Transat A.T. Inc.

[Foreign Language] Hi, everyone, and welcome to the Transat conference call for the presentation of the financial results of the first quarter ended January 31, 2021. I'm here with Jean-Marc Eustache, President and CEO; Annick Guérard, COO; and Denis Pétrin, 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 details. We will then answer questions from financial analysts.

Questions from journalists will be handled off-line. The conference call will be held in English, but questions may be 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 certain forward-looking statements concerning a transaction involving the acquisition of all the 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 subject to customary closing conditions, including regulatory approvals, particularly by authorities in 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 March 11, 2021, 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 access 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 or 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. Jean-Marc?

Thank you, Christophe. Good morning, everyone.

We are reporting today yet another quarter of pandemic, restrictions to travel and near 0 revenue. At $42 million, revenue is down 94% year-on-year.

Our net adjusted loss is $109 million. And the net loss attributable to shareholders, $61 million.

And yet, there seems to be some light at the end of the tunnel, whether or not the transaction with Air Canada is completed. On the transaction itself, as you know, the outside date has passed on February 15 and has not yet been extended.

The agreement lives on, with each party being now able to walk away from the deal at any time as long as the European Commission's approval has not been obtained. The clock on the Commission's investigation has been stopped for a while, but we expect it to restart very soon.

And at any rate, a decision will come before the first half of the year is over. So we are fast approaching a resolution, whichever it is.

Since the beginning of the transaction, both the Board of Directors and the management have been very aware of the necessity of keeping ourselves ready to continue on our own. I was again telling you about it during the same call last quarter.

Until 1 year ago, this merely meant keeping our strategic plan on the back burner, ready to reactivate it, if necessary. But the pandemic has happened since then and we have adapted our efforts to an entirely different world.

On the operational side, we are constantly updating and fine-tuning a restart plan for a leaner and meaner Transat that will be in a position to play its best cards in a post-pandemic world. There is still no certainty as to exactly when and how fast the recovery will happen, but it will.

The vaccine is there. We can now expect to have it -- to have hit the bottom and start moving upwards again.

For months, studies have shown that people were eager to travel as soon as it will be permitted and safe. The U.K.

travel companies have recently seen a sharp rise in bookings in the first days after restriction were eased. A recent CIBC study show firstly, that the level of cash saving was close to $120 billion or 20% above the level seen before the crisis.

And that the main item people, who made those savings, intended to use them for was travel. As you know, our operations are completely suspended since the government asked us to stop all the flights to the South to support the fight against the pandemic.

We will restart when European volume picks up for the summer, which will probably be sometime around mid-June. And we're finalizing our plan to build from there.

Relying on our strength and fixing what might have hindered us in the past. Our fleet, recentered around the Airbus 321 LR, will be more nimble and efficient.

We are working on our network to balance our seasons better than in the past. We are reducing our cost and correcting our inefficiencies.

We will preserve the customer friendliness that has made us the best leisure airline in the world. We believe that our niche in the leisure and VFR markets will provide us with some tailwinds.

We will rely on our distribution firepower, but -- both over the Internet and through our network of agencies. And the pandemic disaster was yet another opportunity to confirm how strongly our staff is committed to the success of Transat, which will be our best asset for the recovery.

On the financing front, we have seen the government engaged with us much more over the past weeks, and the LEEFF files have seen a lot of progress. We have been present when the government asked us to stop the operation to help combat the pandemic, and we do believe the government will not let us down.

Having extended our short-term $250 million credit facility to the end of June, we are now making good progress in our efforts to obtain the financing we need to get us back to the level of activity where we can sustain ourselves. Lastly, transaction with Air Canada is still the main option today, and the arrangement agreement still prevents us from having discussions with any other parties.

But should the agreement with Air Canada comes to an end, we will actively consider all other options. We have heard signal from Québec that Transat will not let me down.

And we have taken note of Mr. Pierre Karl Péladeau's proposal and its validity after a potential and on the current arrangement agreement.

So there is no need to worry about a plan B. A lot of work is being done in the background.

And all of it will come into the foreground if and when the time is right. With that, I will give the floor to Annick.

Annick, please?

Thank you, Jean-Marc. So I'll tell you a little bit about the stand-alone plan, which would be deployed, of course, in a scenario where the transaction would not go through.

The plan, as described by Jean-Marc, is ready. It is robust.

