Transat A.T. Inc.

Hi, everyone, and welcome to the Transat conference call for the presentation of the financial results of the fourth quarter and year ended on October 31, 2020. I am here with Jean-Marc Eustache, President and CEO; Annick Guerard, COO; and Denis Petrin, CFO.

Jean-Marc will provide his comments and observations on the current situation followed by Annick, who will focus on our operational and commercial plans for the future before Denis reviews the financial results in more detail. We will then answer questions from financial analysts.

Questions from journalists will be handled offline. The conference call will be held in English, but questions maybe asked in French or English.

As usual, our investors’ presentation has been updated and is posted on our website in the Investors section. Denis may refer to it as he presents the results.

Today’s call contains forward-looking statements. There are risks that actual results will differ materially from those contemplated by these forward-looking statements.

For additional information on such risks, we invite you to consult our filings with the Canadian Securities Commission. The call also contains forward-looking statements concerning a transaction involving the acquisition of older shares of the Corporation by Air Canada.

These statements are based on certain assumptions deemed reasonable by the Corporation, but are subject to certain risks and uncertainties, several of which are outside the control of the Corporation, which may cause actual results to vary materially. In particular, the completion of the transaction with Air Canada will be subjected to customary closing conditions, including shareholders and regulatory approvals, particularly authorities in Canada and the European Union.

These approval processes are ongoing and the details of the transaction with Air Canada will be discussed in a few minutes. Forward-looking statements represent Transat’s expectations as at December 11, 2020 and accordingly are subject to change after such date.

However, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise other than as required by law. Finally, we may refer to IFRS and non-IFRS financial measures.

In addition to IFRS financial measures, we are using non-IFRS measures to assess the Corporation’s operational performance. It is likely that the non-IFRS financial measures used by the Corporation will not be comparable to similar measures reported by other issuers of those used by financial analysts, as their measures may have different definitions.

The measures used by the Corporation are intended to provide additional information and should not be considered in isolation or as a substitute for IFRS financial performance measures. Additional information on non-IFRS financial measures, such as their definition and their reconciliation with the more comparable IFRS measures are available in our Annual Report.

With that, let me turn the call over to Jean-Marc for his opening remarks.

Good morning, everyone. I am not going to dwell too long on our financial results per se.

You have seen them. Our revenues are down 96% year-on-year for the quarter and 56% for the entire year.

Our net loss attributable to shareholders is very close to $500 million and our net adjusted loss is $355 million. Those numbers are appealing, but they are very much in line with what is happening to travel and aviation all over the planet.

IATA is forecasting global drop in revenues for airlines of more than US$500 billion, leading to a net combined loss of US$119 billion. For tourism as a whole, the loss in revenues is estimated by the UNWTO to about US$1 trillion.

No company is built to operate at close to zero revenue for nine months. The mere fact that we are still standing is a tribute to how solid the balance sheets we had before the pandemic and how quickly we adjusted ourselves to protect our cash.

But beyond numbers, I think, there are three questions I should address today. One, where are we with the transaction?

Two, how prepared are we to continue on our own should the transaction not go through? Three, where is the Canadian government?

And I am already warning you that I have no answer to this third one. So, first about the transaction.

As you are very well aware, the Shareholders Meeting is tomorrow December 15. Our Board and a Special Committee have reiterated their unanimous recommendation that the revised arrangement with Air Canada is in the best interest of Transat and its stakeholders and it’s fair to Transat’s shareholders and unanimously recommend that the shareholders approved the arrangement.

We have said many times in the past that the alliance with Air Canada was the best way forward for Transat and all of the stakeholders and that is even more true in the context of the pandemic. Joining ourselves as a leisure company to Air Canada’s might and network can only make both companies emerge stronger from the crisis.

For shareholders, the cash consideration of $5 is a premium of 31.6% to the average price before the execution of the arrangement agreement and the share consideration was worth $7.49 at Air Canada closing price of $26.16 on Friday – on last Friday. If our shareholders follow our recommendation and approve the transaction, we will then be waiting for the regulatory approvals.

