☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware |
13-3697002 | |
(State of incorporation) |
(I.R.S. Employer Identification No.) | |
W6390 Challenger Drive, Suite 203 Appleton, |
54914-9120 | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
None |
None |
None |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
Page |
||||
1 | ||||
3 | ||||
3 | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
19 | ||||
27 | ||||
27 | ||||
29 | ||||
29 | ||||
29 | ||||
42 | ||||
43 | ||||
43 | ||||
43 | ||||
43 | ||||
44 |
• | the dependence of the business of our subsidiary, Air Wisconsin Airlines LLC (“Air Wisconsin”), on a capacity purchase agreement (the “United capacity purchase agreement”) with United Airlines, Inc. (“United”), given United is currently Air Wisconsin’s sole airline partner, particularly given the expiration of the United capacity purchase agreement by its terms in February 2023; |
• | the possibility that United does not agree to enter into a new capacity purchase agreement or to extend the current United capacity purchase agreement on commercially reasonable terms or at all, that the parties fail to resolve existing or future disagreements relating to the agreement, or that United elects to terminate the agreement prior to the expiration of the term as a result of the occurrence of a termination event specified in the agreement; |
• | the supply of qualified pilots and mechanics to the airline industry, attrition, and the costs associated with hiring and training qualified pilots and mechanics; |
• | the announcement by three major airlines, including United, that they intend to significantly reduce or discontinue the use of single class 50-seat aircraft, including the CRJ-200 regional jet comprising Air Wisconsin’s fleet, which may limit Air Wisconsin’s opportunities to enter into a new capacity purchase agreement with United and its ability to enter into substitute arrangements with another airline partner; |
• | the possibility that United could provide Air Wisconsin with inefficient flight schedules, or change the expected utilization of Air Wisconsin’s aircraft under the United capacity purchase agreement; |
• | the extent to which Air Wisconsin’s current growth opportunities and strategic operating plan are restricted based on factors impacting the airline industry; |
• | the amounts Air Wisconsin is paid or reimbursed under the United capacity purchase agreement may be less than the costs incurred, particularly as labor costs increase in response to qualified pilot and mechanic shortages; |
• | the significant portion of Air Wisconsin’s workforce that is represented by labor unions and the terms of its collective bargaining agreements; |
• | aircraft and engine maintenance costs; |
• | Air Wisconsin’s reliance on only one aircraft type, aircraft manufacturer and engine manufacturer, and the potential issuance of operating restrictions on this aircraft or engine type or occurrence of any aviation incident involving either this aircraft or engine type; |
• | Air Wisconsin’s ability to obtain additional financing may be limited; |
• | the impact of losing key personnel or inability to attract additional qualified personnel; |
• | the negative impact of information technology security breaches and other such infrastructure disruptions on Air Wisconsin’s operations; |
• | the duration and spread of the ongoing global COVID-19 pandemic and its variants, and the related impact on the business, results of operations, financial condition and liquidity of Air Wisconsin and United, in particular, and the airline industry in general; and |
• | the impact of the application of accounting guidance, including the requirement to defer a significant amount of revenue under the United capacity purchase agreement, on our financial condition and results of operations. |
March 31, 2022 |
December 31, 2021 |
|||||||
(unaudited) |
