Macquarie Infrastructure Corporation (NYSE:MIC) Q2 2020 Earnings Conference Call August 4, 2020 8:00 AM ET

Company Participants

Jay Davis – Managing Director-Investor Relations

Christopher Frost – Chief Executive Officer

Liam Stewart – Chief Financial Officer

Conference Call Participants

Tristan Richardson – Truist Securities

TJ Schultz – RBC Capital

Thomas Shen – Golden Tree

Jonathan Reeder – Wells Fargo

Matthew Marks – Jet Capital

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Macquarie Infrastructure Corporation Second Quarter 2020 Earnings Call. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Mr. Jay Davis. Please go ahead, sir.

Jay Davis

Thank you. And welcome to Macquarie Infrastructure Corporation’s earnings conference call, this covering the second quarter of 2020. Our call today is being webcast and is open to the media. In addition to discussing our quarterly financial performance on this call, we have published a press release summarizing the results and filed a financial report on Form 10-Q with the Securities and Exchange Commission. These materials were released this morning and copies may be downloaded from our website at www.macquarie.com/mic.

Before turning the proceedings over to Macquarie Infrastructure Corporation’s Chief Executive Officer, Christopher Frost, let me remind you that this presentation is proprietary and all rights are reserved. Any recording, rebroadcast or other use of this presentation in whole or in part without the prior written consent of Macquarie Infrastructure Corporation is prohibited.

This presentation is based on information generally available to the public and does not contain any material nonpublic information. The presentation has been prepared solely for information purposes and is not a solicitation of an offer to buy or sell any security or instrument.

This presentation contains forward-looking statements. We may, in some cases, use words that convey uncertainty of future events or outcomes to identify these forward-looking statements, including those used to describe the anticipated specific and overall impacts of COVID-19.

Forward-looking statements in this presentation are subject to a number of risks and uncertainties. A description of known risks that could cause our actual results to differ appears under the caption “Risk Factors” in our Forms 10-K and 10-Q.

Our actual results, performance prospects or opportunities could differ materially from those expressed and/or implied by the forward-looking statements. Additional risks of which we are not currently aware could also cause our actual results to differ. The forward-looking events discussed in this presentation may not occur. These forward-looking statements are made as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statements after the completion of this presentation, whether as a result of new information, future events or otherwise, except as required by law.

During today’s call, we will reference to the non-GAAP measures, earnings before interest, taxes, depreciation and amortization, or EBITDA, and free cash flow as defined by us. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our 10-Q and in the tables attached to our earnings press release.

Also participating in today’s call is Macquarie Infrastructure Corporation’s Chief Financial Officer, Liam Stewart.

With that it is my pleasure to welcome MIC’s Chief Executive Officer, Christopher Frost.

Christopher Frost

Thank you, Jay. And thanks to those of you joining our call this morning. I hope that you and your families will remain safe and well.

As you will be aware, we reported MIC’s financial and operational results for the second quarter of 2020 earlier this morning. I will begin our call by commenting on some of the highlights from those results and the steps we are taking to navigate the challenges posed by the ongoing pandemic. Liam will provide additional details on our financial results and I will wrap up our prepared remarks by discussing our outlook for 2020 before opening the call to your questions.

The performance of MIC in its businesses in the second quarter of 2020 reflects improvement in utilization of our IMTT, which averaged just under 95% and ended the quarter at 95.7% and stable level of ancillary services. Two, monthly, sequential improvement in general aviation and flight activity at airports on which Atlantic Aviation operates from 21% of the levels recorded in April, 2019 to approximately 77% of the levels recorded in June 2019. And three, the impact of reduced tourism in Hawaii driven by the state mandation of 14-day quarantine that remained in place throughout the period.

During the quarter, we continue to focus on the four priorities identified on our first quarter call. First, protecting the health and safety of our employees and customers; second, keeping our businesses operating safely and efficiently; third, enhancing our liquidity in reducing costs; and fourth, protecting the value of our businesses while continuing to pursue sales of each.

