United States securities and exchange commission logo
September 7, 2023
Ryan Goepel
Chief Financial Officer
Global Crossing Airlines Group Inc.
4200 NW 36th Street
Building 5A
Miami International Airport
Miami, Florida 33166
Re: Global Crossing
Airlines Group Inc.
Form 10-K for the
Fiscal Year ended December 31, 2022
Filed March 10,
2023
File No. 000-56409
Dear Ryan Goepel:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2022
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Business Overview, page 21
1. We have several
comments under this heading concerning disclosure requirements that do
not appear to have been
adequately addressed and we expect that an amendment to your
annual report will be
necessary to provide the information prescribed by Item 303(a) and
(b) of Regulation S-K,
as indicated in the comments that follow.
We have similar
concerns regarding disclosures in your subsequent interim reports for
which you should
address the requirements in Item 303(c) of Regulation S-K, concerning
material changes in
your financial condition and results of operations, relative to the
information that should
have been provided in the annual report.
Ryan Goepel
FirstName LastNameRyan Goepel
Global Crossing Airlines Group Inc.
Comapany 7,
September NameGlobal
2023 Crossing Airlines Group Inc.
September
Page 2 7, 2023 Page 2
FirstName LastName
Please submit draft amendments reflecting all revisions that are
necessary to address the
comments for review in advance of filing the amendments.
Results of Operations, page 24
2. We note that your discussion and analysis does not encompass your
operating loss or net
loss, and that disclosures pertaining to revenues and the nine line
items that comprise your
operating expenses, consist of a single sentence for each item, in
which you quantify and
attribute the change to "...the delivery of aircraft during 2022 and
full year of revenue
service in 2022," although with a few abbreviated variations where you
cite only one of
these reasons, or also reference FAA certification or the change in
block hours.
It appears that you will need to substantially expand this section of
your filing to comply
with Item 303 of Regulation S-K. For example, your discussion and
analysis of the results
of operations should cover the matters identified in the following
points.
Describe any unusual or infrequent events or transactions or
any significant economic
changes that materially affected the amount of reported income
from continuing
operations and, in each case, indicate the extent to which income
was so affected.
Focus specifically on material events and uncertainties known
to management that
are reasonably likely to cause reported financial information not
to be necessarily
indicative of future operating results or of future financial
condition.
Describe the underlying reasons for material changes, including
material changes
within a line item that offset one another, in quantitative and
qualitative terms.
Identify events or circumstances that either have caused or are
reasonably likely to
cause a material change in the relationship between costs and
revenues, such as
reasonably likely future increases in costs of labor or materials
or price increases.
Describe the extent to which material changes in revenues are
attributable to changes
in prices or to changes in the volume or amount of goods or
services being sold or to
the introduction of new products or services.
Given the magnitude of the changes that you report, your view on the
indicative value of
the reported financial information, including your view of the
operating loss and net loss
reported in accordance with GAAP, should be addressed; the extent to
which you expect
the apparent trend to continue, in comparing 2021 and 2022, should be
clear.
Please revise as necessary to comply with the requirements reference
above.
3. We note that you provide a discussion within the earnings release that
you filed on Form
8-K on March 14, 2023 of revenue and your non-GAAP measures of
Adjusted EBITDA
and Adjusted EBITDAR, without any mention of your GAAP measures of
operating loss
Ryan Goepel
FirstName LastNameRyan Goepel
Global Crossing Airlines Group Inc.
Comapany 7,
September NameGlobal
2023 Crossing Airlines Group Inc.
September
Page 3 7, 2023 Page 3
FirstName LastName
and net loss. Please adhere to the following requirements of
Regulation G, pertaining to
your public disclosures of material information that include non-GAAP
financial
measures, such as your earnings releases.
Include a presentation of the most directly comparable GAAP
financial measures.
Include all material facts and information necessary to make
your disclosures of the
non-GAAP financial measures not misleading.
4. We note that your non-GAAP measures of Adjusted EBITDA , Adjusted
EBITDAR, and
Adjusted Net Loss, as disclosed in the earnings release that you filed
on March 14,
2023, include an adjustment to remove the costs associated with
aircraft pilots training.
However, the investor update which accompanies that report, and
certain public remarks
made by your chief executive officer, as with the earnings call on
March 9, 2023, indicate
you are committed to pilot training for the foreseeable future, e.g.
having signed major
agreements with aviation academies to increase the pool of available
pilots, and taking
delivery of a new full flag simulator for your pilot training needs.
Given your risk factor disclosure on page 13, explaining that major
U.S. airlines offer
wage and benefit packages that exceed your wage and benefit packages,
it also appears
that you may be anticipating a continuous need to recruit and train
new pilots to replace
more senior pilots who accept higher paying positions elsewhere.
Please refer to paragraph (b) of 244.100 of Regulation G, and
Question 100.01 of our
Non-GAAP Compliance and Disclosure Interpretations at
https://www.sec.gov/
corpfin/non-gaap-financial-measures, and address the following points.
Tell us the nature of the cost associated with aircraft pilots
training that have been
removed in the computation and clarify the extent to which you
are distinguishing
between recurring and non-recurring pilot training costs for each
adjustment.
Tell us your view on whether these adjustments are normal,
recurring, cash operating
expenses that are necessary to operate your business, considering
your agreements
with aviation academies and acquisition of the flight simulator.
Tell us how you classify the costs of pilot training in your
financial statements.
