Good morning, everyone and thank you for joining us today on this call. With me at the office are Jamie Porteous, our Chief Commercial Officer and John Kim, our Chief Financial Officer.

Ajay Virmani, our President and Chief Executive Officer is joining us remotely. After opening remarks about the quarter we will open the call for questions.

I would like to point out that certain statements made on this call, such as those relating to our forecasted revenues, costs, strategic plans and forward-looking are within the meaning of applicable securities laws. This call also includes references to non-GAAP measures like adjusted EBITDA and adjusted EBITDAR.

Please refer to our most recent press release and MD&A for important assumptions and cautionary statements relating to forward-looking information and for recommendations of non-GAAP measures to GAAP income. On that, I'll now turn over the call to Ajay.

Thank you, Pauline. And thank you everyone for joining us this morning.

2020 has been a year for the history books in many ways. When I first talked about the pandemic at our Q1 earnings call, there was a very high degree of anxiety, shortage of PPEs, COVID cases were rapidly rising, and the world was literally on the edge.

Eight months later, as the winter approaches the case count is on the rise again but we have learned a great deal. We are better prepared on PPE, medical professionals and scientists have developed better treatments to reduce serious outcomes and as human beings, we have developed personal safety protocols and survival skills.

We have changed many of our day-to-day habits, including our shopping habits. There has been many acts of kindness, and we have come together as a community to help each other.

I continue to be amazed by the human spirit and I want to thank everyone who is making a difference and is serving in the frontlines to keep our economy going. Now turning to our third quarter results, we continue to benefit from the strong tailwinds of e-commerce fueled by the work from home culture.

While the initial surge in volume was driven by temporary change in consumer behavior, we are now seeing structural changes in the retail industry that is shifting investment and resources from bricks and mortar stores to digital e-commerce at a much larger scale. E-commerce as a percentage of overall retails has gone up from around 7% to well over 11% in Canada.

The trend in U.S. and U.K.

markets is even steeper touching nearly 30%. The prolonged pandemic has forced virtually all retailers to deploy resources towards digital commerce and we expect Canada to follow U.S.

and U.K. trajectory.

The implications for the shipping and logistics industry means two to three times increase in volumes over the next three to five years as we see a strong comeback of B2C business and B2C remaining strong. This trend was clearly visible in a revenue growth of 38% in the third quarter and strong growth in our domestic overnight network and continued strength in our AMCI segment.

While quarter-on-quarter growth of our charter business was somewhat slower compared to last quarter, this was expected due to fewer PPE shipments from China and other parts of the world and the governments have been shipping enough inventories on hand for the time being. Having enough inventories on hand for the time being we posted a strong growth over prior year in our charter business.

All our key metrics on revenue growth margin and EBITDA continue to show strong growth and demonstrate the operating leverage of our business model. Adjusted EPS for the third quarter was $1.72 compared to $0.09 for the prior year.

With back to back strong quarters, Cargojet generated $59.3 million in adjusted free cash flow during Q3 and 1.1 -- $144.8 million year-to-date, allowing us to further reduce our overall leverage to approximately 2.1x 12 months trailing EBITDAR. We are also continuing to invest in growth opportunities while prudently strengthening our balance sheet with an overall reduction of $92 million in net debt on a year-to-year basis.

Moving on to operations, the number one priority for us remain the health and safety of our employees. We have been operating at our near equal volumes for the past previous month.

This means our teams are working extremely hard to keep the supply chains moving safely and securely, especially as the weather gets colder but with the holiday season on the horizon, we are deploying additional resources to make sure that we delivered the peak season safely and on time for all our customers. We continue to provide the best PPE, medical advice along with enhanced sanitization measures to our team.

Our increased fleet and asset utilization continue to demonstrate additional operating leverage as demonstrated in improved margins. We took delivery of a Boeing 767-300 last month and are in the process of deploying an additional aircraft in the fourth quarter to support these volumes.

One thing that is clearly differentiated is our people. We are so incredibly proud of each one of our team members on a daily basis.

We see stories of heroic effort every night from ram maintenance, or pilots who are going well beyond the call of duty and operating safely to serve our customers during these challenging times. We are closely monitoring the changing shipping habits, shipping and shopping habits, trends in the domestic and international market and spending the necessary time to understand and adapt to these dynamics.

As we have noticed the wide-body passenger business is still ways and years away from becoming normal. This also opens up opportunities in the international shipping arena as well.

While we face some uncertain climate in the near future, we believe the key to success will be resilience and adaptability. We have now diversified into not only charters that are a big part of our business but also ACMI that has helped us reduce over-dependence on domestic overnight business.

Let me say this, that we are all positioned to handle the changing that station and logistics landscape. We have a great team a strong set of assets, a highly flexible fleet, and we are well-capitalized to continue to capture growth opportunities in the standing environment.

We have positioned ourselves with over $600 million of liquidity in case the economy went soft on us. Once again, thank you for joining us this morning.

And we will open the calls to questions now.