The provisional deadline in Europe is set at February 9 and there is no firm date for the Governor in Council’s decision in Canada, but we expect to receive the answer in the same timeframe in time for a closing by the outside date of February 15. Secondly, should the transaction not close for any reason?

Are we prepared to continue on our own? The first aspect of this question is obviously financing.

As at October 31, 2020, our cash and cash equivalents totaled $426 million. Since the beginning of the pandemic, we have taken many initiatives to reduce our cash burn.

We have adapted our program almost on a weekly basis to adjust to demand. We have granted our customer travel credits rather than reimbursements.

We have followed the vast majority of our employees. We have postponed the bulk of our lease payments and taken some planes out of the fleet.

We have negotiated with other suppliers and reduced our non-vital investments. On the other hand, we have drawn down on our $50 million revolving credit and we have put in place $250 million short-term credit facility, which we will be able to draw down in trenches until February 28 subject to certain conditions.

This latter facility expires on March 31, which means that by then, we will need to either extend it or put in place a new long-term financing. We assess that our need over the course of 2021 will amount to around $500 million subject among other things to the reimbursement of travel credit.

We are considering our options for this long-term financing, including, of course, lease program. This being solved if it comes to that we are in a good position to benefit from the future restart of travel, which we all hope will soon be triggered by a broadly available vaccine and receding of the pandemic.

We are operating on a segment leisure and visiting friends and relatives that will all will most likely to be the first to pick up. We have used the opportunity of the pandemic to accelerate the transition of our fleet now centered around our single aisles long range Airbus 321, the ideal aircrafts in tomorrow’s world are recovering demand.

They will be completed by a reduced number of wide-body Airbus 330 for the most popular routes with cockpit commonality between the two types. We have in the past few years made huge progresses in our revenue and network management as was demonstrated by our results in the first 4 months of the year.

We were on track to enhance profitability and we will benefit from that once the demand is back. Our resilience, our nimbleness and the good relations we have always enjoyed with our employees’ groups, unionized or non-unionized will allow us to adapt to the new environment and emerge in a satisfying position once we are over the lowest point of the crisis.

Third question, where is the Canadian government and why it’s not acting more resolutely to support these aeronautics and airline industry in this unprecedented situation? I have to say, it’s impossible to comprehend.

Canada enjoys or enjoyed a very robust aeronautics industry and several air fleet airlines more than so than many other countries. They constitute a solid ecosystem of supplier, airline and infrastructure that did not cost a sense to the taxpayer, because of the user pay approach, while many others subsidized their airport or navigation services.

These provide many well-paying jobs in Canada and especially in Quebec and was very instrumental in economic development in the global world, while helping the tourist industry flourish in the country. When the crisis hit, many governments in the world acted swiftly to back their airline industry of the art of the ecosystem, IATA recounts that airlines travel the world, mostly in Europe, the U.S.

and part of Asia has received $173 billion and counting. IATA has allowed airlines to maintain a certain level of activity and prepare for the future, while reimbursing their customers for flight canceled during the pandemic.

This goes to major carriers like in the U.S. Airlines, Air France, British Airways, Air Portugal, Air Italia, Lufthansa, but also to leisure airlines such as Costa Air or Condor.

A major travel group like TUI has also received billions euro from the German government. That support has been progressive to governments adding support as the need grew.

There is, for instance, talks this week of France injecting €4 billion to €5 billion in equity in Air France, which has already received €4 billion in government backed loans and €3 billion in loans directly from the state. This, of course, has consequences by our weakening Canadian Airlines have for instance giving up 11 market shares points towards European between May and August.

If it does not change, our foreign competitors will be in a much stronger position to cater to a recovering demand. But in somehow, looks like the Canadian Airlines are being punished for their strong balance sheets before the crisis.

We had the capacity to weather the onset of the crisis. So no action was taking to support us.

But you are going to say but you have received the Canadian Emergency Wage Subsidy, is that not support from the government? Have you not received a loan from EDC?

Let me answer to that. About use we are having €106 million at the end of October and we are very grateful for that, but two-third of it was for salaries paid to employees, we were on leave with pay.

If the program did not exist, these employees will have been laid off and received CRB or unemployment insurance. That leaves us with €38 million for employees who are at work already something, but not much in comparison with what is needed and provided to others.