||||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 25,573 | $ | 37,170 | ||||
Restricted cash |
576 | 1,449 | ||||||
Marketable securities |
136,178 | 138,370 | ||||||
Accounts receivable, net |
15,680 | 7,422 | ||||||
Notes receivable |
51,078 | — | ||||||
Spare parts and supplies, net |
5,114 | 5,200 | ||||||
Contract costs |
499 | 518 | ||||||
Prepaid expenses and other |
1,834 | 4,174 | ||||||
Total Current Assets |
236,532 | 194,303 | ||||||
Property and Equipment |
||||||||
Flight property and equipment |
260,926 | 259,720 | ||||||
Ground property and equipment |
8,221 | 8,252 | ||||||
Less accumulated depreciation and amortization |
(150,109 | ) | (143,313 | ) | ||||
Net Property and Equipment |
119,038 | 124,659 | ||||||
Other Assets |
||||||||
Operating lease right-of-use |
17,328 | 18,679 | ||||||
Intangibles |
5,300 | 5,300 | ||||||
Long-term deferred tax asset |
616 | 533 | ||||||
Long-term investments |
4,275 | 4,275 | ||||||
Long-term contract costs |
— | 96 | ||||||
Long-term notes receivable |
— | 47,568 | ||||||
Other |
1,805 | 3,988 | ||||||
Total Other Assets |
29,324 | 80,439 | ||||||
Total Assets |
384,894 | $ | 399,401 | |||||
Liabilities and Stockholders’ Equity |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ | 15,797 | $ | 20,060 | ||||
Accrued payroll and employee benefits |
12,484 | 14,885 | ||||||
Current portion of operating lease liability |
5,180 | 5,150 | ||||||
Other accrued expenses |
228 | 172 | ||||||
Contract liabilities |
6,917 | 8,098 | ||||||
Deferred revenue |
40,102 | 35,792 | ||||||
Income taxes payable |
751 | — | ||||||
Current portion of long-term debt (stated principal amount of $3,500 at March 31, 2022 and December 31, 2021) |
5,845 | 5,880 | ||||||
Total Current Liabilities |
87,304 | 90,037 | ||||||
Other Long-Term Liabilities |
||||||||
Long-term debt (stated principal amount of $56,000 at March 31, 2022 and December 31, 2021) |
61,110 | 61,670 | ||||||
Long-term promissory note |
4,275 | 4,275 | ||||||
Deferred tax liability |
653 | 688 | ||||||
Long-term operating lease liability |
9,515 | 10,877 | ||||||
Long-term contract liabilities |
— | 1,326 | ||||||
Deferred revenue, net of current portion |
— | 9,046 | ||||||
Other |
2,663 | 2,722 | ||||||
Total Long-Term Liabilities |
78,216 | 90,604 | ||||||
Total Liabilities |
165,520 | 180,641 | ||||||
Commitments and Contingencies (Note 8) |
||||||||
Mezzanine Equity (Note 10) |
||||||||
Series C Convertible Redeemable Preferred Stock, $0.01 par value, 4,000,000 shares authorized, issued and outstanding at March 31, 2022 and December 31, 2021 |
13,200 | 13,200 | ||||||
Stockholders’ Equity |
||||||||
Common Stock, $0.01 par value, 100,000,000 shares authorized, 55,481,140 shares issued at March 31, 2022 and December 31, 2021, 47,053,806 shares outstanding at March 31, 2022 and 53,316,299 shares outstanding at December 31, 2021 |
555 | 555 | ||||||
Additional paid-in capital |
286,262 | 287,429 | ||||||
Retained deficit |
(69,881 | ) | (79,144 | ) | ||||
Treasury stock |
(10,762 | ) | (3,280 | ) | ||||
Total Stockholders’ Equity |
206,174 | 205,560 | ||||||
Total Liabilities and Stockholders’ Equity |
$ | 384,894 | $ | 399,401 | ||||
Three Months Ended March 31, |
||||||||
2022 |
2021 | |||||||
(unaudited) |
||||||||
Operating Revenues |
||||||||
Contract revenues |
$ | 66,968 | $ | 49,756 | ||||
Contract services and other |
7 | 18 | ||||||
Total Operating Revenues |
66,975 | 49,774 | ||||||
Operating Expenses |
||||||||
Payroll and related costs |
26,601 | 22,751 | ||||||
Aircraft fuel and oil |
51 | 13 | ||||||
Aircraft maintenance, materials and repairs |
14,501 | 11,072 | ||||||
Aircraft rent |
— | 23 | ||||||
Other rents |
1,613 | 922 | ||||||
Depreciation, amortization and obsolescence |
6,644 | 6,500 | ||||||
Payroll Support Program |
— | (27,914 | ) | |||||
Purchased services and other |
3,765 | 3,150 | ||||||
Total Operating Expenses |
