before the possible voluntary repayment of the $60 million outstanding under our CARES Act secured loan. Depending on the pace of the recovery, we could be cash positive in the second half of 2021. If the economic effects turn out to be worse and the recovery slower than we currently expect, we have additional liquidity tools that we can call on, including our cash balances, our revolver, and either $665 million of undrawn availability under our secured CARES Act loan facility, or the $1.5 billion of collateral that frees up if we decide to let that facility expire next month. In addition to our strong core liquidity position, we are expecting 2021 and 2022 to be years where we continue to focus on our balance sheet. As of March 31st, 2021, our debt net of cash balance is actually $200 million lower than it was as of the end of the year 2019. In 2021, we expect to repay over $400 million in principal debt balances related to existing aircraft financing. Of course, we continue to expect to take delivery of additional aircraft in 2021. That, as usual, will be financed with long-term debt financing. Over the next couple of years, we expect to reduce our absolute debt balance while maintaining strong liquidity. During Q1, the debt on another 24 used aircraft was fully repaid. Including partner-owned aircraft, over 50% of our fleet in service now has no financing obligation. We also continue to have minimal tail risk of around $100 million, the dollar delta between financing term and contract term on our fleet. Our next pocket of tail risk is now out to late 2022. Especially in times of great uncertainty like this, and consistent with our policy and practice, we are not in a position to give any specific EPS guidance at this time. Let me give you a little color. Ignoring the effect of PSP3 net of related temporary partner concessions, we expect Q2 earnings to be close to break even, with the second half of 2021 likely positive both in earnings and cash flow. Continued headwinds to our model include several factors I'd like to call out. Number one, our prorate business was still unprofitable in Q1. Wade will talk more about this in a minute. Number two, maintenance expense was up $17 million from Q4 as we continue to prepare our fleet for a busy summer. Maintenance expense for 2021 will likely continue at the current run rate before finding a new, lower, normal level later in 2022. Number three, deferred revenue was $21 million in Q1 2021, and now is a cumulative $132 million. We expect to defer additional revenue until later in 2021, when it could start to reverse. Now some tailwinds. Number one, production is trending higher into the summer with good demand for our product. Number two, new PSP3 program brings us $205 million in grant income to be recognized in Q2 and Q3 before any new temporary partner concessions. Number three, deferred revenue may begin reversing later in 2021, pending the timing of the recovery. We are excited that the actions we are taking now and expect to take over the next few quarters are setting us up nicely for the new normal in the future. Wade? Thank you, Rob. I'll provide a fleet and production status update as well as an update on our prorate and leasing businesses. To update by partner, during the quarter, we put nine CRJ700s into service with American, bringing our total CRJ700s under contract with American to 74. We anticipate placing 16 additional CRJ700s into service from our existing fleet throughout the remainder of the year, bringing our American CRJ700 fleet total to 90 by year-end. These 25 aircraft have been in long-term storage for the past few years and have required a lot of maintenance to return to service. We also have 20 new E175s scheduled for American service in 2022, with delivery scheduled from Q3 of this year to the first quarter of 2022. This will bring our total American fleet to 110 in 2022. Let me briefly talk about our Delta agreement. During the first quarter, we took delivery of one new CRJ900 under our Delta agreement. The aircraft is owned and financed by Delta. As of March 31st, 2021, we have 116 aircraft under contract with Delta. During the quarter, we worked with all of our major partners on a second round of contract concessions that included temporary rate reductions. These concessions are reflected in our first quarter results. We expect to work with our major partners during the second and third quarters for a third round of concessions. Let me review our current production. During the first quarter, our completed block hours were down by approximately 23% compared to the same quarter last year. Based on the current schedules we have from our major partners for the second quarter of 2021, we anticipate that our block hours will be up by approximately 10% compared to the first quarter of 2021. As we look at the third quarter, we anticipate that our block hours will be down by approximately 5% compared to Q3 2019, and the fourth quarter will be approximately the same as the fourth quarter of 2019, pending continued improvement in the recovery curve. The E175 fleet continues to fill an important need for our major partners. While the majority of the reductions in block hours have been on the CRJ200 