As for the financing that we have put in place, EDC has indeed been part of it, and again, we are grateful. But as I said, that is a short-term loan arranged by a private bank at market rate, not preferential one, which means high rates in the current circumstances.

And we are not told that having taken it maybe an obstacle to subscribing to leave. We have been very disappointed to say that the lease not to hear anything about our industry in the fall economic statement.

On November 8, Minister Gatto issued a statement saying that the air sector cannot respond to these challenges on its own giving the unprecedented impact of its operation. We cannot agree more.

He continued by stating that the government anticipated beginning discussion next week, a month has elapsed since then, and we are still waiting for a phone call when other countries are reached or react months ago, time is now the essence. To continue and to summarize before we move on to elaborate on our operations and our financial results, the absolute desolation that COVID-19 has sown across the aviation industry has not fared Transat.

However, there we are ready for a restart now that the promise of a vaccine shine the first light at the end of the tunnel. We still believe that the best way for work is the transaction with Air Canada and we encourage our shareholders as well as the regulatory bodies to approve it.

But should that not be the case, we are also ready to rebuild on our own. And we hope that in either case, our government understands that is at stake here and will step up to the challenge.

With that, I will pass the mic on to Annick for an overview of operations. Thank you.

Thank you, Jean-Marc. So after having seen the worst for our industry, we are finally starting to see some positive in front of us.

We see promising initiatives that are being led by the Province of Alberta and now Ontario, in collaboration with the Government of Canada and the Public Health Agency regarding science-based arrival testing programs at Calgary and Toronto airport, which goal is to reduce quarantine. The other, of course, encouraging news is clearly around the vaccine and the vaccination campaign that is starting this week in Canada.

With that, we remain confident that the upcoming year will be stronger than 2020 difficult to do worse. In addition, according to recent surveys, consumers’ confidence towards travel is slowly improving, especially around international travel.

So in the short-term, we need to continue our semi-hibernation and as Jean-Marc described, we take every possible means to protect our cash flow. Over the upcoming weeks, we will still operate around 20 routes on a weekly basis.

Our current program represents a reduction in capacity that varies between 85% to 90% versus same time last year. Our load factor continues to show better results than the industry.

Even if it remains far from figures we are using, we are used to seeing, as an indication, we closed the month of November at 58% load factor whereas the industry was under 43% average load factor for the international market. We continue to carefully adjust the capacity on an ongoing basis to optimize our results.

Our operation, even if it is minimal, gives us an understanding of demand not only from a quantitative perspective, but also from a qualitative one. And this allows us to adapt our operations and commercial approach to the new environment.

Current demand has shifted towards more of a last minute market. And on average, we are also looking at younger travelers with longer stays.

We continue to offer a lot of flexibility to our customers in the current context. People can change their travel plans up to 24 hours before departure.

All of our products also include medical travel insurances to cover for COVID. We are still very pleased with the implementation of our Traveler Care travel program featuring enhanced health and safety measures throughout the customer journey.

So far, we have received very positive feedback on this program from our customers and we remain confident that these measures prevent on-board transmission as demonstrated by multiple studies so far. To-date, Transport Canada is not aware of any instances of transmission of COVID-19 between passengers on flight to and from Canada or on domestic flights.

When we look at the upcoming year, with lack of clear visibility on future demand, especially with the travel restrictions in place, we have prepared of course multiple scenarios ready to be deployed. Our goal at this point is to be able to add and reduce capacity in a short period of time while maintaining the most efficient operation and organization in place in order to protect our liquidity.

Recent studies demonstrate that leisure travel will fully return. We don’t know exactly when demand for travel will be back to 2019 levels, but we sure anticipate a resurgence when the vaccine starts to be deployed and travel restrictions are relaxed.

All the changes, we are – we know that all the changes we are making right now will strong – and we strongly believe that when the crisis ends, we will have among the most efficient models in the market, a 100% simple leisure, fast product and a much, much lighter cost structure driven by 100% Airbus fleet two types only fully compatible. That combined with the quality of our brand and our client satisfaction, which has remained at high levels even if in these challenging times, will put ourselves within the leading pack of the race once we get out of this crisis.