Good morning. Congratulations on the quarter and thank you for taking my questions.

In your outlook, or in your commentary, at least you stated that you're focused on ensuring strong long term growth in the ACMI and Charter Business. And then you even just touched on your diversification into those two areas.

I'm just wondering if you could speak a little bit more about that and how it shifted some more ad-hoc short term demand and what kind of visibility do you have into the next quarter and even 2021?

Well, I think as the domestic gets stronger, our other businesses are also getting stronger. So if you're deploying more planes on domestic overnight, that gives us additional flexibility of fleet during the weekends and during the days.

So what that shows is that with domestic obviously which has been our core and still is one of the core businesses, as that demand grows, we can certainly look at utilizing the same assets over the weekend and during the days to do the charters and some ACMI work. The second part of this is the ACMI business, we are now operating three flights to Mexico a day out of U.S.

and we are operating a daily flight to Bermuda and New York. We are operating a weekly flight into Havana.

We are operating two flights into Cologne. We continue to grow that ACMI segment business because we feel that there is a lot of opportunity that exists not only in Canada but also across the border, where we have some licenses that allow us to fly to another country from U.S.

not within the U.S. but out of the U.S.

That part of the business is strictly growing because the integrators are not now going to depend on for at least the next three to five years on commercial lift by passenger carriers coming back because the confidence in flying 777 and 787 for passengers is very low at the moment. Even if that takes three to five years of that recovery, that leaves a big gap and holes in cargo dock that was being traditionally shipped on passenger aircraft.

So that lift needs to be replaced and that's where we see -- we have grown in the ACMI business and we will continue to make strides in that.

Perfect, that's great power. Thank you.

Just lastly for me; you've seen tremendous growth over the last nine months. I'm just wondering if you could provide some insight into how you've been coping to meet increased demand and really where any potential bottlenecks exist, or you need to make further investments if at all?

Thank you.

Well, the investments we have been able to cope is keeping -- trying our best to keep our people safe. We have the challenges or the PPEs are much better now, like availability, and we have been stockpiling because we can never depend on the marketplace and the governments to supply us with that.

So that has been our biggest challenge to keeping our team and resources ongoing. We have hired additional, I would say in the past six months or so over 300 employees that were available from other airlines because of layoffs in the aviation sector.

So we were fortunate to find great people to work on a short notice and the learning curve was also not as long. So those resources were hired recently.

We have then added a couple of planes in the past which we had converted on spec would have been a spare plane. So that's been put in use already and there's another one on the way.

So besides that, we have also looked at our ground support equipment, and we have made a significant investment to make sure that while these flights land and these flights are there, that they're not waiting to be offloaded. Stuff like loaders, for example, is a very simple thing but you need operators to load those -- operate those loaders.

So, there has not been an area including expanding our facilities like in Edmonton, we are building a 10,000 square foot portable, temporary shed to accommodate the growth. Those are some of the examples that we are going through and we are making sure that all hands are on deck and any resource that is needed to make sure to handle the growth is being handled.

But our biggest challenge still remains, as you asked me is keeping our people safe and making sure that they don't become victims of the ongoing pandemic.

Thank you. That's it for me.

Good morning, Ajay. Just building on Mona's last question there but I want to focus more on the domestic side of the business.

Historically, you guys have pointed that your sort of base fleet from say 2019 was able to grow volumes up that 4% to 5% range. Obviously, you guys have added a bit more aircraft here.

So I was just wondering, how should we think about future volume growth on the domestic side of the business and what changes have you made to sort of your fleet schedule that can make you extract a little bit more on the volume growth side?

I'll just take this question and then I will get Jamie to address it in a second. Well, the business on domestic side remains solid and strong.

At the end of the first quarter and the beginning of the second quarter, we saw some slowness in the domestic side of the business, because the b2b business because all the businesses or most of the businesses started closing down. That trend shifted to business to commerce customers.

There were smaller packages and eventual deliveries. It doesn't make a difference to us, whether it's 10 small packages or one big package.

But we saw that trend and now we've also seen lately that as businesses open the business to business segment also picked up and hence we saw some tremendous growth on the domestic side of the business. So that's a big part of our business.

We continue to focus on that as much as it needs. I think that business sector will continue to grow as more people buy online and more people stay at home working so that the supplies are shipped to them at home.

So, Jamie, you want to add something to that.

Sure, Ajay. Morning, David.

Just had to add to Ajay's comments and the other benefit that we have, as we've noted in previous quarters is increased utilization of our existing aircraft assets, particularly on the domestic network with the growth, particularly the growth of e-commerce, it's allowing us to add additional flights as we've added a Saturday flight earlier in September-October timeframe to meet the demand that e-commerce volumes. We're running two flights a week now for the last several months -- two flights a Sunday for the last several months utilizing existing aircraft that were operating during the overnight primarily on the business days during the week.

E-commerce, again, as we saw in October with Amazon's prime week that was delayed from July till October, we were able to handle those significant increases in volumes by utilizing aircraft during the day without having to bring in additional capacity. So combination as Ajay noted, we have two other aircraft that are coming.