53,175 | 16,517 | ||||||
Income From Operations |
13,800 | 33,257 | ||||||
Other (Expense) Income |
||||||||
Interest income |
574 | 370 | ||||||
Interest expense |
— | (362 | ) | |||||
Loss on marketable securities |
(2,423 | ) | (57 | ) | ||||
Other, net |
210 | — | ||||||
Total Other (Expense) Income |
(1,639 | ) | (49 | ) | ||||
Net Income Before Taxes |
12,161 | 33,208 | ||||||
Income Tax Expense |
2,898 | 7,983 | ||||||
Net Income |
$ | 9,263 | $ | 25,225 | ||||
Preferred stock dividends |
198 | 198 | ||||||
Net income available to common stockholders |
$ | 9,065 | 25,027 | |||||
Basic Earnings per share |
$ | 0.19 | $ | 0.46 | ||||
Diluted Earnings per share |
$ | 0.14 | $ | 0.35 | ||||
Weighted Average Common Shares: |
||||||||
Basic |
47,638 | 54,863 | ||||||
Diluted |
64 535 | 71,662 |
Mezzanine Equity - Series C Convertible Redeemable Preferred Stock |
Common Stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Treasury Stock |
Amount | Additional Paid-In Capital |
Retained Deficit |
Cost of Treasury Stock |
Total Stockholders’ Equity |
||||||||||||||||||||||||||||
Balance, December 31, 2021 |
4,000 | $ | 13,200 | 53,316 | 2,165 | $ | 555 | $ | 287,429 | $ | (79,144 | ) | $ | (3,280 | ) | $ | 205,560 | |||||||||||||||||||
Net income |
— | — | — | — | — | — | 9,263 | — | 9,263 | |||||||||||||||||||||||||||
Dividends |
— | — | — | — | — | (198 | ) | — | — | (198 | ) | |||||||||||||||||||||||||
Cancellation of stock option |
— | — | — | — | — | (969 | ) | — | — | (969 | ) | |||||||||||||||||||||||||
Treasury stock purchases |
— | — | (6,262 | ) | 6,262 | — | — | — | (7,482 | ) | (7,482 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance, March 31, 2022 (unaudited) |
4,000 | $ | 13,200 | 47,054 | 8,427 | $ | 555 | $ | 286,262 | $ | (69,881 | ) | $ | (10,762 | ) | $ | 206,174 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine Equity - Series C Convertible Redeemable Preferred Stock |
Common Stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Treasury Stock |
Amount | Additional Paid-In Capital |
Retained Deficit |
Cost of Treasury Stock |
Total Stockholders’ Equity |
||||||||||||||||||||||||||||
Balance, December 31, 2020 |
4,000 | $ | 13,200 | 54,863 | 618 | $ | 555 | $ | 288,221 | $ | (171,770 | ) | $ | (481 | ) | $ | 116,525 | |||||||||||||||||||
Net income |
— | — | — | — | — | — | 25,225 | — | 25,225 | |||||||||||||||||||||||||||
Dividends |
— | — | — | — | — | (198 | ) | — | — | (198 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance, March 31, 2021 (unaudited) |
4,000 | $ | 13,200 | 54,863 | 618 | $ | 555 | $ | 288,023 | $ | (146,545 | ) | $ | (481 | ) | $ | 141,552 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 | |||||||
(unaudited) |
||||||||
Cash Flows From Operating Activities |
||||||||
Net income |
$ | 9,263 | $ | 25,225 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||
Depreciation, amortization and obsolescence allowance |
6,644 | 6,500 | ||||||
Amortization of contract costs |
(1,066 | ) | (661 | ) | ||||
Amortization of engine overhauls |
616 | 298 | ||||||
Deferred income taxes |
(118 | ) | 163 | |||||
(Gain) loss on disposition of property and equipment |
(2 | ) | 49 | |||||
Loss on marketable securities |
2,423 | 57 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(8,258 | ) | (14,193 | ) | ||||
Notes receivable |
(3,510 | ) | (7,235 | ) | ||||
Federal tax receivable |
— | (3,026 | ) | |||||
Spare parts and supplies |
(229 | ) | 211 | |||||
Prepaid expenses and other |
4,523 | (1,256 | ) | |||||
Operating lease right-of-use |
19 | 96 | ||||||
Accounts payable |
(4,263 | ) | 609 | |||||
Accrued payroll and employee benefits |
(2,401 | ) | (510 | ) | ||||
Other accrued expenses |
56 | 33 | ||||||
Long-term deferred revenue |
(9,046 | ) | 355 | |||||
Contract liabilities |
(1,441 | ) | (312 | ) | ||||
Deferred revenue |
4,310 | 7,556 | ||||||
Income taxes payable |