Regarding health and safety, we are fortunate to have had a low incidence of COVID-19 amongst our employees. We attribute this to the timely and effective decisions made by our leadership teams and to the diligence of our employees. To protect our employees and customers, we continue to maintain appropriate physical distance, to clean and disinfect our facilities regularly and require the use of personal protective equipment by all employees. We have also updated our operating procedures and made changes to the physical layout and infrastructure of our facilities where appropriate. A sizable portion of our employees continue to work at our facilities to ensure continuity of service and a portion continue to work remotely. We have developed our return-to-work protocols and intend to implement those as local conditions permit.

I would like to take this opportunity to once again publicly thank our employees for their resilience and commitment to delivering the essential services provided by our businesses. Together, these steps have allowed all FBOs, all terminals and all facilities and operations in Hawaii to continue to serve customers safely and without interruption during the pandemic.

Regarding our liquidity and cost controls. First, as noted in our first quarter call, we have drawn nearly $600 million on our holding company revolver. Given the better-than-anticipated performance of Atlantic Aviation, in particular in the second quarter, and taking into consideration our obligations, we do not envision using any of that cash. Second, the cost reduction initiatives implemented in April have had a meaningful positive impact on our results. Our businesses, primarily Atlantic Aviation, were able to achieve an annualized approximately $50 million of cost savings in the second quarter. Most of the savings were reductions in operating expenses, consistent with the lower activity levels we were seeing in April.

With the increase in general aviation flight activity, some of the Atlantic Aviation staffs who were working reduced hours have returned to normal hours and some who have been furloughed have been recalled. These actions have reduced the annualized savings to approximately $25 million.

Regarding sales of our businesses, we have continued to move forward with sales processes during the past quarter, although COVID-19 has clearly had an impact on logistics and the timing of processes. Once again, we believe the sales of our operating businesses remains the best way of generating additional value for shareholders. We continue to be encouraged by the level of interest in our businesses. As lockdown rollbacks continue, we expect to work with potential bidders to facilitate on the ground due diligence and face-to-face meetings with our management teams in order to advance the sales processes.

Practically speaking, a transaction for MIC Hawaii may be achievable in the current environment given the size of that business, but it will be informed by a view on what the recovery of tourism looks like in the state.

IMTT is clearly performing well and demonstrating the resilience of storage assets, while potential buyers of Atlantic Aviation are likely to need to see additional data regarding the recovery in general aviation flight activity in order for us to maximize value for that business.

As I said in our first quarter call, the steps we have taken over the past 2.5 years to strengthen our balance sheet and improve our financial flexibility have positioned us well to navigate the impact of COVID-19 on both our operations and on our sales processes.

In terms of operational highlights during the second quarter, the improvement in general aviation flight activity during the second quarter was supported by the progressive rollback of lockdown measures across the U.S. The improvement was driven by leisure-oriented activity in markets, including Florida and Colorado, where Atlantic Aviation has a significant presence. We believe that a substantial portion of this activity reflected customers quarantining outside of major cities.

The amount of fuel sold by Atlantic Aviation in the second quarter of 2020 declined by more than the reduction in flight activity. We believe this is a result of changes in travel patterns and that these are temporary. Specifically, we saw smaller aircraft in single destination flights in addition to the lower activity levels. We also believe that the pandemic has had a disproportionately negative impact on long-distance flight activity, including international and transcontinental domestic trips, a target market for Atlantic Aviation.

Collectively, we believe these account for the difference between the extent of the recovery in-flight activity and the change in fuel sales.

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As expected, tenant hangar rental income remained stable during the second quarter. As we discussed in our first quarter call, approximately 20% of Atlantic Aviation’s gross margin was generated from tenant hangar rental in 2019. Tenant hangar rental helped Atlantic Aviation generate positive EBITDA in each month of the second quarter and gives us confidence that the business will continue to meet its obligations from internally generated resources.

Our MIC Hawaii business performed as expected during the second quarter [indiscernible] of the ongoing requirement for a 14-day quarantine on arrival. Tourist visits to the island were down by more than 95% during the period. Resorts and restaurants constitute a sizable portion of commercial and industrial gas consumption. The significantly lower level of tourism resulted in a decline in gas sales of approximately 14% versus the prior comparable quarter, in line with our comments on our first quarter call.

MIC Hawaii also generated positive EBITDA in each of the three months of the second quarter, and we remain confident that, that business will continue to meet its obligations from internally generated resources. The continued good performance of IMTT supported our overall results for the quarter. Although utilization remained strong and is expected to average in the low- to mid-90% range for the year, with relatively few storage contracts coming up for renewal during the remainder of the year, rates are unlikely to increase materially in 2020.