One that just came into the fleet at the end of September, one that's literally coming online early next week that will give us additional overnight capacity, but then will contain the additional e-commerce volume on weekends and during the day. You may have noted yesterday that some of you probably saw [indiscernible] press release indicating that they were expecting a 20% increase in volumes in the holiday season this year.

In the last couple of weeks, I've seen similar commentary from our other customers, whether it's UPS or FedEx all predicting the record peaks, not to mention Amazon with significant double-digit growth. So we think we're well-positioned in terms of capacity to handle it.

You just took my next question, Jamie. But perhaps if we see volumes continue at this rate and not this club I mean for Q3, the domestic side was 18% year-over-year, and you guys suffered some heavy maintenance.

If the demand is there can you guys meet that looking into next year? Is that the right way to think about it?

Yes, we don't see an issue with the -- it's consistent, although the volumes obviously are heavier than what we had predicted a year or so ago. For the last, I think we've been consistent in the last couple of years saying that we didn't think we would need to add necessarily another aircraft to the domestic fleet to meet the particulars of b2c e-commerce growth.

That's changed a little bit but with the aircraft that we brought online, we're confident that we have enough capacity domestic network, at least for 2021 and we continue to pursue and look for other aircraft because as we've noted before, there are other opportunities, not just on the domestic, but on ACMI side of the business that we think we may be able to take advantage of.

Last one, for me here, just more maintenance question. How should we be thinking about CapEx as we head into 2021?

It's John. I can take that question, Ajay.

Go ahead.

With the delivery of the last 767-300 this year that brings us to about $150 million of CapEx for the full year. We are looking at potentially buying some additional feedstock and engines so that may bring us up to about $190 million for the full year.

Because we want to be well-positioned in case we want to put more aircraft into conversion. So of that $190 million, the additional in Q4, about $50 million to $60 million of that will be leased debt so it's the last aircraft that's being delivered as we speak, that's on a finance lease.

Then we've extended you'll notice in our fleet plan in the MD&A we've extended the one operating lease that we have on the 767-200. That's a two-year extension, we'll probably throw up about CAD10 million to CAD12 million as lease debt.

Then we don't have any other acquisitions, new CapEx plan for next year other than maintenance.

Okay, that's it for me. Thanks, guys.

Thanks, and good morning, everyone. Congrats on a great quarter.

Just few -- first one on the margin. So looking at the EBITDA margins, they took a big jump in Q2 and expanded further in Q3.

I'm guessing that's ACMI in the mix that probably expanded the margin sequentially in Q3. But do you see further margin expansion in Q4 sequentially as utilization typically increases in Q4?

I don't think we're going to see a big jump in Quarter 4 on the margins on that side. Because obviously, when we add routes, and we get more business, obviously, the pricing is going to get adjusted.

As you know, then quarter 2, there was not a lot of wide-body lift available outside. So that resulted in a lot of ACMI revenue.

In quarter 2, we saw some of the left come back so the price of the charters that were sky high in quarter 2 and beginning of quarter 3, they kind of declined and became more realistic. Then actually keep in mind we also -- we compete with the passenger side of the business that is non-existent or is very little right now but also people have been stockpiling with ocean freight and surface transportation so that they don't have to spend a lot of expensive air.

So while everybody was caught with no PPE at all, that's where why the air margins were so high and we have seen steadily the decline and more realistic levels of margins. I don't think that we'll see a big expansion in quarter 4 for the margins.

Okay. And if we can just go forward to 2021 and modeling out these margins.

This year has been a pretty big jump in margins, clearly. But what are the various puts and takes you would point out for us to consider when modeling out these margins in the next year or so?

Margins are at a new normal level, would you say that sustains or builds up from here or do you expect them to normalize somewhere between 2019 and 2020 levels?

Yes, I would say that's a better way of saying that they will, depending on how quick the vaccine comes in, for example, if you're shipping vaccine, which we're ready to do, obviously, there's going to be some higher-margin business because it requires a lot of specialized handling business. So I would consider that sort of a normal day-to-day business.

But depending on how quickly the passenger side of the business recovers. A lot of airlines and is calling for three to five-year recovery.

If that's why a three to five-year recovery is a gradual step-by-step recovery, I would say that your estimate or your comment about somewhere between 2019 and 2020 would be a good starting point to look at the worst normalization of bargains.

Thanks. Then perhaps on the domestic side, if you look at the pricing, so I'm looking at volume growth in domestic has been faster than revenue growth in the last two quarters, which suggests obviously, overall pricing has softened a bit.

So I'm just trying to understand if you can provide any color as to why pricing mix or pricing overall would be softer and deviating from CPI like inflation. Is it spot versus the contract mix, is it the b2b versus b2c mix or is that still playing into that pricing weakness?

Yes, I think a few plays a big part into it and that kind of brings the whole margins down on the domestic side; definitely.

Okay, thanks. The last one for me on the fleet side, I see you have extended the lease on 767 and I think you have acquired a few aircraft recently as well.