But as long as the transaction is alive, we're not going to communicate too many details at this point. Maybe a word on the resumption of operation, which will be, of course, gradual as vaccination is deployed and border restrictions are eased.

We strongly believe that a uniform, coordinated approach to passenger testing for the COVID will be critical to building back consumers' confidence in the safety of travel. We are, at this point, unlikely to fill the positive impact from vaccine distribution until the third quarter of 2021.

It will take some time, but we are very confident that demand will return, especially in leisure travel, where we are well positioned, as this is our natural market. In the short term, we expect to restart our operations in mid-June, which marks the beginning of summer demand.

With a season -- the spring season, representing a low season in the leisure travel sector. So this is very natural for us not to start before mid-June.

At this point, depending on the travel restrictions in place, we plan to operate a modest program for the upcoming summer, focusing on the markets that will be most attractive in the short term, namely the domestic, the U.S., a few medium-haul sun destinations and some key VFR European destinations. For the following season, we will gradually roll out our plan.

The crisis of COVID will have allowed us to transform our organization and to accelerate all the changes that were and will be necessary to make our organization more efficient and agile. The priorities of the plan are articulated around key drivers: first, we are in a target market that will rebound strongly.

Transat is a leader in the leisure market, and Transat is a strong brand and well-loved brand. We have redesigned our network for the upcoming years to remedy the effects of seasonality that have plagued our results in the past and that have caused significant underutilization of our fleet.

A lot of work has been done on that front, and we are improving significantly problems that we had in the past. Secondly, our fleet is now moving from 4 to 2 aircraft types, fully compatible from the Airbus family, allowing huge gains in efficiency and operational cost reductions.

We are reducing the number of wide-body aircraft within the fleet mix with the exit of the 310s and a significant reduction as well in the number of wide-bodies, A330s, and we are letting go of the Boeing 737. We are making room for a much more suitable and efficient aircraft for our network, the A321neo long range, which spectacular performance -- which has a spectacular performance on the long haul.

We have currently 7 of those and are planning the arrival of the next ones according to anticipated recovery. We have 17 A321neo long range in order as for now, and we plan to potentially order more in the future.

This choice of aircraft is by far the best fleet decision we have made in years. It is an aircraft that we will use at full capacity on a year-round basis, and it allows us to put an end to our need for seasonal aircraft, a model that had reached its limit when we imported in the past several narrow -- in the past year several narrow-body aircraft during the winter season.

The end of the seasonal fleet will bring an important simplification and stabilization of our operations. Meanwhile, we are renegotiating the financial conditions for all our aircraft.

We are also, of course, renegotiating all other agreements with other suppliers to reduce our cost across the board. On the customer experience side, we are transforming our value proposition, which will include the adoption and implementation of new health standards that will redefine the way people travel and the maximum use of digital technologies throughout the customer journey, for which we have strong skills, capabilities and expertise that have been recognized over the years.

Finally, we will drive our ambition to protect the environment, and Transat has always been at the forefront in this area in all its activities. In terms of air travel and the carbon footprint, in particular, we have already worked hard to minimize our fuel consumption.

The new A321neo long range will definitely take us to a new level. And with our partnership with the SAS Plus consortium to sustainable fuel, we think we're going to be ahead of the game.

We are convinced that this matter will become much more important for consumers who have experienced the proximity vacation. So we intend to continue and accelerate our effort and lead the way in the market.

I'll stop here. As I said, the plan is ready and solid.

Transat has a promising future. We have a committed team, and we are all ready for the next step.

Now the transaction is still in progress. So we will communicate the details to what we intend to do and how we intend to do it and if the context changes in due time.

Denis?

Thank you, Annick. Good morning, everyone.

Our first quarter results were significantly impacted by the COVID-19 pandemic. As mentioned earlier, the capacity deployed during the quarter was only a fraction of the one of 2020.

Q1 results were then as follows: revenue of $42 million, down from $693 million in 2020; an adjusted net loss of $109 million compared with $20 million last year. The adjusted net loss of the quarter included amortization and interest for $57 million, mainly on aircraft leases and salary for $28 million versus $105 million for the same period last year or $35 million for every month.

For financial statement, net loss attributable to shareholders was $61 million compared with $34 million in 2020. This includes foreign exchange gain of $33 million mainly related to the reevaluation of our aircraft lease obligations as a result of a stronger Canadian dollar versus the U.S.

dollar as at January 31. And a gain of disposal of assets of $17 million related to the reversal of liability of 3 aircraft leases terminated during the quarter and for which related assets were fully depreciated in Q4 2020.