fleet, our Q1 E175 block hours were down by 3% compared to Q1 last year, while our Q1 CRJ200 block hours were down by 53%. Let me talk a little bit about our prorate business. During the first quarter, we reduced our prorate block hours by 6%, and revenue decreased by 32%, or approximately $32 million compared to Q1 2020. We anticipate our prorate block hours for Q2 to be up by approximately 14%, and the prorate revenue to increase by 30% as compared to Q1 2021 as we see demand beginning to recover. Our prorate model is nicely levered to the recovery. With prorate revenue down 32%, we expect the incremental revenue coming back to the prorate business will have attractive margin characteristics. Let me shift gears to our leasing business. Last quarter, we announced that we signed a purchase agreement to acquire 13 additional used CRJ700. As of today, we have closed on five of the 13 aircraft and expect to close on the others throughout 2021. We are working with several parties for SkyWest to either operate or lease these aircraft. Following the purchase of these 13 aircraft, we will own or control 169 CRJ700 aircraft. We are fortunate to be in a unique position to purchase these aircraft, as we believe the CRJ700 is an exceptional asset that will continue to set SkyWest apart with strong demand from our major partners. Let me talk briefly about our current maintenance expense, which is up $44 million or 27% from Q1 2020. The increase is primarily due to anticipated recovery of our flying and bringing the 25 aircraft from the American agreement out of long-term storage. We currently have 30 lines of heavy maintenance at our third-party providers, and the ramp-up of these suppliers have been slower than anticipated. To provide some context, this level of maintenance unprecedented in our history. We anticipate that we will continue maintenance at roughly these levels through this year and expect to return to more normal levels during the second half of 2022. We have spent the last several years reducing risk and enhancing fleet and financing flexibility to ensure we're well-positioned. We are committed to continuing our work with each of our major partners to provide creative solutions as we work towards full demand recovery. Okay, operator, we're ready for our sell-side Q&A. Yes. Thank you. We will now begin the question and answer session. To ask your question, may press star then one on your touchtone phone. If you're using a speaker phone, please pickup your handset before pressing the keys. To withdraw your question, please press star then two. It is time to pause momentarily to assemble the roster. The first question comes from Mike Linenberg with Deutsche Bank. Hey, good afternoon, everyone. Hey, just a couple here. If I can start with the temporary rate reductions. If I heard you correctly, Rob, the second phase was obviously this March quarter, right? There was nothing in the fourth quarter of last year or the first quarter. The first phase, I think, covered the second and third quarter of 2020. I think we have a third phase that will be in the second and third quarter of 2021. Is that the timing on these temporary rate reductions, the concessions? Yes, that's correct. Have you called out the magnitude of those reductions in your Qs? Can you give us a feel? How do they tie to when we look at deferred revenue? Is that a good guide as that builds up to give us a sense of what these reductions are? I'm trying to get a sense here for the magnitude, and I don't want to double count on a couple items here. Yeah, Mike, this is Wade. Hey, Wade. On the temporary rate reductions, we've been working with our partners for several quarters. As you said, during the second and third quarter of last year, there were temporary rate reductions. This quarter, we're not going to get into the magnitude of these, but they are significant. We've worked with them. We want to make sure we're a good partner, and we're proactively helping them with their businesses and their recovery as well. Wade, as I think about modeling forward, though, because these are temporary, when they come back, as well as a reversal in deferred revenue, as we go out to 2022, 2023, there will be a meaningful bump up, right? Is that? Yeah, Mike, look, as we talked about for the rest of the year, where we expect Q2 to be in the breakeven neighborhood, and then positive earnings in Q3 and Q4, that is ignoring the net effect of the PSP grant income that will come in over Q2 and Q3 and the partner concessions related to that will also come in over Q2 and Q3. Okay. That guidance, just to be clear, was before any PSP3 noise in those numbers. Okay. That's helpful. Wade, I'll probably hit you on this question as it relates to the 18 American airplanes. They're coming, I guess 18 are going to come in the third and fourth quarter. Two are going to come in 2022. You're going to incur the CapEx this year. It's pretty sizable, but it looks like they're not going to go into service until the March quarter of 2022. Are you just going to deliver them to American and get some sort of compensation or not? It seems like there's a two, three-quarter mismatch between when the planes come in and when they actually go into