Good morning, and welcome to the Blade Urban Air Mobility Inc. Fiscal Second Quarter 2022 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Mr. Ravi Jani, Vice President of Investor Relations. Please go ahead.

Thanks, and good morning. Thank you for standing by, and welcome to the Blade Air Mobility Conference Call and Webcast for the quarter ended June 30, 2022. We appreciate everyone joining us today. Before we get started, I would like to remind you of the company's forward-looking statement and safe harbor language. Statements made in this conference call that are not historical facts, including statements about future time periods may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual future results may differ materially from those expressed or implied by the forward-looking statements. We refer you to our SEC filings, including our annual report on Form 10-K filed with the SEC for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are made only as of the date of this call. As stated in our SEC filings, Blade disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. During today's call, we will also discuss non-GAAP financial measures, which we believe may be useful in evaluating our financial performance. Reconciliation of the most directly comparable GAAP financial measures to these non-GAAP financial measures is provided in our earnings press release, which will also be available on our website. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Hosting today's call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade; Melissa Tomkiel, President; and Will Heyburn, Chief Financial Officer. I will now turn the call over to Rob Wiesenthal, Rob?

Thank you, Ravi. Good morning, everyone. I'd like to thank you for your interest in blade and welcome you to our earnings call for the second quarter ended June 30, 2022. I'll start with a few highlights from the quarter. Our financial performance in the second quarter was once again well ahead of our expectations. Revenue in the June quarter increased 175% to $35.6 million versus $13 million in the 2021 comparable period, contributing to a record quarter for both revenue and flight profit on establishing total revenue of $62.3 million for the first half of this year. We are seeing great performance across the broad portfolio of diverse aviation businesses that we have built and acquired since our inception. On a pro forma basis, assuming we had owned Trinity Air Medical and Helijet's scheduled passenger business in the prior year period, organic revenue growth would have been 87%. As you can tell from this figure, the benefits of the Blade platform are paying dividends across our divisions, both old and new. This is a testament to our ability to aggressively and efficiently integrate our acquisition. At Blade, M&A is a core competency. Let me walk through a few highlights in the quarter. In our MediMobility organ transplant business, we're making great progress in terms of new client acquisition and are now serving 59 transplant centers and Organ procurement organizations. We remain the largest dedicated air transporter of human organs for transplant in the United States. By leveraging the combined buying power of the entire Blade customer base, both consumer and medical, we provide better pricing and reliability for hospitals in a way that few others can. Expect us to continue rolling out our great service and capabilities to even more clients in the coming months. We have also made…

Thanks, Rob. We have made incredible progress on our strategic initiatives this quarter. We are targetting a late summer close for our Blade Europe transaction. where we will acquire the asset-light charter and scheduled air mobility businesses of Monacair,Héli Sécurité and Azur Hélicoptère. Together, in 2019, these businesses generated an aggregate of approximately EUR 30 million in revenue, while servicing approximately 125,000 flyers. All 3 businesses are performing well with pre-close and we're pleased to report that 2022 revenue is tracking ahead of 2019 year-to-date. We've already begun to introduce our existing customer base to the south of France Monaco by offering seats and charters to and from key events, including the Monaco Grand Prix and the festival, demonstrating the significant crossover demand from our new leisure flyers. Our new Urban Air Mobility alliance with JetBlue launched in June. Under the partnership, JetBlue will purchase 4 Blade airport transfers per year for its top-tier Mosaic+ loyalty program members, while all TrueBlue members will receive first-time flyer pricing benefits from Blade. We expect this partnership to improve utilization in our airport business and provide a fantastic experience for JetBlue's loyal flyers. All of our strategic and financial accomplishments served to build an even bigger launch pad for future electric vertical aircraft, EVA or eVTOL industry parlance, whether it's a last mile connection to bring a donor heart to a hospital helipad or $200 seat between eastern Monaco, Blade is aggregating the largest and most profitable existing use cases for electric flight, and we believe we are better positioned than anyone in the world to reach the expected benefits of future quiet, emission-free and lower-cost EVA. To that end, Blade has been planning an EVA test flight in order to demonstrate the unique capabilities of these aircraft to the communities we serve. Today, we are pleased to announce that Blade will be conducting that test light during the fourth quarter using Beta's Alia aircraft in the greater New York City area. With that, I'll turn the call over to Will.