Now for our balance sheet. Corporation free cash totaled $303 million as at January 31 versus $426 million at the end of October.

The variance for the quarter was $123 million and represent $41 million per month. The cash used during the quarter was attributable to fixed cost, namely salary, aircraft rents and also include financing costs, payment of lease termination and working capital items.

Cash interest or otherwise reserve totaled $249 million. The deposit for future travel stood at $573 million, of which, travel credit vouchers granted to customers in compensation for flight cancels due to the COVID-19 pandemic amounted to $519 million.

Of the total amount of deposit for future travel, an amount of $241 million is held in trust, and obviously, not included in our free cash of $303 million at the end of January. The long-term debt stood at $50 million and lease liabilities at $853 million, which now includes 7 A321neo long range.

Off-balance sheet agreements excluding agreements with supplier, stood at $753 million at the end of January, mainly related to the 10 Airbus A321neo to be delivered. We have continued to implement decisive financial measures aimed at preserving our cash.

As said in our press release, on February 17, we amended our $250 million subordinated short-term credit facility with National Bank of Canada. The facility will now mature on the earlier of -- the end of June, June 30, and closing of the arrangement with Air Canada.

Should the transaction not be completed, active efforts are underway to secure long-term financing to cover needs of at least $500 million. They include financing in the form of LEEFF program and could also include extending the current facility.

Other forms of support from both levels of governance may also contribute to this financing and possibly allow the reimbursement of travel vouchers. Negotiation with aircraft lessors have also continued, as said earlier, and we managed to terminate 3 aircraft leases during the first quarter of the year.

Finally, as you can read in our press release this morning, we will not for now provide any outlook for the remainder of 2021. We will now proceed with your questions.

So my first question is on the liquidity requirement. So you guys mentioned that you still need at least $500 million for this year in liquidity.

That has not changed over the last 3 months, I guess, even though you have suspended flights for 4.5 months almost until mid-June. So one, I'm confirming, is that correct, that the $500 million liquidity remains still the need?

And if that is the case, is it because you are expecting any other external one-off funding or any further fixed cost reduction? So just curious why that amount has not increased.

In the press release issue and in the communication made available this morning, we added the word at least to the $500 million. And $500 million was evaluated on the basis of the assumption that we were having last December.

Now that it will probably take a little bit more time before the volume to come back in 2021. And pushing the activities to June, we have added the word at least.

We're working on obviously updating our assumption like on a constant basis with every information that we could get from the outside. And depending of the position on the customer deposit and everything, this is the reason why we added the word -- the 2 word at least $500 million.

Okay. That's great, Denis.

So basically, it means that you might need more than $500 million. But whatever the amount you have disclosed in the press release, that is not net of any external financing you are anticipating?

Like you still need the financing to support this liquidity requirement, right?

It's the total amount, yes.

Yes. Okay.

And the second question on the LEEFF program. So the government discussions, as other airlines have suggested recently, it seems like the discussions are progressing well from the government side of things for a sectoral support, and the LEEFF program has been around for quite a long time.

Are you considering using the LEEFF program because you are not confident that the Canadian government is going to support the airline sector through an aid or the terms may not be as favorable? Or what's driving you toward the LEEFF program here?

Okay. The first thing is do we -- going to have -- are we going to have a transaction?

Yes or no. So first point is to have an answer about that.

As you know, there is some uncertainty about that. It's dependent of Air Canada, it's dependent of us.

It depends on the European Commission. But we -- like we said, everything will be settled before the end of June.

And I think with -- to be realistic even before that. So part number one.

So today, we still have officially transaction with Air Canada; number two, we're working for a long time, and we are saying to the shareholders for a long time that we're working on the LEEFF program. And now we're pushing faster, and they are working with us faster to be sure that we're going to have the cash necessary to continue the organization, if the deal doesn't go through.

We're having discussion also with [indiscernible] Québec and other parties. The LEEFF program, as you know, is a program that can help a large company if they need money, how do you say that, fast for a while.

This program is not built for the next -- is built for 5 years. But I think they realize and we realize that it's not going to be there for 5 years.

So it's going to be for a medium period. So for us, short term was to bring the $250 million.

So this brings us to June. In the meantime, we put LEEFF together, if necessary.