Now, I understand your point on you don't need much more capacity to be added than domestic for the next year or so. But given the opportunities you've pointed out and charter and ACMI, if you need to add another few dedicated aircraft for ACMI, what are your options at this point?

Are you looking externally if so, is it enough capacity? You might get aircraft on time?

Or are you looking internally, you have maybe a couple of aircraft that are leased with third parties? Would you like to internalize them or how are you thinking about that?

Well, actually, we are reviewing three aircraft for acquisition for 2021. If at all, they should be converted by third quarter or 2021.

We do have tentative offers out there subject to due diligence on at least three aircraft right now at the present time. But obviously, there's a lot of record checking that goes on when you buy an aircraft.

So those aircraft are probably going to help us with our growth on ACMI charters, and also, somewhat of domestic as well. On the domestic growth, as Jamie had pointed out that we have the ability, and we have the crews and infrastructure to turn these aircraft around, for example, if aircraft lands in Western Canada or coming back from Western Canada, we landed three or four in the morning, we have the ability to turn it around at five o'clock in the morning and be in Vancouver for seven o'clock the same day.

So not everything is required at four or five in the morning. So you can have a second-tier sort of delivery around 6:30-7:30 in the morning to keep up if the demand continues to grow on the domestic side as well.

Perfect, thanks. That's it for me.

Thank you.

Thanks very much. Good morning, everyone.

Good morning, Walter.

When I look at the ACMI at $37 million in the third quarter, you booked a couple, I think you said at least two new contracts late in the quarter, what is roughly the exit rate on your quarterly, roughly this quarterly cadence on the exit rate out of Q3 from the contracts that you've already have in place?

I can add to that, Ajay. We had a full quarter in Q3 of the two additional routes that we added earlier this year, Walter.

The ones to Europe. So I think by adding -- so Q3 is a good run rate for sort of the new ACMI routes that we started earlier this year.

We've added one more route at the end of September. So incrementally in Q4, you should see the effect of that one route for the entire quarter.

Like the guidance that we gave on the other Mexican route somewhere around $10 million annualized ACMI. That's what you should expect for Q4.

An additional $10 million on top of the $7 million?

If you take our Q3 as a run rate, another $10 million per year when we add another route it's $2 billion to $3 billion on top of what we had in Q3.

Just be aware that in 2021 we are going to enjoy some premium pricing in quarter 3 and quarter 4 for ACMI, just because of the peak and lack of availability, but coming back to quarter 1, 2021 the premium pricing that we have for ACMI is going to come down by at least 15% or so on average. So while we enjoy those because of the peak period, they will normalize in 2021.

In 2021 and then back up again you said as you go into peak of 2021 is that right?

Yes, then it would pick up a little more.

Okay. Like you said Ajay ACMI have about $150 million a year is almost -- is tracking almost half of your domestic network.

Now you add any all in charter and you do indeed have a well-diversified kind of base there.

Yes. And that was a card game all the time to sort of be in all the aviation sort of cargo aviation type of businesses, not just an overnight business.

Is there any ACMI contracts now that you're looking at that are out for tender that could be additive to next year and specifically, is $150 million your absolute capacity with your current fleet, or could you go much, much higher than that in terms of ACMI revenue?

Look, over the current fleet, I think we can always increase the capacity by 5% to 10% by rejigging schedules and sometime doing additional flights on the weekend or doing extra turns. So, yes, I would say between 5% and 10% with the existing fleet, as far as your questions, if we are looking at additional routes, I mean, there's not a day goes by where we don't go out and quote [ph] and hunt for business; so that's our job and we continue to do that.

But do we have anything that we feel we can get it? We have already -- as we said, there is opportunities while the international air cargo capacity is down, because of the passenger side of the business, so more and more integrators are looking at adding their own capacity.

And we continue to provide them with quotations and sometimes it works, out sometimes it doesn't. But also sometimes, it's also the ad-hocs that that we expect are going to go up, as well.

And how long are you locking these customers in ADL [ph]? Is it longer now that you have the option?

People sound like they're more desperate for international air freight capacity. Are they willing or wanting to lock in for longer terms here and what would be the term?

All the ACMI contracts are -- they're not as hard as domestic contracts. The industry in ACMI and CMI works on typically three to four-year contract, with certain outs at six months or average six months, some of them are 90 days, some of them are a year.

But most of these are also that we have flexibility where they can switch from one route to another; so you might lose some moving [ph] into Europe and pick it up in South America or the Caribbean. So I think that -- to ask for five-year, seven-year contracts, just like the domestic side of the business, ACMI does not operate like that, because people need flexibility and redeploying the aircraft.

So that is just the nature of the business.

And your current customer base, your big ones are out to 2025? Has there been any movement?

Or have those customers wanted to extend beyond 2025? I know you have three-year renewals with one of them that are being exercised early?

Is there any avenue for an early exercise of a contract extension with any of your major customers on the domestic side?