Ancillary services revenue, such as throughput, blending and heating, was flat with the second quarter of 2019 and ahead of our expectations discussed in our first quarter call. Together with the high level of utilization, things resulted in IMTT generating an increase in EBITDA of 6% versus the prior comparable period.

In summary, given the better-than-anticipated activity levels at Atlantic Aviation to date and the performance of IMTT, we remain confident that we’ll be able to fund our operations and contractual commitments without external capital and without using the funds drawn on our holding company revolving credit facility.

At this point, I will turn the call over to Liam for the highlights of our financial performance during the second quarter.

Liam Stewart

Thank you, Chris, and good morning everyone. For the second quarter of 2020 versus the prior comparable period, adjusted EBITDA, excluding non-cash items, declined by 35%, primarily reflecting the impact of COVID-19-related travel and other restrictions on Atlantic Aviation and MIC Hawaii, offset by improved performance at IMTT. The second quarter of this year also included a net $7 million provision recorded in SG&A at Atlantic Aviation for environmental remediation at one of our FBOs.

Adjusted free cash flow declined by 48%. Free cash flow was reduced by the lower EBITDA and by higher maintenance capital expenditures, but partially offset by a tax benefit. We continue to expect our businesses to deploy a total of approximately $60 million in maintenance CapEx during the year, with the majority of that occurring at IMTT. The MIC Board determined that it was appropriate to continue the suspension of any dividend. Regarding the performance of our operating businesses. The sharp reduction in general aviation flight activity in the quarter resulted in a substantial reduction in the amount of fuel sold by Atlantic Aviation, although this was partially offset by stability in the gross profit generated by tenant hangar rentals.

For the quarter, Atlantic Aviation generated EBITDA and free cash flow of $17 million and $12 million, respectively, each down substantially versus the comparable period in 2019. The Atlantic Aviation team moved quickly to right size the cost base of the business to the level of activity that they were seeing in early April and maintained these savings through the second quarter despite the increase in activity. Naturally, these costs will increase to the extent current activity levels are sustained. As Chris noted, at current levels of activity, we are confident in Atlantic Aviation’s ability to meet its financial obligations using internally generated resources.

Hawaii got to experience the significant decline in gas consumption during the second quarter with a reduction in the number of tourists visiting the islands. With fewer people staying in hotels and eating out, gas consumption declined by approximately 40% versus the second quarter of last year. MIC Hawaii generated EBITDA of $7 million for the quarter, down 50% versus 2019, and free cash flow of $3 million, down 70% versus the prior comparable period.

In addition to the reduction in the amount of gas sold, Hawaii Gas also booked realized losses of $2 million on certain of its commodity hedge contracts during the quarter. These losses reduced both EBITDA and free cash flow for the quarter. As is the case with Atlantic Aviation, we are confident that MIC Hawaii will continue to meet its obligations from internally generated resources. IMTT was a substantial driver of our financial results for the quarter. With utilization in the mid-90s percent range at a largely normal level of ancillary services revenue, IMTT generated $68 million of EBITDA, an increase of 6% over the prior comparable period and free cash flow of $44 million versus $45 million last year.

The modest decline in free cash flow reflects an increase in maintenance CapEx of $5 million for the quarter, which is more a matter of timing as we continue to expect IMTT to invest between $40 million and $45 million in maintenance capital for the year. Looking ahead, we believe IMTT will continue to be a stable contributor to our results over the remainder of the year. Utilization is forecast to average in the low mid-90s percent range, and we expect rates to remain stable through the balance of the year. IMTT continues to progress a number of growth projects. The growth projects are backed by long-dated contracts and both reposition the business and improve connectivity to new and existing customers.

The projects that have or will be placed in service during the year are expected to generate approximately $4 million of incremental EBITDA in 2020. The growth projects under development at IMTT are part of our larger capital deployment program, aimed at investing in the infrastructure of our businesses and improving their resiliency. We continue to expect to deploy between $200 million and $225 million of growth capital this year, with approximately $180 million of that being allocated to projects with IMTT. Through the end of the second quarter, we had successfully deployed $119 million of the total amount.