This could be done by the end of this month as fast as this and to be sure that we will be -- we will have the cash for the next 5 years. But really, for us, it's for 2 or 3 years maximum.

And the government is still talking about an aid, financial aid, sectoral financial aid. They're talking since November about that.

So -- and we know that they are talking a little bit with us. They're talking to Air Canada.

We know they're talking to all the other airlines. But in the meantime, nothing is happening with that.

We're crying, we are asking. We're -- everybody is asking for that.

We want to be sure that we have the cash if the transaction's not there. For sure, if there's a financial sectoral aid, we will be part of it.

We will use it. And for sure, like we said, we will reimburse the passenger with that money.

LEEFF program, you don't have to reimburse the passenger. They accept the credit voucher.

So for us, if the aid is there, we will be there. We will use it.

If it's not there, we will have LEEFF. We continue with the credit voucher with the customers.

And the deal is not there, Transat continue on its own. Transat has been there for 42 years.

They're going to be there for the next 10 years. There's no problem about it.

We have a real good business plan that we're going to present as soon as we know if there's a transaction and if there's not a transaction. Part number three, this transaction finished, we're talking for nothing.

There's no transaction, we've got LEEFF. And after that, we will listen to everybody that has interest to buy Transat, again, something that we cannot do today.

But if tomorrow, Mr. Péladeau is still interesting to buy Transat, good.

Mr. Péladeau, come to us.

We talk with you, and we do what we have to do. For today, there's still a deal with Air Canada.

We're still in the deal. But we want to -- everybody is saying, we're supposed to have a plan B, a plan C.

For sure, we have a plan B. We have a plan C.

And we will do what we have to do in the timing of necessity and necessary. And we will do it.

That said, thank you very much. That's it.

Right. No, that's great color, Jean-Marc.

Just want to make sure I understand correctly. So if you tap the LEEFF program, will you be required as part of the program to refund the travel vouchers?

Or the LEEFF program does not mandate you to refund tickets?

No, we don't refund the tickets with the LEEFF program.

Denis, I was hoping you could just help with -- so I appreciate the cash burn evolution slide you have in your presentation deck, down to an average of $41 million in the most recent quarter. But just wondering what that would look like now given you're effectively at 0 revenue.

Is $41 million still a good number? Or -- it seems like you've been able to kind of squeeze out more savings every quarter as you've -- we as we've pushed through this pandemic longer than we'd all hoped a year ago.

I would say, looking back since the beginning of the pandemic, looking at last summer, quarter number 3 and the fourth one, we're at around $50 million. This quarter, we're at around $40 million.

This amount comes from fixed costs and just consider the contraction of fixed cost, everything we could do. But also include some element of working capital, paying invoices to supplier, paying deferred amount that we have obtained over time.

Then it vary a little. But I think using the proxy of the $40 million to $50 million, we should not be very far from this at the end of the second quarter.

Will it be $50 million, $48 million, $53 million? But I expect we will be around this.

Okay. That's great color.

And then I'm not sure who -- I guess, just maybe this goes to Jean-Marc. I know you can't comment specifically on the EU process here.

But I guess to stop the clock has been a lot longer than I think any of us had anticipated. I'm not sure if you can provide any color in terms of what the EU was looking at or a sense of how far along they are in their due diligence process, if you're able to quantify that.

Just wondering if there's a way to kind of frame why they're taking as long as they are during the stop the clock process than maybe we would have thought a few months ago.

I am origin European. So I think it's because they're European, it takes time in Europe to do something, I suppose, different from America.

So that's why I moved from Europe to Canada. I suppose that's the reason.

I cannot talk about the European Commission. Excuse me, I make a joke.

It's a joke.

No, that's -- I get what you're saying. And then maybe, Denis, just a couple of housekeeping items in terms of how we should think about the second quarter here.

Your aircraft rents were 0 in the first quarter. Is that kind of what we should assume for the second quarter given the lack of flying, and I suspect some of the deferrals you have with your lessors?

And then I guess, maybe surprising to me, you didn't have any income tax recovery despite revenue being down so much. Just how should we think about that tax line in the second quarter here, which will be another challenging quarter for you?

Okay. To your first question for the rent, now with the implementation of IFRS, short-term lease are presented on the line rent and we do not have any more short-term lease.

That's the reason why you see 0. All of the commitment on aircraft or fleet, A321, A330, are now presented in -- from the balance sheet in -- like an asset and a liability.