751 | 763 | ||||||
Other long-term liabilities |
(59 | ) | 24 | |||||
Net Cash (Used in) Provided by Operating Activities |
(1,788 | ) | 14,746 | |||||
Cash Flows From Investing Activities |
||||||||
Additions to property and equipment |
(1,210 | ) | (163 | ) | ||||
Proceeds on disposition of property and equipment |
3 | 4 | ||||||
Purchase of marketable securities |
(231 | ) | (20,000 | ) | ||||
Net Cash Used in Investing Activities |
(1,438 | ) | (20,159 | ) | ||||
Cash Flows From Financing Activities |
||||||||
Repayments of long-term debt |
(595 | ) | (700 | ) | ||||
Dividends paid |
(198 | ) | (198 | ) | ||||
Cancellation of stock option |
(969 | ) | — | |||||
Repurchased stock |
(7,482 | ) | — | |||||
Net Cash Used in Financing Activities |
(9,244 | ) | (898 | ) | ||||
Decrease in Cash, Cash Equivalents and Restricted Cash |
(12,470 | ) | (6,311 | ) | ||||
Cash, Cash Equivalents and Restricted Cash, beginning of period |
38,619 | 131,193 | ||||||
Cash, Cash Equivalents and Restricted Cash, end of period |
$ | 26,149 | $ | 124,882 | ||||
Net losses recognized during the three months ended March 31, 2022 on equity securities |
$ | (2,423 | ) | |
Less: Net gains and losses recognized during the period on equity securities sold during the three months ended March 31, 2022 |
— | |||
Unrealized losses recognized during the reporting period on equity securities still held at March 31, 2022 |
$ | (2,423 | ) | |
Net losses recognized during the three months ended March 31, 2021 on equity securities |
$ | (57 | ) | |
Less: Net gains and losses recognized during the period on equity securities sold during the three months ended March 31, 2021 |
— | |||
Unrealized losses recognized during the reporting period on equity securities still held at March 31, 2021 |
$ | (57 | ) | |
Assets | Depreciable Life | Current Residual Value | ||||
Aircraft |
7 years | $ | 50 | |||
Rotable parts |
7 years | 10 | % | |||
Spare engines |
7 years | $ | 25 | |||
Ground equipment |
up to 10 years | 0 | % | |||
Office equipment |
up to 10 years | 0 | % | |||
Leasehold improvements |
Shorter of asset or lease life | 0 | % |
March 31, 2022 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Marketable securities – exchange-traded funds |
$ | 111,851 | $ | 111,851 | $ | — | $ | — | ||||||||
Marketable securities – mutual funds |
24,327 | 24,327 | — | — | ||||||||||||
Long-term investments – bonds (see Note 6) |
4,275 | — | 4,275 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 140,453 | $ | 136,178 | $ | 4,275 | $ | — | ||||||||
|
|
|
|
|
|
|
|
March 31, 2021 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Marketable securities – exchange-traded funds |
$ | 19,943 | $ | 19,943 | $ | — | $ | — | ||||||||
Long-term investments – bonds (see Note 6) |
4,275 | — | 4,275 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 24,218 | $ | 19,943 | $ | 4,275 | $ | — | ||||||||
|
|
|
|
|
|
|
|
March 31, 2022 |
December 31, 2021 |
|||||||
Notes, due December 31, 2025 (4.0%) |
$ | 66,955 | $ | 67,550 | ||||
Less: current maturities |
5,845 | 5,880 | ||||||
Total Long-Term Debt |
$ | 61,110 | $ | 61,670 | ||||
Fiscal Year |
Amount |
|||
April 2022 through December 2022 |
$ | 5,285 | ||
2023 |
9,170 | |||
2024 |
8,890 | |||
2025 |
43,610 | |||
Total |
$ | 66,955 | ||
Weighted-average remaining lease term |
3.47 years | |||
Weighted-average discount rate |
5.41% |
Three Months Ended March 31, |
||||||||
2022 |
2021 | |||||||
Operating lease costs |
$ | 1,474 | $ | 766 | ||||
Short-term lease costs |
104 | 146 | ||||||
Variable lease costs |
35 | 33 | ||||||
Total Lease Costs |
$ | 1,613 | $ | 945 | ||||
Fiscal Year |
Amount |
|||
April 2022 through December 2022 |
$ | 4,558 | ||
2023 |
5,832 | |||
2024 |
3,356 | |||
2025 |
2,645 | |||
2026 |
147 | |||
Thereafter |
511 | |||
Total lease payments |
17,049 | |||
Less imputed interest |
(2,354 | ) | ||
Total Lease Liabilities |