I mean, because of the pandemic, those discussions haven't even started yet. So somewhere in 2021, when you have four years, four and a half years remaining normally, typically, these kind of discussions start closer to two and a half to three year mark rather than a four and a half year mark.

But at some stage next year, we'll certainly start talking to people.

I told my questions, congratulations on a great quarter.

Good morning, everybody. Just taking myself off mute here.

Thanks for taking my questions. And just echoing Walter, congratulations on a good quarter.

Maybe if I could just look at peak season, specifically. If I look at historical and just kind of do a simple domestic network or your previous overnight network revenue divided by operating days, you typically see about a 20% sequential list in that unit metric in Q4 versus Q3, just reflecting that peak season.

Just given a strong Q3 was this year, how should we be thinking about that kind of revenue per operating day within the domestic network, should we think of that seasonal pattern holding so that typical 20% sequential list or do you see some of that flow into Q3, just given how strong ecommerce has been especially during the pandemic here?

Good morning, Kevin. I figured to be realistic to think that our typical Q4 volumes, we already started to experience those late in Q2, but particularly in Q3.

And the volumes that you've seen, that we reported today, are reflected of what we would normally -- actually, in fact a little higher than what we would normally report in Q4. I don't think you'll see quite the 20% bump from a typical Q3 to Q4.

I think we've already seen some of that growth in Q3, although I still to my comments earlier, when you read and see some of the comments of some of our customers, including as recent as yesterday with Purolator, they're predicting actually a 20% increase in their total packages, but that includes their ground volume. We're going to see a significant and a record peak season, I'm not sure it would be quite the 20% bump from a traditional Q3 to Q4.

Okay, that's helpful. And then, you note in your revenue commentary that it looks like B2B volumes exiting the quarter had essentially come back to pre-pandemic levels or what it looked like the prior year.

just wondering how those B2B volumes shaped in October as parts of the Canadian economy went back into lockdown, but at the same time, you are laughing, easy or calm [ph]; so, any commentary there would be helpful.

As we reported there, Kevin, at the tail end of Q2, we started to see some of the B2B businesses come back. And again, I think we explained before that some of it -- we have some direct visibility too, some of it is mixed, because we have customers like Purolator, obviously, that are very heavy in both B2B and B2C and they don't report, and we don't physically know the difference between the two different products when we're handling it.

But I know in the dialogue with them, and again, with some of the -- as we reported another strong indicator, some of our customers, if you look at some of the transporters group of companies, some of them are just strictly in the B2B business. So we saw significant declines there, but those in Q3 for the most part have come back to pre-COVID-19 pandemic levels, and we expect those to continue going into Q4, barring any other significant shutdowns to the economy and we haven't seen anything yet that's impacted.

Okay, that's such a good color. And just last one for me on ACMI, obviously a great result in the third quarter here.

Just confirming this new route, this this new US to Mexico route, I suspect it's with DHL. And then, when you look at your overall ACMI customer footprint, any concerns of just the customer concentration with DHL as part of your ACMI growth strategy to diversify the customer base, any comments there?

Yes, obviously, because if you look at UPS and FedEx, they are licensed American carriers, and their ACMI needs are more ad hoc, and because they have their own fleet, whereas DHL is not a registered airline in the US. And so, there's more opportunities with that, hence the concentration.

Yes, you're absolutely right, we are looking to expand our relationship with not only DHL but other South American and Caribbean carriers, we are looking at our own commercial flights into places like Mexico, as there is less passenger flights going in. We just could not do any of that because of the lack of fleet.

And when you got -- you're occupied, your planes fully chartered and occupied, those commercial decisions took a backseat. So we are actively pursuing international flights, they wouldn't be certainly ACMI, but they would be maybe more like blocked space agreements, just like there were domestic stuff going into the international arena.

So it'll be kind of the ACMI because of the licensing issues. The concentration is there with one customer.

But we are looking at expanding those relationships with other international carriers, which are based in South America and the US that need additional lift, because they cannot serve us with what they have. So that is ongoing at the moment.

Perfect. That's it for me.

Thank you very much.

Thanks. Good morning.

I'm just turning back to the Charter Business. Ajay, last quarter, you gave us some really good color around how you thought it was going to evolve as we came to call it the Q2 pandemic.

And you've also made the comment about wanting to build maybe some longer term stability in that. So I guess a couple of parts of this question, first of all, how do you think Q4 charter is going to be?

And do you think that, while historically, it's been a very choppy type of business, and even at one point, you were talking about maybe moving away from it a little bit? How do we think about that business as we go into 2021 and your ability to maybe put together longer term contracts or leaving more stable contracts, period to period?

Good morning, Chris, I think we would expect that Q4, the all-in charter will be less than we experienced in Q3, I think we predicted we'd run about 25% to 30% of what we experienced in Q2, which is about bang on what we actually achieved. I think it's realistic to expect less than that in Q4, for a couple of reasons.