And through the P&L, you'll see the expense in amortization and interest that we still have to face. And in the P&L, you still see amortization and interest.

On the balance sheet side, if we are successful in pushing to a later date some of the payment, the impact on the cash will appear there. But on the P&L, you will not see that because the expense is the expense.

As for tax, because of the huge losses made in 2020, conclusion was made that no -- we just could not account for the benefit of having income tax recoverable in the future. Obviously, it's there.

As soon as we become profitable again, we'll be able to apply those losses through profitability generated in the future, and we will not have to pay or to account for the -- anything for the income tax. But it's not recognized on the balance sheet and in the P&L because of the situation where we're in.

So can I just ask one clarification? You convert to IFRS 16 and like the fiscal 2020 results would have included IFRS 16.

Would they not have?

Having what, you said?

Like the IFRS 16 impact on your aircraft rent line or your -- actually, maybe I should just call it the rental line, that would have been in your last year's estimates as well, too. So -- and if I looked at like, for example, Q2 of 2020, for example, you were running $50 million, which was significantly below what you did in 2019 because of the conversion of IFRS.

Is that line number now 0 going forward? Like the -- like -- that there's no delayed payments there related to the impact of the pandemic?

Because I would have thought the $50 million in rental expenses you saw in the second quarter of fiscal 2020 would have already accounted for the IFRS 16. Just -- I can take this off-line if it's easier...

Yes, let's take it because -- offline because, as you remember, we apply, in fact, recently, the new IFRS rule. And we decided to adjust our numbers, our past numbers, in order to help for the comparison between quarters and between periods.

Now everything is -- for all leases, we apply the IFRS 16 rules because it all has to be done. And the only small amount that could have been there on the lease side was for the very short-term lease, and we don't carry any more than -- that's the reason why it's 0.

It's not [indiscernible] to compare. That's how it is, yes.

In comparison to prior period calls, I'm just wondering, looking at your comments today versus previously, I think on the December call, the Air Canada transaction was seemingly the only unfavorable option. And today, there were a number of comments speaking about plan B, referencing seeing a light at the end of the tunnel with or without Air Canada.

I'm just wondering if you could speak about the change in tone, if I'm reading correctly. Is it really due to the deadline having been passed and the ability of the 2 parties to walk away?

Is it because as vaccination ramps up, you're seeing a potential return in activity in the back half of the year? Or really, are you still -- Air Canada transaction is your favorable option, but you're just satisfying stakeholders as you discuss alternative options, Jean-Marc, as you just addressed?

Before that, last quarter, I was maybe not saying strong enough. But already, we don't know.

With the European Commission, waiting and asking questions and asking more questions and this and that, it takes so long time that at one point, 1 party or the 2 parties could say, listen, we will never go through that and we will do what we have to do. So today, both parties didn't decide -- did not decide to say, okay, thank you very much.

Good luck, my friend, do what you have to do. But it's something that can happen.

So that's why we were working -- we are working with the LEEFF program for a few months already. But now we go faster because we're saying to ourselves, we cannot continue to be in the nimble, you said in English to be one side, the other side, something can happen tomorrow.

So we want to be sure that we will be ready for anything that happened. And as you saw, a lot of people and some of our shareholders and some of our important shareholders said we hope that Transat's got a plan B.

For sure, we have always a plan B until the transaction is not finished and you didn't receive the check. And for me, even if you say the transaction is okay, but you don't receive the cash, it doesn't mean anything for me.

So at the end of the day, we said, okay, now we're going to be more clear with everybody saying that we have a plan B and a plan C and we're going to do what we have to do. That said, so it's clear.

So call the European Commission for me and tell them to go a little bit faster, I will be very happy. But anyways.

And so we will do what we have to do. So it's clear.

And Transat will be there stronger than ever because we have the right playing. The people of Transat, they love Transat.

Our customers love Transat, even if sometime when something happened in Ottawa, they hate us. But it's short term.

And at the end of the day, we will be there stronger than ever. Why?

We are used to have 4 types of planes. We're going to have 2 types of planes.

The same pilot can drive a plane of Airbus 321 or an Airbus 330, it's going to be the same pilot. On the other side, we all know all the markets, all the analysis, all the studies in the market are saying the first people that they come back to travel, number one, VFR; number two, tourism; number three, business people.

We are in the VFR market. It's our first market and tourism.