productive service. I'm curious about the timing on that. Yeah. You're right. We have 20 new E175 coming in, as you said, the majority of those are coming in Q3 and Q4 of this year. We've worked with either the OEM or the partner to cover the cost associated with carrying those for a little bit. Okay. That's great. Then just my last one, this is just on pilots. Hard to believe, we obviously were dealing with a pilot shortage, then I think at one point we thought we all of a sudden went from a deficit to surfeit, now all of a sudden, everybody's hiring again, including yourselves, as well as new entrants, Avelo, Breeze, and even carriers like ExpressJet. It looks like that they're going to be reincarnated as a prorate operator. I'm curious where your pipeline is, tie into either flight schools and are we going to go from a situation where we thought we were going to have a lot of pilots out, but because of the PSP and new entrants coming into the market, that it's actually going to get pretty tight pretty quickly, combined with the fact that we have a slew of retirements across the industry. You've got a pretty gray workforce. It's a broad question there, but I'm just curious if we're going to start running into pilot problems over the next 6- 12 months. Thanks. So Mike, it's Chip. Hey, Chip. That's a great question. I think that it's teed us up really, really well. It's almost like we want to go back to where we were over a year ago. You remember the conversation we had on previous pre-COVID earnings calls that we are built for a pilot shortage. Okay. We have 300 schools that we work with. We had a very strong machine going and tremendous demand to come fly at SkyWest. Now, I will say this, as we opened the doors back a couple of weeks ago to start hiring again, bringing guys back to class, getting the pipeline up, we were astonished at the response. Okay. We knew it would be strong because of how we've managed through the pandemic. We've had a lot of incredible awards and things happen to us, as we tried to manage through what's happened this last year, and I think it goes to show the demand to come with SkyWest. I would say, honestly, we've been overwhelmed with the demand to come here. We've been pleasantly surprised. I don't think that SkyWest is going to have a problem anytime in the next foreseeable future. Long term, is it going to get tight? Possibly, but so far there's still very strong supply. There's a lot of new entrants, but I don't think there's SkyWest, and I think a lot of people feel the same way. We're excited about the opportunity. There's never been a better time to come to SkyWest, I will say that, and we're excited to do some things with the schools to enhance the professionalism and diversity, the type of company that we want to be. Great. Thanks, Chip. Thanks, everyone. Thank you. Thanks, Mike. Thank you. The next question comes from Duane Pfennigwerth with Evercore ISI. Hey, thanks. On your 4Q block hours back to flat, I wonder if you could just outline what the fleet change is year-over-year. Does that imply higher or lower utilization? For my follow-up, if we assume kind of keeping that more normalized utilization into 2022, plus your booked growth, what sort of top line, high-level top line should we be looking at into 2022? Hey, Duane, this is Wade. I'll talk a little bit about the production. The production mix, if you compare Q4 of 2019 to Q4 of 2021, we are going to see a pretty sizable production mix difference, right. As I said in my script, even this quarter, the E175s are only down 3% compared to where they were a year ago. As we continue to bring on airplanes and continue to put them in service, that mix is going to change. In our 50-seat mix, the CRJ200, we're down about 53%, and so the mix will definitely change quite significantly. The revenue side of this should, if you exclude the concessions, once those get out, the revenue side should be very consistent with where we were at in 2019. Thanks. I guess, just to extend that, right? If we keep that more normalized level of production, combined with the booked growth that you have, what is sort of baseline production growth into 2022 if we just sort of run rate that forwards? Yeah. At this point, I don't think we're prepared to quite talk about 2022, but we will see continued growth. As I talked about the American E175s, we have 20 of those coming into service in basically Q1 and Q2, and so we will continue to see growth there. We will have additional growth on top of that, but at this point, we're not prepared to give guidance on where it'll be in 2022. Okay. That's fair. Then just to follow up on Mike's question, and maybe you answered it in your response to him, but should we be thinking about the concessions very similarly to the amount of PSP grant funding that you're receiving? Yeah. Directionally, it'll be very close. It's directionally the same amount, yes. Okay. Some of it does stick a little bit with us, but not all of it, but directionally same. Thanks so much. Sure. Thanks. Thank you. The next question comes from Savi Syth with Raymond James. Hey, good afternoon, everyone. I think the plan for the E175 fleet is pretty clear, but I wonder if you could talk a