$ | 14,695 | ||
Total |
April through December 2022 |
2023 |
2024 |
2025 |
2026 |
Thereafter |
||||||||||||||||||||||
Aircraft Notes Principal |
$ | 59,500 | $ | 3,500 | $ | 7,000 | $ | 7,000 | $ | 42,000 | $ | — | $ | — | ||||||||||||||
Aircraft Notes Interest |
7,455 | 1,785 | 2,170 | 1,890 | 1,610 | — | — | |||||||||||||||||||||
Operating Lease Obligations |
17,049 | 4,558 | 5,832 | 3,356 | 2,645 | 147 | 511 | |||||||||||||||||||||
Total |
$ | 84,004 | $ | 9,843 | $ | 15,002 | $ | 12,246 | $ | 46,255 | $ | 147 | $ | 511 | ||||||||||||||
Three Months Ended March 31, |
||||||||
2022 |
2021 | |||||||
Net income |
$ | 9,263 | $ | 25,225 | ||||
Preferred stock dividends |
198 | 198 | ||||||
Net income applicable to common stockholders |
9,065 | 25,027 | ||||||
Weighted average common shares outstanding |
||||||||
Shares used in calculating basic earnings per share |
47,638 | 54,863 | ||||||
Stock option |
397 | 299 | ||||||
Series C Preferred |
16,500 | 16,500 | ||||||
Shares used in calculating diluted earnings per share |
64,535 | 71,662 | ||||||
Earnings allocated to common stockholders per common share |
||||||||
Basic |
$ | 0.19 | $ | 0.46 | ||||
Diluted |
$ | 0.14 | $ | 0.35 |
March 31, 2022 |
December 31, 2021 | |||||||
Gross Carrying Amount |
Gross Carrying Amount | |||||||
Trade names and air carrier certificate |
5,300 | 5,300 | ||||||
Total |
$ | 5,300 | $ | 5,300 | ||||
• | In April 2022, Air Wisconsin and United entered into a third amendment to the United capacity purchase agreement which addressed the date by which United must provide a wind-down schedule for the period following the expiration of the term of the agreement. |
• | enhance Air Wisconsin’s aircraft cleaning and sanitation procedures; |
• | provide gloves, masks, and other personal protective equipment for crew members; |
• | provide options to Air Wisconsin’s employees who are diagnosed with COVID-19, including pay protection and extended leave options; |
• | provide financial incentive to employees to encourage vaccination and booster shots; |
• | implement workforce social distancing, mask requirements and other protection measures, and enhanced cleaning of our facilities; and |
• | provide regular, ongoing communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures. |
Three Months Ended March 31, |
||||||||||||||||
2022 |
2021 | Change |
||||||||||||||
Operating Data: |
||||||||||||||||
Available Seat Miles (ASMs) (in thousands) |
321,822 | 205,738 | 116,084 | 56.4 | % | |||||||||||
Actual Block Hours |
28,534 | 19,600 | 8,934 | 45.6 | % | |||||||||||
Actual Departures |
18,508 | 13,861 | 4,647 | 33.5 | % | |||||||||||
Revenue Passenger Miles (RPMs) (in thousands) |
247,653 | 126,358 | 121,295 | 96.0 | % | |||||||||||
Average Stage Length (in miles) |
357 | 308 | 49 | 15.9 | % | |||||||||||
Contract Revenue Per Available Seat Mile (CRASM) (in cents) |
20.81 | ¢ | 24.18 | ¢ | (3.37 | )¢ | (13.9 | )% | ||||||||
Passengers |
691,324 | 400,617 | 290,707 | 72.6 | % |
Three Months Ended March 31, |
||||||||||||||||
2022 |
2021 | Change |
||||||||||||||
Operating Revenues ($ in thousands): |
||||||||||||||||
Contract Revenues |
$ | 66,968 | $ | 49,756 | $ | 17,212 | 34.6 | % | ||||||||
Contract Services and Other |
7 | 18 | (11 | ) | (61.1 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Operating Revenues |
$ | 66,975 | $ | 49,774 | $ | 17,201 | 34.6 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||||||||||
2022 |
2021 | Change |
||||||||||||||
Operating Expenses ($ in thousands): |
||||||||||||||||
Payroll and Related Costs |
$ | 26,601 | $ | 22,751 | $ | 3,850 | 16.9 | % | ||||||||
Aircraft Fuel and Oil |
51 | 13 | 38 | 292.3 | % | |||||||||||
Aircraft Maintenance, Materials and Repairs |
14,501 | 11,072 | 3,429 | 31.0 | % | |||||||||||
Aircraft Rent |
— | 23 | (23 | ) | (100.0 | )% | ||||||||||
Other Rents |
1,613 | 922 | 691 | 74.9 | % | |||||||||||