Thank you. Denis, I will now turn to you for financial results.

Thank you, Annick. Good morning, everyone.

Thank you for being with us on this Monday morning, which is quite unusual for us. We have unfortunately had to postpone our fourth quarter and fiscal 2020 results from Thursday to Friday, the reason being that we needed a little bit more time to finalize our financial communication documents in the context of COVID-19 situation, which has made everything more difficult for our auditors and for ourselves.

The other more important impact of the pandemic is that we are signaling that there might be a question mark on our ability to continue as a going concern considering that additional financing will be necessary if there is no transaction that has been our primary focus since the onset of the pandemic and continue to be. I will come back with in more detail later, but in the nutshell, we have secured a $250 million subordinated short-term credit facility which mature on March 31, 2021.

This short point facility carries us over the outside date of the transaction. Should the transaction not take place we are actively working on several solutions for the rest of the year.

They include extending the current facility or replacing it by a new one, possibly provided by the much awaited state aid in the form of lease or a program dedicated to our industry yet to be announced. We estimate our needs for the year under reasonably assumptions around $500 million.

Our fourth quarter results were significantly impacted by COVID-19 pandemic. On July 23, we partially resumed our airline operations after 4 months of inactivity.

In the context of COVID-19, we implemented a very limited summer program. Consequently, for the fourth quarter, capacity deployed was a fraction of the one of 2019.

Q4 results were then as follows: revenue of $28 million, down from $693 million in 2019 and adjusted net loss of $156 million compared with an adjusted net income of $98 million last year. The adjusted net loss of the quarter included amortization and interest were $64 million mainly on aircraft leases, which are essentially fixed, even if rent deferral has been agreed and modification of rents where the benefits have to be recognized over the remaining term of the lease.

Clearly, these two initiatives does not really affect P&L. Salaries were $34 million versus for the same 3 month period last year $105 million or $35 million per month.

Settlement of fuel hedging contracts put in place before the pandemic were $23 million. The remaining $35 million was composed of fixed costs and those incur to resume operation, which represents roughly $12 million a month and also include year-end adjustment.

And there has been a few counted with the review in the – of all accounts in the context of the COVID-19. As for financial statements, the net loss attributable to shareholders was $238 million compared with a net income of $23 million in 2019.

This includes special items, consisting of impairment charges totaling $87 million, comprising $51 million for assets related to lease aircraft that will no longer be used, $33 million for the land in Mexico, and $3 million for the investment in a Mexican company operating a hotel in Puerto Vallarta. Special items also include additional provisions for return condition of $6 million for lease aircraft that will no longer be used, professional fee and reversal of compensation expenses of $3 million related to the transaction with Air Canada, and A310 engines saw for a gain of $8 million.

Finally, special items include an unrealized gain on change in fair value of derivatives of $18 million caused by the strong ascent in jet fuel prices after the collapse during Q2. Now, for the balance sheet, Corporation free cash totaled $426 million versus $576 million at the end of July.

The variance of $150 million for the quarter or $50 million per month is the equivalent of what we experienced in Q3 and this amount is lower than what we were anticipating. Excluding the settlement of hedging contract for the period, the cash burn was $43 million per month on average and include fixed costs, salary, aircraft rent paid and others and also variation in other working capital items like payment to supplier or reimbursement to clients.

Cash interest or otherwise reserves totaled $252 million at the end of the year. The deposit for future travel stood at $609 million as of October 31.

Of the deposit for future travel, travel credit vouchers granted to customers in compensation for flights canceled due to COVID-19 pandemic amounted to $532 million. Long-term debt stood at $50 million and lease liabilities at $854 million, which includes 6 A321neo new long-range.

Off-balance sheet agreements, excluding agreements with suppliers stood at $872 million as of October 31 mainly related to the 11 Airbus A321neos to be delivered, of which one has been delivered mid-November. During the quarter, we have continued to implement decisive financial measures aimed at preserving our cash.

As said in our press release on October 9, 2020, we have put in place $250 million subordinated, short-term credit facility with National Bank of Canada lead arranger, which remains unused this date. Should the transaction not be completed efforts are underway with our bankers and the various level of government to secure financing to cover needs estimated to $500 million for the year 2021.