So Transat will have the first -- and we have the right type of product, the right type of plane. How are you going to work with plane -- the 777, 787, with class of -- business class of 80 seats.

There will be nobody in those planes. All the people will be in the back of the bus.

Transat got 12 big seats and the rest, it's normal seats for normal people. And we are in that business.

So we're ready, ready, ready to go as soon as something happens, but we will not wait another 6 months to be clear. If we have to take a decision at one point, we will take the decision.

So it's clear like that for us.

No, that's great. Your comments and explanation are very much appreciated and make sense.

I appreciate the color and the context. And just secondly, perhaps for Denis, you've had significant success at reducing the cost base, Denis.

You just spoke about a baseline level of burn, and you pulled multiple, multiple drivers to get to the position that you're in right now. I'm just wondering, once we start to see a pickup in activity, call it Q3, call it Q4, can we expect to see an immediate increase in OpEx right away?

I'm just wondering how operations in the P&L will look once we have this kind of new normal.

I think we could expect to have to invest some amount like in the restart of the operation. On the other hand, we should expect to have some outcome coming from the working capital because as you could appreciate, looking at our balance sheet, looking at our accounts payable are very, very low.

And normally, a company like us get some benefit or cash coming from the situation where we're getting the cash from customer before departure, paying the supplier after then. And I expect this portion to be a lot more important and positive than the investment to restart the business.

That cost of restarting the business will mainly be included on the P&L. But again, more than compensated on the balance sheet, on paying cash-wise by the benefit of recovering the attribute coming from the working capital.

And this is how we see it. We think that, to what Annick was saying earlier, the restart, we have assumed here that it will be progressive.

And we are adjusting our fleet in order to be able to manage that and the same for our employees then. We're just -- we're ready and we just want to restart the engine again.

I'm just wondering if you feel there's any chance that the travel restrictions to the Caribbean could actually -- or the lifting of those restrictions could actually be pulled forward at all depending on the trajectory of cases? And if that were to happen and thinking about your kind of mid-June restart plans, how able is the business to actually pull forward the start of operations if conditions justify it?

Well, at this point, what has been communicated is that the restrictions would remain until the end of April. This is what was requested from the different carriers in Canada.

We don't know if the restrictions of the borders will be lifted after that or if they will remain. So we plan to operate as of mid-June.

However, this could review depending on several factors on the restrictions, on the vaccination process as well as on the coordination between countries and how travel will be managed moving forward, establishing protocol and standards that will allow people to travel from one country to the other or from one zone to the other. So we're all waiting to better -- to receive more feedback on how this is going to work.

But in a nutshell, to quickly give you an answer, we are exactly doing what we've been doing over the last year. We plan different scenarios, we adapt.

We don't know if we're going to be able to operate. What's really important at this point is to be ready in an efficient manner to add or cut capacity in a short period of time.

One more question. Just thinking out over the time that this takes to recover, let's call it, 2 or 3 years, do you see any difference in terms of the proportion of capacity that may be used in the domestic market versus the international markets?

And I'm lumping U.S. and international together.

I mean, look back historically, you've been doing some connectivity domestically to help facilitate international travel. Just given that the domestic market probably is going to recover more quickly, do you anticipate a higher proportion of capacity relative to total capacity at Transat will be in the domestic market as the recovery kind of gathers momentum over, again, whatever time frame that might be 2 to 3 years?

Certainly, in the short term. Again, there's still a lot of uncertainty in the market.

We plan -- in terms of at high level, we plan a return of -- to the 2019 levels around 2024. Again, this is how we see it today.

It could change for -- if vaccination process picks up, if restrictions are removed. We know that leisure and VFR will be the first to travel.

And we know as well that the domestic market, followed by the U.S. transborder market, and then a short-haul market as well to international.

So we will -- our plan is designed -- our program is designed to be able to capture this demand in time, and this is why the domestic market and the transborder market in the short term will be one of our priorities. And as we move along, in the upcoming years, as I described earlier, our network has been fully redesigned to be able to get a better balance between long-haul and medium-haul routes to be able to increase aircraft utilization and reduce seasonality as well.

So this is something that we are tracking on a, I would say, on a daily basis, making sure that we adapt, that we capture what needs to be captured and be up in the air as soon as we can.

So thank you, everyone. There's no additional closing remarks.

So let me just remind you that our second quarter results will be released on June 11, 2021. Thank you, and have a great day.