Depreciation, Amortization and Obsolescence |
6,644 | 6,500 | 144 | 2.2 | % | |||||||||||
Payroll Support Program |
— | (27,914 | ) | 27,914 | 100.0 | % | ||||||||||
Purchased Services and Other |
3,765 | 3,150 | 615 | 19.5 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Operating Expenses |
$ | 53,175 | $ | 16,517 | $ | 36,658 | 221.9 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||||||||||
2022 |
2021 | Change |
||||||||||||||
Net cash (used in) provided by operating activities |
$ | (1,788 | ) | $ | 14,746 | $ | (16,534 | ) | (112.1 | )% | ||||||
Net cash used in investing activities |
(1,438 | ) | (20,159 | ) | 18,721 | (92.9 | )% | |||||||||
Net cash used in financing activities |
(9,244 | ) | (898 | ) | (8,346 | ) | 929.4 | % |
Total |
April through December 2022 |
2023 |
2024 |
2025 |
2026 |
Thereafter |
||||||||||||||||||||||
Aircraft Notes Principal |
$ | 59,500 | $ | 3,500 | $ | 7,000 | $ | 7,000 | $ | 42,000 | $ | — | $ | — | ||||||||||||||
Aircraft Notes Interest |
7,455 | 1,785 | 2,170 | 1,890 | 1,610 | — | — | |||||||||||||||||||||
Operating Lease Obligations |
17,049 | 4,558 | 5,832 | 3,356 | 2,645 | 147 | 511 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 84,004 | $ | 9,843 | $ | 15,002 | $ | 12,246 | $ | 46,255 | $ | 147 | $ | 511 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• | the acute on-going shortage of qualified pilots and mechanics, and the increasing pressures to significantly increase wages; |
• | actual or potential changes in political conditions, including wars, outbreak of hostilities, terrorism, or government sanctions; |
• | changes in demand for airline travel or tourism, in consumer preferences, or demographic trends; |
• | changes in the competitive environment due to pricing, industry consolidation, or other factors; |
• | labor disputes, strikes, work stoppages, or similar matters impacting employees; and |
• | actual or potential changes in economic conditions, including rising fuel and other commodity prices, currency exchange rate fluctuations, increasing interest rates, inflation and changes in discretionary spending and consumer confidence. |
• | at least 75% of Air Wisconsin’s voting equity securities must be owned and controlled, directly and indirectly, by persons or entities who are citizens of the United States; |
• | at least 51% of Air Wisconsin’s total outstanding equity securities must be owned and controlled by U.S. citizens and no more than 49% of Air Wisconsin’s equity securities may be held, directly or indirectly, by persons or entities who are not U.S. citizens and are from countries that have entered into “open skies” air transport agreements with the U.S. which allow unrestricted access on air service routes between the United States and the applicable foreign country and to points beyond the foreign country on flights serving the foreign country; and |
• | citizens of foreign countries that have not entered into “open skies” air transport agreements with the U.S. may hold no more than 25% of Air Wisconsin’s total outstanding equity securities. |
• | the possibility that United will not agree to extend the United capacity purchase agreement or enter into a new agreement on commercially reasonable terms or at all, or that United elects to terminate the United capacity purchase agreement prior to the expiration of the term as a result of the occurrence of a termination event specified in the agreement; |
• | market perceptions and speculation as to the future terms of any capacity purchase agreement we may enter into with United or any other airline partner; |
• | the industry-wide pilot and mechanic shortages; |
• | future announcements regarding fleet strategy changes by major air carriers, including regarding any decision to reduce or eliminate single class 50-seat aircraft; |
• | the impact of the COVID-19 pandemic or other pandemics and widespread outbreaks of communicable diseases on passenger demand for air travel, consumer behavior and tourism; |