If you believe that you are able to support the continued disclosure
of non-GAAP
performance measures that exclude pilot training costs, explain to us
how you propose to
clarify the limitations on the utility of the measures and address the
relevance and
significance of the excluded amounts in connection with any future
disclosures.
5. We note that you are presenting Adjusted EBITDAR as a non-GAAP
performance
measure in your earnings releases, and have excluded aircraft rental
costs in its
computation. As such costs appear to be normal, recurring, cash
operating expenses that
Ryan Goepel
FirstName LastNameRyan Goepel
Global Crossing Airlines Group Inc.
Comapany 7,
September NameGlobal
2023 Crossing Airlines Group Inc.
September
Page 4 7, 2023 Page 4
FirstName LastName
are necessary to operate your business, address paragraph (b) of
244.100 of Regulation
G, and the guidance in Question 100.01 of our Non-GAAP Compliance and
Disclosure
Interpretations at
https://www.sec.gov/corpfin/non-gaap-financial-measures.
If you believe that you are able to support the continued disclosure
of non-GAAP
performance measures that exclude aircraft rental costs, explain to us
how you propose to
clarify the limitations on the utility of the measures and address the
relevance and
significance of the excluded amounts in connection with any future
disclosures.
Liquidity and Capital Resources, page 25
6. We note that your discussion and analysis of liquidity and capital
resources does not
include an evaluation of the certainty of cash flow resources or
requirements, though is
instead comprised entirely of a recitation of the reconciling items
and line item activity
reported in the operating, investing and financing sections of your
cash flow statements.
It appears that you will need to substantially expand this section of
your filing to comply
with Item 303 of Regulation S-K. For example, your discussion and
analysis of liquidity
and capital resources should cover the matters identified in the
following points.
Include an analysis of your ability to generate and obtain
adequate amounts of cash to
meet your requirements and plans for the short-term and
separately in the long-term;
identify and describe internal and external sources of liquidity
and briefly discuss any
material unused sources of liquid assets.
Include an analysis of material cash requirements from known
contractual and other
obligations, specifying the various types of obligations and the
associated time
periods in which these must be satisfied, and identify
commitments for capital
expenditures and the anticipated source of funds.
Identify and describe any known trends, demands, commitments,
events or
uncertainties that are reasonably likely to result in your
liquidity or capital resources
increasing or decreasing in any material way; discuss any
reasonably likely material
changes in the mix and relative cost of such resources, including
any reasonably
likely changes among equity, debt, and any off-balance sheet
financing arrangements.
We expect that you will also need to provide a more informative
discussion and analysis
of cash flows from operating activities, to identify and address
material changes in the
underlying drivers (e.g. cash receipts from sales and cash payments
for costs of sales),
rather than merely identify changes in your working capital
components.
In doing so, explain the underlying reasons and implications of
material changes between
periods to provide investors with an understanding of the apparent
trends and variability in
cash flows. Please refer to Section IV of our Commission Guidance
Regarding
Management's Discussion and Analysis of Financial Condition and
Results of Operations,
Ryan Goepel
FirstName LastNameRyan Goepel
Global Crossing Airlines Group Inc.
Comapany 7,
September NameGlobal
2023 Crossing Airlines Group Inc.
September
Page 5 7, 2023 Page 5
FirstName LastName
issued December 19, 2003 (SEC Release Nos. 33-8350; 34-48960; FR-72).
Please revise as necessary to comply with the requirements reference
above.
Financial Statements
Consolidated Balance Sheets, page 28
7. We note that you report $9.5 million of accrued liabilities which
represent 34% of current
liabilities as of December 31, 2022.
Please address the requirement to disclose in the balance sheet or in
a note thereto, any
item in excess of 5 percent of total current liabilities in Rule
5-02.20 of Regulation S-X,
and submit the analysis of the account components that you conduct in
evaluating the
need for incremental disclosure pursuant to this requirement.
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies
Revenue Recognition, page 37
8. We note that you report significant balances for deferred revenues and
customer deposits.
Please expand your disclosures to include the accounting policy that
you follow in
distinguishing between amounts that are classified as deferred
revenues and amounts that
are classified as customer deposits to comply with FASB ASC
235-10-50-1.
Please also disclose the revenue amounts recognized each period that
were included in the
contract liability balance at the beginning of the period to comply
with FASB ASC 606-
10-50-8(b); and any obligations for refunds pursuant to FASB ASC
606-10-50-12(d).
Controls and Procedures, page 53
9. We note your disclosure indicating that disclosure controls and
procedures were
evaluated and found to be effective. However, it appears that you have
not provided the
information required by Item 308(a) and (c) of Regulation S-K,
regarding management's
annual report on internal control over financial reporting.
Given the absence of this disclosure, as well as the deficiencies
noted in the other
comments in this letter, it appears that your disclosure controls and
procedures were not
actually effective, notwithstanding your earlier conclusion.
Please amend your filing to include such clarification along with the
information
referenced above. Please obtain and file updated certifications from
your officers with
the amendments consistent with Item 601(b)(31) of Regulation S-K.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Ryan Goepel
Global Crossing Airlines Group Inc.
September 7, 2023
Page 6
You may contact John Cannarella, Staff Accountant, at (202) 551-3337 or
Karl Hiller,
Branch Chief, at (202) 551-3686 with any questions.
FirstName LastNameRyan Goepel Sincerely,
Comapany NameGlobal Crossing Airlines Group Inc.
Division of
Corporation Finance
September 7, 2023 Page 6 Office of Energy &
Transportation
FirstName LastName