Negotiation with aircraft lessors have also continued as we manage to terminate for aircraft leases after year end. Finally, as you can read in our press release this morning on Friday, we will not for now provide an outlook for the winter 2021.

We will now proceed with your questions.

Yes. Good morning and thank you for taking my questions.

So I was wondering, is there a mechanism to extend the outside date and accommodate the new deadline provided by European regulators as you did before under the previous agreement? Thank you.

Yes, the mechanism will be by consensual agreements between the two parties. So, it’s not automatic, but it needs consent.

Okay, perfect. Thank you very much.

And then you mentioned that the positive development with vaccine could help to bring a certain level of demand in 2021. So I am curious if there you have seen a certain material change in bookings for the summer of 2021 over the past month as these positive development came in?

What we are seeing right now with the closed borders, travel restrictions and quarantines continue to be in place. Travel demand is still low.

However, over the last week, we have seen a little bit more booking, more movement than what we were seeing in November. So we are seeing a certain pickup at this point for – it’s mostly for winter.

It’s still slow for summer. So, summer is – since we have late booking pattern right now, we are not expecting to see summer bookings before a few weeks, a few months, but we remain confident with the distribution of the vaccine that these bookings will pick up.

Okay, thank you for the color. And when you look at the new bookings that are coming – that comes in, the certain pickup you mentioned, is that – are those booking more related to people that ask travel credits or there is also a mix of new clients in there?

We see a mix about within those bookings about 30% of customers are booking with credit vouchers, 70% are new clients.

Okay, perfect. Thank you.

And then the last one for me, I was wondering if you could provide an update on how revenues are shaping up so far in Q1, now that we are about halfway through the quarter and how does it compare with Q4? Thank you very much.

Like you saw in the press release, we will not comment on the outlook for the rest of the winter. And level of booking at this point, we’ve been in, say, in the pandemic is reflected in our customer deposits then we will adjust with the demand on our program.

Jean?

Thank you. Thank you.

Good morning, and thanks for taking my questions here. Maybe just first off on the cash burn in the quarter, about $50 million a month average similar to Q3.

I guess a little bit surprised by that just given what some of the airlines have been able to do with their cash burn in terms of showing sequential improvement. So I am just wondering, were the things you weren’t able to, where the leavers you weren’t able to pull on because of your upcoming transaction with Air Canada.

And if it wasn’t for that transaction, is there a sense of maybe what you could have reduced that cash burn further by or was this $50 million a pretty clean number with or without the transaction expected in February?

It’s a pretty clean numbers. And to consider, like I commented earlier, in that $50 million per month that includes settlement of hedging contract for the period was made before the beginning of the pandemic, then that brings us to $43 million.

And this $43 million include not only the cost of the period, but also payment of accounts payable that were there and reimbursement of clients. Then I think in total, getting to $43 million in average per month, it’s a solid performance and for which all the initiatives were necessary to get there.

If you remember, when we were in September and we commented on what would be the level of cash burn for the next three months, which are the one that we are talking about today, we thought at the time that the cash burn on a monthly basis will increase and not be maintained by combining payment to supplier and reimbursement to client. Then this is where we are.

And again, on a monthly basis, not so bad for an organization of our size.

That’s a fair comment. Maybe just secondly, on the $500 million of financing, you think you will need additional liquidity, you think you will need in the event that transaction with Air Canada does not go through.

Just wondering how you came up with a $500 million, is that essentially the credits that you have outstanding within your customer deposits suggesting if you treated that as restricted cash and had liquidity to offset that, that the remaining cash on your balance sheets should see you through this recovery or just wondering how you got to that $500 million specifically?

Obviously, first, it comes from results that we have had for, say, since March. But I also take into account results that we could forecast to have in 2021 by having the pandemic and let’s say continuing to have an effect on our results.

As we all know, bookings will depend on where people will see that they are safe to travel and that’s not happening as we speak like right now. And the third item is the effect on working cap, which is combination of deposits, accounts payable and all of this that we could think that in the next 12 months will surely not be at the level where we were before the pandemic then.