One, the demand has lessened a little bit, although the capacity has tightened up and rates of yields and rates are going up in Q4, just because of the seasonality in demand. But also, because we need our aircraft to meet the demands of both of our domestic business and the peak season volume growth, the demands that we're going to have there, as well as on the ACMI business, customers like DHL also experienced peak seasonality, and they're going to have requirements for additional block hours flown during the quarter, which is going to prevent us.

We've always, even in normal years, we've always restricted the amount of aircraft and crew availability we have for ad hoc charters during the quarter, because we know that we're going to need those crews, and we're going to need those aircrafts to meet the domestic and the ACMI demand. So I think you'll see a slight drop in that in Q4 in 2021.

I think there's going to continue to be a significant demand for international all-in charters. Not just because of PPP.

Obviously, there's a whole question about vaccines and a second or third resurgence of the pandemic driving more PPE. But certainly, the continued lack of belly capacity from mobile passenger carriers is going to continue to present significant opportunities for charter for us in 2021 and I believe 2022, as well.

Okay, that's helpful. And then my other question is just really around capital structure, really a tremendous job of deleveraging through the year.

And, in a lot of ways, you've kind of hit what we thought was going to be a tough target to get to at about 2.1 times net debt to EBITDA. How do we think about capital employment from this point forward?

I mean, it does sound like -- I think John alluded to capital spending for a couple of aircraft and just maybe some spare engines as we go through. But, how do we think about things like dividends or share buybacks or anything like that?

Well, certainly, we have not considered and looked at the share buyback at this stage, certainly, because of the obviously the price and also, secondly, our priority that means to keep the debt as low as possible or in theory, and would like to be that in the next five to seven years, to be relatively debt-free. So that when we are quoting on some of the major contracts that come up, that we remain competitive and a debt-free company can certainly outbid and out-way any other competitive threat.

So that's why it's very important to reduce that leverage you're talking about, 2.1. And that's our key area.

So, any time we have met with institutional investors, everybody has given us an indication that priority is not -- they would be more happy to see us retire debt and get ready for the next round of bidding and RFPs that would come out in general, rather than a few cents increase in dividend. We continue to run to the increase over dividend is we have been doing, but certainly we have not considered a big dividend payout, because as they said, the demand for aircraft and the demand for resources are up.

So we are going out and investing in that area. And secondly, whatever is left over, we want to concentrate on debt.

So dividends, although is an important part of any kind of investment, but I think we'll see a lot of that as the debt retires.

Okay. And do you have any maturities coming?

I appreciate you've got the revolver that you can just pay down debt. Do you have any other maturities or other, either sale or purchase of leased aircraft or anything else that you could maybe be thinking about deploying capital in 2021?

Yes, Chris, I think we've mentioned in previous calls, we do have a number of finance leases that will be coming to the end of their term. So over the next 18 to 24 months, we'll be paying out all of our finances.

With the idea of just keeping those aircraft in the fleet?

Yes. I mean, basically was just a form -- it's a lease with a buy-out option which we're planning to exercise.

So I think those buyouts are about CAD100 million, roughly over the next 18 to 24 months.

All right, thank you, folks. Good quarter.

Good morning. I guess really just a clarification question.

Or just to confirm, I think you mentioned that you're looking to potentially add or looking to add three feedstock aircraft in in Q4. Just want to make sure that that is correct?

And that you would expect those to be converted by Q3 2021, assuming everything goes as you expect, is that correct?

Yes, Cameron, just in terms of the feedstock purchases in Q4, I think that's correct. In terms of converting those aircraft next year, there are not a lot of slots available for conversion.

We're trying to secure a couple. And so, I would expect at least one of those three would be converted and brought into the operations by this time next year.

Okay. So maybe one more addition, and just to get an idea on the CapEx impact, as we look ahead to 2021.

What's the cost of a conversion these days? I know the feedstock, I guess the expense has probably come down, but the conversion costs, what is that about?

Yes, all in for [indiscernible], you're talking $15 million to $18 million US. But, a lot of also has to do with condition of engines, and whether you have to do an engine and the export, but the conversion themselves, with heavy maintenance and aviation upgrades, you're looking at $15 million to $17 million, depending on the condition of the aircraft.

Okay, that's helpful. And I assume that the aircraft that you're looking at would all be 767.

Is that correct?

Yes.

Okay. And you've been asked this question in the past, but just one of your updated thoughts on it, just as far as additional fleet types, especially if you're thinking about going out and pursuing some additional international at a charter work, does it may be start to make sense to get a longer range aircraft into the fleet?

Well, certainly, I mean, a two 777s if I had them today, they would be a great addition, and we control them in every other direction. The 777 are extremely expensive, because they're only factory-built right now as they stand; there is no conversion, sublicense or STC is yet to convert those aircraft.

Although Boeing has announced with Israeli aircraft industries to start converting them in about three year timeframe, there are a number of other private companies that are trying to get that license as well to convert that. So we, even with the speed up, we don't see the first aircraft coming out for at least three years.

And I think, that would be a perfect timing for us to consider replacing, let's say, at least two 767-200 or phasing out 757. And 757s, once they're phased out they will be replaced by 767-200; and then 767-300 with the 777.