Thank you, Melissa. I'll start with some quick housekeeping. As you may have noticed from our press release this morning, we have realigned our disaggregation of revenue in order to provide analysts and investors better visibility into our growing MediMobility organ transportation business. which is now broken out as its own revenue category. We have provided a schedule of historical quarters in both the current and prior format in our press release to assist you with your models. With that, I'll walk through a few highlights from the quarter. In short distance, revenues were up 89% to $11 million in the June 2022 quarter versus $5.8 million in the comparable 2021 period. Growth was driven by our acquisition of Helijet's passenger routes in Vancouver, increased corporate and leisure flight volumes, the resumption of our blade airport service and price increases. On a pro forma basis, assuming we had owned Helijet's passenger business in the prior year yet, organic revenue growth would have been 77%. In Airport, we saw significant sequential passenger growth in Q2 of approximately 50% versus Q1 with a larger increase in revenue given higher yields on a per seat basis. We've continued to see passenger volume around the 25,000 flyer annualized run rate that we highlighted on our last call in May. Part of the reason for this is intentional as we made the decision to allocate excess peak hour capacity to profitable seasonal short distance routes. We recently added additional capacity dedicated to airport routes, which we expect to support future growth. Turning to MediMobility organ transport. Revenue increased 1,013% to $17.2 million in the June 2022 quarter versus $1.6 million in the comparable 2021 period. Growth was driven by our acquisition of Trinity Air Medical, the addition of new hospital clients and significant growth within…

Thank you, Will. Given our formidable organic growth prospects as well as our strong balance sheet, Blade maintains an unmatched competitive posture. As we've demonstrated over the past year with our acquisitions of Trinity and Helijet, M&A is a unique component of our shareholder value creation model. We will continue to pursue both on acquisitions of profitable companies where we can leverage our global platform and where we see strong opportunities to generate attractive returns for our shareholders. At the same time, we remain focused on both growing and maximizing the profitability of our existing businesses. Our area airport transfer service alone has an annual addressable market of over 27 million flyers. In short, we have strategically built a flexible and diversified aviation business serving resilient end markets with significant growth prospects, irrespective of shifts in the economic environment. With that, I'll turn it over to Ravi for questions.

Thanks, Rob. As a reminder, we will take questions from analysts and investors on this call today. Reporters should send inquiries to me directly. Operator, we're now ready for questions.

[Operator Instructions]. The first question comes from the line of Hillary Cacanando from Deutsche Bank.

Great quarter. It sounds like demand is very strong across all segments. In the Blade Airport segment, could you just talk about just like the corporate travelers, are you seeing a change in the way they travel? And I guess what are you expecting for corporate travel in the third quarter?

It's Rob Wiesenthal speaking. I think we've been pleasantly surprised with a 57% business versus 43% leisure based on our own surveys. The bulk of the action is clearly the JFK. I think a number of the airlines have had some issues at Airport. And I think that we're seeing, especially the smaller companies and senior executives going back on the road again, to differentiate themselves versus their peers to also even visit offices that are sometimes remote to gather everybody who was remote into regional offices. So business travel from our perspective is definitely an important part of this product, and we see nothing kind of in the current quarter that I would think that make us think that, that would not continue.

We're also seeing good results in terms of the per CEO. In Q1, we were around the $200 level. And currently, we're seeing around $225 with our dynamic pricing. So that's also really encouraging in terms of an average price, yes.

Okay, that's great. That's great to know. And then obviously, you mentioned M&A core competency and your European deal is going to close late summer. So what could we expect in terms of like the M&A I guess, like the number of M&As and the frequency of M&A transactions. Could we expect another one maybe late this year? Or should we expect 1 per year? How should we think about that?

We really don't put it in terms of targets, in terms of number of deals and we're really being opportunistic. Where we are right now is we've basically aggregated what we believe are the -- which are the largest markets in the world, the Northeast corridor, Western Canada, Southern Europe in terms of Monaco and the south of France, and we also have a joint venture in India. There are a bunch of other markets that we've targeted. And essentially, what we do is we do a very strong -- a very comprehensive and in-depth analysis as to whether or not build versus buy because there's an investment either way. You can buy the passenger part of a company in their customer list and that brand and those routes and you reduce your risk and you're paying upfront and you can be pretty close to immediately profitable or you can invest in a route, build utilization, take early ramp-up losses and do it that way. And as -- and to a certain extent, the M&A is many times less risky if you have an incumbent like many of the companies that we bought have been there some for 30 years, 50 years or more with huge customer list, very valuable. And also where this cross-fertilization between, say, the U.S. flyer and the European flyer or the Canadian flyer. So I would expect more M&A. It is a core competency, and we'll stick with what we've done in the past, which are very new routes that really offer a reduction in friction in people's travel, infrastructure whereby we can service more places, -- those are really, I would say, kind of the 2 key areas that we retain our focus with respect to acquisitions or other types of alliances.