This is more a timing – this is not a permanent impact. This one is more a temporary one, but we expect this to have also an impact in 2021.

Then when we put all this together less that we have made in 2020 results that we could expect to have in 2021 and the temporary impact on working capital items, this is how we get to our approximately $500 million.

That’s helpful. Maybe just last one for me and I recognize it’s difficult question to answer, but just given the going concern comments from your auditors and some of the comments within your MD&A.

Do you think that assists in getting this deal approved by the regulators just given the fact that you have a going concern comment now in your audited statements? And obviously, there is maybe a firm failure argument that that they need to consider like, do you think this changes the trajectory of the negotiations you are having with regulators or do you think this was already being contemplated in their due diligence?

I think that’s something that they could assess by themselves. Obviously, I don’t think it’s a surprise.

I don’t want to minimize the impact of a going concern note in financial statement, but because of the transaction, let’s say, the financing is not surely put in place and finalized. And when you are in the situation where financing is not secure for the next 12 months and you issue your financial statement, then this note is an automatic, then this is why we are getting this in our financial statements then.

The impact of the COVID is not only for us, it’s for the entire industry and I am sure that everyone were looking at our numbers from investors to government were able to assess this.

That’s very helpful. Thanks for taking my questions.

And I guess happy holidays as you get through the holiday season here and best of luck to the recovery.

Thank you.

Thank you and good morning. Maybe I want to kind of dig into the regulatory environment.

So, the European Commission obviously pushed out the date, the deadline by 1 month to February 9 after you offered the remedies recently. How confident are you that those remedies that you have offered would be sufficient to receive the approval in a timely manner?

The package that has been offered has been greatly improved, the parties are negotiating with the authorities and it’s following the normal process.

So you don’t think at this point based on what you know you don’t need to provide another improvement or changes in the package rates?

I just said that the parties are negotiating with the authorities and that they have and it’s a continuous dialogue and they are pushing forward.

Okay, that makes sense. Thank you.

Do you see – we don’t obviously get to see the regulatory updates from Canada as much as from the EU, do you see the Canadian regulatory environment or scrutiny as complicated as it is in the Europe right now?

The test in Canada is slightly different. You have to keep in mind that the test in China is also a public interest test.

And that is left to the discretion of the Minister and the cabinet, the Governor in Council. So, this is why it’s a bit more I would say complicated.

I see, okay. So we haven’t heard anything at all on this front at this point.

We are waiting for the decision…

It’s not what I said. What I said is that the transparency that you see in Europe is different, because the questions being asked are different and the file is also moving ahead in Canada.

I see. Okay.

Thank you.

And we are confident within the timeframe that we have in front of us, Canada will also make a decision.

Okay, thank you for that. And Denis perhaps for you on the financing side, how much is the monthly fixed cost at this time before reflecting the wage subsidy benefits?

If we have been able to reduce aircraft rent, we are adjusting also salary for the operation and the other fixed costs have been also reduced. When you look at the P&L though initiatives on aircraft rent, it’s not really, you couldn’t really see them.

Because like I was saying earlier, it’s a deferral does not affect the P&L even if we deferred cash which is one of the main initiative for aircraft and even if we get through negotiations, favorable adjustment to our lease for a period of time, also has to be – I can’t say recognize over the term of the lease and not over the period, which it was to cover then example, you get reduction in your rent, let’s say, make it simple to zero for two aircraft for 6 months, then this will have to be recognized over the term of the lease and let’s assume for a second that it’s a 10-year lease. And again, on the P&L you don’t see really the impact then depending if you look at P&L or if you look at the cash that we are using included in the cash burn, the answer is very different.

Absolutely. But what I was trying to look for is without looking into the lease payments let’s say at this point, just the kind of fixed costs for the company on the P&L, where would you put that number before the lease payments?

I would say, $20 million, $25million…

$20 million, $25 million number…

$20 million, $25 million per month, yes.

Okay, perfect. Thank you for that.

And on the lease payment, can you help us understand you have deferred obviously some lease payments so far for the last several months, where does that, like what is that amount of capital lease payment at this point?