little bit about how you're thinking about what your other fleet types would look like exiting this year from a fleet count standpoint. Yeah, Savi, this is Wade. The CRJ700s, we have a lot of movement in our CRJ700s right now. As of today, as of the end of the quarter, we had 74 CRJ700s under contract with American. By the end of the year, we will have 90 with those guys. There's 16 airplanes that we are going to put into service with American through the back half of 2021. That is the primary fleet growth on the other ones. The CRJ200s are very consistent with where they are at. We shrunk the Delta fleet a few quarters ago on the CRJ200s. On the CRJ900s, it's a very stable fleet at this point. The primary growth on the CRJ side is going to be in the CRJ700. Got it. The other, if I look at, you had 74 CRJ700 with American and 98 in total, just the other 24 kind of stick around, or should I just assume 90 + 24? What does that total go to? Yeah. That's a great question. We have 19 under contract with United, and we anticipate leaving those with those guys, and then the rest of them are with Delta, and they are also under contract with Delta, and we anticipate them staying there. Makes sense. Thanks for that, Wade. Then on just the 1Q quarter, it seemed a little bit stronger than anticipated. Is that fair? Did that come from block hours? Was there anywhere else that maybe came in better, or maybe it came in line with what you were thinking? Yeah. No, as we talked about, Savi, production was up sequentially. I guess, net-net, we're pleased with the level of demand that we're seeing for our product, and we're obviously investing right now in that product, in the form of maintenance and getting ready for a busy summer. All right, makes sense. Is it fair to say the surprise came out on the CPA side more so than the prorate side? Yeah, I would say yes. Demand was strong on the CPA side. On the prorate side, prorate was not profitable in the first quarter. As we see volumes coming back in general, that'll benefit that prorate side of the business during the summer and beyond. Makes sense. Thank you. Thank you. Next question comes from Catherine O'Brien from Goldman Sachs. Hey, good afternoon, everyone. Thanks for the time. I've got a similar one to Mike's first question as well. Just as we think forward to back when you're fully up and running your full schedule with your partners again, at a minimum Contractual minimums sounds like more like back to pre-COVID levels. How should we think about your margin profile? I can think of a couple of tailwinds, so higher percentage of E175 flying probably than pre-COVID as you take some of these new deliveries, and then, probably the positive impact of that deferred revenue coming back on, as you talked about earlier. If we put those things together, should we just think about margins probably being higher post-COVID, or are there some tailwinds I'm not giving enough due? Thanks. Hey, thanks for the question, Cathie. It's Rob. Look, I think that, as we sort of indicated, that there are some gives and takes in the margin question, I think in the near term. As we indicated that things like maintenance are going to continue to run hot as we bring new airplanes back into service again, as we prepare for what's shaping up to be a pretty busy summer. I think there's some puts and takes in there. Obviously, prorate is another area that's a drag currently on our overall margins, as prorate's not profitable. Obviously, we're hoping that, as we said, that that business is nicely levered to the recovery, and those will come back. You mentioned deferred revenue, t hat's another one, that, again, in the next quarter or so, we could have some modest amounts of incremental deferred revenue, again, depending on how quickly things come back. Obviously, when that starts to reverse, that reversal will be 100% margin in that deferred revenue. Again, it's sort of a long-winded answer to your question, I think near term, again, we've got those headwinds on the expense side. Longer term, we hope that the combination of demand and the reversal of some of these other items will be positives. Okay, great. Thanks for that. Then yesterday, we had one of the big global lessors talking about airlines starting to take action to plan for the future and lock in additional aircraft. Hopefully when we get back through the recovery and back to growth perhaps versus 2019. Not asking about your leasing business, but just more in general, are you starting to have conversations with your partners on potential incremental regional flying over the next couple of years? I imagine they were mostly just concerned with stemming cash burn throughout 2020. Would love just to hear if the long-term growth planning conversations are back on the table or if it's still a little too early for that. Thanks. Hey, Cathie, this is Chip. That's a great question. Thanks for asking that because I think it adds good perspective of our strategy. First thing that we're still focused on through the rest of this year is out-executing everybody relative to helping our partners recover. In all candidness, we've been having those conversations even through the pandemic because we also thought