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Operator: Good day, and welcome to the Cargojet Year-End Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to David Tomljenovic, Vice President, Investor Relations. Please go ahead.
David Tomljenovic: Good morning, everyone, and thank you for joining us on this call today. With me on the call today are Ajay Virmani, Executive Chairman; Pauline Dhillon, Chief Executive Officer; Aaron McKay, Chief Financial Officer; Sanjeev Maini, Vice President, Finance; and Remi Tremblay, General Counsel and Corporate Secretary. After opening remarks about the quarter, we will open the call for questions. I would like to point out that certain statements made on this call, such as those relating to our forecasted revenues, costs and strategic plans are forward-looking within the meaning of applicable securities laws. This call also includes references to non-GAAP measures such as adjusted EBITDA, adjusted earnings per share and return on invested capital. Please refer to our most recent press release and MD&A for important assumptions and cautionary statements relating to our forward-looking information and for reconciliation of non-GAAP measures to GAAP income. I will now turn the call over to Ajay.
Ajay Virmani: Good morning, everyone, and thank you for joining us this morning. Before we begin the detailed review of the quarter, I'd like to offer a few broader remarks. Cargojet operates at the intersection of global trade, capital discipline and time-critical logistics; in stable environments that create opportunities; in volatile environment that demands clarity, discipline and execution. What defines this company is not the cycle. It is how we manage through it. As previously announced, we transitioned to a single CEO structure as part of our long planned succession framework. I'm pleased that this is our first quarterly call with Pauline Dhillon as Chief Executive Officer. This next phase of Cargojet's evolution is centered on sharpened accountability and disciplined execution. The Board has been very clear in its mandate to Pauline and her management team. Our priorities are extremely straightforward: deliver profitable growth with strong returns on invested capital; maintain operational excellence and industry-leading reliability delivered safely; exercise rigorous cost control and discipline while maximizing utilization of our fleet and infrastructure; and last of all, continue investing in our people and leadership depth to ensure sustainable and long-term performance. Strong financial outcomes are only possible with a strong culture and an engaged workforce. That remains a core competitive advantage for Cargojet. These principles guide our capital allocation, our operating discipline and our long-term value creation. Pauline and her team are fully focused on delivering against these objectives. Before I turn the call over, I'd like to express my sincere appreciation. On behalf of the Board of Directors, I want to thank more than 2,000 Cargojet employees for their professionalism, resilience and commitment to excellence. I want to thank them for coming through one of the roughest winters that I have seen in the last 30 years and maintaining our on-time performance. To our customers, thank you for your continued trust. We'll continue to earn your business every day. And to our shareholders, thank you for your confidence and long-term support. We remain totally committed to disciplined execution, financial strength and sustainable value creation. With that, I want to thank everyone and turn the call over to Pauline.
Pauline Dhillon: Good morning. Thank you, Ajay, for your kind words and continuous support. Before we discuss the details of our fourth quarter and full year results, I would like to echo Ajay's comments to start by thanking the entire team at Cargojet for their incredible effort and dedication over the past year. The strength and resilience of our business comes from our team who show up every day and every night to deliver world-class service for our customers. As Ajay mentioned, that was never more true than during peak 2025. Despite the extreme conditions across the nation, our teams delivered exceptional on-time performance at 99%. On behalf of myself and the entire executive, we want to thank every single member of the Cargojet team. During our Q3 call, we noted persistently high levels of uncertainty throughout global shipping lanes due to volatile tariffs and geopolitical conditions. We anticipate that global uncertainty will persist, and we will continue to limit our visibility for the foreseeable future. As a result, we intend to continue with our disciplined approach to aligning our fleet, our operations and cost to current market conditions to ensure we protect our margins and profitability while delivering industry-leading on-time performance to our diverse customer base across 3 business lines. Cargojet experienced some event-driven activity in the fourth quarter that impacted our results. The grounding of MD-11 cargo freighters left their operators with reduced capacity and an uncertain outlook for the MD-11's return to service. Some of our long-term partners have been impacted by the grounding and asked Cargojet to support their needs in the fourth quarter. We continue to support those partners into the first quarter and will continue to do so for as