So, yes, that is definitely some of the considerations and meetings we've had and we continue to keep an eye on, as a lot of 777s are parked, feedstock is not an issue today. It's just that the conversions are not there at the time by Boeing or any of the licensed outputs by the Boeing Company.

So we continue to monitor that situation. And I think the conversion might even be speeded up since there's a lot of feedstock out there that is sitting there right now.

Right. Okay, that's very helpful, that was all from me.

Thanks very much.

Thank you so much. I just had a question about market strength.

So do you worry about this type of market strength allowing a new entrant to establish a foothold? And how do you ensure that you are committing capital to unsustainable revenues longer term, while ensuring we serve the market and minimize those new entrants?

Well, look, I mean, it's free market, people are going to enter the market because they think it's very lucrative, obviously, they will. Just keep in mind, what we built -- it took us 20 years to build this organization, there is a lot that goes on, just not a license, it is developing programs that you're continuously training, hiring people, you have ground support, the equipment and operators, you have the maintenance team, which we have a strong maintenance team of 200 engineers.

Domestically, we serve 15 cities every night, if somebody wants to fly into a domestic market, and offered, let's say, Toronto, Vancouver, or Hamilton, Vancouver service and back or Calgary in between, they still need to service 13 major cities in Canada. So, we welcome any competition, we're not against competition, I think competition keeps everybody healthy.

But I think the congregate culture is of such that, we treat our customers, we treat our employees, we treat our suppliers well, to ensure that we never feel that -- yes, we do have a major market share of the overnight business, but we are not free of any competitive issues at this time. We certainly have competition we.

And, although we can't stop anybody from entering the market, but on the other hand, we do not give an opportunity in terms of service pricing or our culture or how we handle things for people to compete with us, as well. So, it's really in our hands at the end of the day as to how we handle ourselves in the marketplace.

Cargojet was the result of a very bad service that previous 15 airlines had provided from 1985 to the year 2000. So, there was 14 of them that tried the business undercapitalized, no commitment to servers, and that's why the Cargojet was born, and Cargojet that totally realizes that's why those carriers never survived.

So, we have a great access to capital, we are very well capitalized, anybody who's starting a new business like this has to look at least $600 million to $800 million worth of investment in this business today, plus hiring a whole bunch of people. So it is -- although for a big company to put in a billion dollars, it's not difficult, but also making sure that the stuff gets handled on a priority basis and services provided, it is certainly a challenge in this country, especially this country is one way as well, because a lot of product moves from east to west and center to east, but hardly anything comes back and balancing those acts on a daily basis is also a challenge for any new input.

Okay, thank you. And just one last question actually on ServiceNow.

Are you still trending at high values [ph] for on-time performance?

Yes. So our on-time performance has not gone below 98.5%, these are the carrier controllable delays, I mean, taking the weather and other non-uncontrollable delays out.

We this year certainly were fulfilling 98.5% and we are one of the best maintenance and dispatch reliability. Not the best, we are the best when it comes to 767 and 757, according to Boeing statistics.

Thank you so much for your time today.

Thank you. Good morning, and thanks for squeezing me in.

I'm curious, given everything that you just said about the competitive dynamics, your track record, the amount of capital required? Why you think that reducing your leverage to zero or near zero net debt is a necessary milestone to hit to eliminate or reduce the threat of competition?

And who you think that competition would potentially be, when you do get around to that point where you're renewing these kind of foundational contracts?

Well, look, first of all, we don't know competition can come from anywhere, right? So we're not sure where the competition is going to come from.

We don't know of any at this stage. Why the debt reduction is necessary, because our whole model was built on buying and owning these aircrafts and pay them off in seven to eight years.

And we certainly, and this is one of our philosophies that when the renewal time comes in five to seven years, we do want to share some of that, you know, the free cash flow. And I'm not saying that, we want to give it away, but certainly the customers that have helped us pay off the debt, customers that have stuck with us, customers that have given us loyalty, and customers that have helped reduce our debt, deserve, when they renew their contract, and reappeared off the debt, so we have extra cash that goes towards certainly shareholders in dividends.

But some of it should go back to the customers. And that's the philosophy that I've always believed in sharing with our customers.

And that's what differentiates us from a lot of other companies that might not find it necessary that they have to share with customers. But that's what is the difference between us and a lot of other companies out there.

Okay, that's helpful. Just a couple of questions are on the charter business, you've given some color as to the linearity that business is going into Q4 and into next year.

Just help me understand, I mean how much of that that extra business right now is still PPE government type business as opposed to, I guess I'd say other commercial charter business, it's not necessarily tied directly to pandemic provisioning, and is more tied to regular commercial business just trying to find a different way of getting overseas.

Yes, Jamie would take that.

Good morning Doug. Probably the best way to look at it is that, the PPE we sort of restricted to weekends going forward into Q4, just because of availability of aircraft, so you're probably looking at they are depending on demand maximum one to two flights per week.