that that was a big part of how they could recover. There's certainly, today is big demand for a regional lift, and we think as the economy post-COVID continues to evolve, that smaller locations and midsize cities are going to have more travel demand. We're having a lot of conversations with the partners about this, long-term aircraft orders. We're also having a lot of conversations with manufacturers about evolutionary ways that we can meet the needs of the environmental footprint that we're trying to achieve with our partners and all of those things. In quick answer to your question, we're having a lot of dialogue with both partners and manufacturers, but it's secondary to making sure we continue to recover from the pandemic. Those conversations are alive and well. Got it. Maybe I'll just sneak one more in since you brought it up. I guess any thoughts on what the future aircraft for growth will be for SkyWest? I'm pretty sure the E2 is still not scope compliant. Not sure what other options there are out there in terms of next generation aircraft. Would just love to hear what your thoughts are. Thanks. Yeah. Thanks, Cathie. That goes to an entirely different conversation as well. I can tell you very clearly that part of our long-term approach for the last almost 50 years of SkyWest is to out-execute the competition and continue to make sure that we're strategically in a strong spot. We're evaluating a lot of opportunities. One thing I will say is that the world has recognized us as an excellent performer, a dispatcher of aircraft, and we do have a lot of conversation about the future of aviation with several entities. We are not going to get into more detailed conversation or announcements about anything of that nature until we are comfortable with that. Again, I'll go back to the original premise of your other question, is we need to get ourselves out of this pandemic, and we need to get recovery. We need to take care of our people, take care of our partners and our customers. Again, we're also not oblivious to the needs of what the flying public is going to want, and our strategy is to be at the forefront of all those things. Hopefully that helps kind of give you the perspective of where we are. Yes. All very fair. Thanks for the time. Thank you. The next question comes from Helane Becker with Cowen. Thanks very much, operator. Hi, gentlemen. Thanks for the time. Two questions. one is, pre-pandemic, was the prorate business ever profitable in the first quarter, or is that just normally a seasonally weak quarter? Yeah, Helane, this is Wade. We're very consistent with the rest of the industry. Q1 is always, even pre-pandemic, was definitely weaker. Historically, we did make a little bit of money in Q1, but not a lot on the prorate side. Okay. My other question is, I think last year, some of the airports were working with the airlines to mitigate landing fees and other airport facility charges using their CARES Act funding, right, to help you guys. Is the decline in year-over-year OpEx net line item, is that the run rate, or should we think about that as coming back as flying comes back? Yeah, Helane, this is Wade again. On the landing fee side, the majority of those, the partners take care of directly and are not reflected in our financial statements. The other line item on our expenses is primarily just volume related, and there are decreases associated with volume. Okay. Thanks. Very helpful. Thank you. Okay, thank you. The next question comes from Joseph DeNardi with Stifel. Thanks. Good afternoon. Just one quick question from me, I think. I just want to understand, Wade, on the maintenance challenges you're facing with your third-party providers, is that just a byproduct of the tight labor market, or are you kind of displeased with the performance of those providers? No, that's a great question. There's a lot going on, obviously. As we said, we have over 30 lines of C Check going on. A lot of it is just the ramp-up, right? We never really stopped during the pandemic, but we definitely have increased as we anticipate the flying come back, and as we got some of these American contracts. Our third-party providers, they are great partners of ours. They do a lot of things. They're just bringing back their workforces. They're getting them trained. They're getting them back up to speed. I anticipate that they'll be able to execute at a very high level for us going forward. SkyWest is very uniquely positioned with the size of our fleet and the strength of our own internal maintenance capabilities that we should be able to navigate through any challenges that are in front of us. Helpful. Thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Chip Childs for any closing remarks. Thank you, Keith. Thanks to everyone for joining us again on the call today. We really appreciate your support and interest in SkyWest. I especially, again, want to thank our people. I'm proud of our airline and our teams and the great work they're doing to support each other in the long-term success of SkyWest. Couldn't be more proud and fortunate to be involved with such a great team. Thanks again, and we'll talk to you next quarter. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.