long as they require. We are thinking of our fourth quarter of 2025 as the tale of 2 cities that exist within our business. While the domestic network remained robust, long-haul transatlantic and transpacific lanes continue to be impacted by geopolitical uncertainty. According to recently released data from China customs, 2025 experienced the first decline in e-commerce volumes since 2022. China to U.S. e-commerce volumes fell by 50% in the third month in a row, including December and were down 28% for all of 2025. While global uncertainty persists, we believe that Q4 2025 should represent the trough for our ACMI customers. While it is early, we are cautiously optimistic that ACMI conditions will show signs of improvement towards the end of 2026 if global political, tariff and economic conditions improve. While global conditions remain challenging, our core domestic overnight business experienced a strong seasonal peak period. During our Q3 call, we were cautious about the resilience of the Canadian economy and consumer demand. Despite challenges from inflation and job uncertainty, Canadian consumers were active during the holiday season. As well, our domestic business continued to benefit from the ongoing adoption of e-commerce across the Canadian retail sector. Increasingly, retailers are choosing e-commerce channels to optimize inventories and to best satisfy customer needs. The speed of delivery is critical to ensuring ongoing customer satisfaction in an increasingly e-commerce-driven retail environment. We expect this transition in buying behavior to provide an ongoing tailwind for our business. Our focused efforts on developing new charter opportunities have resulted in the commencement of new charter services that align with our current North to South Americas flying. As well, we will deploy our assets to increasingly align with opportunities best suited to the composition of our fleet on lanes that are less impacted by political and trade-related tensions while we wait for broader shipping conditions to improve. During Q4 2025, we commenced service between North, Central and South America for a new scheduled charter partner. This charter operates 5 days per week with destinations in the Caribbean as well as Central and South America. This charter business is well suited to our fleet and aligns well with the activities across other lines of our business. In Q4, we also announced a new weekend service to Liege, utilizing capacity within our fleet. This service reestablished a scheduled connection between Europe and Canada with the goal of building up this lane over time. During Q4, the service captured strong seasonal demand in Europe for premium Canadian seafood and other Canadian goods, while our general sales agent in Europe delivered consistent volumes on the westbound sector. In many cases, the westbound volumes feeds into our domestic overnight market. Our Liege service has continued into the first quarter, and we will keep it going as long as it represents the best use of fleet capacity. We continue to explore opportunities in a similar manner as we have with Liege. Our goal is to develop new profitable reoccurring revenue opportunities that utilize existing fleet capacity while also enhancing the value of our core domestic overnight network to other parts of the world. We are seeing changing global trade patterns impacting our China charter business with transpacific exports from China beginning to fall for the first time since 2022, according to our previously noted report. In the fourth quarter of 2025, ongoing political and tariff challenges kept our frequencies relatively flat sequentially compared to the back half of 2024. When we announced our agreement with our Chinese partner, we noted that total revenue for the agreement was expected to be approximately $160 million. With the early success and extra flying we completed in late 2024 and early 2025, we have approached that total deal value in early 2026. Given current conditions, we have mutually agreed with our partner to suspend ongoing service early in 2026. Our relationship remains strong, and we look forward to future business together when geopolitical and trade uncertainty allow. We expect that the new arrangements I noted earlier with both existing and new partners will more than replace expected minimum revenue in 2026 from our previous Chinese flying, while keeping our aircraft closer to home and operating missions best suited to their most efficient use. As we look forward to 2026, our core focus on customer obsession will be demonstrated through our continued best-in-class on-time performance. We are always -- we are aware that we are operating in an unstable global trade environment and believe our disciplined approach to service delivery, cost management and capital deployment will set us up for success regardless of challenging operating conditions. We've proven our ability to be nimble to find and execute on new opportunities and to take advantage of changing markets to deliver value to our customers and our shareholders. Despite the ongoing uncertainty that exists within global trade lanes, we will continue to look for and sign new opportunities for growth while remain focused on disciplined and profitable execution across all of our business lines. I'm going to pass the call over now to Aaron for his comments on our financial performance.