Finally, we recorded a smaller amount of negative EBITDA and a slightly larger amount of negative free cash flow in our Corporate and Other segment. As anticipated, selling, general and administrative expenses were flat with 2019, but down sequentially as we foreshadowed in our first quarter call when we noted that professional services costs were higher at the start of our sales processes. An income tax liability this year versus a tax benefit last year resulted in a generation of negative $15 million in free cash flow versus negative $10 million in 2019.

We ended the second quarter with $874 million of cash on hand, $599 million of which was drawn on our holding company revolver. We remain confident in the liquidity and funding position of our business. Reflective of the impact of COVID-19, our consolidated leverage increased to 4.8 times net debt-to-EBITDA at quarter end. We assume leverage will increase through the end of the year, driven by the ongoing impact of COVID-19 on our operating performance.

With that, I will turn the call back over to Chris.

Christopher Frost

Thanks, Liam. Before I open the call to your questions, I will spend a couple of minutes discussing our outlook for the remainder of 2020. First, we assume no additional COVID-19-related quarantine or lockdown measures are implemented. While changes in consumer preference using private rather than commercial aviation or a sustained increase in leisure travel via private jet could drive further increases in general aviation flight activity and the performance of Atlantic Aviation. We need to see a more complete rollback of lockdown measures. This would likely positively impact business-oriented and corporate flight activity in major metropolitan areas, international travel and the resumption of in-person events and conferences.

We believe the resumption of this type of activity is likely necessary if flight activity is to recover to 2019 levels, particularly in markets such as New York, Chicago and Los Angeles. Second, in Hawaii, the government has extended quarantine rules and travel restrictions through to the end of August. From September 1, visitors to the state will have to demonstrate they have recently tested negative for COVID-19 prior to arrival. I note that the state’s quarantine rules have been extended several times. Our recovery in gas sales to commercial and industrial customers, particularly the hotels and restaurants, could take time. Importantly, gas sales to residential customers are expected to remain stable.

Last, we believe we have good visibility into the outlook for IMTT. The environment remains constructive for the storage business. And given the relatively modest number of contracts coming up for renewal, we are confident in the ongoing stable performance of the business over the remainder of the year. With that, I thank you again for your participation in our call this morning.

At this time, I will ask our operator to open the phone lines for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Tristan Richardson with Truist Securities. Please go ahead, sir.

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Tristan Richardson

Good morning, guys.

Christopher Frost

Good morning, Tristan.

Tristan Richardson

Really appreciate all the detail on activity you’re seeing in AA. And noted the comment you made around June being down only 23% year-over-year. Can you talk a little bit about what you’re seeing in July or even the past few weeks?

And then secondly, should we assume that that mix shift persists? I mean it just seems like as the recovery continues, it seems like a return to larger aircraft and/or larger, longer legs might lag that recovery. But just curious your thoughts?

Christopher Frost

Yes. Look, I think, Tristan, that’s a good summary. Trading through July has been broadly consistent with June, albeit we saw, obviously, a good increase in flight activity over the July 4 weekend. And I think it was actually up year-over-year. But as I said in the prepared remarks that for our own liquidity and planning purposes, we are assuming that we won’t necessarily see that recovery in the business- or corporate-orientated travel, the event-driven travel. And by event-driven travel, I mean large in-person sporting events and conferences and also international travel. So while we remain confident in the outlook for that business and the resilience of GA flight activity, for our own internal planning purposes, we’re assuming that, that – those markets may take a little longer to recover.

Tristan Richardson

Helpful. And then just one quick one on aviation. Just around the environmental expense at one of the FBOs. Should we think of that as sort of onetime in nature and that $7 million is the entire estimated cost to resolve the matters there?

Liam Stewart

Yes. Tristan, its Liam. So it relates to an April 2019 incident. And the reason for recording it this quarter is we have clarity around the plan for remediation and clarity around the estimated cost of that remediation as well. And so that represents our kind of current thinking around the plan. There may be some variation according to how the plan eventually transpires, but the recognition this quarter is really our best estimate of what the total environmental liability is to clean it up.

Tristan Richardson

Helpful. Thanks, Liam. And then just last one for me, just around the strategic initiatives. I appreciate all the incremental comments you’ve given there around sales processes for the operating business. Can you talk about tax considerations there, as it seems maybe the sale of the individual businesses might be the probable outcome rather than an outright sale of the company? And how you’re planning for that?