So call it, eight to 10 flights at the most per month going forward. And I would say less than that in the month of December.

Because as I noted earlier, we significantly reduce our ad hoc charter availability during the month of December, and particularly this year with what we expect to be record domestic volumes, we're going to need the aircraft and crews pretty much seven days a week.

And as your visibility on charter demand and profile improved, I mean, typically it was only a couple of weeks out, you'd have requests for charter, I mean, has people attempted to go out there and book ad hoc charters further out to the future, which gives you that competence and now starting in the next year, and things like that?

Not on the ad hoc side, its typically a fairly short window in terms of booking, definitely, we're seeing, as I noted before coming into November and towards the middle of Q4, we're seeing a significant increase in pricing for ad hoc charters. And you see that internationally, pricing levels are going up because capacity is being reduced.

Demand is still there might be a little less than it was in Q2 in the PPE side. But certainly with no passenger virtually, no global passenger international flights back, providing that belly cargo capacity and going into a traditional peak season for international cargo, not just for domestic cargo, demand is being squeezed and pricing, therefore it's going up.

And just to add to that [indiscernible] there is a lot of requests for future bookings. To answer we have received a lot of requests for January, February, March, for charters and charter pricing and availability and possibility of contracts.

We believe that's basically to do people protecting their position as you probably have read that around the world 8000 cargo flights would be needed for the transportation of vaccine and vaccine related equipment that would be needed. So a lot of countries have asked and availability and some of have even offered to see if we are interested in doing a deal for a whole year.

But that our philosophy is that being a Canadian cargo airline, our priority is to look after the Canadians first. And that's why we are holding out to make sure that Canadians needs there met [ph] before we offer lift to other countries.

As a Canadian, I got to say, appreciate that. Thanks for answering my questions.

Good morning, guys. Congrats on the significant quarter.

Just quickly on the charter side and Ajay you just mentioned customers are trying to discuss longer term contracts. Any terms that came out of that in terms of what are they discussing?

In terms of commitments and that ability to back out? Like what do you sense of that?

They just like to lock themselves in and then if they don't need the capacity, they'll try to protect their selves to back out? Just a little bit more color on the terms that being discussed, the lock in for the…

Well, the terms that are being discussed are basically pre buying certain number of flying hours, whether the flights will be to Europe, whether they will be to Asia, whether they will be to Mexico, and whether they will be to U.S. or UK.

Nobody knows where the vaccines are going to be, coming out of this stage. So everybody's kind of -- as you can see, the government has bought vaccines from four or five different suppliers from various parts of the region.

So everybody's kind of spreading, or at least taking the position that you can't put all your eggs in one basket. So similarly, people have inquired about the charters, people have offered us charters, people have offered to buy ours, so they would commit to a certain number of hours in a year or six months.

Again, nothing has been formalized, nothing has been sort of discussed because we have not sort of seriously entered -- we have listened, but we have not gotten into nitty-gritty or discuss with any of the American carriers or Europeans who are looking for cargo lift. And the reason partly as explained, although the Canadian government has started some discussions with various parties about shipping the vaccines, there's nothing finalized.

But as you know that since we are a Canadian company and we're going to keep a lot of capacity available to Canadians and the Canadian government and Canadian people. So we haven't gotten into the nitty-gritty of the contract but basically as happened in PPE, we were offered a lot more money by other foreign governments to divert flights into their countries for the charters and we didn't take that opportunity, because this country really needed PPEs.

We could have had better margins, had we taken some more American flights or more European flights at that time. But we decided, no, Canada is our priority.

This is where we are based and this is what Canadians depend on and we did not go for the short-term, huge increases that we were being offered. So I think similar thing, we can see similar trends developing and vaccine at some point.

That's great. And just one follow-up on the charter for me.

In normal season, let's say Q1, Q2 and some of Q3 going forward, in light of the current network design that you guys have, how should we think about the maximum theoretical revenue generation on the charter business? Is Q2 this year achievable, again, given where your fleet is currently right now?

Or what would be kind of be a nice number to use for if you were able to utilize?

This year is certainly a unique year because every government and including our government was caught with no PPEs, so the pricing was never an object. I think there's a lot more planning going on for next year.

People know what the shortfalls are, people know how much capacity is needed. There's slightly more competition on that.

So I think that we will not see the craziness that went on this year, because nobody was expecting a pandemic. I wouldn't say that everybody in every government is 100% prepared, but at least they're at 60% to 70% prepared with what carriers to choose and what aircraft to deploy and more time to negotiate the deals, fuel prices lower.

So I think a lot more is planned this year and I think the margins that we got on charters, in spite of that we took the lower margins are probably not something that are in my view, sustainable for 2021. We will have pretty good margins but -- I remember talking to Konark about somewhere settling between 2019 and 2020 would be a good way to sort of consider that question.

That's great. That's it for me.

Thanks for answering my questions.

Thank you.

Okay, thank you very much, everybody, for joining and we look forward to having some chats with individuals beyond the conference call and appreciate the support, really. Thank you.