Aaron McKay: Thank you, Pauline. As Pauline noted, despite a challenging operating environment, Cargojet's disciplined approach to customer service, cost management and capital deployment as well as our ability to be nimble and take advantage of new opportunities allowed us to deliver strong Q4 results that we are proud of. That happens because of the experience and dedication of the Cargojet team, and I'd like to echo Pauline's thanks to the entire team for all the hard work through the fourth quarter. As Pauline discussed, global trade uncertainty remains high, which means our forward visibility remains lower than we would like. Despite these challenging conditions, our disciplined execution and expense controls resulted in another quarter of strong adjusted EBITDA and adjusted EBITDA margins, which came in at $95 million and 33.4%, respectively, despite a small year-over-year decline in total revenues of 2.9%. Revenues from the domestic overnight business were $120.2 million, an increase of $17.4 million or almost 17% from the same period last year, which led to a full year increase of almost 14%. This growth resulted from continued e-commerce penetration across Canada as consumer demand remained robust through Q4 and the holiday season. Looking forward, given broad geopolitical and trade uncertainty, we remain cautiously optimistic about continuing Canadian consumer demand and the continuation of e-commerce penetration we've seen, which may be offset by broader economic challenges. Disruptions in transatlantic and transpacific trade routes continued in Q4 2025, which drove a continuing year-over-year decline in our ACMI revenue, in line with the declines we saw in the third quarter. Despite the lower activity, our ACMI partnerships remained strong and generated $64.6 million of revenue, a decline of $18.9 million from Q4 2024. As in the third quarter of 2025, in Q4, our ACMI flying consisted of shorter stage length north-south routes compared to those flown in the same period of 2024 when activity levels were higher than baseline economics of our long-term ACMI agreements. The lower block hours, which result from the shorter stage lengths were the primary driver of the year-over-year decline. Current activity levels are aligned with those baseline economics, supporting revenue stability and certainty moving forward. We remain as the top service provider to key customers because of our relentless focus on maintaining our industry-leading on-time performance and customer service. The charter business in Q4 2025 was also impacted by global political and tariff conditions, particularly on transpacific trade routes. Our total charter revenue was $58.2 million, down from $64.4 million in Q4 2024. The year-over-year decline was primarily driven by muted incremental peak season flying in Q4 2025 for our Asian charter partner because of ongoing uncertainty and unfavorable tariff and trade conditions. This was partially offset by increased seasonal peak flying for some of our long-term customers. We expect to continue to support our customers through what has begun as an event-driven charter opportunity. Currently, it's difficult to predict whether these represent longer-term economic opportunities. We continue to believe that discipline in cost management and capital deployment is the correct approach to running the business through the current period of volatility. Our ongoing cost control initiatives allowed us to maintain EBITDA margins in the low to mid-30% range in the fourth quarter. The diversity of our revenue streams, our high level of customer service and existing flexibility in our fleet position us to capture new opportunities that develop in the market while longer-term global and political conditions normalize over time. Turning to our fleet and CapEx. During the quarter, we completed the divestiture of our last Pratt & Whitney-powered aircraft. The 767 fleet is now standardized around the use of GE-based engines, which allows us to optimize our spare engine pool, spare parts inventory and ongoing maintenance activities. At the end of Q4 2025, our operational fleet was 41 aircraft. CapEx for Q4 2025 was $45.6 million, which consisted of $37.5 million of maintenance CapEx and $8.1 million of growth CapEx. This compares to Q4 2024 CapEx of $136.9 million, which included $92.7 million of maintenance CapEx and $44.2 million of growth CapEx. We believe our current fleet of aircraft offers the operational capacity to accommodate our current customer commitments with enough available capacity to capture near-term growth opportunities. In the first quarter, we expect some delivery payments for aircraft to be more than fully offset by the proceeds we received for the sale of 2 aircraft in the back half of 2025. Outside of that, we intend to tightly control growth CapEx through 2026 and any such spending will be tied to new long-term committed revenue agreements. Prudent and disciplined capital allocation remains a key priority for Cargojet. Maintaining a net debt to adjusted EBITDA below 2.5 turns over the long term, supporting the investment-grade credit rating we achieved in the second quarter of the year is a key objective for us. The current operating environment as well as the timing of certain transactions means that the ratio remains slightly elevated at the end of 2025. Although pro forma for the receipt of proceeds received in early 2026 for the aircraft sold in 2025, our net leverage ratio was 2.8x. We remain dedicated to that goal and we'll balance that objective with returns to shareholders through continued dividend growth and the opportunistic use of our normal course issuer bid. With that, I'll hand the call back to Pauline.