Christopher Frost

Why don’t I sort of address the last here and then Liam can pick up the first. I think it’s right where we sit today that it is more likely to be a sale of the individual operating businesses than a sale of the whole. And the reason I say that is tying back to the comments in the prepared remarks, as it relates to Atlantic Aviation. I don’t think it’s appropriate to advance that process at this stage, given that I expect potential buyers will need to see further evidence of the recovery in general aviation flight activity in order for us to maximize value for that business.

So therefore, that would sort of suggest that at this stage, a sale of the company as a whole is perhaps less likely than a sale of the individual operating businesses. And by that, we would be sort of saying a sale of MIC Hawaii and IMTT and then Atlantic being sold through a take out of the listed entity, which would continue to hold Atlantic Aviation. Just in terms of the way that we would evaluate that. I mean, clearly, our objective is to maximize value for shareholders. And as I said on our first quarter call that the way that we would do that is really look at what the present value of the expected proceeds are to shareholders under the different sale configurations or sales structures under consideration. And so the judgment as to what sales structure we ultimately pursue will be one which we believe maximizes value, taking into account any capital gains tax that will be payable will be to sell the underlying businesses.

Liam Stewart

Yes, Tristan, and I think as Chris said, there are sort of permutations within the sale of the individual businesses that generate a more tax effective outcome than just selling three individual businesses out of the listed parent. So the example that Chris mentioned where the last divestiture would effectively be a takedown of the public company is one that’s more efficient than just selling all three businesses out of MIC. And yes, clearly, we’re focused on maximizing value on an after tax basis.

Tristan Richardson

It’s great. Thank you guys very much.

Christopher Frost

You’re great. Thanks Tristan.

Operator

And our next question comes from the line of TJ Schultz with RBC Capital. Please go ahead.

Christopher Frost

Good morning, TJ.

TJ Schultz

Hi. Good morning. Just first at Atlantic. What was the mix of business versus leisure travel in 2019? And as you think about trying to get back to 2019 levels, when you think about lower corporate travel and fewer in-person events, it sounds like you are planning for some slower recovery there, which makes sense. But maybe if you could just provide some color on what run rate cash flow may look like in a slower corporate travel environment?

Christopher Frost

So why don’t I take the first part of that? Look, the sort of the short answer is, in terms of the split between leisure and business, it’s very difficult to assess that on the basis that we just don’t know. I mean, clearly, one of the attributes of flying private aviation is we don’t have visibility as to the purpose of that trip. What I would say, and I’m tying it back to the prepared remarks, in June, we saw flight activity being down 23% compared to the prior comparable period. We think a lot of the recovery was driven by leisure-orientated travel and the absence of corporate or more business-orientated travel. What I would say is that, that international and event-driven traffic, we would estimate to be – to account for around 15% of Atlantic’s traffic in a normal year.

To the extent that we see a complete rollback and businesses and corporates returning to more normal activity, then I would anticipate that we would sort of see a substitution from what we surmise is leisure-orientated traffic to be more business-orientated traffic, which would have been the added benefit of being supported by larger aircraft flying longer distances with multiple destinations and, therefore, using more fuel. So we don’t have visibility as to the ultimate purpose of a trip, say, unlike commercial airlines. And I think you’d appreciate that, I mean, clearly, that is one of the attributes for passengers using private aviation. But as I said, I think in terms of international on event-driven traffic, we see that as accounting for about 15% of the traffic. And the other recovery is really going to come from a shift in mix away from the leisure to more of the business in corporate.

TJ Schultz

Okay. Now that’s helpful. Just switching gears on storage contracts at IMTT. What percent of the capacity that is under contract comes due for renewal in 2021? I’m just trying to understand if we should expect some noticeable step down in utilization next year from one-year contracts that maybe you’ve entered into due to COVID-related disruptions? Thanks.

Christopher Frost

Yes. What I would sort of refer to is previous comments we’ve made which would sort of say in the ordinary course, we normally see 1/3 of the customer book coming up for renewal each year. I would also say that where we stand today that we see a constructive market for storage and enjoying good demand both from system players and from volatility traders who are playing their role in terms of balancing the commodity markets. I think as we start to see a recovery in the U.S. economy and global economies more generally, we would expect to see some volatility in some of the commodity markets for petroleum products. And as we know, the periods of volatility is often – terminal operators often benefit from that.