• | actual or anticipated fluctuations in our financial and operating results from period to period; |
• | the repayment, restructuring or refinancing of Air Wisconsin’s debt obligations and our actual or perceived need for additional capital; |
• | market perceptions about our financial stability and the financial stability of Air Wisconsin’s business partners; |
• | market perceptions regarding Air Wisconsin’s operating performance, reliability and customer service, and the operating performance, reliability and customer service of its business partners and competitors; |
• | factors and perceptions impacting the airline industry generally, including future passenger demand for air travel; |
• | announcements of significant contracts, acquisitions or divestitures by us or Air Wisconsin’s competitors, including any new or amended capacity purchase agreement with United or another airline partner; |
• | bankruptcies or other financial issues impacting Air Wisconsin’s business partners or competitors; |
• | threatened or actual litigation and government investigations; |
• | changes in the regulatory environment impacting Air Wisconsin’s business and industry; |
• | purchases or sales of shares of the Company’s common stock pursuant to the Company’s publicly announced stock repurchase program or otherwise; |
• | the illiquidity of the Company’s common stock; |
• | speculative trading practices of the Company’s stockholders and other market participants; |
• | perceptions about securities that are traded on the OTC Market; |
• | the impact of the application of accounting guidance; |
• | actual or potential changes in political conditions, including wars, outbreak of hostilities, terrorism, or government sanctions; and |
• | actual or potential changes in economic conditions, including rising fuel and other commodity prices, currency exchange rate fluctuations, increasing interest rates, inflation, and changes in discretionary spending and consumer confidence. |
• | prohibit the transfer of any shares of the Company’s capital stock that would result in (i) any person or entity becoming a “Five-Percent Stockholder” (as defined under Treasury Regulation Section 1.382-T(g)) of the Company’s then- outstanding capital stock, or (ii) an increase in the percentage ownership of any person or entity who is already a “Five-Percent Stockholder” of the Company’s then-outstanding capital stock; |
• | authorize the board of directors, without stockholder approval, to authorize and issue preferred stock with powers, preferences and rights that may be senior to the Company’s common stock, that could dilute the interest of, or impair the voting power of, holders of the Company’s common stock and could also have the effect of discouraging, delaying or preventing a change of control; |
• | establish advance notice procedures that stockholders must comply with in order to nominate candidates to the board of directors and propose matters to be brought before an annual or special meeting of the Company’s stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company; |
• | give the board of directors exclusive authority to set the number of directors and increase or decrease the number of directors by one or more resolutions, which may prevent stockholders from being able to fill vacancies on the board of directors; |
• | authorize a majority of the board of directors to appoint a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which may prevent stockholders from being able to fill vacancies on the board of directors; and |
• | restrict the ability of stockholders to call special meetings of stockholders. |
Total number of shares purchased (1) |
Average price paid per share |
Dollar value of shares repurchased |
Approximate dollar value of shares remaining available under stock repurchase program |