Pauline Dhillon: Thank you, Aaron. Our position as the #1 air cargo carrier in Canada is the result of decades of discipline and execution that provides us with the experience to consistently meet our customers' high expectations for on-time performance regardless of the operating environment. 2025 again demonstrated the resiliency and the flexibility of our business to deliver through all market conditions. That resiliency comes directly from our unique culture and the efforts of our almost 2,000 Cargojet team members. I want to close today by again saying how proud we are of the entire Cargojet team for their continued dedication to the success of our business, resilience and discipline they demonstrate in their work every day. While the economic environment remains uncertain, we are confident that all those qualities will continue to drive the success of our business in the long run. We thank our customers for their continued belief in us. And to our shareholders, we remain committed to creating value. And with that, we will open the call for questions.
Operator: [Operator Instructions] With that, your first question comes from Kevin Chiang with CIBC.
Kevin Chiang: Maybe just a clarification question first on the update you provided on the Great Vision HK contract. It sounds like you're confident in being able to replace that revenue. Do you have that revenue in hand already? Or is it optimism around when you look into the pipeline that you'll be able to replace that as we get through this year?
Pauline Dhillon: Yes. Let me start by addressing the China question, Kevin. That contractual revenue was net in early 2026. This is a rapidly changing trade lane. As I stated in my prepared notes, I highlighted the decrease in the traffic primarily as a result of global uncertainty and tariffs. We, as a company, continue to look for opportunities. We look at trade flows, trade lanes constantly changing. We have seen a decrease in the China to North America markets, but an increase from China to Europe. We are also seeing an increase from Canada to Latin America and Canada to South America. As I stated in my remarks, we mutually suspended the China route, and we continue -- we'll continue to revisit that with them as there's more stability in the global markets. In the interim, we have found opportunities in North America for better utilization of our aircraft, better rotation, better revenue, better margins and better shareholder value.
Kevin Chiang: That's helpful. And then, Aaron, maybe this is for you. Strong sequential revenue improvement into the fourth quarter and peak season, tough weather conditions as well. But if I look at your OpEx less fuel and depreciation, I'll call it, your controllable costs, on a per block hour basis, they were flat to modestly down. Just wondering how we should think about your cost control initiatives as we go into 2026 here? Like are we starting to see maybe some of that cost momentum you highlighted last year? Or is there anything you'd call out in Q4 that might be anomalous that we shouldn't just straight line into 2026 here?
Aaron McKay: No, I think generally, what you're seeing is the outcomes of those cost control initiatives. And we're continuing to look at new opportunities. I mean one thing I'll call out, and this is not onetime, this is something that we'll keep going is if you look at crew costs within direct costs, you can see the impact of the work we did even late 2024 into 2025 of hiring and training the crew pool to the right levels for the business. So overtime costs are down quite a bit. That continues into 2026. Now obviously, we have the [indiscernible] in 2026 that will drive changes there. But it's a long-winded way of saying, I think what you're seeing is the outcomes of our cost control initiatives, and we expect those to be long-term savings.
Kevin Chiang: Okay. That's helpful. And maybe just a quick accounting or modeling question. It looks like you had a reevaluation of your depreciation. Is the number we saw in Q4, is that kind of the right run rate to move forward with? And then just working capital was a pretty decent drag in Q4 and for the year. Does that reverse in '26? Or is there anything we should be thinking about from a working capital perspective?
Aaron McKay: Yes. On the first part of that, I think you're correct. I used the Q4 depreciation number. On the second part, I think there were a few items right at the end of the year that probably contributed to things like AR being a little elevated and created some of that working capital drag. So I think there'll probably be at least a modest reversal of that.
Operator: And your next question comes from the line of Konark Gupta with Scotiabank.
Konark Gupta: On good performance in Q4. Just maybe a clarification on the MD-11s. Did you quantify the revenue benefit you saw in Q4 or what you expect in Q1? And then did it only impact the domestic line of business? Or did it also show up in the charters?
Aaron McKay: It all showed up in the charters.
Pauline Dhillon: In the charters.
Konark Gupta: Okay. And then what sort of magnitude would you say that, that had? Because, I mean, just if we kind of straight line the revenue for that line of business, should that be sustaining into the second half as well? Probably not.