And so I think as we sort of see the recovery take hold, our expectation is that we are going to continue to see strong demand from the system players, particularly around fuel and sea. And we’re also likely to see good demand from volatility traders who will be looking to take advantage of any arbitrage opportunities in markets. So we’re feeling pretty good about – certainly feeling good about the outlook for 2020. And the market is currently constructive for storage and for many of the petroleum products that continues through to 2021.

TJ Schultz

Okay. Thank you very much.

Operator

And our next question comes from the line of Jerome Han [ph], Investor. Please go ahead.

Unidentified Analyst

Yes. Good morning. Yes. I was calling to find out when you might restore dividends?

Christopher Frost

Thank you. Thanks for the question. Look, clearly, the dividend is a matter for the Board. And as always, our Board considers the current performance of the business and the expected future performance of the business under a range of different scenarios and stress testing as well as considering the state of our balance sheet as well as our financial commitments and contractual obligations. As it relates to the current quarter, the Board assessed all those factors and determined that maintaining the suspension of the dividend was the most appropriate way forward. It wouldn’t be appropriate for me to speculate as to what the Board may decide with respect to Q3 or Q4 at this stage.

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Unidentified Analyst

Yes. Unfortunately, I was looking forward to having a $40,000 a year return on my investment through dividends. I’m 70 years old. I wanted to use it for my retirement, and this is a major blow to me. So that’s why I asked the question.

Christopher Frost

No. I appreciate that. But I think given the current environment that we’re in, the steps we’ve taken are really designed to ensure that we have sufficient liquidity to work through this crisis as well as ensuring we protect the value of our businesses to latter realize that value through the sale of each of the operating businesses. Thanks for your questions.

Unidentified Analyst

Thank you very much.

Operator

And our next question comes from the line of Thomas Shen with Golden Tree. Please go ahead.

Thomas Shen

Hi. In regards to kind of July, are you seeing big differences in locations and how they’re recovering on the Atlantic Aviation side?

Liam Stewart

Yes, so Thomas, it’s Liam. As Chris said, in terms of trading performance through July, broadly consistent with what we saw in June in terms of flight activity being roughly 23% down year-over-year. We haven’t yet seen a sort of big variation in geographies relative to what we observed at the end of the second quarter. And my guess is that while school holidays are still underway across the bulk of the country it was, and it will really be sort of as we get deeper into the third quarter that we may see some differential relative to what we observed from a location – on a location basis in the second quarter.

Thomas Shen

I guess intuitively, I would think, like in July, the Northeast would have done better than like Texas, Florida, kind of opposite of maybe what you would have thought in late May or May. Is that kind of the correct way to think about it?

Liam Stewart

No. Sort of broadly speaking, the more leisure-oriented destinations rather than the commercial destinations in the Northeast have been one sort of performed a little better, notwithstanding sort of case counts and that type of stuff relative to COVID-19. But I think, yes, sort of typically, you would see slower activity in the Northeast at this time of the year, just given people on vacations, et cetera, et cetera. Also, it’s a little bit hard to bifurcate what may be COVID-specific relative to what may just be a function of the fact that people are on vacation and out in resort locations and so forth.

Thomas Shen

And you mentioned when business activity does come back as a substitution for leisure travel, I guess, why would it be a substitution necessarily as opposed to just added kind of demand?

Christopher Frost

I think that’s a good point. I mean as I said in the prepared remarks, it may be that given the advantages that private aviation has over commercial airlines, but we will continue to see leisure traffic growing. What we are summizing is that a lot of the flight activity we have seen is perhaps folks quarantining out of the metropolitan areas while business and corporate activity is suppressed. I think to the extent we see a complete rollback of the lockdown measures and businesses return to more normal activity that maybe folks who have relocated to those resort areas return to normal activity.

Thomas Shen

Got you. Thank you.

Christopher Frost

Thank you.

Operator

And our next question comes from the line of Jonathan Reeder with Wells Fargo. Please go ahead.

Jonathan Reeder

Hey good morning gentlemen.

Christopher Frost

Good morning Jonathan.