If you look at the balance sheet, it’s included in short-term – in the short-term in the line obligation and yes, that’s what I could say, because confidentiality agreement that we have had with lessor than I cannot say more than this year.

That’s perfect for me.

But you will find that in the obligation for term portion.

Okay, I look for that for sure. Thank you.

And then last one for me on the fleet. So I can see in your presentation that you are obviously cutting down the fleet over time and then you have some targets for the winters.

Can you help us understand what is your target fleet size and the fleet mix by the end of this winter and then what would be the recurring monthly lease payments for that fleet?

Yes. So, we went over the last month, if we look at the A330s, we went from having 20 of those aircrafts and we are now at 15 and our ultimate goal is to move to 12.

So we are still working negotiating on those. As for the A321neo long-range, the new ones we have set 7 so far and we are expecting potentially 3 over the upcoming months.

But we are working in delaying as much as possible those aircrafts and the remaining 10 after the remaining 7 because we would have 10, let’s say, by the end of 2021 would be delivered between 2022 and 2023. We have 4 A321ceos that will remain on the fleet.

And among the 5 Boeing 737 that we had within our portfolio, there is only one remaining and we are still working at seeing how we could negotiate with the lessors to remove this aircraft from our fleet. In any cases, this aircraft will not fly anymore so that we only operate A320s from Airbus and A330s so that are fully compatible.

So this is where we stand right now still working a lot on three fronts. Denis explained one is to delay payments, the other one is to activate early returns and the third one is to negotiate permanent reduction of aircraft rent.

As we have started discussion, however, there are discussions that are little bit difficult in the context of a transaction with Air Canada. So, we will wait before being a little bit more active I would see on this front more active, because we are already active, but when the transaction which Air Canada had to realize or not.

This is where we stand in terms of rents. They need to – if you have – okay, so we are not able because it’s moving so much so that we are not able to provide you with the specific points right now that we are paying and we don’t pay in the upcoming months.

Okay, thanks for that. That’s great color.

I appreciate it. Thank you so much and happy holidays for you guys.

Thank you.

Good morning. I just wanted to say firstly, I do fully appreciate your comments, I understand that the situation is extremely challenging and commend your work thus far.

Thank you for taking my questions. I just have two very brief ones.

So first is a clarification, I am just wondering, so you drew down the $50 million in its entirety, but you have not tapped into the $250 million as of yet if I heard correctly?

Absolutely, you are right.

Okay, perfect. And so would it be safe to assume then that you anticipate drawing down perhaps fully before the February 28 date, I believe it was?

I would say not necessarily. Not necessarily, it will depend on where our cash position is.

And yes and there is – they are like we mentioned also in our different communication, there are also conditions associated with this facility, then we will drawdown what’s necessary to be drawdown by that date.

Okay. And then secondly, I understand the Board’s unanimous support for the offer, along with a significant shareholder that’s spoken out.

But I was just wondering, was there any reasoning as to why the breakthrough we see was lower if a competing offer was made. I am just wondering if perhaps a few months ago, there was any potential for third-party interest or just any comments or thoughts you could have on this, just particularly as the stock price is sitting above the offer price, although it’s come down some?

Thank you.

Mona, could you ask your question, again. We had noise on the line.

Sure. Yes.

I understand break fee, but just…

Yes, that’s okay. It was just reasoning.

So the breakthrough was lower if a competing offer was made. And so I am just wondering if perhaps a few months ago, there was third-party interest or any potential.

It’s just really why the stock price is trading above the $5 offer price, although it’s come down some. And I just want – I stated at the beginning that I do understand the Board’s unanimous support for the offer along with a significant shareholder?

I think, Mona, it’s really related to the fact that shareholder have the choice of taking $5 or getting shares of Air Canada at a rate that is all – conversion that is already specified. There was 1747.

Then could assume here that shareholders will take share in the $5 and if, by using the close on Friday, instead of getting $5, they will receive a value of $7.49 of shares of Air Canada. And I think it’s mostly this that drives the increase in above the $5.

Okay, that’s helpful. Thank you.

That’s it from me.

So, thank you everyone. And let me just remind you that our first quarter results will be released on the March 11, 2021.

And with that, thank you very much and have a good day.