Ajay Virmani: Konark, I'll take that. We have a quarterly commitment from -- of that opportunity. It's a quarter-to-quarter, but we expect it to be lasting at least till quarter 3 or quarter 4 of next year because quarter 4 becomes the peak where everything is required, but we expect -- we haven't seen anything from FAA or Boeing or anything when the MD-11s are going back or even if they are going back to service. So there is going to be a 54 aircraft capacity lag in the global cargo world. And I think that depending on the hours we fly, it's quite a fluid situation. But let's put it this way that it makes up more than what we had in China and some of the other charters. It's the utilization of the assets within our own network that produces that revenue. And we're pretty hopeful that this is going to be a consistent revenue for this quarter and a couple of other quarters.
Konark Gupta: Okay. That's great color. And on the China contract, so thanks for the details there. But just wondering, with the early termination, and I believe the contract would have been due in May 2027, was there any penalty on either side or any kind of termination fee or compensation from the customer?
Pauline Dhillon: No, Konark, nothing such.
Ajay Virmani: As a matter of fact, it was a mutual suspension of the contract, while the Chinese look at their -- not only their shipping, but their incentives from the governments for exports. So that's under review. And we had better opportunities keeping our, as Pauline said, aircraft closer to our home for maintenance, for pilots and all that stuff. So it was a very good opportunity for us to deploy the aircraft in this part of the world. And for them, it was also to review how they stand with the Chinese government and also with the U.S. government on tariffs. So it was kind of a mutual suspension for the time being. And it could start any time depending on when U.S. and China could end up in a deal. They will eventually. And I think it has a lot more potential in the future years. So it's all amicable and very -- as a matter of fact, the Chinese customer is also a big domestic customer of ours.
Konark Gupta: Right. Okay. And last one for me before I turn over. Capacity, I think you guys mentioned that you don't need to necessarily invest in growth CapEx, and it will be very contained going forward until you see any opportunities. But what kind of capacity or excess capacity you might have in the system today? I mean, I think with the China contract suspension and then some replacement contracts you talked about, would you still have excess capacity? Or would you need to get a couple of more aircraft if you get new contracts?
Ajay Virmani: My answer to that is, Konark, this team has always found capacity because the team we have in our scheduling and operations working with maintenance when the aircraft are needed. The excess capacity for charters, we have never said no, we find a way to get it done, and we will. On a paper, you might see that, okay, we are 97% utilized on the aircraft. But we always find ways to locate the aircraft, downgauge the aircraft, upgauge the aircraft according to the demand and find that excess capacity for charters. The idea is that we never say no.
Pauline Dhillon: Yes, Konark, just to echo what Ajay is saying, we always are looking for opportunities. We have an exceptional skilled set of individuals who explore every single charter opportunity that comes in. Bringing the aircraft back all into North America certainly helps us with our fleet utilization. So we're constantly looking for growth, constantly looking for opportunities, and we believe that we have the right fleet to continue with our current customer needs and our projected customer needs.
Operator: And your next question comes from Walter Spracklin with RBC.
Walter Spracklin: I know there's a lot of focus here on China and MD-11s, but your core business, the domestic overnight, that was up 17% in the quarter. This is during a freight recession. Just curious, can you -- I know e-commerce continues to do well. Was that the main driver? And is that going to -- is there anything onetime in that fourth quarter? Or do we see that kind of growth continuing into 2026 here?
Pauline Dhillon: Yes. Walter, great call out. Yes, you're absolutely right. We did see growth in the fourth quarter. I think e-commerce is the factor that we've seen this growth, especially over the entire year. We remain cautiously optimistic about 2026, and we continue to see e-commerce on the rise in Canada. As we've stated in previous calls, Canada has certainly been behind the rest of the globe in e-commerce activity. The new generation that's out there probably doesn't know how to shop in retailers, they're online. So we continue to be hopeful to see that continued growth in Q1. Again, we were a bit surprised ourselves that the domestic growth was so significant over the year. We remain committed to hopefully seeing single-digit growth in Q1, but it's going to be, I guess, on purchasing powers and what the consumer market does.
Walter Spracklin: Okay. That's great. And just in terms of modeling, Aaron, maintenance CapEx for 2026, I know growth you said would be offset by some sales. So is it going to be entirely maintenance CapEx? And do you have a range for us for '26 in maintenance CapEx?
Aaron McKay: Yes. Our expectation is that the 2026 CapEx will be largely maintenance CapEx. I think we've said in the past that we're seeing the maintenance CapEx come back down towards what we think of a long-term mean. So somewhere, I think, in the range of between $190 million and $210 million is a good number for 2026.