Jonathan Reeder

Chris, did you say you thought the sale of MIC Hawaii could move forward sooner rather than later, even without seeing a recovery in Hawaiian economy, just given the beautiful small size of the business?

Christopher Frost

Yes I think, Jonathan, what I said in the prepared remarks is, ultimately, it’s going to be informed by the – a recovery in tourism. And I think the important thing that we need to see is the governor lifting the 40-day quarantine restrictions. And as I said in the prepared remarks, that will also enable us to work with the bidders to facilitate their on the ground due diligence and face-to-face meetings with the management team. And I think that is the important step that we need to see as we advance that process going forward. My comment around Hawaii was also related to the size of that business relative to the others.

Jonathan Reeder

Okay. And then remind us, what are you assuming in terms of time to close any sale of that business, as presumably, you need the state utility regulatory commission approval?

Christopher Frost

Yes, that’s correct. And perhaps that is also another factor in our thinking that it may make sense to advance that process forward, given the time it will take for PUC approval. And for our own planning purposes, we are assuming that from entering into definitive agreements with the buyer through to obtain PUC approval is likely to take 12 months as they have typically done in the state of Hawaii.

Jonathan Reeder

Great, thanks for additional color. I appreciate it.

Christopher Frost

It’s my pleasure.

Operator

And our next question comes from the line of Matthew Marks with Jet Capital. Please go ahead.

Matthew Marks

Hi. I had a question, which is in 2019, at AA, can you speak to sort of what utilization was as a share of theoretical potential kind of flight capacity or flight volumes? How much was your recovery, assuming a meaningful pickup in private aviation demand? How much busier could those FBOs be?

Christopher Frost

Yes, I think, the best way to answer that question is just coming back to where we’re sort of seeing flight activity today. As I said, June is down 23% compared to the same month last year. Trading through July is consistent with what we’re seeing in June. As I said in the prepared remarks, what we are not necessarily seeing is international private aviation activity, given a lot of the travel restrictions on inbound arrivals into the U.S. and we’re not seeing a lot of the in-person event, sporting events and conferences traffic.

As I said previously, we estimate that, that is worth about 15% of flight activity. And so I think – as I said, I think in order for us to see a return to 2019 levels, I would want to see that complete rollback, particularly that orientation of the mix to more corporate travel, and I’d also want to see the international markets opening up as well as seeing the sort of the rescheduling of in-person conferences and sporting events, which we would sort of suggest would probably drive around 10% of our 2019 activity level.

I think unlike commercial airlines, I think it is difficult to actually look at the theoretical seat capacity within the market and therefore, how much addition you could pick up.

Matthew Marks

Okay, thanks.

Operator

And our next question comes from the line of Kyle Cheung [ph] a investor. Please go ahead.

Unidentified Analyst

Hi. Thank you for the additional color on the sales process. I think you previously mentioned and you mentioned today that you’re encouraged by the level of interest. Can you characterize the sort of mix of the potential buyers there? Is it primarily private equity? Is it primarily strategic? Or any color you can cover there?

Christopher Frost

Yes Kyle [ph], I would prefer not to get drawn on the – either the sort of the level of interest or the characteristics of the potential buyers. I think we need to preserve the degree of confidentiality not to prejudice MIC’s position in a sales process.

Unidentified Analyst

I understand that.

Christopher Frost

Thank you.

Unidentified Analyst

With respect to the corporate revolving facility, I think it matures in roughly year and a half. Do you anticipate that you will need to push out that maturity? Or do you anticipate that much of sales process – or there will be some finality for the sale process prior to the maturity of the revolver?

Liam Stewart

Kyle [ph] it’s Liam speaking as well. Look, you’ll appreciate, as you mentioned, that is our nearest maturity, notwithstanding that we have the cash proceeds from the drawdown sitting on our balance sheet. We are currently evaluating, extending that facility.

Unidentified Analyst

Thank you very much.

Operator

Thank you. And now I would like to turn the conference back over to Mr. Frost for any closing comments.

Christopher Frost

Thank you for participating in our conference call today. We look forward to speaking with you on our next quarterly call or prior to that as the circumstances warrant. With that, we wish you a great day.

Operator

Ladies and gentlemen, thank you for your participation. This does conclude today’s conference call. You may now disconnect.



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