Next question comes from the line of Stephen Ju from Credit Suisse.

So the type of footprint of the pending European acquisitions seem more leisure focused and that is, of course, a large opportunity. But as a supplement, can you also talk about potential commuter opportunities, hopefully, around the lines of what may already be the case for the Northeast corridor in our country?

So on the Europe point, it's Will here, definitely a little bit more exposed to leisure markets, but we've seen incredible strength in that consumer. So we're happy to report that we're actually ahead of 2019 levels and what we underwrote for that acquisition on a pre-closed basis. So everything we're seeing from that market is showing real strength. And I think Rob can address some of the points on the commuter side of things.

Yes, I think that we're watching very carefully traveler patterns. But if you think about it, the best way we can attack the business flyer is from what we believe is the biggest market in the world in terms of New York where people come from all over the globe to do business. So we think with 28 million people as an addressable market coming to and from the New York City airports, we see a very huge opportunity. There are obviously other opportunities in the Northeast that we continue to evaluate. We're not -- we have not given any new guidance as to specific timing, but we're going to continue to look at acquisitions versus building new routes. And I think that you'll definitely see in the coming months, new routes emerging that will have both a business and a leisure component. When we have both, that's obviously optimum. And I would also say in Europe, especially with respect to the Monaco side the acquisitions, there is a meaningful business component that is year round. It is not purely seasonal. Melissa, I don't know if there's anything else you want to add to that?

Yes. No, this is Melissa Tom Hill, President of late. Yes, we -- while we do see the core group of our flyers in Europe being leisure, there certainly is a business element there because the service that we're providing provides regular and frequent connectivity from a major hub in the region at Nice airport to Monaco. And there's many business people that travel that route every day.

Next question comes from the line of Bill Peterson with JPMorgan.

Nice job on our quarterly results. Two questions, if I may. The first question is on the organ transplant business. I think in the past, you've talked about this business having somewhere like 15% market share. I'm not sure if that was when this business was a $10 million business or a $13 million business or now a $17 million business. So I guess, based off to your recent quarter, where do you think share is? And I guess at this point, how should we think about the growth of this business over the longer term and ultimately, what kind of share you can achieve, I suppose in there? What areas or geographies do you have further share opportunities?

Thanks for the question, Bill. Will here. 15% is sort of an estimate that we still think is about right. That's our share just of heart, liver and lung. So that's about half, a little less of the 40,000 transplants that happen in the United States every year. So there's a separate opportunity in kidneys that we're not really attacking directly right now. And we think given our scale, both in the retail and organ transport sign of things. We've really been able to create a network across the U.S. that gives us better availability than a lot of our competitors and also better pricing for those hospitals. So particularly when folks have transplant centers and organ procurement organizations are a little bit more focused on cost. We think we have an advantage in that market. So we really think there's a huge opportunity to grab the majority of share in the overall heart liver lung market. And that's what we're focused on doing right now very aggressively working to add new hospitals to our network across the U.S.

I guess I'd like -- and thanks for breaking out the realigned segments. It makes it a lot easier to see the growth patterns as well as seasonality. And I wanted to ask about how we should think about seasonality going forward amongst the various segments. If we think about Jet and other, it looks like there's some pretty clear seasonality on the short distance, you have Vancouver, you have Southern Europe coming soon. If you can help break that out amongst the segments so that we can again sort of better calibrate our models?

Sure. Happy to help with that. Start with the organ transportation piece. That's generally nonseasonal. We expect it to generally be a sequential grower. You're also seeing some intrinsic growth within that market as a whole as hospitals start going farther to pick up organs than maybe they've done previously, and as folks start working together better to make sure fewer organs go to waste. So there's -- there's both hopefully some growth in the volume overall of organ transplants to take place and part of the way that you unlock that is by going farther to pick up organs that maybe wouldn't have been matched that distance. So you got a number of growth drivers there that are nonseasonal. On the European and U.S. leisure side of things in short distance, both of those businesses are going to continue to have some summer seasonality. On the Vancouver side of things, actually see reverse seasonality from what we see here in the U.S. And that's because the instrument flight rules, helicopters that are utilized up in Vancouver, have a competitive advantage in the winter months because they can fly in weather conditions that their competition to sea planes cannot. So you actually see strength in that business coming into December, January, February, still good volume in the summer, but you see more volume and you're able to get better pricing in the winter months. And then finally, going to our jet and other segments, you've got a little bit of jet charter business, but what really is going to drive the seasonality there is our scheduled by the seat jet services, BLADEone as we call them. that's a seasonal business that starts around Thanksgiving and currently goes through the beginning of April. So you'll see that jump in revenue there in those months. And then for the remaining parts of the year, you'll see some lumpiness from brand partner payments that come in as we signed some contracts with some brands that work with us. and then the rest will be some retail jet charter. And that's just a nice strategic add-on for us because we're able to utilize the same fixed wing aircraft that we use for the medical business. And it tends to come the demand for jet charter during the day, whereas the demand for medical transport tends to come at night. So it's a nice way to put more hours on those aircraft, and ultimately create lower pricing for our hospitals.