Walter Spracklin: Okay. And then finally, capital -- yes, capital deployment, where do you focus free cash flow for '26? Is it bringing leverage? Is it keeping your leverage in that range you were focused on? I know you did a 10% dividend increase. Is there any room left for buyback? What are you thinking on capital deployment?
Aaron McKay: Yes. I think we've said over the long term, we want to keep that net leverage ratio below 2.5 turns. We obviously want to balance that with returns of capital to shareholders. So like you said, we saw the 10% dividend increase we just announced, and we'll obviously continue to think about opportunistic use of the NCIB. The leverage target, again, is where we'd like to get back to over the long term.
Operator: And your next question comes from the line of Benoit Poirier with Desjardins Capital Markets.
Benoit Poirier: Congrats for the strong finish into the Q4. When we look in terms of adjusted EBITDA margin, you finished the year close to 33%, strong execution from a margin standpoint. You mentioned, obviously, a favorable environment with the MD-11 and also some rotation into more profitable lane. What about the -- whether the tighter capacity with the MD-11 helped in terms of pricing? And if you could maybe provide some thoughts about how we should be thinking in 2025, that would be great.
Ajay Virmani: Well, it's Ajay. The pricing on the MD-11s, we obviously can't divulge into customer individual pricing. But let's say -- let's put it this way, that we do -- this is an opportunity which came out of a very unfortunate incident. We cannot see -- we do -- our style of business is that we do not -- this is from our existing customers. We do not look this -- take this opportunity as taking advantage of gouging the customers. All I can say to you is the pricing is extremely fair, competitive. And also, we were not the only game in town, like they had 10 carriers to select from, and we were one of the top 3 carriers they selected. So we have to be competitive, but they're also aware of that this is something they need on top of their. So it produces better-than-average margins, and we will continue to build that relationship with that customer.
Benoit Poirier: That's very good color, Ajay. And could you maybe provide an update on the pilot agreement that is up for renewal this year?
Ajay Virmani: Yes. We are in the middle of negotiations. We have a very cordial and excellent relationship with the pilot group and their leadership. We have been on the table for 3 to 4 months. We are making steady progress. The contract is due till June. Both parties have a willingness to get the deal done prior to that period. And so far, we have not seen any sort of road blockers on that. I think that everybody realizes -- both parties realizes the realities, which are the uncertain climate, some competitiveness of wages on the other side, we recognize that. But also, we are also focused on -- besides financial gains, the company is also focused on productivity improvements, which the other side we're also aware of. So our target is to get a balanced deal done by the end of June. That's our target. And we have enough dates in the calendar, and we've had enough meetings and everything so far is very, very cordial and there's a willingness to do a win-win deal.
Pauline Dhillon: Yes. And just to echo Ajay's comments, Benoit, our pilots do understand our business, and they understand that providing our customers with the service levels that they've become accustomed to is paramount, not just for the organization, but for them as the pilot group. So we're very optimistic, as Ajay stated.
Benoit Poirier: Okay. That's perfect. And maybe just a quick one for Aaron. You mentioned that maintenance CapEx should be at around a range of $190 million to $210 million. What about the proceeds from the disposal we should expect this year?
Aaron McKay: Yes. So that's a great point, Benoit. Just to clarify, that number that I gave is a gross number. That's before netting off any proceeds of disposal. So we have mentioned previously that there is a little bit of gross growth CapEx in Q1 as we make some delivery payments for aircraft. So that will be more than offset by the proceeds from the aircraft that we sold last year. And then we'll continue to explore opportunistically sale-leaseback transactions like we looked at in Q3 of last year. So I think there is good potential to have a significantly smaller net number on CapEx.
Operator: And your next question comes from Tim James with TD Cowen.
Tim James: Congratulations on a good quarter to end the year. Yes. Just wondering, returning to the domestic revenue, just a great number to see there, e-commerce B2B. Is there anything in terms of particular lanes within Canada or regions? Or I know you don't get into customers, but customer types. So just -- I'm still amazed at how strong that was. But I'm just wondering if there's any sort of particular pockets in there that you would call out as driving that number.
Pauline Dhillon: No, Tim, it's just e-commerce. We're seeing an uptick in e-commerce. We saw probably more activity on the domestic overnight as we indicated in Q4, but it's primarily driven by e-commerce and consumer spend.