|||||||||||||
January 1 – January 31, 2022 |
5,736,920 | $ | 1.10 | $ | 6,314,627 | $ | 103,467 | |||||||||
February 1 – February 28, 2022 |
248,648 | $ | 2.22 | $ | 551,676 | $ | 551,791 | |||||||||
March 1 – March 31, 2022 |
276,925 | $ | 2.22 | $ | 614,928 | $ | 936,863 | |||||||||
Total |
6,262,493 | $ | 1.19 | $ | 7,481,231 | $ | 936,863 |
(1) |
All of the reported shares were repurchased pursuant to the Company’s publicly announced stock repurchase program. In addition, with the exception of the 5,437,500 purchased from stockholders as described above, all of the reported shares were purchased pursuant to a trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act and in compliance with Rule 10b-18 under the Exchange Act. |
Incorporated by Reference |
||||||||||||||||||||||
Exhibit Number |
Exhibit Description |
Form |
File No. |
Exhibit |
Filing Date |
Provided Herewith |
||||||||||||||||
31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||||||||
31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||||||||
32.1** | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||||||||
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | X | ||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | X | ||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in any such filing. |
HARBOR DIVERSIFIED, INC. | ||||||
Date: May 9, 2022 | By: | /s/ Christine R. Deister | ||||
Christine R. Deister | ||||||
Chief Executive Officer and Secretary | ||||||
Harbor Diversified, Inc. | ||||||
(Principal Executive Officer) | ||||||
Date: May 9, 2022 | By: | /s/ Liam Mackay | ||||
Liam Mackay | ||||||
Chief Financial Officer Air Wisconsin Airlines LLC | ||||||
(Principal Financial Officer) | ||||||
Date: May 9, 2022 | By: | /s/ Gregg Garvey | ||||
Gregg Garvey | ||||||
Senior Vice President, Chief Accounting Officer and Treasurer | ||||||
Air Wisconsin Airlines LLC | ||||||
(Principal Accounting Officer) |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christine R. Deister, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Harbor Diversified, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 9, 2022 | By: | /s/ Christine R. Deister | ||||
Christine R. Deister | ||||||
Chief Executive Officer and Secretary | ||||||
Harbor Diversified, Inc. | ||||||
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Liam Mackay, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Harbor Diversified, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 9, 2022 | By: | /s/ Liam Mackay | ||||
Liam Mackay | ||||||
Chief Financial Officer | ||||||
Air Wisconsin Airlines LLC | ||||||
(Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The following certifications are hereby made in connection with the Quarterly Report on Form 10-Q of Harbor Diversified, Inc. (the Company) for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the Report):
I, Christine R. Deister, Principal Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, (i) the Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented.
Date: May 9, 2022 | By: | /s/ Christine R. Deister | ||||
Christine R. Deister | ||||||
Chief Executive Officer and Secretary | ||||||
Harbor Diversified, Inc. | ||||||
(Principal Executive Officer) |
I, Liam Mackay, Principal Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, (i) the Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented.
Date: May 9, 2022 | By: | /s/ Liam Mackay | ||||
Liam Mackay | ||||||
Chief Financial Officer | ||||||
Air Wisconsin Airlines LLC | ||||||
(Principal Financial Officer) |
The preceding certifications accompany the Report pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the Companys filings under the Securities Act or the Exchange Act, whether made before or after the date of the Report, irrespective of any general incorporation language contained in any such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.