Okay. That's helpful. If I can ask one more. On flight margins, you gave us some nice color, it sounds like your price increases are outpacing some of the cost increases. I think you mentioned you have 2 to 3-year contracts, I believe you said that was related to MediMobility. I guess more on the helicopter side, considering wage pressures, pilot shortages, things like that. Do you have similar contracts? Or I guess what I'm getting at is do you still expect price increases to outpace some of the -- presumably you're seeing some cost inflation, but just trying to understand how the contracts and costs work.

Yes. We enter into generally agreements with our helicopter operators that are based on a fixed hourly rate that includes pilots, fuel, all of the above based on fixed distances. And so they're kind of some are midterm, some are long term, some are short term. We don't see any kind of -- we don't have any concern on our part in terms of our ability to kind of outpace the cost of business. We don't see the kind of pilot shortages in the helicopter business that we see in, say, commercial jets and in private jets you may have. And I guess the short answer is also on the fuel side, we're looking at aircraft that are burning about 40 to 45 gallons an hour of jet fuel versus, say, 450 gallons an hour for G4 Jet. So fuel is not as large a component for short business aviation in helicopters and previously planes and such that in other -- in other parts of aviation. So that's something that we're not overly concerned with. I think that this year, in particular, we were pleasantly surprised by the amount of demand that we've had and could have certainly used more aircraft, and we have now arranged to enter into deals where we do have more aircraft, which is terrific, and we haven't had any kind of issues with respect to availability.

Yes. Seat pricing has been a margin driver for us rather than just an offset to inflation. So it's been a good driver for us.

It sounds like you have some opportunities to keep driving that higher. Is that the right way to think about it?

Yes. Well, I think across the board, the resilience of the flyer that we're seeing, they see the value in reducing the friction, the traffic is only getting worse is clearly still pent-up travel demand, especially on some of the higher-end products that we have. We have bought the seat products that are now at the 1,100 hour mark for 35-minute flights and they just keep growing.

The next question comes from the line of Itay Michaeli from Citi.

Just to continue the conversation on the slight margin, maybe Will, could you just maybe provide a bit more context into where you kind of see second half light margin going as well. Just how should we think about the impact from the pending acquisitions over in Europe? And second, maybe for Rob, any update on the use of drones in the MediMobility business? And I know we've talked about that in the past. Just curious if there's any update there.

Thanks for the question. When we think about flight margin, as we've talked about before, we generally see a slightly higher contribution margin from our mature routes in the short distance side of things. So as we talked about on the seasonality there, Q3 is always going to be the biggest quarter for us, particularly in the New York short distance business. So you'll see probably the highest margins seasonally in that Q3. But then broadly across the businesses, we've talked about optimizing our pricing, and so you'll see a benefit across the business lines going into second half. But generally, you would expect Q3 to be the highest. And in Q4 is not going to match the margins that you see in Q3 because some of that seasonal short distance revenue that's on these mature routes that we've been building for 7 years now is going to be less prevalent as a percent of the overall mix. Does that answer the question for you?

Yes, that's very helpful.

With respect to the medical side and drones, we continue to believe since we're flying hospital to hospital and more organs are being moved without doctors that drones are going to be an important part of this business going forward. They are not yet as we've discussed on previous calls. There have to be changes in terms of the FAA line of sight regulations with respect to flying drones. However, we do have a team, and we are actively meeting with both drone manufacturers and drone service providers. I think they offer unique opportunities for alliances and/or acquisitions, especially if they -- as they start to develop books of business. So this is something we're keenly focused on.

That's very helpful. If I could sneak one last one in. Just with the strength you saw in the quarter to just an overall short distance demand. Just curious kind of what you're seeing in terms of the mix of first-time flyers as opposed to kind of repeat flyers and kind of how you see that shaping in the last few quarters?