Aaron McKay: The only other thing I might add, Tim, is we've been seeing some of the same news reports I think everyone else has about the changing stocking patterns at retailers in 2025. So it's really -- it's difficult for us to see exactly what's happening with the freight on the planes. But I think we did see a little bit of a pattern where some of that stocking was pulled forward at the start of the year into Q1, Q2. And then there was a little bit of a hesitation of stocking in Q3, and then we saw that pick back up for the holiday season.
Tim James: Okay. Okay. That's helpful. And then just turning to the lease service. It sounds like good volumes on the westbound. Anything you're seeing right now in that service that would suggest that it won't be sustainable or anything in particular that suggests it definitely is a feasible long-term service? I'm just trying to understand kind of the outlook and where the bias is at this point, if the current sort of revenue and economics of that, if they continue, you keep it in place? Or does something need to change to justify continuing with the service?
Pauline Dhillon: Yes. Good question. Good call out there, Tim. Yes, that was a research and development kind of a lane for us. It was something that we wanted to reenter Europe with -- on what trade lane we were going to go into, what airport. And Liege is very similar to Hamilton. It's the hub of cargo for Europe. It's proven to us that there is a lot of potential there. We ran it through Q4. Q1 still is looking very optimistic. It's a lane we're certainly going to watch. But at this time, we have no concerns or no hesitation to continue operating into Liege.
Operator: And your next question comes from the line of Chris Murray with ATB Securities.
Chris Murray: So maybe turning back to the charter. This is maybe more of a conceptual question. If I look back over the last few years, Charter was always one of those kind of lumpier businesses, ad hoc contract here, contract there. But if I'm listening to you, it almost feels like you're trying to build a much more sustainable charter business, be it -- you talked about the North-South planes, the MD-11 contracts, which you could conceivably see those turning into an ACMI or something like that, [ Liege ]. You talked about other perhaps lanes that you could open. Is this a conscious effort on your part to try to build this business to be more consistent or more stable? And should we start thinking about this as less of an ad hoc charter and more of just a scheduled operation but more internationally focused?
Pauline Dhillon: Yes. Yes. Thanks, Chris. Good question. We're always looking for opportunities. I think we spoke about this at your conference. Cargojet is always looking for growth. We always look towards building our brand. One of the things that we had decided in 2026 was our domestic footprint is very strong here in Canada that our growth will come from global expansion. So we're constantly looking at new trade routes, new ACMI, new charter. And I think one of the reasons that we started Liege was for this reason, and it's proven to be a successful R&D project for us. And as we enter 2026, we're going to continue to look for opportunities always on the domestic and continual growth opportunities in North America, South America and Europe. That's going to be our primary focus as we enter the year.
Operator: Okay. Along those lines, any -- like I guess if you're going to stay in those geographies, so there's no thought of like either looking at a connection to Asia or other parts of the world there?
Pauline Dhillon: No, we will continue to look at all opportunities, but we want to make sure that with the fleet size that we have, with the utilization of the fleet that we have, that we integrate that fleet and those opportunities to marry one another.
Chris Murray: Okay. That sounds good. And then, Aaron, maybe just to go back on the CapEx and the sale-leaseback question. So maybe I'm a bit confused. So the $190 million to $210 million numbers, that's gross CapEx and then we should expect that sale-leasebacks will reduce that number overall. Is that the right way to think about it?
Aaron McKay: Yes. That's gross maintenance CapEx to be 100% clear. There will be a little bit of gross growth CapEx as well in Q1, but that will be more than offset by the proceeds that are coming in, in Q1 for the aircraft that we sold in 2025. And then yes, any sale-leasebacks that we look at will further net down the total CapEx.
Chris Murray: Okay. So maybe a different way to ask a question. Like if we were to think about all the moving parts here, independent of other like unplanned sale-leasebacks, what's the net number going to look like roughly?
Aaron McKay: Independent of other sale-leasebacks, I'm just doing the math in my head, somewhere in the [ $160 million to $170 million range ], I think. Operator, I think that will be our last question for today.
Operator: I would like to hand it back to Pauline Dhillon for closing remarks.
Pauline Dhillon: Thank you, everyone, for joining us today. We appreciate you taking the time. We will move on to the one-on-ones that have been scheduled. Anyone else that wants to reach out, please reach out to David to set up any additional questions that you may have. Wishing everyone a wonderful day ahead. Thank you.
Operator: Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.