Well, we're bringing a lot of new flyers into our network, particularly through the airport products, that's been growing really quickly and also the partnership that we talked about with JetBlue has really increased our visibility. In fact, this month, you started seeing some promotion for Blade on seatbacks for select flights that are coming in here to the New York market. So that's driven a lot of new visibility and a lot of new flyers. Of course, on some of our mature routes, you see a higher percentage of folks that love us and come back every year.

I would say that, obviously, in the short distance, there are a lot of kind of commuter routes that continue to have repeat flyers. But one thing that's important to note, in the past, Blade has been very focused on advertising within the markets we serve, specifically think about New York for the New York market. We've been extremely , as you may see yourself both the Kennedy Airport and Newark Airport, very active in digital advertising within the airport terminals, which obviously gets the attention of flyers from all over the world. So we are seeing many more flyers that are not from our core areas that are first-time flyers.

Next question comes from the line of Jason Helfstein from Oppenheimer.

I just wanted to ask just a bit more about two questions around airports. So how are you thinking about it? Obviously, you don't give us a specific number. You do give a seat, but maybe how about size how big short distance flight services needs to get to suggest that airport is really seeing kind of the margin inflect kind of to a more run rate level? Or is it kind of number of seats? And then maybe talk about any kind of changes to the service that you think that would drive more usage, any discussions with airports about kind of post security? Just any kind of enhancement you're thinking about to the airport business.

Sure, Jason. So it's a combination, right, of growing the number of seats, but also growing the concentration of those seats, the load factor on individual flights. So in the past quarter, we've had weeks that were profitable on JFK. So we're hovering around that level. It's not a place that we've gotten to consistently yet. And so that's where we're starting to look at dynamic pricing, which, as we talked about earlier, has already driven up our average yield per seat. And so I think it's a combination of looking at the times when the value proposition is even stronger and making sure that you've got availability for people who really want it by having to price match the demand and then also continuing to grow our capacity. And so with respect to some of the changes that we are making, we had to make those decisions, as we talked about earlier in the call to allocate capacity to our most profitable routes here in the summer because as Rob mentioned, we saw incredibly strong demand for some of the seasonal short distance businesses, and we wanted to make sure that we were maximizing margin above all. We've moved quickly to bring in additional capacity that's dedicated to airport. So we're going to have ability to service additional flyers going forward and also we recently launched an additional route from the East Side of Manhattan to JFK, which is available in the afternoons now servicing a flyer then maybe it wasn't as convenient to drive over to the West 30 Street Heliport. So we're attacking this from a lot of different directions to try to pull all the different levers that help us get to overall profitability. And we've gotten much, much closer, just trying to get to that profitability on a consistent basis.

Jason, it's Rob speaking. I guess you raised a very good point in terms of what else we're trying to do. We've done a lot of things, I think, have really improved the service. And they've also increased the average ticket price in terms of checkout. We introduced something called staged cars, which allows cars that are basically waiting upon people's arrival at the heliports since they're not always easy to find and you don't want to necessary weight. You're taking a 5-minute flight, you want to wait 10 minutes for an Uber. We introduced that. We also mentioned in the last call, and we'll be opening up starting this fall our first full dedicated lounge at an airport. It will be at Newark Airport at Signature Aviation. So that gives a great place for people to aggregate before flight, if they need to take a phone call before heading back to the city or going to -- they are early per flight. I think that will be a terrific experience for people. And with respect to the airlines, we continue as we have had in the past with respect to Delta and American Airlines, explore ways with the Port Authority and with the airlines to get to the point where we can have a more seamless experience, getting people from behind the Tarmac to helicopters, which is something we've done in the past and is achievable right now, usually through some of the higher-end services at these airlines as opposed to straight through plate. So those are -- those are very important. We're continuing to work on those to make kind of smooth out anything in terms of the experience to make it as seamless as possible, still a 5-minute flight. And I think we've really the guys on the ground are really master logistics to get people to their flights on time and from their flights to the aircraft or the trip back to the city.

This concludes -- we do not have any questions anymore. Can we come ahead and conclude.

Great. Yes, you may now end the call.

Okay. This concludes our question-and-answer session. I would like to turn the conference back over to Rob Wiesenthal, CEO, for any closing comments.

It's Rob Wiesenthal. I'm very proud of the quarter, proud of the team, great performance on all key metrics across the company. So we look forward to having more calls. Glad I give you more data on the segments. If you have any questions, don't hesitate to e-mail us or call us, and we'll be doing a number of conferences, which you can find on Bloomberg, during the week to really dive a little bit deeper into the performance of the company, and we appreciate your continued support. Have a great day, everybody.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.